BUILDING A CLEANER
HEALTHIER WORLD
Annual Report and Accounts 2022
01
Reckitt Annual Report and Accounts 2022
CO NTE NTS
A B O UT T H I S R E P O RT
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STRATEGIC REPORT
GOVERNANCE
Investment Case
At a Glance
Chair’s Statement
88
91
Corporate Governance Report
Board Leadership and Company Purpose
103 Division of Responsibilities
Chief Executive Officer’s Statement
107 Composition, Succession and Evaluation
Culture and Inclusion
Our Strategy
Our Business Model
Market Context
Our Sustainability Approach
and Performance
Key Performance Indicators
Progress Against Our Strategy: Hygiene
Progress Against Our Strategy: Health
Progress Against Our Strategy: Nutrition
Focus on: Innovation
Focus on: Executional Resilience
Focus on: Digital Transformation
Focus on: Our Productivity Journey
Focus on: Human Health
and Planetary Health
Focus on: Winning in
Attractive Categories
Stakeholder Engagement
TCFD Summary
S172 Statement
Non-Financial Information Statement
Group Financial Review
Risk Management
109 Nomination Committee Report
113 Audit Committee Report
120 CRSEC Committee Report
126 Directors’ Remuneration Report
156 Report of the Directors
160
Statement of Directors’ Responsibilities
Culture and Inclusion
For further information
see page 9
FINANCIAL STATEMENTS
161
Independent Auditor’s Report
177
Financial Statements
241
Shareholder Information
Our Strategy
For further information
see page 12
Our Business Model
For further information
see page 13
87 Our Viability Statement
02
03
05
07
09
12
13
14
16
18
20
23
26
29
33
36
39
41
44
47
59
62
65
68
80
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 02
Reckitt Annual Report and Accounts 2022
I N V ESTM E NT CAS E
REASONS TO INVEST
RIGHT CATEGORIES
Large addressable
market, attractive
growth and margins
HYGIENE1
MARKET-LEADING BRANDS
Trusted and loved brands
that innovate and grow
across large demand spaces
ATTRACTIVE
EARNINGS MODEL
High gross margin business
driving a strong earnings model
SUPERIOR EXECUTION
Relentless focus on execution
SUSTAINABILITY EMBEDDED
Sustainability embedded
in how the company runs
OWNERSHIP CULTURE
Strong and evolving
culture: run by owners
O R G A N I C R E V E N U E G R OW T H
I M P R OV E M E N T I N CU S TO M E R
N E T R E V E N U E F R O M M O R E
E M P LOY E E
#1 globally
#1 globally
#1 globally
#3 globally #3 globally
HEALTH1
#1 globally
#1 globally
#1 globally
#1 Europe
#2 US
NUTRITION1
#1 globally #2 globally
MID-SINGLE
DIGIT
M E D I U M -T E R M TA R G E T
A DJ U S T E D O P E R AT I N G
P R O F I T (AO P) M A R G I N
BY T H E M I D -2 0 S
MID-20s
M E D I U M -T E R M TA R G E T
R E L AT I O N S H I P S CO R E
+100bps
S U S TA I N A B L E P R O D U C TS
S H A R E H O L D E R S
24.4%
c.50%
S H A R E O F M A R K E TS W H E R E
R E D U C T I O N I N A B S O L U T E
R E CO G N I S E D A S TO P T I E R
C A R B O N E M I S S I O N S I N O U R
BY S U P P L I E R PA R T N E R S 2
O P E R AT I O N S S I N C E 2 0 1 5
+6 positions
R E AC H I N G R E C K I T T ’ S
H I G H E S T R A N K I N U S K A N TA R
P OW E R R A N K I N G S U RV E Y
S I N C E 2 0 1 5 3
66%
1. Claims based on information
aggregated and reported in part
from data supplied by Nielsen
through its Retail Measurement
Services and in part from data inputs
from other suppliers, in each case, for
the relevant category, geographic
focus and latest available MAT
2. Based on Advantage Group 2022
survey of retailers. 100bps increase
in markets rated top tier, from 43.7%
in 2021 to 44.7% 2022. Share of
markets excludes US
3. Kantar USA PowerRanking overall
composite score 2016-2022
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 03
Reckitt Annual Report and Accounts 2022
AT A G L A N CE
FINANCIAL HIGHLIGHTS
STRATEGIC HIGHLIGHTS
SUSTAINABILITY HIGHLIGHTS
L I K E - F O R- L I K E ( L F L)
I F R S N E T R E V E N U E G R OW T H
C AT E G O RY M A R K E T U N I TS (C M U S )
N E T R E V E N U E G R OW T H ¹
H O L D I N G O R G A I N I N G M A R K E T S H A R E
N E T R E V E N U E F R O M M O R E
S U S TA I N A B L E P R O D U C TS
7.6%
2021: 3.5%
9.2%
2021: -5.4%
62%
2021: 62%
24.4%
2021: 24.9%
A DJ U S T E D O P E R AT I N G
I F R S O P E R AT I N G M A R G I N
S H A R E O F M A R K E TS W H E R E R E CO G N I S E D
A B S O L U T E R E D U C T I O N I N G R E E N H O U S E G A S
M A R G I N E XC L . I F C N C H I N A¹
A S TO P T I E R BY S U P P L I E R PA R T N E R S 2
E M I S S I O N S F R O M O P E R AT I O N S S I N C E 2 0 1 5
23.8%
2021: 22.9%
22.5%
2021: -6.1%
+100bps
2021: +930bps
A DJ U S T E D TOTA L E P S¹
I F R S TOTA L E P S
TOTA L R E C K I T T S H A R E O F
D I LU T E D
341.7p
2021: 288.5p
F U L L Y E A R D I V I D E N D
183.3p
2021: 174.6p
D I LU T E D
324.7p
2021: -4.5p
TOTA L D I S T R I B U T I O N P O I N TS 3
+70bps
2021: +110bps4
1. Adjusted and other non-GAAP measures, definitions and terms are defined on
page 75
2. Based on Advantage Group 2022 survey of retailers. 100bps increase in markets
rated top tier, from 43.7% in 2021 to 44.7% 2022. Share of markets excludes US
3. Increase from 24.0% (YTD Oct 2021) to 24.7% (YTD Oct 2022)
4. Increase from 22.2% (Dec 2020) to 23.3% (Nov 2021)
66%
2021: 66%
I N V E S T E D I N F I G H T F O R
ACC E S S F U N D I N 2 0 2 2
£32m
2021: £38m
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
04
Reckitt Annual Report and Accounts 2022
AT A G L A N C E CO N T I N U E D
OUR GLOBAL BUSINESS UNITS
HYGIENE
41%
of Group net revenue
HEALTH
42%
of Group net revenue
NUTRITION
17%
of Group net revenue
N E T R E V E N U E
£5,960m
A DJ U S T E D
O P E R AT I N G P R O F I T
£1,214m
N E T R E V E N U E
£5,992m
A DJ U S T E D
O P E R AT I N G P R O F I T
£1,648m
N E T R E V E N U E
£2,501m
A DJ U S T E D
O P E R AT I N G P R O F I T
£577m
-3.1% LFL net revenue growth
0.8% IFRS net revenue growth
20.4% adjusted operating
profit margin
14.7% LFL net revenue growth
18.6% IFRS net revenue growth
27.5% adjusted operating
profit margin
22.9% LFL net revenue growth
10.2% IFRS net revenue growth
23.1% adjusted operating
profit margin
C AT E G O RY P R O F I L E
G E O G R A P H I C A L P R O F I L E
C AT E G O RY P R O F I L E
G E O G R A P H I C A L P R O F I L E
C AT E G O RY P R O F I L E
G E O G R A P H I C A L P R O F I L E
Surface & Disinfection
Auto Dishwash
Air Care
Fabric Additives
Lavatory Care
Pest Control
Other
North America
Europe/ANZ
Developing Markets
OTC
Germ Protection
Intimate Wellness
VMS
Personal Care
North America
Europe/ANZ
Developing Markets
Infant & Child
Specialty & Adult
North America
Europe/ANZ
Developing Markets
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
05
Reckitt Annual Report and Accounts 2022
CHA I R ’S STATE M E NT
PROGRESS AND
RESILIENCE IN AN
EVENTFUL YEAR
C H R I S S I N C L A I R
C H A I R
Reckitt today is a well-invested,
resilient business with a clear
strategy and purpose, a strong
culture, dynamic and committed
leadership and an excellent
portfolio of leading and
trusted brands.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 06
Reckitt Annual Report and Accounts 2022
C H A I R ’ S S TAT E M E N T CO N T I N U E D
Reckitt saw strong all-round performance
in 2022, delivering 7.6% LFL net revenue
growth1. We executed effectively and
delivered on our priorities, whilst advancing
on our transformation journey during what
was yet another challenging year.
Last year I wrote about the company being at
an inflection point. I suggested then that the
benefits from our transformation journey would
become increasingly apparent, and they have –
in the progress, flexibility and resilience Reckitt
has demonstrated this year, against a backdrop of
market volatility, inflation and economic disruption.
Our problem-solving, innovative culture has been
a driving force in helping us successfully navigate
both supply bottlenecks and demand spikes.
When the war in Ukraine threatened sunflower oil
supplies, we acted fast to source alternatives and
sustain production. Faced with a sudden shortage
of infant formula in the US, we swiftly ramped up
supply to help ensure babies continued to have
access to the nutrition they needed. These are
clear examples of the organisation’s ability to
manage and excel through dynamic change.
Business performance
There is also momentum in our financial
performance, and we remain on track to meet
our medium-term targets.
With respect to our transformation, the business
has now pivoted from focusing on foundational
changes to enjoying the benefits of those changes
already implemented. Sharper execution, a more
flexible and resilient supply chain, expanded
capacity, better customer service and continually
improving digital capabilities have all helped
to deliver strong underlying performance
across our portfolio of purpose-led brands.
Reckitt’s Purpose to protect, heal and nurture in
the relentless pursuit of a cleaner and healthier
world remains central to our future and we
remain focused on delivering our strategy.
At the same time, governance and risk
management continue to be very important
areas of focus for the Board. Alongside our
sustainability agenda, all three elements are key
to our investments and initiatives and enhance
the safety and efficacy of our products.
Talent and culture
Also key to our investments and initiatives is
our cultural agenda. For example, we have
expanded and deepened our commitments
on diversity, equity and inclusion. More broadly,
we are building a vibrant culture founded
on purpose and governed by our Compass.
Both affect the way we operate, how we
think of ourselves and our approach to the
wider world. Progress here is increasingly
making Reckitt a place where everyone has
a real opportunity to succeed and grow.
Executive change
Reckitt saw the departure of our former CEO,
Laxman Narasimhan, in September. We were
fortunate that Nicandro Durante was willing
and ready to step in for an interim period, to
help steer the company on our continued
transformation journey, and to give the Board
time to find the right permanent successor.
As Reckitt’s longest-serving Non-Executive
Director, Nicandro already knew our company
well. This, along with his experience as a
global FMCG CEO and strong track record
of managing change, equipped him for
the task. Nicandro is ably supported by a
strong and committed leadership team.
The process for naming a new CEO is well
underway with assessments of both internal
and external candidates. We look forward to
updating shareholders and the market as soon
as we are able.
Finally, I’d like to express my gratitude to Laxman
for his important contribution over the past three
years. Reckitt today is a stronger company with
excellent talent and well positioned for the future.
Changes to the Board
Recent appointments have refreshed and
strengthened the Board. In February 2022,
we were pleased to welcome Alan Stewart
as a Non-Executive Director. As former CFO
at Tesco, Alan brings a wealth of experience,
and his insights are already helping to inform
our approach to strengthening retail partnerships.
Alan was also appointed as Chair of the
Remuneration Committee, replacing Mary Harris
in that role. Mary continues to be a valued
member of the Remuneration Committee.
Following Nicandro becoming CEO, Jeremy
Darroch joined us as Senior Independent
Non-Executive Director in November and was
appointed to the Remuneration Committee
and the Nomination Committee. Formerly
Executive Chairman and Group Chief Executive
of Sky, Jeremy is an outstanding leader with
considerable expertise in the consumer retail
environment, built up over a successful career
at some of the UK’s highest-profile companies.
We are also delighted to welcome Tamara
Ingram OBE as a Non-Executive Director and
member of the Audit Committee from February
2023. With many years of experience at major
advertising firms, including as Global Chair of
Wunderman Thompson and CEO of McCann
Worldgroup in London, Tamara’s informed
perspective, on marketing and communication
issues especially, will add tremendously
to the quality of our deliberations.
In February 2020, the Board committed
to maintain the dividend at 2019 levels as
investments were made to benefit long-term
sustainable growth. The Board has updated
its dividend policy and now aims to deliver
sustainable dividend growth in future years,
subject to any significant internal or external
factors. Accordingly, the 2022 dividend has been
increased by 5% in line with this objective.
The Board of Directors recommends a final
2022 dividend of 110.3 pence, which when
added to the interim dividend of 73.0 pence,
gives a full-year dividend of 183.3 pence
(2021: 174.6 pence). Subject to shareholder
approval at the Annual General Meeting, this will
be paid on 24 May 2023 to shareholders on the
register at the record date of 11 April 2023.
Conclusion
In summary, Reckitt today is a well-invested,
resilient business with a clear strategy
and purpose, a strong culture, dynamic
and invested leadership and an excellent
portfolio of leading and trusted brands.
With good momentum and a strategy fit for
the times, we are well placed to both manage
upcoming challenges and respond to opportunities.
We approach the future with confidence.
We will continue to drive sustainable growth
and deliver on our priorities and purpose. We
know these are the right priorities and we will
continue forging our path to long-term success
for Reckitt, its shareholders and its stakeholders.
1. Adjusted and other non-GAAP measures, definitions
and terms are defined on page 75
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 07
Reckitt Annual Report and Accounts 2022
CH I E F E XECUTIV E O FFI CE R ’S STATE M E NT
A YEAR OF
DELIVERY AND
MOMENTUM
N I C A N D R O D U R A N T E
C H I E F E X E CU T I V E O F F I C E R
Our growth strategy is delivering.
The Group is now 28% larger
than in 2019 on a like-for-like
net revenue basis, driven by the
strength of our iconic brands,
which are often number one or
two globally or in their markets.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 08
Reckitt Annual Report and Accounts 2022
C H I E F E X E CU T I V E O F F I C E R ’ S S TAT E M E N T CO N T I N U E D
Overview
Reckitt has a unique portfolio of brands that
consumers love, trust and rely on to protect, heal
and nurture millions of people each and every day.
revenue basis with price/mix improvements
of around 18%, and volume growth of around
10%, with broad-based growth across our
three Global Business Units (GBUs).
Our brands are steeped in history and are
iconic leaders in their categories, often ranked
number one or two globally or in their markets.
Each brand also has a specific fight, aligned
with the Sustainable Development Goals,
which helps to identify unmet opportunities.
Our strong brands therefore have the equity
to expand into adjacent categories, travel
to new geographies, earn trust from new
consumers and stand for something bigger.
That equity has helped drive growth in our
market share and penetration and has allowed
us to move into new spaces and places,
deepening and broadening the reach of our
trusted brands in high-growth categories.
Behind everything we do is our culture, which
guides each of us to Own, Create, Deliver and
Care. Our focus on sustainability steers our work
towards a cleaner, healthier world through our
purpose-led brands. Overall, we contribute
to a healthier planet and a fairer society.
2022, a year of strong delivery in
challenging conditions
When I took over as CEO in October 2022,
it was immediately clear that our growth
strategy is delivering. In 2022, amid an extremely
challenging environment of high inflation,
consumers facing cost-of-living pressures and
global supply challenges, we delivered 7.6%
like-for-like net revenue growth1, a resilient
gross margin performance and strong
adjusted operating margin expansion of 90bps
(excluding IFCN China) to 23.8%. The Group
is now 28% larger than in 2019 on a LFL net
Our resilient performance was underpinned by
sequential improvement in our Hygiene GBU
throughout the year as the Lysol base continued
to normalise, and ongoing momentum in the
Health GBU, led by OTC brands and our Intimate
Wellness portfolio. The Nutrition GBU also made
good progress, with solid net revenue growth
aside from the short-term outperformance
resulting from a competitor’s supply issue.
Our in-market competitiveness remains
strong, with 62% of our core Category Market
Units (CMUs) holding or gaining share. This
performance is due to a more resilient supply
chain, improved in-store execution and successful
innovation that is increasingly supported by deep
consumer insights and investment in science.
I am particularly proud of the outstanding
delivery by our Nutrition team in the US, where
the supply of infant formula was a serious issue
during much of the year. The team’s focus on
doing everything possible to put more formula
on shelves, addressing concerns of parents
across the US, whilst safeguarding quality and
safety, was exceptional and a testament to
the Reckitt ‘can-do’ attitude. As a result, we
delivered more than 1.8 billion 8oz servings
of infant formula in North America.
A firm focus on execution in 2023
Market conditions in 2023 are likely to remain
challenging, with further inflation and consumers
facing continued financial pressures. We are mindful
of these issues; however, we have good momentum,
a strong innovation pipeline and an organisation
fully focused on delivering superior products.
We target another year of mid-single-digit growth
in 2023, excluding the impact of the 2022 one-off
gain from competitor supply issues in our US
Nutrition business. This impact is approximately
+2.5% on our LFL net revenue growth in 2022.
Looking ahead, with our strong innovation
pipeline, improved executional muscle, and
significant penetration opportunities, we
are well positioned to deliver sustainable
mid-single-digit growth in the medium term.
Creating long-term value
The Group Executive Committee and I are
committed to maximising long-term value for our
shareholders. Our interests are fundamentally
aligned through our market-leading shareholding
requirements for all of our top management.
Reckitt is well positioned to create long-term value
for all of its stakeholders. This starts with a strong
growth algorithm from its trusted, market-leading
brands operating in growth categories, and is
bolstered by all the improvements we’ve made
in the business and the opportunities ahead.
The quality of our categories and the strength
of our brands enable us to achieve leading
gross margins in our peer group. It is these
high gross margins that fund investment in
innovation, support for our brands and our fixed
cost infrastructure, whilst delivering strong
adjusted operating profits and margins.
In summary, we have a unique portfolio of
trusted, market-leading brands in structurally
attractive categories with significant headroom
for growth. This, combined with our progress to
date, gives me great confidence in our future.
1. Adjusted and other non-GAAP measures, definitions
and terms are defined on page 75
CO R E C M U S G A I N I N G
G R O U P L F L N E T R E V E N U E
O R H O L D I N G S H A R E
62%
28%
G R OW T H VS 2 0 1 9
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
09
Reckitt Annual Report and Accounts 2022
CU LTU R E A N D I N CLUS I O N
DYNAMIC, INCLUSIVE
AND COLLABORATIVE
We are nurturing our dynamic,
inclusive and collaborative culture
to take on the fight for a cleaner,
healthier world. We celebrate
and encourage behaviours rooted
in our shared sense of purpose.
OUR PURPOSE
OUR FIGHT
We exist to protect, heal and nurture in the relentless
pursuit of a cleaner and healthier world.
We have a fight on our hands. A fight to make access
to the highest-quality hygiene, wellness and nourishment
a right, not a privilege.
OUR COMPASS
OUR LEADERSHIP BEHAVIOURS
Our Compass guides our business. At its heart is the
goal of doing the right thing. Always. We put consumers
and people first, seek out new opportunities, strive
for excellence and join forces to win bigger and build
a culture of shared success.
Put consumers
and people first
Build shared
success
Do the
right thing.
Always.
Seek out new
opportunities
Strive for
excellence
Our culture aims to empower our people to always bring
their authentic self to work so they can operate at their
best. This is articulated in our Leadership Behaviours,
which set out our expectations about how we behave.
Everyone at Reckitt, not just our leaders, is expected to
Own, Create, Deliver and Care. These behaviours define
how we operate and how we make decisions.
Own
– Live our Purpose, Fight
and Compass
– Know our business cold
– Make decisions
Create
– Spot opportunities
– Innovate, iterate and scale
– Relentlessly build better
Deliver
– Focus on what matters
– Move boldly and at pace
– Join forces to win bigger
Care
– Actively listen, learn
and include
– Speak direct with respect
– Act to unleash potential
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
10
Reckitt Annual Report and Accounts 2022
CU LT U R E A N D I N C L U S I O N CO N T I N U E D
United by Purpose
Our Purpose, Fight, Compass and Leadership
Behaviours have been widely welcomed and
adopted within the company. Our culture
has evolved to support this strategy and
cement our status as a purpose-driven,
consumer-centric business.
Reckitt has long been recognised as a place
where people take responsibility for making things
happen. Now, that drive for delivery and innovation
is even more strongly combined with a sense of
purpose. We take care of each other and recognise
we all have a part to play in making access to the
highest-quality hygiene, wellness and nutrition
a right, not a privilege. A dynamic, inclusive and
collaborative culture is at the heart of that.
We build sustained business performance by
encouraging the four Leadership Behaviours that
promote and embed our purpose-led culture.
We want our people to Own their decisions,
whilst living our Purpose and Compass every
day. We seek to Create new opportunities
to relentlessly pursue our Purpose, whilst
putting people and consumers first. Deliver
encapsulates our commitment to superior
execution. Last but not least, we Care about
others within the company and in wider society.
125nationalities operating in 68 countries,
spanning six continents reflects
our diverse culture
have demonstrated tremendous talent and
resilience by responding effectively to these
external pressures, whilst still progressing
Reckitt’s own transformational journey.
This year, we decided to mark this outstanding
effort and recognise the added financial
burden we all face, with a one-off appreciation
bonus or salary increase for the majority of
our employees globally. A fixed amount,
agreed country-by-country, was awarded
to the majority of employees below senior
management. This ensured that colleagues
most affected by the rising cost of living
received the largest percentage benefit.
When reviewing compensation, we take
account of inflation, salary market norms
and affordability in determining pay levels.
Colleagues’ safety and security are paramount.
In February 2022, following the outbreak of
the war in Ukraine, we temporarily suspended
our operations there. Despite this, we have
committed to continuing to pay the salaries
to our colleagues in Ukraine at least until
mid-2023. We are also engaged in a process
aimed at transferring ownership of our Russian
business. We continue to employ and support
our Russian colleagues whilst this is underway.
Mental health and wellbeing
Promoting wellbeing is not just an employee
consideration at Reckitt, it goes to the core of who
we are: we exist to protect, heal and nurture in the
relentless pursuit of a cleaner, healthier world.
In March 2022, we launched our Global Wellbeing
Policy. This sets out our ambition to create an
environment where people can live a better life.
It recognises mental health as critical to
that and reflects our belief that focusing on
Leveraging diversity
Our cultural diversity is a key strategic capability.
With around 40,000 people of 125 different
nationalities operating in 68 countries spanning
six continents, we closely reflect and represent
the consumers and communities we serve. This
leaves us better placed to develop solutions our
consumers really need, whilst having a positive
impact and helping build a more inclusive world.
We are gathering global diversity information,
with employee consent, to enrich our
understanding of the make-up of our
workforce and colleagues’ experiences.
Taking care of each other
We continually assess how best to care for
colleagues and deliver exceptional business
performance, whilst adapting to changing
social and economic conditions.
We live in volatile and challenging times. After
a pandemic that changed the world of work
overnight and triggered demand disruption and
supply chain bottlenecks, we have faced cost
inflation and product availability challenges.
In 2022, the war in Ukraine, the ongoing
cost-of-living crisis and increased energy
prices have all taken their toll. Our people
R A N JAY R A D H A K R I S H N A N
CH I EF H U M A N R ESOU RCES O FFICER
Our culture of ownership
drives us to live our
Purpose in our Fight,
model our Leadership
Behaviours and
deliver sustained
high performance.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT J É R Ô M E L E M A I R E
E X E C S P O N S O R O F LG BTQ + E R G
A N D E V P C D O H YG I E N E
Our four global ERGs
provide visibility, support
and understanding, all
the things that help us
bring our full selves to
work. I am proud to
sponsor the work we
are doing within the
LGBTQ+ community.
11
Reckitt Annual Report and Accounts 2022
CU LT U R E A N D I N C L U S I O N CO N T I N U E D
colleagues’ personal and professional wellbeing is
foundational for sustained business performance.
We have a wide range of tools and resources to
support employees’ mental health and wellbeing.
People share stories through our global Stronger
Together conversations, including each year
on World Mental Health Day. Performance
coaches support Reckitt’s leaders in managing
constant change, beating fatigue, and resetting
and refocusing. Employees are encouraged to
take time out for monthly Wellbeing Boosters
where performance coaches provide tips
and tools to support them on their wellbeing
journey. We’ve also teamed up with Heart On
My Sleeve, a global organisation focused on
emotional wellness, which helps people forge
meaningful connections through understanding,
peer support and community engagement.
Employee Resource Groups (ERGs)
ERGs are employee networks that aim to raise
the visibility of underrepresented communities.
They provide a space for colleagues to connect
and support each other. ERGs welcome anyone
who wants to advance group interests, either
as a community member or as an ally.
TO P E M P LOY E R
Seven of our markets were named in the Top
Employers Institute Awards, which globally
recognises excellence in people practices
ERGs are represented on our Global Inclusion
Board and provide input on consumer
perspectives, which inform our innovation process.
This Board is led by our CEO and includes senior
business leaders as well as ERG representatives.
Their work is complemented by Local Inclusion
Boards working with local ERGs. Chaired by
regional general managers, these provide
representation and support in specific markets.
With the launch of our new Disability ERG in
April 2022 we now have four global ERGs.
Women@Reckitt works to unlock the potential
of women at Reckitt and transform the way we
think about gender. LGBTQ+ @Reckitt celebrates
diversity in all its forms. It aims to eradicate
discrimination and empower LGBTQ+ people
to bring their whole selves to work. The Race
and Ethnicity ERG encourages conversations
and promotes corporate actions to create an
environment where employees of all races and
ethnicities can thrive. Our Disability ERG enables
and empowers employees with disabilities
and those caring for people with disabilities.
Embedding inclusivity
All colleagues should feel able to participate
fully, bring their authentic self to work, and
realise their full potential. Together, we can
make a real, meaningful difference.
We have been intensifying our efforts to
embed this sense of inclusion. Internally, we are
strengthening our inclusive culture by focusing
on leadership, people and policy. Externally, our
inclusive approach to procurement, brands and
partnerships aligns who we are with what we do.
Our dedicated Global Inclusion team works
in close partnership with the Global Inclusion
Board to set and drive our inclusion agenda.
We have also been rolling out a conscious
inclusion learning programme globally. This is
spreading the message that we all need to play
our part in creating a culture where everyone is
included and valued. We have issued specific
guidance on inclusive recruitment practices
for managers with hiring responsibilities.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 12
Reckitt Annual Report and Accounts 2022
O U R STR ATEGY
OUR GROWTH STRATEGY
STRATEGIC IMPERATIVES
Our strategic imperatives are those areas of focus which
support our medium-term objectives of delivering sustainable
mid-single-digit growth and mid-20s adjusted operating margins.
STRATEGIC GROWTH DRIVERS
Our category-led growth strategy is anchored in consumer demand.
We use our deep consumer insights, combined with our strength
in science and technology to drive growth via our strategic levers.
2030 SUSTAINABILITY AMBITIONS
Our 2030 ambitions embed sustainability at the core of our business
and build on the progress we have already made. They focus on
three areas:
G ROW B R A N DS
A N D I N N OVAT E
D R I V E S U PE R I O R
E X ECUT I O N
For further information
see page 29
For further information
see page 33
I N V E S T I N
C A PA B I LIT I E S
I N CR E AS E
PRO D U CT I V IT Y
For further information
see page 36
For further information
see page 39
E M B E D
S US TA I N A B I LIT Y
ACT I V E LY M A N AG E
T H E P O RT FO LI O
1
2
PRO D U CT
PE N E T R AT I O N
Increasing product
usage by capturing
new consumers
and households.
M A R K E T
S H A R E G A I N S
Winning by serving
existing consumers
faster, better and
more efficiently with
superior and more
relevant products.
3
4
E X PA N S I O N I NTO
N E W PL ACE S
E X PA N S I O N I NTO
N E W S PACE S
Taking our brands
and products into
new geographies
and new channels.
Capturing new market
opportunities using
our brands and
consumer relationships.
PU R P OS E- LE D B R A N DS
We sell more than 30 million products every single day.
We want to have a positive impact by selling products
people want and that make a positive difference in the world.
A H E A LT H I E R PL A N E T
A healthier planet and healthier people are inextricably
linked. We play an active role in helping to combat climate
change, addressing biodiversity concerns and improving
planetary health through our own actions, our partnerships
and our brands.
A FA I R E R SO CI E T Y
We are fighting for a world where access to the highest-quality
hygiene, wellness and nourishment is everyone’s right, and
not a privilege. We are building an inclusive culture, where
everybody is treated fairly and equally. Our teams represent the
diverse geographies we operate in and the people we serve.
For further information
see page 41
For further information
see page 44
For further information
see pages 20 to 28
For further information
see page 17
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 13
Reckitt Annual Report and Accounts 2022
O U R B US I N ESS M O D E L
EARNINGS GROWTH MODEL
WHO WE CREATE VALUE FOR
HOW WE
CREATE VALUE
OUR ASSETS
O U R P E O P LE A N D CU LT U R E
We employ outstanding people who are focused
on execution. They work in a unique culture,
with a strong sense of shared ownership,
that harnesses their passion and allows them
to make a real difference.
O U R B R A N DS
We have a global portfolio of leading brands,
offering attractive growth prospects and margins,
and sustainable competitive advantages.
O U R K N OW LE DG E A N D S K I LLS
We have deep consumer understanding, proven R&D
capabilities and an agile organisation, which gets the
right products into the hands of consumers quickly.
O U R PA RTN E RS H I PS
We develop strong, trusted relationships with our
customers, consumers, suppliers, communities and
other partners to allow us to extend our impact.
O U R I N FR ASTRU CTU R E
Our business is underpinned by strong manufacturing
sites, R&D laboratories, centres of excellence and
logistics centres as well as digital infrastructure.
O U R FI N A N CIA L STR E N GTH
Shareholders’ equity, debt and retained profit give
us the financial resources to implement our strategy.
H I G H G R O S S
M A R G I N B U S I N E S S
S U S TA I N A B L E N E T
R E V E N U E G R OW T H
U N D E R P I N N E D BY
S T R O N G C U LT U R E
P R O D U CT I V I T Y
B R A N D I N V E S T M E N T S
A N D I N N OVAT I O N
1
H I G H
O P E R AT I N G
P R O F I T
H I G H G R OS S M A R G I N B U S I N E S S
Gross margin reflects the quality of both
the categories in which we operate, and
strength and premiumisation of our brands.
This funds reinvestment in our brands, our
growth drivers and the delivery of leading
operating profit margins in our peer group.
P R O D U C T I V I T Y
Embedding programmes to enhance
effectiveness and efficiency in the
company and to fund investment.
B R A N D I N V E S T M E N TS A N D I N N OVAT I O N S
Investing behind our brands through innovation,
consumer education and advertising, amongst
other activities, ensures that our brands
remain relevant to our consumers, whilst
making their lives incrementally better.
S U S TA I N A B L E N E T R E V E N U E G R OW T H
We operate in high-growth categories,
underpinned by innovation and investment
in brand-building initiatives. This creates
a strong platform to support sustainable
mid-single-digit net revenue growth.
CU S TO M E R S
Ranking in top 100
consumer packaged
goods companies
O U R E N V I R O N M E N T
absolute reduction in
carbon emissions from
operations since 2015
#28
66%
For further information
see page 47
For further information
see page 56
CO N S U M E R S
Net revenue from
more sustainable
products
24.4%
For further information
see page 49
O U R P E O P L E
Gender balance
across all
management
50/50
For further information
see page 112
S U P P L I E R S
S C I E N T I S TS
I N N OVATO R S
I N D U S T RY B O D I E S
I N V E S TO R S
CO M M U N I T I E S
For further information
see page 51
For further information
see page 52
For further information
see page 52
For further information
see page 53
For further information
see page 54
For further information
see page 54
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 14
Reckitt Annual Report and Accounts 2022
MA R K ET CO NTE X T
TACKLING FOUR BIG
GLOBAL PROBLEMS
Reckitt fights to help tackle
four big problems for humanity.
Our brands help people meet
these challenges. Growing our
markets increases our impact.
S US TA I N A B I LIT Y A N D
D I G ITA L PR ACT I CE E M B E D D E D
As we seek solutions to these problems, we are embedding
sustainability into our work and strengthening our digital
capabilities to meet consumers’ evolving tastes, values
and behaviours.
Sustainability is not just about doing the right thing, it is a commercial
imperative. Consumers want to buy products that are not only
safe and effective, but have also been developed in a responsible
manner, recognising the positive and negative impact that their
production and use can have on the environment and wider society.
Digital technologies are transforming consumer behaviour
and purchasing decisions, affecting what and how people
buy. Technology also has implications for the way we develop
and market our products, the value we can offer consumers,
and how we manage our supply chain.
1
2
T H E PRO B LE M
T H E PRO B LE M
POOR WATER, SANITATION
AND HYGIENE CAN HAVE
DEVASTATING CONSEQUENCES
FORMAL HEALTHCARE SYSTEMS
HAVE LIMITED RESOURCES AND
ARE UNDER INCREASING PRESSURE
3
4
See
following
page
T H E PRO B LE M
T H E PRO B LE M
LIMITED UNDERSTANDING AND STIGMAS
AROUND INTIMATE WELLNESS DAMAGE
PUBLIC HEALTH AND WELLBEING
BOTH INFANTS AND THE INCREASING
NUMBER OF SENIORS IN OUR SOCIETY
HAVE SPECIALISED NUTRITIONAL NEEDS
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 15
Reckitt Annual Report and Accounts 2022
M A R K E T CO N T E X T CO N T I N U E D
1
2
3
4
POOR WATER, SANITATION
AND HYGIENE CAN HAVE
DEVASTATING CONSEQUENCES
FORMAL HEALTHCARE SYSTEMS HAVE
LIMITED RESOURCES AND ARE UNDER
INCREASING PRESSURE
LIMITED UNDERSTANDING AND STIGMAS
AROUND INTIMATE WELLNESS DAMAGE
PUBLIC HEALTH AND WELLBEING
BOTH INFANTS AND THE INCREASING
NUMBER OF SENIORS IN OUR SOCIETY
HAVE SPECIALISED NUTRITIONAL NEEDS
As cities become more crowded and populations
more mobile, good hygiene practice is essential
in reducing the spread of infection. In developing
economies, water stress can compromise
hygiene. This has a direct impact on health,
both in cities and in rural communities.
Across the world, ageing populations and
stretched public finances are putting pressure
on healthcare systems. Meanwhile, individuals
are becoming better informed and are more
actively involved in looking after themselves.
Self-care solutions, supported by consumer-
centred technology on apps and elsewhere,
give people more control. By saving trips to
the doctor, they can also help reduce demand
on strained public healthcare systems.
In many parts of the world, there is limited
awareness and understanding of intimate
wellness. In some traditionally conservative
societies, cultural taboos rather than health
considerations guide policy priorities.
Reproductive health and sexual wellbeing
have not been priorities in recent years.
The contact-averse public health measures
during the pandemic restricted young people’s
access to sexual education and development.
Infants deserve the best possible start in life and
the nutrition they receive is a key part of that.
That is especially true for those suffering from
allergies or other conditions which require
specialised nutrition. Equally, with people living
longer, there is a growing demand for nutritional
products that help promote and sustain mental
and physical faculties. All adults, especially
seniors, can benefit from high-quality speciality
food supplements that support immunity,
digestion, cognition and mental health.
O U R R E S P O N S E
O U R R E S P O N S E
O U R R E S P O N S E
O U R R E S P O N S E
We supply products that meet the highest
hygiene standards. We promote hygiene
as the foundation for health
We are reducing demand for institutional
healthcare by empowering consumers with
effective and practical self-care solutions
More and more consumers use our premium,
category-leading products to protect their homes
and families. They provide a frontline defence against
the spread of transmissible diseases and viruses.
Lysol and Dettol, our disinfectant brands, help
break the chain of infection on surfaces in
kitchens and bathrooms, from hands, and other
‘at-risk’ spaces. Harpic, Vanish and Finish support
cleanliness and hygiene in the home. Our pest
brands, like Mortein and SBP, protect against
unwanted pests and insects. The Reckitt Global
Hygiene Institute and our Fight for Access
Fund are building scientific understanding
and extending awareness of hygiene issues.
With our over-the-counter healthcare brands,
via vitamins, minerals and supplements, and
through health literacy campaigns, we give
people the tools and the knowledge to take
better care of themselves, prevent illness and
treat everyday symptoms at home. We share
insights gleaned from our science platforms
(see page 31) and address specific consumer
needs across our product range. We partner
with clinical professionals and share science-
backed information with consumers to
prevent and treat infection. These dynamics,
combined with digital trends, continue to
provide opportunities in areas like personalised
nutrition, wellness and digital health.
We are supporting intimate wellness and
safeguarding young people by promoting
sexual wellbeing and combating sexually
transmitted diseases
As the world’s leading producer of condoms
and with 90 years of brand heritage, Durex plays
a crucial role in reducing the risk of sexually
transmitted infection and encouraging safe
sexual practices. With brands like Queen V and
KY, we are supporting vaginal health and getting
people to talk openly about intimate wellness.
Our specialised nutrition is helping infants
to flourish and allowing older adults to live
fuller lives
Through the strength of our brands, consumer
insight and science understanding, we are well
placed in the nutrition market. Brands such as
the Enfa range and Nutramigen nurture infants
by serving important nutritional needs. For adults,
brands like Provital, Move Free, Airborne and
Neuriva deliver essential vitamins, minerals and
supplements. Our product innovation teams
leverage the capabilities within our allergy and
immunity and digestive health science platforms
to deliver innovative solutions that address the
specific nutritional needs of infants and adults.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 16
Reckitt Annual Report and Accounts 2022
O U R S USTA I NA B I LIT Y A PPROACH A N D PE R FO R MA N CE
A CLEANER
HEALTHIER
WORLD
Our 2030 Sustainability Ambitions sit at the
centre of our business and support our Purpose
to protect, heal and nurture in the relentless
pursuit of a cleaner, healthier world.
Embedding sustainability across our business
and throughout our value chain is a strategic
imperative. We work with independent external
experts to assess the priority issues for our
stakeholders through focused research and
dialogue. Using the ‘double materiality’ approach
recommended by the Global Reporting Initiative,
we consider both our impact on these issues
and their impact on us. Our latest assessment
in 2021 identified the following top six issues:
– Climate change
– Product quality and safety
– Packaging and waste
– Advancing global health and hygiene
– Ethical business conduct
– Sustainable product innovation
For more detail see
Focusing on what matters
Our desire to see a cleaner, healthier world
aligns with our fight to tackle four of the world’s
biggest problems. As a member of the UN Global
Compact, we are committed to contributing to
the UN Sustainable Development Goals (SDGs).
See our latest performance on
page 18
And within our
Sustainability Insights
PURPOSE-LED BRANDS
HEALTHIER PLANET
FAIRER SOCIETY
SA F E R A N D M O R E
S U S TA I N A B L E P R O D U C TS
50% of net revenue from more sustainable
65% reduction in chemical footprint
products by 2030
by 2030
or reusable by 2025
E N A B L I N G A C I R CU L A R E CO N O M Y
100% of plastic packaging to be recyclable
25% recycled content in our plastic
packaging by 2025
50% reduction of virgin plastic in
packaging by 2030
footprint by 2030
CO M BAT I N G C L I M AT E C H A N G E
50% reduction in our product carbon
65% reduction in Greenhouse Gas (GHG)
emissions in operations by 2030
100% renewable electricity by 2030
25% less energy use by 2025
WAT E R P OS I T I V E
Water positive in water-stressed sites
by 2030
50% reduction in our product water
30% reduction in water in operations
footprint by 2040
by 2025
C R E AT I N G F R E E D O M TO S U CC E E D
An inclusive culture where everybody
is treated fairly and equally
Our teams represent the diverse geographies
we operate in and the people we serve
50/50 Gender balanced management
at all levels by 2030
FA I R N E S S AC R OS S O U R VA L U E C H A I N
Sustainable livelihoods and working conditions
Our teams and communities throughout
our value chain have livelihoods that enable
their health and wellness
Embed human rights through impact
assessments and action plans in our
key value chains by 2030
A CLEANER HEALTHIER WORLD THROUGH THE POWER OF OUR PURPOSE-LED BRANDS
Reach half the world with
brands that help people live
cleaner, healthier lives
Engage two billion people in our
partnerships, programmes
and campaigns
Make a lasting difference in
communities through our
Fight For Access Fund
and our programmes
Work with our partners to help
deliver the UN Sustainable
Development Goals
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 17
Reckitt Annual Report and Accounts 2022
O U R S U S TA I N A B I L I T Y A P P R OAC H A N D P E R F O R M A N C E CO N T I N U E D
OUR 2030
AMBITIONS
IN ACTION
Every day, through
our global brands, we
encourage millions of
consumers to take small
actions that add up to
meaningful change.
PURPOSE-LED BRANDS
HEALTHIER PLANET
FAIRER SOCIETY
R E D U C I N G P L A S T I C
R E S TO R I N G N AT U R E
Progressing the SDGs is core to our Purpose.
As we pursue our Purpose through our brands,
strategies for making more sustainable
products, including using less plastic,
are integrated into brand development.
In 2022, we launched paper-based
packaging for Finish, a first for automatic
dishwashing products. The new stand-up
pouch uses 75% less plastic. It’s the latest
milestone on the way to our 2030 goal
of halving virgin plastic in packaging.
Too much plastic is produced worldwide and
far too much of that goes to landfill. Alongside
reducing plastic use, we’re also improving
recyclability by using materials that are
more readily recyclable and simplifying our
packaging to make it easier to recycle. We’re
increasingly using more non-virgin packaging
materials and we’re working to develop
circular economies for plastics through
cross-industry alliances like RecyClass and the
Business Coalition for a Global Plastics Treaty.
Biodiversity is fundamental for a healthy
planet. We are developing methodologies
to monitor our impact on nature and the
tools to manage it. We’ll use these to
set new targets in supply chains for key
ingredients. And we’ve set ourselves a
stretching target to help improve ecosystems
internationally. We aim to restore 1.2 billion
square feet of wildflower habitats globally.
Botanica by Air Wick is actively involved. Its
international partnership with WWF has already
restored more than 77 million square feet of
forest and wildflower habitats. Numerous
plant species have been conserved.
The partnership is progressing its biodiversity
plans in 10 countries. In the US, it’s reseeding
nearly 40 million square feet of Great Plains
grasslands. In Mexico, it’s protecting the
Monarch butterfly by preserving wild flowering
plants on migration routes. In the UK, the
Let’s Bring Nature Back campaign pledges to
restore and protect 20 million square feet of
wildflower habitats. In Australia, 22 endangered
wildflower species are being preserved.
D R I V I N G ACC E S S TO C L E A N
WAT E R A N D SA N I TAT I O N
Today, 771 million people lack access to
safe water and one in four lack access to
safe sanitation. Without action, 4.8 billion
people will face water stress by 2050.
SDG 6 calls for access to clean water and
sanitation for all by 2030. This demands
four times faster progress and a three and
a half times increase in global investment
in water, sanitation and hygiene (WASH).
Water is critical to our Purpose and our
Sustainability Ambitions because it’s the
biggest ingredient in the manufacturing
of our products, and our consumers
often need water to use them.
We’re aiming to reduce our water footprint
everywhere by recycling water in our factories.
Our Hosur factory in India is now water neutral
through actions we have taken to reduce
our water use, develop water harvesting
and strengthen water security in the local
catchment. We partner with global experts
to provide and improve sanitation. With
Water.org, we’ve helped 1.4 million people
gain improved access to water and sanitation.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 18
Reckitt Annual Report and Accounts 2022
KE Y PE R FO R MA N CE I N D I CATO RS
FINANCIAL1
L I K E - F O R- L I K E N E T
R E V E N U E G R OW T H
A DJ U S T E D O P E R AT I N G
P R O F I T M A R G I N
KPI: An indicator of strong sales execution,
innovation and customer service.
KPI: An indicator of brand strength, return
on investment in innovation and marketing.
A DJ U S T E D D I L U T E D E A R N I N G S
P E R S H A R E ( E P S )
KPI: An overall indicator of success.
F R E E C A S H F LOW CO N V E R S I O N
R E T U R N O N C A P I TA L E M P LOY E D
KPI: A strong link to efficient
capital structure and well-managed
working capital.
KPI: An indicator of the efficiency of
converting capital into earnings.
2022
7.6%
20212
3.5%
20202
11.8%
2019
0.8%
2018
3.0%
2022
23.8%
20213
21.7%
2020
23.6%
2019
26.2%
20184
26.7%
2022
341.7p
2021
288.5p
2020
327.0p
2019
349.0p
20184
339.9p
2022
83%
2021
61%
2020
131%
2019
87%
20184
84%
2022
13.2%
2021
10.1%
2020
10.1%
2019
10.3%
2018
10.7%
Target: To sustainably grow
mid-single digit in the medium term.
Target: Mid-20s adjusted operating
profit margin by the mid-2020s.
Target: To achieve consistent earnings
per share growth as we deliver
mid-single digit revenue growth
and improving margins over time.
Target: To maintain the delivery of
strong free cash flow conversion
over time.
Target: To sustainably grow return on
capital employed through disciplined
capital management.
HEALTHIER PLANET
G H G E M I S S I O N S F R O M
O U R O P E R AT I O N S
WAT E R U S E P E R TO N N E
O F P R O D U C T I O N
Z E R O WA S T E
TO L A N D F I L L
KPI: The percentage reduction of our
Scope 1 and 2 emissions against our
2015 baseline.
KPI: The percentage reduction in
total water consumption per tonne of
production, against our 2015 baseline.
KPI: The percentage of our factories
achieving zero waste to landfill, including
both hazardous and non-hazardous waste.
2022
66%
2021
66%
2015
0%
2022
20215
2015
5%
5%
0%
2022
94%
2021
96%
2020
96%
2019
96%
2018
93%
Target to 2030: 65% reduction against
2015 baseline (383,365 tCO2e)5.
Target to 2025: 30% reduction against
2015 baseline (2.76m3 per tonne
of product)5.
Target to 2030: 100%.
1. See details on our alternative performance measures on page 75
4. 2018 figures are as reported within relevant periods and have not been adjusted for subsequent updates made to IFRS
2. IFCN China disposed in 2021, and therefore not included in 2021 LFL NR Growth. 2020 figures include IFCN China (excluding IFCN
5. Data restated due to removal of divested sites and data reporting improvements. See our Reporting Criteria for more detail
China: 13.9%)
3. 2021 figures include IFCN China (excluding IFCN China: 22.9%)
at www.reckitt.com/sustainability/policies-and-reports
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 19
Reckitt Annual Report and Accounts 2022
K E Y P E R F O R M A N C E I N D I C ATO R S CO N T I N U E D
PURPOSE-LED BRANDS
P R O D U C T I N N OVAT I O N
P R O D U C T F O OT P R I N T
P U R P OS E - L E D B R A N DS
KPI: Total percentage net revenue
from more sustainable products.
KPI: The percentage reduction of our
product carbon footprint against our
2015 baseline2.
KPI: Total number of people engaged
through our partnerships, programmes
and campaigns since 20204.
2022
24.4%
2021
24.9%
20201
30.4%
2019
24.6%
2018
18.5%
2022
20213
2015
+17.0%
+20.5%
0.0%
2022
1.48bn
2021
0.90bn
Target to 2030: 50% of net revenue.
Target to 2030: 50% reduction against
2015 baseline (11.1 million tCO2e)3.
Target to 2025: 2 billion people
since 2020.
FAIRER SOCIETY
G E N D E R D I V E R S I T Y
KPI: Gender balance across all
management levels combined5.
LOS T WO R K DAY ACC I D E N T
R AT E ( LW DA R)
KPI: Number of incidents resulting in
at least one lost day of work per
100,000 hours worked.
S O C I A L I M PAC T I N V E S T M E N T
KPI: Total value of cash contributed,
employee time in working hours and
in-kind product donations valued at
cost to the business.
2022
50%
2021
49%
2020
49%
2019
48%
2018
47%
2022
0.066
2021
0.046
2020
0.050
2019
0.076
2018
0.084
20226
£31.7m
2021
£38.2m
2020
£52.8m
2019
£12.2m
2018
£14.4m
Target to 2030: Gender balance at all
management levels.
Target: Continued decrease in
LWDAR rate.
Target to 2025: £20 million per year.
1. Figures prior to 2021 exclude our Nutrition business unit
2. Excluding energy used indirectly by consumers at home
3. Data restated due to divestments and acquisitions and data reporting improvements. See our Reporting Criteria for more detail
at www.reckitt.com/sustainability/policies-and-reports/
4. From 2013-2020, our programmes reached 1.8 billion people, exceeding our target of 1 billion. We introduced new targets
in 2020 and now report on cumulative engagement since then
5. Figures showing percentage of women
6. Highlight figure on page 3 rounded to nearest million
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 20
Reckitt Annual Report and Accounts 2022
PROG R ESS AGA I NST O U R STR ATEGY
HYGIENE
VO L K E R K U H N
PR ES I D E N T H YG I E N E
Our team is coming
out of the pandemic
stronger than ever.
Since 2019, we added
£1.1bn in incremental
revenues, delivered
a 7.6% net revenue
CAGR and significantly
improved our
capabilities across
the entire value chain.
O U R C AT E G O R I E S
Surface & Disinfection Lavatory Care
Fabric Additives
Air Care
Auto Dishwashing
Pest Control
Overview
Our Hygiene Global Business Unit (GBU) is
anchored in hygiene as the foundation of health.
We have leading brands that consumers trust
in six core categories, an ambitious focus on a
superior consumer offering, and a strong culture
of outperformance. This underpins our ambitions
to grow mid-single-digits as we continue to
innovate to meet the evolving needs of our
consumers; embed our excellent go-to-market
capabilities; and leverage a resilient, agile supply
chain to navigate changing market environments.
The increased risk of pandemics, rising
urbanisation and climate change make the need
for improved hygiene solutions ever more critical
– from our disinfectants that break the chain
of infection through to pest control products
that reduce potential exposure to disease.
Importantly, the growing middle class in emerging
markets aspires to a more hygienic and healthier
way of living. We are determined to be at the
forefront of this trend, leveraging the trust and
loyalty our globally leading brands have built
to bring more people into these categories.
Our brands are typically leaders in their categories.
Lysol is the largest disinfectant brand in the world
and, despite the category normalising after its
pandemic peaks, has added nearly 16 million
households since 2019. Finish is the leading auto
dishwashing brand globally; and Air Wick, our air
care brand, holds number one or two positions
in over 80% of the markets in which we operate.
We have developed consumer-inspired
category growth strategies, strengthened
by our scientific expertise which is enabling
us to deliver cutting-edge innovations.
Lysol net revenue
G R OW T H
+ c . 4 5 %
FY 2019
Core1
New places
and spaces2
FY 2022
LYS O L S H A R E G A I N S VS 2 0 1 9
300bps
1. Includes Lysol disinfectant spray, wipes, lavatory care
and non-wipes multi-purpose cleaners
2. Includes adjacencies
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P R O G R E S S AG A I N S T O U R S T R AT E G Y CO N T I N U E D
The external environment remains unpredictable
as we manage through changes in consumer
behaviour post-pandemic, macroeconomic
uncertainty, and unprecedented inflationary
pressures. However, we have reinforced our
commitment to strengthen our brand building.
Our innovation pipeline going into 2023
is our strongest in recent years. Therefore,
we are confident that we can accelerate
our growth journey. We are progressing our
supply chain transformation where we have
focused on regionalising our model and have
already achieved close to 90% local sourcing,
allowing us to be more agile and resilient to
changing market dynamics. Our categories
are coming out of the pandemic materially
stronger thanks to our improved capabilities
and our operational excellence programme.
An example of our superior category creation is
Lysol laundry sanitisers in the US. We launched
this category in 2018. Since then, we gained more
than 10% household penetration. Our product
delivers excellent consumer satisfaction as
evidenced by the repeat purchase rate of above
50%. Lysol laundry sanitisers are now generating
circa $200 million and this has become Lysol’s
second biggest segment ahead of wipes.
We believe that there is more growth to come in
this category as more consumers adopt its use.
For example, in Italy circa 25% of households now
use laundry sanitisers. This also creates significant
value for our retailers, namely incremental
revenue of around $0.45 per wash load.
In our largest category, Auto Dishwashing,
we continue to lead the market with the Finish
brand. We are improving the standard and
efficiency of dishwashing for consumers, with
the introduction of our Thermoform formats,
offering superior solutions whilst allowing them
to conserve water. In developing markets, where
currently fewer than 13% of households have a
dishwasher, we continue to partner with machine
manufacturers to grow dishwasher penetration.
Equally important to our portfolio is our Air Care
category where we hold the number one or two
position in over 80% of our markets. This has
delivered mid-single-digit growth since 2019.
In the US alone, we have added almost two
million households to our Air Wick franchise in
the past three years by expanding the category
with a new line of scented oil products that
attracts users looking for lighter fragrances.
Whilst smaller players in our overall portfolio,
the growth of our Fabric Care, Lavatory Care,
and Pest Control categories are building scale,
each generating between one-quarter of a billion
and three-quarters of a billion GBP in retail sales.
And we are delivering more sustainable products.
On Finish, we launched the first recyclable pouch
in 2019 and, in 2022, we were the first to launch
a recyclable paper-based pouch. Meanwhile our
#SkipTheRinse campaign influences consumer
behaviour with a clear message that you don’t need
to pre-rinse dishes when using Finish. This is saving
many millions of litres of water every year across
the world. In Fabric Care, up to 60% of a product’s
carbon footprint is incurred when the product
is in use during a wash cycle. The biggest single
impact is to reduce washing temperatures (in the
EU the average temperature is 42°C). With Vanish
you get a better performance at 20°C than with a
leading detergent alone at 40°C. We are excited
about how we can further grow our categories
through educating consumers on different ways
to manage their hygiene needs, whilst delivering
innovations which are more sustainable.
Finally, we have been embedding our Leadership
behaviours of Own, Deliver, Create and Care
into everything we do. This is particularly
evidenced by the progress we have made with
our customers where our commercial teams
were recognised by the retailers for their
transparent and action-oriented communication,
and their tenacity and agility in meeting
customer needs in challenging times.
I am proud of everyone’s contribution, resilience,
and passion, particularly as we navigate the
challenges presented by the external environment.
Our revenue growth algorithm
Whilst our external macro environment will
remain very unpredictable, we are confident
about the long-term growth potential of
the under-penetrated categories in which
we choose to play. Our strategies and plans
are designed to grow our Hygiene business
over the medium term at mid-single-digits.
We continue to improve our capabilities and
invest in brand building and innovation to
accelerate the growth of our core categories.
In 2022, our Hygiene business net revenue
declined by 3.1% on a like-for-like (LFL) basis.
This was due to normalisation of Lysol during
the year as we lapped tough, COVID-19
impacted comparatives. Excluding the impact
of Lysol, the rest of the Hygiene business grew
by 5.1% on a LFL net revenue basis, and in line
with our medium-term growth target.
We have strengthened our capabilities in revenue
growth management, e-commerce and digital
marketing with a proprietary digital marketing
engine which has increased the ROI in trade
and marketing investments, contributing to a
tripling of our e-commerce business since 2019.
And our stronger go-to-market capabilities have
enabled us to reset our customer partnerships,
resulting in strengthened promotional support
that helped us to increase our share month-by-
month in the second half of 2022. I am proud
of the focus we have put on this capability
which has resulted in us being recognised
as a top supplier in even more markets.
The Hygiene GBU accounts for more than 40% of
our total net revenue, and we remain a profitable
business with operating margins of above 20%.
This is driven by the strength of our market-
leading brands and our focus on productivity.
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P R O G R E S S AG A I N S T O U R S T R AT E G Y CO N T I N U E D
C A S E S T U D I E S
P E N E T R AT I O N
FINISH: DRIVING
GROWTH THROUGH
SUSTAINABLE INNOVATION
Materials science has been at the heart
of a continuing programme of innovation
for the world’s largest automatic
dishwashing brand.
Thermoformed tabs have proved extremely
popular with consumers. The latest
generation uses consecutive dosing to
deliver superior washing performance.
In use, the thermoformed plastic coating
melts. Since the enzymes it releases are
also coated, different chemicals get added
to the wash at various points in the cycle
as the coatings dissolve. The first enzyme
bleaches, the second tackles grease and
starch, the next works on shine, and so on.
This targeted form of dosing is more
effective and therefore requires a smaller
amount of chemicals. As a result, our tabs
are 20% lighter than our competitors’.
Reducing plastic is a priority for Reckitt. We
plan to halve our use of virgin plastic by 2030.
Finish has contributed to that. In 2021, it was the
first dishwashing tablet brand to incorporate at
least 30% recycled plastic into its packaging.
In 2022, Finish was again ahead of the competition,
as the first to launch paper-based packaging.
This combines paper with 75% less plastic to
make a fully recyclable, stand-up container. This is
ultimately expected to save 2,000 tonnes of plastic
annually, equivalent to 50 million 1-litre bottles.
M A R K E T S H A R E G A I N S
VANISH: PURPOSE-LED
INTERNATIONAL GROWTH
Vanish is the number one global stain remover
brand, with strong leading positions in most EU
and LATAM markets. Its popularity is anchored in
a strong and distinctive equity that optimises
laundry cleaning performance and fabric care.
The brand continues to build market share
internationally and has significant penetration
potential in the Fabric Care category. Less than
one in five detergent users currently include
fabric treatment in their laundry regime. Vanish
makes the case for its category by providing
a highly efficacious solution to clothing stains,
discolouring and odours. The brand’s core
purpose is aligned with the SDG12 goal of
ensuring sustainable consumption: Vanish
seeks to help clothes live many lives.
Its strategy for growth pursues this purpose
with solutions that remove stains and revive
clothing and by engaging with consumers
to promote more sustainable fashion.
The Vanish brand promise ties in well with
sustainable fashion trends. Rejuvenating
clothing extends its useful life and allows
consumers to get more use out of their existing
wardrobe. Vanish stays focused on its mission
by embracing innovative joint ventures,
with laundry startup Oxwash for instance,
and forging partnerships with key fashion
decision-makers, like the British Fashion Council,
and through more sustainable packaging.
N E W P L AC E S
HARPIC: IMPROVING
SANITATION IN EMERGING
MARKET TERRITORIES
Harpic launched in Europe 100 years ago to
improve sanitation. Its core purpose hasn’t
changed since then but the scale of the issue
has become much more visible. Today, the brand
is active in circa 60 countries; it wants everyone,
everywhere to have safe, hygienically clean
toilets. Harpic is working towards the SDG 6 goal
of sustainable clean water and sanitation for all.
As it grows its operations, especially in emerging
markets, the brand is spreading good sanitation
practice with education, partnerships and
economic support.
The brand has been in India for over 30 years and
the country is now Harpic’s largest market. In that
time, the Harpic brand has become synonymous
with toilet hygiene. Consumers in India are
increasingly more aware of the importance of
toilet hygiene and Harpic presents a superior
sanitisation solution. The brand has a 78%
market share in the country, reflecting a 17%
annual growth in this rapidly expanding market.
Harpic has built on its strength in India to
grow internationally. The India business model
has proved successful in other emerging
market territories. Indonesia saw a 27%
increase in sales in 2022. Harpic launched in
Thailand in 2021, within nine months it was the
number two toilet cleaner brand with a 20%
market share. There was high double-digit
growth in Mexico, Brazil and Argentina.
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P R O G R E S S AG A I N S T O U R S T R AT E G Y CO N T I N U E D
HEALTH
K R I S L I C H T
PR ES I D E N T H E A LT H
2022 was a great year
for the Health GBU.
I’m most proud of the
way we have built solid
foundations for future
sustainable growth,
through strengthening
our innovation pipeline
and focusing on
improvements to our
operational execution.
O U R C AT E G O R I E S
Germ Protection
OTC
Intimate Wellness
VMS
Personal Care
Overview
Our Health Global Business Unit (GBU) represents
a well-diversified portfolio of leading global health
brands across five key categories. We have bold
plans to continue to grow our business, by winning
in the market, launching innovations which delight
consumers and leveraging the significant progress
made to date in operational execution right
across the Health portfolio. I am excited about
the long-term growth potential for this business
and the steps we have already taken to realise it.
With an ageing population, and a heightened
awareness of the extreme stress healthcare
systems have recently been under, the role of
trusted and efficacious self-care products is
becoming increasingly important to consumers.
And similar to the premium hygiene segments
in which we operate, a growing middle
class means many consumers are now able
to readily afford self-care treatments.
Trust and loyalty are key factors for consumers
when it comes to consumer health products.
We have a portfolio of market-leading brands,
trusted by consumers in each of our key
categories, which include over-the-counter
(OTC), Intimate Wellness, Vitamins, Minerals
and Supplements (VMS) and Personal Care.
We have built a consumer healthcare
infrastructure and capability over the course
of the last two decades. This is important
when it comes to pharmacy distribution,
doctor and medical detailing, and regulatory
approval capability. Such infrastructure and
expertise do not happen overnight.
The Health GBU represents around 40% of
total Group net revenue and is now a £1.4
billion larger business than in 2019 on a LFL
basis. We are present in around 120 markets
across the world with a balance of revenue
from developed and emerging markets.
Dettol, our germ protection brand, has maintained
an absolute net revenue of around 40% above
pre-pandemics levels, driven by strong penetration
gains – the highest of any consumer brand in the
last decade, as reported by Kantar. Additionally,
revenue from core innovation roll-outs in both new
places and new spaces is broadening the shoulders
of the brand and creating a larger base from
which to grow. We have a very strong innovation
pipeline in Dettol, and we have rolled out these
innovations in multiple markets, including the
launch of Dettol 4in1 laundry pods with sanitiser
in China, rated by consumers for their germ
protection, cleaning power, colour protection
and softness to clothes. We also upgraded our
Dettol personal care range, premiumising our
range, such as with Dettol Cool, which adds
new functionalities like refreshing menthol
combined with our trusted germ protection.
Our OTC business contains a portfolio of highly
efficacious and trusted brands and has grown
at a compound annual growth rate (CAGR) of
12% over the last three years, with increased
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category slowdown, we have recognised a
non-cash goodwill impairment charge of £152
million for the brand. We expect future growth
to remain in line with our expectations, with
double-digit growth targeted in the near and
medium term, underpinned by category growth,
innovation, improved execution in the US market
and international roll-outs in select markets.
Our Intimate Wellness category continues to
innovate and leverage our brand equity as the
world’s leading producer of condoms. In China,
we launched our new Durex polyurethane (PU)
condom, our softest polyurethane condom to
date, providing superior comfort, fit and sensation.
Personal Care and VMS are important scale-
builders within our portfolio, and there are many
markets in which we see growth potential. We
launched Veet for Men Intimate Hair Removal
Kit, our first dedicated men’s intimate hair
removal product, which has already achieved
number one positions for this category on
Amazon in a number of countries. In VMS, our
new Neuriva Sleep range supports restorative
sleep and helps improve sleep quality.
Go-to-market execution
We continue to work towards our vision to be
one of the most admired sales organisations in
our sector, and have invested in improving sales
capability right across our team. In 2022, more than
3,000 colleagues completed sales competency
learning as part of a new global standard of
excellence, and more than 20 markets have
started utilising our updated commercial operating
model. This consistency right across Reckitt leaves
us well positioned to support and partner with
our growing number of multinational customers.
This investment is already delivering tangible
results, with our customers increasingly recognising
our step-change in capability and delivery.
We were awarded Overall Supplier of the Year
2022 by Woolworths in Australia, named Supplier
of the Year by the Brazilian Association of Cash
and Carry Retailers, and Best Key Account Manager
2022 by AS Watsons Group in Malaysia. Our focus
remains on cementing relationships and building
strong partnerships with our key customers, so we
were also pleased to be recognised for our Joint
Business Plan of the Year 2022 with Boots in the UK.
Throughout the challenges of the pandemic, the
Health business has continued to be guided by
our Reckitt Compass and Leadership Behaviours.
We put care at the heart of everything we do,
exemplified in 2022 by our supply colleagues,
who worked tirelessly to meet the unusually
high demand for our OTC products during a
strong cold and flu season in particular. I am
enormously proud of the whole team, and the
commitment and focus they have shown in a
volatile and at times unpredictable environment.
Our revenue growth algorithm
In the medium term, we expect our revenues
to grow by around mid-single-digits per
annum, outperforming the broader market.
This will continue to come from growth in
penetration and market share, and through
entering new places and new spaces; across
our categories. In particular, germ protection
through its greater presence in developing
markets, as well as Intimate Wellness, being
the fastest growing segments of the portfolio.
In 2022, we delivered net revenue like-for-like
growth well ahead of our medium-term target
of between 4% and 6%, driven by an exceptional
performance from our OTC portfolio, through
a combination of strong market share gains and
an unusually long and strong cold and flu season.
penetration and market share in more spaces and
places. In this endemic COVID-19 environment
the symptoms of COVID-19 are becoming more
flu-like over time and the lines are becoming
blurred between the two. I am really proud of
the work our teams around the world have done
to expand our OTC brands over the last couple
of years to create a sustainably larger base on
which to grow. A good example of how we have
expanded into new spaces and places is by
stretching the equity of Mucinex in the US, into the
sore throat category with Mucinex InstaSoothe.
Biofreeze, our strategic entry into the pain relief
category in the US, the world’s largest pain relief
market, saw a slower start in the first half of the
year due to a combination of temporary supply
issues and a wider category slowdown reflecting
economic uncertainties in the US in particular.
Good progress has been made in the second
half of the year however, with our market share
increasing as we leverage our strong infrastructure
and go-to-market capabilities, in addition to
launching new innovations such as overnight
patches. Reflecting the slower start and short-term
Dettol net revenue
G R OW T H
+ c . 4 0 %
FY 2019
Core
New places
and spaces1
FY 2022
D E T TO L S H A R E G A I N S VS 2 0 1 9
180bps
1. Includes adjacencies
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C A S E S T U D I E S
M A R K E T S H A R E
DUREX: BUILDING
A DESTINATION
LIFESTYLE BRAND
Durex continues its evolution to be the
lifestyle brand of choice for open and curious
consumers. The brand exists to unleash
people’s freedom to be their true sexual
selves; it celebrates diversity, identity
and exploration.
Durex’s new global strategy equips, educates,
entertains and liberates consumers. This is echoed
by the limitless ‘X’ in its new visual identity.
The brand is connecting with its open and
curious audience through a major passion
point, music. Durex was featured in a
range of high-profile artist videos this year,
including Sam Smith, Yungblud and emerging
artist Jordy. These collaborations have
generated publicity and increased awareness,
subsequently earning Durex over a quarter of
a billion views so far through online channels.
The brand’s own presence on social media,
including TikTok and influencer-led social
commerce, led to a number of awards,
including the Ultimate TikTok award in Spain.
In more conservative markets where Durex
faces advertising restrictions, music helps
the brand break down barriers. It worked
with Vice Arabia to found Tasjeelat Durex
(Durex records). This vibrant new channel taps
into Arabic hip hop to reach more than 20 million
people in 2022. It is empowering Saudi youth to
explore their own sexuality and self-expression.
In China, Durex added to its polyurethane (PU)
range, with the latest new product, its most
successful launch to date. Innovation will continue
to be a core growth driver in the coming years.
N E W P L AC E S
DETTOL: LAUNCHING
GERM-KILLING LAUNDRY
PODS IN CHINA
In China, Dettol is the clear market leader in the
laundry sanitiser (LS) segment of the laundry
care category. The laundry care category
continues to grow, but the LS segment is under
pressure as improvements in liquid detergents
and the convenience benefits of laundry pods
encourage more consumers to switch.
Laundry pods are rapidly replacing liquid and
powder-based formulations as the preferred
laundry detergent. They are also the fastest
growing segment in the laundry care category.
Consumers appreciate the convenience
and aesthetics of soluble film pods and the
multifunctional benefits they can deliver.
Dettol identified an opportunity to leverage
its dominant position in the laundry sanitiser
segment with a laundry pod differentiated with
Dettol’s strong germ protection. It designed and
developed the Dettol 4in1 laundry pod. These
four-chamber pods combine four different types
of protection in a convenient, sustainable form:
72-hour germ protection, eight times cleaning
power, fabric softener and colour protection.
We launched our 4in1 laundry pods in China
in June 2022. The roll-out capped one of our
fastest ever innovation cycles, with just eight
months between the initial idea and on-shelf
availability. This short window helped us retain
first-mover advantage. The results so far have
been excellent: Dettol 4in1 achieved 6% value
share in its first three months post-launch.
N E W S PAC E S
OTC: MAKING THE CASE
FOR SELF-CARE AS AN
ALTERNATIVE TO ANTIBIOTICS
Over-use of antibiotics today is a leading
concern for health treatments in the future.
Antimicrobial resistance (AMR) played a role
in the deaths of nearly five million people in
2019 and is now the third leading cause of death
worldwide, surpassing conditions such as breast
cancer and malaria.
The medical consensus is that antibiotics are
ineffective for sore throats in nine out of 10 cases,
but recent research suggests that many people
are taking antibiotics unnecessarily. Reckitt is
raising awareness of this issue with both
healthcare professionals and consumers.
The Sore Throat and Antibiotic Resistance study,
published during World Antimicrobial Awareness
Week was commissioned by the Global
Respiratory Infection Partnership and Reckitt.
It found that over half of adults surveyed had
taken antibiotics for a respiratory condition
like a sore throat in the previous six months.
Since sore throats are usually caused by
viruses, not bacterial infection, antibiotics
are ineffective in most cases. Sufferers
benefit more from effective treatments
for painful symptoms. Anti-inflammatory
throat lozenges and painkillers found in our
Strepsils range target pain relief directly.
US-based sore throat sufferers gained a new
treatment option in 2022 with the launch
of Mucinex InstaSoothe. The new product,
offered in three lozenge flavours and spray
form, delivers powerful numbing relief. The
product was well received by consumers and
achieved 6% penetration in the US sore throat
category in the 18 months since launch.
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P R O G R E S S AG A I N S T O U R S T R AT E G Y CO N T I N U E D
NUTRITION
PAT S LY
PR ES I D E N T N U T R I T I O N
I’m incredibly proud of
how the Nutrition team
stepped up to meet
demand during the
formula shortage crisis
in North America. We
worked fast to utilise
our global network,
bringing on incremental
supply and obtaining
new import approval.
Our first and foremost
priority was to ensure
babies received the
nutrition they needed.
O U R C AT E G O R I E S
Infant & Child
Specialty & Adult
Overview
Our Nutrition Global Business Unit (GBU)
provides the highest-quality nutrition through
various stages of life. The strength of this
business is the leading position we occupy
in infant nutrition across our key markets and
the immense trust placed in us, especially
by healthcare professionals and parents.
We believe infants deserve the best possible
start to life. A key part of that is the nutrition they
receive, whether they are breastfed, use a routine
formula, one that provides support for digestive
issues, or a specialised formula for those suffering
from allergies. With birth rates relatively stable,
demand for more specialised products in digestion
and allergy has enabled us to drive continued
growth in our global infant formula business.
At the same time, life expectancy has increased
rapidly. With people living longer, there is growing
demand for health, wellbeing and nutrition
products that help adults to live their lives to the
fullest. Our presence in the adult nutrition segment
in both Latin America and ASEAN, with our brands
Sustagen and Provital, has helped define how
we can develop our business in this category.
#1
SELLING IN FANT FORMULA
B R AN D G LOBALLY
Nourishing children’s best start
so they can thrive tomorrow
#1
S E LLI N G A LLE RGY
B R A N D G LO BA LLY
Creating a world free of allergies
#1 Paediatrician recommended brand
#1 Paediatrician recommended for
in the US
cow’s milk allergy
#1 Consumer trusted brand in the US
#1 Selling allergy brand in the majority
#1 Net Promoter Score in the majority
of top markets
of top markets
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P R O G R E S S AG A I N S T O U R S T R AT E G Y CO N T I N U E D
We have leveraged the expertise we have
built in the US to enhance the growth we
are seeing in ASEAN and Latin America.
Our renewed focus on our go-to-market
strategy and execution has further accelerated
our growth this year in those regions.
Our revenue growth algorithm
In the medium term, we expect our revenues to
grow by around mid-single-digits per annum, by
our continued focus on the fastest growing and
more premium segments of the nutrition category.
In 2022, we significantly exceeded our medium-
term targets through a combination of improved
growth in our Developing Market businesses,
continuing mid-single-digit growth in our North
American business, and a temporary increase
in revenue from the competitor supply issue.
The GBU represents 17% of Group net revenue, with
60% from developed markets. Our strong brands,
deep consumer insight and scientific foundations
will help this business win in the long term.
Our investments in commercial execution
and innovation allow us to meet the evolving
needs of our consumers, resulting in consistent
performance in North America, where our Nutrition
business is anchored. Since the acquisition of
Mead Johnson in 2017, we have consistently grown
this region at mid-single-digit rates. In 2022, our
agility, commitment and high-quality standards
enabled us to significantly step up supply during
a shortage exacerbated by a competitor’s
temporary supply issue. Through partnership with
the US Administration and regulators, as well as our
suppliers and customers, we delivered 1.8 billion
8oz servings of infant formula in North America.
Throughout this year, our Leadership Behaviours
were at the core of our work, and never more
evident than in how we galvanised our global
resources to respond to the needs of parents
and their babies across North America during the
infant formula shortage. I am incredibly proud
of our entire team, from our consumer relations
colleagues dealing with distraught parents to
our supply colleagues who worked tirelessly
to provide more formula. It demonstrated how
we truly live our Purpose and deliver on the
commitment we have made to our consumers.
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C A S E S T U D I E S
P R O D U C T P E N E T R AT I O N
IFCN: MANAGING
THE US INFANT
FORMULA SHORTAGE
Infant formula, such as Enfamil, is among
the most critical and highly regulated foods
in the world. In February, when another
manufacturer temporarily shut a major US
factory, ensuring that babies in the US had
access to safe, high-quality nutrition became
a complex, industry-wide challenge.
With a significant portion of the US supply
unavailable, a nationwide shortage soon
spiralled into a full-blown crisis.
Reckitt colleagues, suppliers and retail
partners immediately stepped up to
support parents and caregivers, increasing
supply, speeding up distribution, providing
information and securing more capacity.
Through unwavering commitment, Reckitt
operated US factories 24/7, got product to
shelf 40% faster and gained approval to
import formula from two overseas factories.
All of this combined allowed us to produce
for the North America market the equivalent
of 1.8 billion 8oz feedings, all whilst ensuring
safety and quality were never compromised.
We used a fleet of trucks to import 202 metric tons
of PurAmino, a specialty formula, from our facility
in Delicias, Mexico. PurAmino is for infants and
toddlers with severe digestive disorders and was
distributed to US hospitals and other healthcare
settings to feed those who were most vulnerable.
Our north star was always how to maximise the
number of feedings for babies, and all of our
decisions reflected this. We put extra focus
on serving the most vulnerable infants, and
we are tremendously proud of all our employees
who sacrificed their weekends, family time
and vacations to make this happen. We are
a purpose-driven organisation and we have
never proved it more than in the last year.
enjoys premium positioning in the market
through its clinically proven unique ingredient
‘MFGM’ (milk fat globule membrane) which
supports infants’ cognitive development.
Perhaps the biggest contributor to our
success has been the trust we have built
with healthcare professionals. Parents and
caregivers rely on the nutritional guidance
and independent advice that these medical/
paediatric professionals provide.
Ongoing investments in our facilities, products
and scientific expertise translate into external
recognition of the quality of our products,
and our dedication to giving infants and
children the best start in life possible.
To help alleviate the crisis, we worked closely
with the US Administration and regulators,
meeting with the heads of agencies such
as the FDA and USDA, the White House and
President Biden, to unlock supply bottlenecks
and deliver formula from abroad.
Following Reckitt’s collaboration with the
White House on its Operation Fly Formula
initiative, we continued self-funding additional
air freight from our state-of-the-art facility
in Tuas, Singapore, delivering 2,000 metric
tons of Enfamil base powder in total from
Singapore. This product was aimed at lower
income families who rely on the government’s
Women, Infant and Children (WIC) Program.
M A R K E T S H A R E
ENFA: STRONG
PERFORMANCE
IN MEXICO
In 2022, the team in Mexico continued investing
to upgrade its factory in Delicias, and as a result
was able to help support babies in the US with
deliveries of PurAmino specialty infant formula
base powder during the shortage.
We’ve also invested in our product development,
adding additional benefits for babies. For
immune support, Enfamil has added HMOs
(Human Milk Oligosaccharides) to its routine
Enfamil products in Mexico. The brand also
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STR ATEG I C I M PE R ATIV ES:
G ROW B R A N DS A N D I N N OVATE
FOCUS ON:
INNOVATION
Innovation is a key engine for
growth at Reckitt. We develop
superior solutions grounded in
science that delight consumers
and extend our categories. Our
expanded knowledge base and
strengthened innovation pipeline
are unlocking new opportunities
for sustainable growth.
A N G E L A N A E F
C H I E F R & D O F F I C E R
Our innovative culture is
at the heart of everything
we do. In the face of
unprecedented challenges
to our business, we
developed and scaled
cutting-edge solutions
to continue serving our
customers and
consumers.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 30
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S T R AT E G I C I M P E R AT I V E S CO N T I N U E D
Strategic innovation benefits the business
Innovation is a key source of our competitive
advantage. It ensures our product portfolio meets
consumers’ evolving needs in a changing world.
Innovation helps drive the growth agenda
by delivering smart solutions and superior,
more sustainable products. We identify
opportunities through consumer research and
customer feedback, and by understanding key
market and scientific trends. A strengthened
innovation pipeline is creating opportunities
for future sustainable growth in our brands.
Embedding sustainability
Sustainability is a key consideration. We want
every product change we make, whether
it’s a minor incremental improvement or
major new launch, to have a positive impact
on sustainability. All innovation projects are
assessed against sustainability criteria using
our Sustainable Innovation Calculator. This rates
products’ carbon, water, plastics, packaging
and ingredients performance and scores
our extended producer responsibility risk.
C A S E S T U DY
A MORE SUSTAINABLE
SOLUTION WITH VANISH
MULTI-POWER TABS
The 2022 UK launch of Vanish multi-power
tabs improved the product’s sustainability
and efficacy. The new format packaging,
designed for online buyers, delivers a
standard dose in tablet form. The tabs have
been reformulated with better ingredients
and improved regenerative, biodegradable
and chemical footprint scores. This
30-tab product package saves carbon
and water usage as well as reducing pack
and plastics weights on a per-dose basis.
Our Sustainability Innovation Calculator
Data output for illustration purposes only.
C A R B O N
5 . 3 9 p t s
Low
H i g h
P L A S T I C S
5 . 0 0 p t s
Low
H i g h
I N G R E D I E N TS
5 .9 1 p t s
Low
H i g h
WAT E R
2 0 . 3 p t s
Low
PAC K AG I N G
3 .1 0 p t s
H i g h
Low
H i g h
An integrated approach
An innovation mindset is rooted in our culture.
We conduct scientific research and tap into
expertise, both internally and outside the
company, to grow our knowledge base. We apply
that knowledge by sharing best practice and
working together to build smarter solutions.
Our innovation process combines teams and
individuals around the world, integrating people
and processes as specialists in different
competency areas.
We connect competencies and capabilities at
the right times and places to solve problems
faster. In 2022, when another manufacturer
temporarily shut a major infant formula factory
in the US, we sourced additional supplies
from production facilities outside of the US,
which meant we had to collaborate closely
with authorities to accelerate regulatory
approval to allow distribution in US markets.
And when the war in Ukraine disrupted the
supply of sunflower oil, a key ingredient for
infant formula products, we moved quickly
to get regulatory approval to reformulate
in case it was needed. Using our science,
knowledge and external advocacy strengths,
we work together to anticipate and solve
these kinds of problems, making us a more
agile and responsive organisation.
We deploy our regulatory and medical capabilities
to open up new markets and create new,
differentiated claims. We also look at trending new
categories and growth opportunities beyond our
current product portfolio to ensure our innovation
pipeline is sufficiently varied and disruptive.
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S T R AT E G I C I M P E R AT I V E S CO N T I N U E D
Science platforms
Interconnected, foundational disciplines
Polymer
science
Microbiome
Allergy
and immunity
Digestive
health
Sensory
enrichment
Surface
chemistry
Growth
and cognition
Entomology
Smart
release
We continue to invest in science and we protect
our science-based innovation through patent
filings and enforcement. Our international
patent filings rose by 17% in 2022.
Consumer-centric analysis
Innovation at Reckitt is built on understanding in
detail what consumers really want. We collect
human insight through our sales teams, supply
chain partners, customers and consumers. Our
sensory and consumer science labs combine
that feedback with behavioural analytics.
We use that knowledge to create impactful
products that solve specific consumer problems.
We succeed with solutions that satisfy the
consumer’s overall experience. This is key to
how we deliver ownable product differentiation.
Our recently launched Durex PU 001 and Durex
PU 003 condoms are great examples.
Building depth with science platforms
Our science platforms are independent of
our individual brands, they yield insights that
can create value across multiple brands and
products. They are springboards to sustainable
growth. We conduct in-depth research in
nine interconnected foundational disciplines.
This unearths scientific and technological
discoveries with implications in multiple brands
and categories. Some are technical, near-term
solutions; others have long-term implications.
Through our science platforms we are
expanding knowledge and constructing
a robust, forward-looking innovation pipeline
that focuses on real differentiation, future
growth pathways and sustainable outcomes.
C A S E S T U DY
DUREX: POLYURETHANE
CONDOMS
We had identified a consumer need
for a soft, comfortable experience.
Our investment in deep science expertise,
including work from the polymer science
platform and coordinated R&D leadership,
paid dividends.
We launched our first polyurethane
condom, the Durex PU 001, in 2021 to
meet that consumer need. Since then,
we have continued to deepen our
understanding of PU chemistry to enable
the design of improved products. In 2022,
we introduced the 003, for an even
softer, more comfortable experience.
The 003’s size and fit attributes make
it almost imperceptible to the wearer
and less interruptive to the moment.
Partnering for competitive advantage
Good science is founded on fundamental
knowledge, research, collective discovery
and a broad range of experiences and partners.
We regularly participate at conferences and
events and engage on topical issues in our
specialist areas of expertise, supported by
our partners from industry and academia.
Growing academic engagement with our scientific
research is improving understanding of digestive
health. In 2022, for example, we published five
peer-reviewed publications in digestive health
and presented our work with external partners
at three global congresses, which contested the
widespread view that heartburn and indigestion
are caused by too much acid and proposed that
healthcare professionals should instead treat
reflux as a mechanical event. This has led to
the inclusion of Gaviscon on four new treatment
guidelines in Europe and Developing Markets
due to growing academic awareness and
engagement with our body of data that is driving
a better understanding of digestive health.
Innovation can come from anywhere: we cultivate
our innovation culture as a key value creator.
We issue regular innovation-led challenges to
encourage colleagues to share great ideas. We
encourage and incentivise entrepreneurial thinking.
We engage externally, including through our
online innovation hub, IGNITE with Reckitt,
which launched in 2022. IGNITE invites external
partners to work with us on specific challenges
to accelerate our approach to solving and scaling
up science and technology-driven solutions.
The IGNITE platform has triggered enquiries
and submissions from a wide range of partners,
including small-scale start-ups, academics
and companies from around the globe.
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S T R AT E G I C I M P E R AT I V E S CO N T I N U E D
C H R I S H O U S M E K E R I D E S
S V P R & D, H YG I E N E
The launch of the
Auto-Dishwashing
category’s first
recyclable paper-based
pouch, with 75% less
plastic is a significant
step on our
sustainability journey.
These challenges and partnerships contribute
to our short-term product development. The
longer-term picture is also promising. Broadening
our science and knowledge base and investing
in capabilities has built a foundational platform
for future disruptive and transformative solutions.
We join forces with experts, peer companies and
trusted partners to progress the best ideas. Over
the last three years, we have been working with
flexible packaging leader Mondi as our innovation
partner to develop more sustainable packaging for
Finish. In November 2022, paper-based, recyclable
Finish Ultimate Stand-Up pouches were piloted at
French Carrefour stores. Finish is leading the way
on plastic reduction. This paper-based packaging
is the first of its kind in this product category.
Science-based research is accelerating our
development by building knowledge with
applications across our portfolio.
When consumer research revealed a preference
in India for a more viscous Harpic product,
we teamed up with a leading manufacturer of
measuring instruments in the field of rheology
to develop our understanding of the brand’s
rheological performance. This led to the launch
in India of a modified Harpic formulation with
20% more viscosity that flows slower and cleans
tough stains better. The knowledge gained about
the flow behaviour of acid-based thickening
systems from the Harpic rheology investigation
has applications for many of our products.
A flourishing and dynamic pipeline
Our innovation pipeline is balanced to deliver
multi-year growth for Reckitt. We focus
on making the right strategic choices to
maximise our return and deliver a robust,
balanced pipeline for the future.
Several factors influence our strategic choices,
including whether there are margin-accretive
top-line growth opportunities, consumer needs
and demand, the investment required, the
likelihood of technical and commercial success,
as well as non-financial elements, like IP potential,
the regulatory environment and sustainability.
Our strategic pipeline actions need to balance the
short-, medium- and long-term value to Reckitt.
We also balance the type of innovation we
undertake by combining core, adjacent and
disruptive innovation projects in our portfolio.
We assess their different risk profiles, timings
and resource requirements against the potential
opportunity and value they can generate.
Balancing our innovation pipeline allows us
to protect existing products and grow our
categories and consumer base whilst also
developing novel, technologically differentiated
products that satisfy unmet consumer needs.
Investment is prioritised against initiatives driving
growth. Our pipeline continues to increase year
on year. In 2022, we met our investment and
pipeline targets. Looking further ahead, we
aim to grow the innovation-led contribution
to net revenue every year. We will continue to
launch at pace whilst also pursuing longer-term
projects focused on future growth.
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STR ATEG I C I M PE R ATIV ES:
D R IV E S U PE R I O R E X ECUTI O N
FOCUS ON:
EXECUTIONAL
RESILIENCE
In the face of economic, political and
public health shocks in recent years
we have sharpened our executional
resilience. We’re meeting consumer
needs in fluid times as an agile,
responsive and competitive business.
SA M I N A F FA K H
CH I E F S U PPLY O F F I CE R
We are building a
much more resilient
supply chain, learning
from the market
disruptions that have
tested us and made
us stronger.
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S T R AT E G I C I M P E R AT I V E S CO N T I N U E D
Proven excellence
Over the last two and a half years, we have
been building a more competitive, resilient and
capable Reckitt. We’ve been on a transformative
journey, evolving our culture around a dynamic
new strategy centred on Purpose. This anchors
the business and adds momentum. We are more
agile and responsive in a changing world.
The investments we have made have unlocked
new capabilities. We have built close relationships
with suppliers and customers that allow us
to respond quickly and at scale when big
issues change the competitive landscape.
M AT T H E W L I N DS E Y
CU S TO M E R S E R V I C E D I R E C TO R
N O RT H A M E R I C A
Customer relationships are
more important than ever,
and our concerted efforts
to strengthen them are
paying off in tangible
and rewarding ways.
We have lived through repeated demand
surges and supply shocks over the past three
years, with cost inflation and energy price rises
exerting increasing pressure on margins. The
pandemic distorted demand and disrupted
supply for two years. In 2022, the war in Ukraine
created raw material and energy shortages.
In North America, a competitor shut down
its largest domestic factory leaving parents
facing a sudden shortage of infant formula.
Reckitt has repeatedly demonstrated the
appetite and agility to meet these external
challenges. Whether by sourcing alternative
suppliers, reformulating our products, shifting
or scaling up production or through our
productivity improvement programme, we
have consistently stepped up with smart
solutions that meet the moment. Whenever
we have faced disruption, we have not only
recovered but we have emerged stronger.
Integrated supply chain management
We counter volatility in the global supply
chain by planning in a holistic way, maintaining
visibility across the full product lifecycle. We
maximise that transparency with high-quality
data and connected technologies. Our supply
function engages directly with all parts of
the business meaning we can adapt swiftly
to shifting market dynamics and adjust
our productive capacity proactively.
Operational excellence
We have built a more resilient supply
organisation creating value for our people,
our customers and our consumers by
strengthening our operations, improving our
ways of working and increasing efficiency.
We manage our supply globally in a highly
integrated way. Connected core capabilities
leverage the strength and scale of our global
network. We meet our strategic priorities through
four workstreams focused on building internal
capabilities and driving excellence. We underpin
these capabilities with the latest technologies.
Our productivity programme has released significant
resources for reinvesting in the business. We have
delivered productivity improvements spanning
each pillar of supply, from logistics through to
customer service. Our centres of excellence are
developing and sharing best practice and driving
continuous improvement across the business.
S
GIS T I C
O
L
MAN
U
F
A
C
T
U
R
I
N
G
O U R C E N T R E S
O F E XC E L L E N C E
C
U
S
T
O
M
E
R
S
E
R
VICE
G
G I N E E RIN
N
E
Manufacturing excellence
Resilient, agile and efficient manufacturing is
a core capability. We have implemented the
Reckitt Production System (R-PS), a common set
of standards, across all our manufacturing sites.
We apply this system to adopt and share best
practice and drive continuous improvement.
Each site monitors its performance against 11
standards, covering areas such as root cause
problem solving, maintenance and waste.
Ten KPIs track progress, with metrics on health
and safety, quality, service levels, costs and
people, and stretching targets for connected
Overall Equipment Effectiveness (OEE) and
waste. Collectively, the R-PS standards ensure
employees have the knowledge and the tools
to operate responsibly and efficiently whilst
minimising our environmental footprint.
R-PS is now in its third year. Our focus in 2022
was on improving OEE and reducing waste in
our sites. We have seen results of an up to 20%
increase in efficiency at our focus sites and
between 10% and 30% material waste reduction.
Customer service excellence
Coordinating how we collaborate with
customers to ensure predictable access to
our products is critical, particularly at times of
supply and demand disruption. We have rebuilt
our customer operating model to change how
we communicate, enable strategic supply
chain solutions and improve availability.
Our cross-business unit approach delivers agile,
responsive and consistent customer service. This
employs improved ways of working that integrate
supply and sales via networked teams. We work in
partnership with our customers across the supply
chain, from manufacturing to customer service to
sales, using mutually beneficial performance and
growth metrics, focused on consumer needs.
Harmonising service and combining sales and
supply is helping us build stronger customer
relationships. It has also reduced our cost to
serve. Further savings came from collaborating
with retailers on order weights and increasing
the number of no-touch orders. 80% of orders
across our Health and Hygiene businesses are
now fully automated providing seamless service.
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S T R AT E G I C I M P E R AT I V E S CO N T I N U E D
Nottingham, UK
Automated production line connectivity monitors
real-time performance. The site received Smart
Factory of the Year at The Manufacturer MX Awards.
Taicang, China
Automated Storage and Retrieval System (ASRS)
warehousing technology allows the site to
organise finished goods pallets efficiently and in
a much tighter space than forklift racking systems.
Belle Mead, US
Digital production dashboards allow line operators
to visually request material replenishment,
drill down into the production plan, monitor
volumes and view production artwork.
Nowy Dwór, Poland
Our new Manufacturing Management
Execution System (MES) software manages
workflows and generates production data
for real-time performance improvement.
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STR ATEG I C I M PE R ATIV ES:
I NV EST I N CA PA B I LITI ES
FOCUS ON:
DIGITAL
TRANSFORMATION
Our transformation into a digitally enabled
and data-driven company is helping us to
forge closer connections with consumers,
customers and employees.
F I L I P P O C ATA L A N O
C H I E F I N F O R M AT I O N
& D I G I T I S AT I O N O F F I C E R
We have a comprehensive
data and analytics
strategy in place, with
value creation as a core
strategic objective.
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S T R AT E G I C I M P E R AT I V E S CO N T I N U E D
We are digitally empowering the company
by integrating talent, technology, and digital
and data value streams. Our aim is to spur and
embed digital transformation as an engine for
competitive advantage. Our strategy focuses
on three main priorities.
The platform that connects these capabilities,
our SAP ERP system, is now managing
80% of Reckitt’s net revenue, delivering
company-wide efficiencies, most notably in
our trade investment, supply chain, finance,
procurement and manufacturing operations.
First, we strengthen and stabilise our digital
foundations by ensuring our core capabilities add
value and improve productivity in a sustainable
way. Our comprehensive and advanced data and
analytics strategy focuses on creating tangible
value and building sustainable and ethical data
foundations to favour scalability and data reuse.
We have transformed our digital operations to
equip Reckitt with the right tech ecosystem
for an omnichannel world. This is allowing us
to capture consumer data across our websites
and apps, target relevant audiences, engage
with consumers in effective ways and measure
the impact of our activities systematically.
Our second priority is to coordinate and optimise
functional transformation initiatives that enhance
our ability to extract efficiencies in our key
end-to-end company flows. This may include
accelerating key programmes that develop
shared capabilities in areas like supply, financial
planning, HR services and media modelling.
Third, we pursue digital-first opportunities that
create competitive advantage; for instance,
with end-to-end e-commerce platforms
for brands such as Air Wick and Durex, by
developing omnichannel strategies and
through personalised products and services.
Strengthening our digital backbone
We completed our technology infrastructure
transition during the year and have migrated
to a multi-cloud landscape. This provides us
with more agile, on-demand and responsive
digital capabilities, enhancing our ability
to scale up innovation at pace and realise
efficiencies by standardising key processes.
Data and analytics
Our data and analytics strategy sets value creation
as a core strategic objective. At the same time,
we’ve committed to building sustainable and
ethical data foundations that will allow us to
benefit from anticipated future growth in
advanced analytics, machine learning and
artificial intelligence (AI).
Our strategy aims to create value by focusing
our investments on operationally critical
capabilities, those that have a significant
near-term P&L impact and those that give
us long-term competitive advantage.
We are building a sustainable data foundation
by upskilling the organisation. We aim to get
everyone fluent in data and analytics. Our IT &
Digital Academy, launched this year, is focusing
on building talent and embedding best practices.
New cataloguing and virtualisation technologies
are making data more accessible and usable.
At the technical level, we are working to ensure
all data is trusted, ethical and FAIR (findable,
accessible, interoperable, reusable) and to
make advanced analytics available at scale
to all employees with user-friendly solutions.
Developments in 2022 include a machine
learning enabled solution that predicts
commodity price movements and advises
buyers on hedging decisions.
We continued to scale the machine learning
model we introduced at the end of 2021,
which monitors more than 200 internal and
external data signals in real time to predict
changing patterns of consumer demand. It is
informing strategic, planning and forecasting
decision-making for many of our brands.
We expanded our internally developed,
audience engine from Hygiene to allow Health
teams to better target their digital campaigns.
In test campaigns, new features that enable
media targeting based on stock availability,
need-state targeting and second-party data
partnerships with appliance manufacturers
helped deliver a 21% uplift in campaign sales.
Media measurement solutions allow us to test
the effectiveness of different campaign tactics.
In 2022, we scaled up IntelliView. We used our
media measurement solution in 43 Hygiene and 13
Health campaigns. It now reaches over 50 markets.
Automation and process mining
We are radically simplifying our operations,
reducing waste and improving user experience
through well-targeted automation. An automation-
first approach, championed by our Intelligent
Automation Centre of Excellence, is helping us
refine and scale up automated processes to
unlock efficiencies and improve capabilities.
DA N I E L D E R O O I J
S V P D I G I TA L T R A N S F O R M AT I O N
A N D C I O H YG I E N E
With inflation top of
mind, we’ve developed
an in-house AI solution
to predict commodity
price movements to
help advise our teams
on hedging decisions.
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S T R AT E G I C I M P E R AT I V E S CO N T I N U E D
Process mining and automation of order fulfilment,
procurement, manufacturing and e-commerce
activities delivered direct P&L savings and
significant improvements in net working capital
this year in partnership with process mining
company, Celonis. Our market-leading activity in
IT operations was recognised at the prestigious
UiPath Automation Excellence Awards. We won
the Excellence in IT Process Automation award
for the second year in succession in 2022.
We are enabling synergies in our Customer
Relationship Management (CRM) operations by
merging Health and Hygiene capabilities. We
continue to roll out our harmonised, connected
digital platform, which is improving the quality
and efficiency of consumer relations. Coverage
was extended in 2022 to 98% of our markets.
Media channels
We have dramatically simplified our channels
landscape to deliver more impactful engagement
and a better brand experience for our consumers.
We’re replacing a fragmented architecture with a
smaller portfolio of apps and websites with more
clearly defined objectives. Over 120 underperforming
websites have been decommissioned. Our new
platform-independent content management and
design system allows digital channels to be
developed more rapidly and flexibly. Harpic’s global
website, which went live in November 2022, is the
first to benefit from this new approach.
E-commerce
Over the past three years, e-commerce has more
than doubled and now accounts for 13% of Group
net revenue.
In 2022, we supported direct-to-consumer (D2C)
brand initiatives and accelerated our efforts to
maximise the impact of online commerce.
The new Durex D2C master template enables
the simultaneous launch of market-specific
e-commerce sites. A striking new website
design includes intuitive, targeted navigation
and campaign module connectivity.
We are ramping up the delivery of commerce
automation to enable our markets to increase
sales at every e-commerce opportunity. For Black
Friday and Cyber Monday on Amazon Prime, we
set up an automated solution to react quickly to
consumer purchasing patterns. Automated search
optimisation and dynamic media buying meant
we could track performance and adjust product
placement in real time during these crucial events.
Supply chain planning
We made strong progress with our end-to-
end supply planning transformation during the
year. Our new operating model is built around
connected planning control towers and supported
by a planning Centre of Excellence and a new
modern technology stack that uses machine
learning to take into account all possible internal
and external variables. We aim to connect all
supply planning processes with our commercial
and financial planning systems. Using this
more coordinated approach, we can manage
inventory more accurately and deliver better
customer service at lower cost, boosting growth,
profitability and our working capital position.
Smart factory operations
Our accelerated investment programme
is crystallising productivity, service and
efficiency improvements.
Our factories are tasked with increasing efficiency,
reducing waste, improving quality, reducing
turnaround, retaining talent and remaining
operationally resilient, whilst becoming more
sustainable. We are introducing technology
and data capabilities to progress these goals.
Our leading digital factories are also innovating
and adding value. Our Nottingham (UK) and
Nowy Dwór (Poland) factories have acted
as testbeds for industry 4.0 connectivity.
Scalable digital architecture at our Factory of the
Future in Nottingham uses automated production
line connectivity, implemented in partnership
with IBM, to manage performance in real time
by monitoring equipment, waste and process
bottlenecks. We have also introduced environmental
performance dashboards and handheld diagnostic
and maintenance management systems.
The results so far have been excellent. Total plant
maintenance costs fell by 10% this year, despite
production volume increasing by 50%1. Digital
projects in the pipeline aim to transform our
approach to predictive quality and to implement
wireless asset tracking and advanced robotics.
This multi-year programme will be fully rolled
out by 2024, but it is already delivering tangible
improvements in planning accuracy and
responsiveness to ever changing consumer
demand. Scenario planning and integrated
business planning were among the new
processes that went live during the year.
We are now applying what we have learnt at
these locations to set up scalable platforms
which add value at all our factories. Their
implementation through Reckitt Production
System (R-PS) supports continuous sustainability
and productivity improvements together
with consistent quality standards.
1. Compared year-on-year over an eight-month period,
including peak demand for seasonal stock build
C A S E S T U DY
DIGITAL AND PHYSICAL
TRANSFORMATION
The full skeleton of our new production
hall for auto-dishwashing detergent at
Nowy Dwór, Poland, is now in place. With
fit-out and testing in progress, we’re
mapping the latest digital technology
onto this advanced equipment.
Our Management Execution System (MES)
software will track production cycles in
granular detail and connect with external
planning and resource management
software. Nowy Dwór piloted this MES
technology in 2021. It is now extending
this solution to other production lines and
supporting its European roll-out at three
other Hygiene factories. Ongoing projects
include digitally connected on-pack
printing and autonomous logistics robots.
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STR ATEG I C I M PE R ATIV ES:
I N CR E AS E PRO DU CTIV IT Y
FOCUS ON:
OUR PRODUCTIVITY
JOURNEY
We are doing more by
cutting waste and building
foundational capabilities.
J E F F C A R R
C H I E F F I N A N C I A L O F F I C E R
Improving productivity is
about changing the way
we work to become more
efficient and sustainable,
and we have done
just that, all the while
delivering £2 billion
in productivity.
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S T R AT E G I C I M P E R AT I V E S CO N T I N U E D
Improving productivity isn’t just about finding
savings. It’s about changing the way we work
to become more efficient and sustainable. It’s
about smart spending, synergies, doing things
together better, using and reusing our assets,
and sharing rather than duplicating resources.
In 2020, we launched the X-Seed Programme
to drive our productivity strategy. This focuses
on delivering additional value from business-
critical projects to reinvest in growth, developing
new capabilities that maintain the momentum
for productivity improvement, and enhancing
business resilience so we are better equipped to
meet upcoming challenges. We initially targeted
£1.3 billion in productivity gains by the end of 2022.
We swiftly exceeded this and revised our target
upwards to £2 billion by end-2023. By the end of
2022, we had already reached this higher figure.
The success of our productivity programme
is mainly due to the energy and commitment
of our people. Colleagues recognise that our
responsibility for combating waste and reducing
our own footprint is an integral part of pursuing our
Purpose of working for a cleaner, healthier world.
The productivity programme has provided
structural support for these efforts and given
colleagues the right tools. Our learn and
adopt approach promotes transparency and
shares best practice. Everyone is encouraged
to think strategically and sustainably
about where we can unlock value.
X-Seed marked a step-change in our approach.
We focused on areas where rethinking or refining
our approach could deliver global transformation.
The programme initially targeted five main areas:
marketing, product costs, indirect procurement,
manufacturing and supply chain optimisation.
In manufacturing, for example, we developed
and implemented Reckitt Production System
(R-PS), a solid set of common standards and
manufacturing best practices. This reduced
waste and boosted our operational excellence
through continuous improvement actions
and by reducing the time and cost spent
on running our daily production cycles.
In our marketing productivity programme, we
focus on all the major marketing spend categories
and work closely with functional teams to
introduce transformational initiatives to make our
marketing investment work harder. Media mix
modelling is just one example. We use this to make
strategic decisions about which media channels
specific brands should invest in for optimal return.
Delivering productivity improvements
There are three main strands to our productivity
journey: foundation building, quick wins and
major projects. In the initial, transformational,
phase, over three-quarters of productivity gains
came from globally led, foundational initiatives.
Much of this work is now in place. We anticipate
that local markets and business units will play a
bigger role in driving future productivity gains.
The productivity team has developed valuation
guidelines which use existing in-house systems
to calculate and report productivity gains.
Finance teams all over the world receive
training in their implementation. This gives us
simple, consistent productivity data and allows
teams to focus on actions instead of data.
The foundation building strand aims to embed
continuous improvement in our day-to-day
thinking. To support this, we’ve been building a
one-stop shop which integrates productivity tools
and techniques. An estimated 20% of our gains
this year stemmed from foundation building.
Quick wins accounted for around half of all
productivity gains made this year. These are local-
and business unit-led initiatives aligned with the
Group’s functional agenda. Savings are frequently
realised with cross-functional and international
collaboration. For instance, when we relaunched
Finish tabs this year, our R&D, supply, quality,
procurement and factory teams worked together
to reduce production complexity. They realised
multiple efficiencies; for instance, by harmonising
artwork and optimising packing materials.
Bigger, transformational projects require
more time and resources to implement but
have the potential to deliver substantial
longer-term gains. Around 30% of the year’s
productivity improvements have been
achieved in this way. Developing an in-house
content production ecosystem for marketing
assets realised a total of £14 million in-year
savings in 2022. The new approach improves
our efficiency and effectiveness whilst
preserving creativity and enables more
impactful conversations with consumers.
Sustainable productivity growth
and business resilience
The success of our productivity programme has
enhanced our business resilience. We’ve been able
to accelerate capital investment and reinvestment
in the business. That has helped to keep our
growth plans on track, despite the significant
headwinds affecting all major economies over the
past few years. Our increased efficiencies have
released additional capital to support investments
in R&D, enhanced digital capabilities, developing
our centres of excellence and broadening
the reach of the Dettol and Lysol brands.
I LYA S E L I VA N OV
S V P PR O D U C T I V I T Y A N D
T R A N S F O R M AT I O N
It is amazing what
true partnership and
collaborative spirit
between procurement,
R&D, quality and
commercial teams can
deliver. With 16,000
productivity initiatives
across the organisation,
everyone has played
a part.
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STR ATEG I C I M PE R ATIV ES:
E M B E D S USTA I N A B I LIT Y
FOCUS ON:
HUMAN HEALTH
AND PLANETARY
HEALTH
We work to help create a cleaner,
healthier world. Human health
and planetary health are
inextricably connected.
FA B R I C E B E AU L I E U
CH I EF M A R K E TI N G , SUSTA I N A B I LIT Y
A N D CO R PO R ATE A FFA I RS O FFI CER
People expect brands
to support a sustainable
future, both through their
products and community
engagement. Adopting
this mindset reframes
innovation and
communication and
propels sustainability
to the very heart of our
brand-building playbook
and growth agenda.
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S T R AT E G I C I M P E R AT I V E S CO N T I N U E D
Nearly 150 years ago, our founder, James Reckitt,
recognised that a business benefited when it
also had a positive impact on its communities.
That still holds true for the company he founded.
The difference today is that we are doing this
globally and in a much more complex world.
Human health and planetary health are connected.
The United Nations cites climate change and
environmental degradation as two of the most
pressing threats to humankind, causing untold
deaths, worsening health inequalities and
pressuring already strained healthcare systems.
Urgent action is needed at the intersection of
health and climate to reduce these impacts.
Our Purpose to protect, heal and nurture in the
relentless pursuit of a cleaner, healthier world
compels us to act. We don’t have all the answers,
but we are determined to understand and
address the global threat to human health from
climate change and environmental degradation.
DAV I D C R O F T
G R O U P H E A D O F S U S TA I N A B I L I T Y
Working to better
understand the
emerging health threats
resulting from climate
change helps connect
our business to a much
bigger purpose and
energises us to act
with urgency.
Working for a cleaner, healthier planet
We have convened a coalition of climate and
health experts to advance public understanding
of how climate and health interact. We fund vital
research into hygiene’s role as the foundation
of health and into how climate impacts health
via the Reckitt Global Hygiene Institute and
through our long-term partnership with the
London School of Hygiene & Tropical Medicine.
We work to mitigate our own contribution to
climate change and environmental degradation
through our 2030 Sustainability Ambitions.
We are switching to more sustainable
ingredients and packaging to reduce the
environmental impact of our products.
Our products are reaching more and more
communities, but poverty still leaves some without
access to markets. These same communities
are often more exposed to environmental
degradation and less able to take protective
measures. They may struggle to get safe
water, basic sanitation and health services.
By increasing market access to our products
and strengthening health literacy through
brand communications and wider health
and hygiene information, we help people to
protect themselves and their families from the
adverse health impacts of climate change.
To help the most vulnerable adapt to climate
change impacts, we work with external partners
to reach people who may not be within our
markets currently. In 2022, for example, we
renewed our partnership with Water.org, to
help realise our aim of getting 10 million people
better access to water, sanitation and hygiene
by 2030. World Toilet Day’s 2022 theme ‘making
the invisible visible’, highlighted the impact that
the sanitation crisis is having on groundwater,
spreading human waste into rivers, lakes and
soil, and polluting underground water resources.
At Reckitt, we heard stories from people whose
lives we’ve changed through our partnership
with Water.org and asked more people to take
the pledge to keep our toilets clean, to keep
loved ones safe. In doing so, we’ll help to achieve
Sustainable Development Goal 6 (SDG 6):
clean water and sanitation for all by 2030.
Our Fight for Access Fund invests in communities
to promote lasting and universal access to hygiene,
health and nutrition. Over the past three years
we have invested over £100 million in more than
fifty countries. We focus on areas that support
hygiene as the foundation of health, address
sexual rights and equality, promote universal
health coverage and improve maternal and child
health outcomes. Many of these programmes
are raising awareness of environmental health
impacts. They not only help the fight for access
to better hygiene, wellness and nourishment,
they also promote long-term self-sufficiency
through economic and social development.
Tackling global problems through our brands
We are working to tackle some of the
biggest problems the world faces through
our purpose-led brands to help bring about
the cleaner, healthier world we want to see.
The damaging health effects of climate change
are evident. Rising temperatures, extreme
weather events and increased air pollution,
magnified in urban settings, all have serious health
consequences. We help protect people from
these and other impacts through our brands.
By supporting hygienic environments, our brands
help build a foundation of health. For example,
Mortein protects people against pests, especially
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S T R AT E G I C I M P E R AT I V E S CO N T I N U E D
PAT T Y O ’ H AY E R
G LO B A L H E A D O F E X T E R N A L
CO M M U N I C AT I O N S & A F FA I RS
In addressing big global
problems, partnerships
are critical. They
enable us to harness
diverse strengths
and abilities to solve
complex challenges.
mosquitoes, as these spread to new locations.
Other health products help people manage and
build immunity to illnesses and infectious diseases.
The problems we seek to solve are expressed
as purpose in our brands. Each of our brands has
a core purpose, which is explicitly aligned with a
relevant Sustainable Development Goal (SDG).
For instance, the purpose for Vanish, extending
clothes’ life, is linked to the SDG 12 goal of
responsible consumption and production. Finish has
the aim of using less water, which relates to SDG 6
and for Durex, it’s SDG 3, protecting human health.
Importantly, we translate these purposes into
tangible solutions. Many solutions relate to
innovation, especially around more sustainable
products. Others relate to communication
and engaging consumers and customers.
We communicate around meaningful
programmes of positive impact that these
superior solutions give our brands the right to
embrace. These programmes are increasingly
becoming core to our brands’ communication,
as we seek to inspire people to participate.
Every day, through our global brands,
we encourage millions of consumers to take
small actions that add up to meaningful change.
Finish saves millions of litres of water by asking its
consumers to #SkipTheRinse. The Vanish campaign,
helping clothes live many lives, lowers energy
usage and promotes sustainable consumption.
We build health literacy and drive behaviour
change that promotes public health through
our brands. Our educational projects and
information campaigns develop awareness
and deepen understanding of the problems
we seek to solve and their solutions, while
connecting our products with a wider audience.
Dettol’s Banega Swasth public health campaign
in India has been running for a decade. It reached
26 million people in 2022 alone, improved public
health and potentially saved many lives with
its core message.
Collectively, these activities advance globally
important issues. In combination, they help raise
awareness of Reckitt as a purposeful business
making a positive difference in the world.
Amplifying our impact and
unlocking opportunities
We are increasingly clear in our conviction
that hygiene, public health and planetary health
are intrinsically linked, and our core business
is focused on this.
However, tackling these complex global
problems also calls for collective action.
We amplify our voice and magnify our impact
by partnering with key stakeholders on major
social and environmental campaigns. The more
often we do this, the more clearly we are heard.
In 2021, we were the official Hygiene Partner
at COP26 in Glasgow. In 2022 at COP27 in
Egypt, we showcased the impact of climate
change on health. We published new research
and moderated discussions on the links
between public health and planetary health.
Through international advocacy, expert knowledge
and the work we are doing, we are becoming a
natural partner for governments and international
organisations on issues that matter to them
and to us.
C A S E S T U DY
RECKITT AT COP27:
THE PLANET’S HEALTH
IS OUR HEALTH
At COP27 in Egypt, we built on our
presence at COP26 in Glasgow to build
awareness and action on the intersection
of climate and health, and profile our
commitment to sustainability.
We convened six round table discussions,
working closely with partners including
the UK Government, the incoming hosts of
COP28, the World Health Organisation and
the London School of Hygiene & Tropical
Medicine, to address issues including water
scarcity, healthy cities, and the growing
threat from vector-borne disease.
We also commissioned consumer research
in the UK, US, UAE and India, to assess
people’s current understanding of the
risks to their health from a changing
climate, what actions they are taking to
protect themselves, and what they want
to see from businesses and government
to build climate-resilient healthcare
systems. 79% of people surveyed
agreed that climate change and their
personal health are connected.
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STR ATEG I C I M PE R ATIV ES:
ACTIV E LY M A N AG E TH E PO RTFO LI O
FOCUS ON:
WINNING IN
ATTRACTIVE
CATEGORIES
We actively manage our portfolio by
selecting attractive market segments
within our chosen categories.
N I C A N D R O D U R A N T E
C H I E F E X E CU T I V E O F F I C E R
We are intentional about
where we play, targeting
segments that offer
opportunities for continued
growth, addressing
consumers’ needs today
and tomorrow.
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S T R AT E G I C I M P E R AT I V E S CO N T I N U E D
Identifying attractive categories
Reckitt has strong brands in attractive categories
that offer long-term growth opportunities. We are
active in 14 major categories, six in Hygiene, five
in Health and three in Nutrition. In each, we have
products and brands that protect, heal or nurture in
the relentless pursuit of a cleaner, healthier world.
Within these categories, we identify specific
market segments, such as laundry additives,
cold and flu, and adult nutrition, where we
have the credentials and capabilities to win.
Typically, we choose to play in non-commoditised
segments with demographic dynamics that
support volume growth and quality differentiation.
We add value for consumers in these spaces
through premium, science-backed and
differentiated product offerings.
M A J O R C AT E G O R I E S
14
5
H E A LT H
H YG I E N E
6
N U T R I T I O N
3
RYA N D U L L E A
V P OTC
We actively look for
opportunities to serve
wider consumer needs
by stretching our brands
to leverage our scientific
expertise and credibility.
We have done this
with Mucinex Sore
Throat and Strepsils
Cough launches recently.
Demand-centric thinking
Some product qualities are fundamental.
For example, all products must be consistently
safe and effective, and all of our trusted brands
are. And everyone wants value for money,
especially with today’s cost-of-living crisis,
but value for money means different things
to different people. Some want time savings,
others prioritise extra-strength cleaning or
natural ingredients. Our strategy, using demand-
centric growth analysis, is founded on a clear
understanding of these differences so that we
can target the right demand segments within
our categories, as characterised by specific
functional and emotional consumer needs.
These demand spaces are not mutually exclusive;
‘natural’, ‘fragrance-free’ and ‘thorough cleaning’
co-exist within the surface disinfection category.
However, the relative values attached to specific
features and functionality do differ. Consumers
in the natural demand space, for instance, place
a high value on proven green credentials, and may
be ready to compromise some thorough cleaning
capability in exchange for that. Careful analysis
of each identified demand space helps guide our
strategy. We add value through innovations that
align brand attributes and product qualities with
the key criteria for our target demand space.
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S T R AT E G I C I M P E R AT I V E S CO N T I N U E D
C A S E S T U DY
LYSOL: BROADENING THE
SHOULDERS OF THE BRAND
People have been trusting Lysol to keep
their families safe since its invention in 1889
when it was created to help end the cholera
epidemic. Today, Lysol is the second most
trusted brand in the US and the largest
disinfection brand in the world, known
by consumers for its germ-kill attributes.
The brand is firmly established in the surface
disinfection category with its range of
sprays, wipes and multipurpose cleaners.
Its strong brand equity and efficacy give
Lysol the right to win in other categories.
These include lavatory care and, most
recently, laundry additives. Lysol Laundry
Sanitiser launched in the US in 2018. Since
then, laundry sanitisers have moved ahead
of wipes to become Lysol’s second biggest
segment, with further growth expected as
more consumers enter the category. This
broadening of Lysol’s shoulders contributed
to the brand’s 2022 net revenues being
around 45% higher than pre-pandemic.
Where we lack the capabilities to succeed in a
strategically important demand space, we may
decide to invest to develop them organically,
such as through targeted R&D, to develop a
product or service. In 2022, our growth was
focused on organic opportunities, but we
can also decide to buy in the necessary skills,
brands or geographic reach through partnerships,
joint ventures or acquisitions. We examine
both routes for growth to maintain a strong
portfolio of brands in attractive categories
poised for long-term sustainable growth.
Extending the reach of our brands
A brand’s market performance depends on the
extent to which it meets consumer needs in its
demand space. Its ability to expand into adjacent
segments speaks to its future potential.
At the end of 2021, our Health business took the
credentials that our cold and flu brand Mucinex
had in mucus protection and pain relief, and
expanded into sore throat relief with the launch
of Mucinex InstaSoothe. Available as lozenges
and as a spray, the new product range builds
on the brand’s reputation for powerful pain
relief, using science and active ingredients
gained from the Strepsils brand. At the same
time, Strepsils was made available in the US
cold and flu sub-category through Cepacol
Extra Strength and as Mucinex DM, a cough
suppressant and sore throat expectorant.
Adopting a portfolio approach
A portfolio approach allows us to leverage several
brands to address distinct demand spaces within
the same category. For example in Hygiene,
Air Wick plays well in air-care demand spaces
where freshness, fragrance and wellbeing are
prioritised. Botanica by Air Wick is a boutique
brand with high-end appeal, attracting consumers
who prefer more natural products. Lysol,
prized for its thorough cleansing and recently
voted the second most trusted brand in the
US by decision intelligence company Morning
Consult, has strong purification and disinfection
characteristics. Together, these brands address
the major demand spaces in air care.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 47
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STA K E H O LD E R E N GAG E M E NT
BUILDING PARTNERSHIPS
WITH STAKEHOLDERS
Incorporating stakeholder voices into
our decisions helps us develop as a
purpose-led business and strengthens
long-term relationships.
21 Aligning purpose and strategy with our customers
22 Putting consumers first
23 Embedding a purpose-led culture and developing our people
24 Building a responsible and resilient supply chain
25 Expert knowledge
26 Partnering with innovators
27 Working with governments, industry partners and NGOs
28 Informing investors
29 Investing in communities
210 Our shared planet
21 ALIGNING PURPOSE
AND STRATEGY WITH
OUR CUSTOMERS
Most people buy our products through retail
channels. Our customers, the retailers, provide
vital feedback on evolving consumer priorities
and patterns of demand. We meet their priorities
through efficient execution and successful
innovation. We aim to build strong structural
relationships and partnerships founded on
common purpose.
Globally, our major trading channels include
hypermarkets and supermarkets, pharmacies,
drug stores, traditional trade and emerging trade
(including discounters, convenience stores,
mother and baby stores, and travel and speciality
retail). Online, we have well over 1,000
e-commerce retailers.
How we engage
We coordinate these relationships globally,
regionally or nationally, depending on the
customer profile. We hold top-to-top meetings
to define and build shared objectives and
define common purpose. We support this
work with joint workshops to agree strategy
and action plans to help us deliver collective
goals, both commercial and non-financial, such
as with our joint sustainability agendas. For
example, we’ve collaborated with Walgreen
Boots Alliance to jointly promote the impact of
climate change on people’s health, something
that our core businesses then act on directly.
Operationally, we provide ongoing multi-
disciplinary support. Our customers can call on
category, shopper, sustainability, operational,
channel and format, and regional specialists.
Our sales teams and specialists act as advocates,
advancing customers’ interests within the
company to help meet our shared objectives.
We have strengthened our customer service
delivery capability to add muscle to these efforts.
These kinds of partnerships, sustained by common
interest, are welcomed by retailers and are helping
us build stronger relationships. In the Advantage
Group 2022 Survey of retailers there was evidence
of continued progress. Our customers rated
us top tier in 44.7% of our markets, a 100 basis-
point improvement on 2021. In the US, Reckitt
moved six places higher in the overall Kantar
PowerRanking. We now rank at 28 out of the
top 100 consumer packaged goods companies.
Meanwhile in the UK, the high street retailer
Superdrug gave Reckitt its annual Best New
Health Care Launch award for its work on
introducing Nuromol to consumers. The award
recognised an unmatched combination of
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S TA K E H O L D E R E N G AG E M E N T CO N T I N U E D
in-store and online initiatives that had bolstered
the brand’s visibility in its stores and helped
to deliver 60% year-on-year sales growth.
Retailers are increasingly reliant on their online
capabilities. We are matching that shift with
an omnichannel approach to category and
customer engagement and by developing
e-commerce-specific supply chains. Our brands
are on all the main portals, and we also trade via
marketplace platforms, through physical retailers’
digital channels and e-pharmacy outlets.
In e-commerce, our customer relationships are
more reciprocal. Digital customers promote and
sell our brands through their online channels.
We both sell through their channels and invest
in media space to promote them. Whether
online or offline, our aim is the same. We seek
to identify strategic synergies, promote
purpose-led innovation and invest in partnerships
and networks that deliver joint growth.
Partnering on sustainability with
purpose-led brands
The global sustainability team works closely with
global and local sales teams. They are developing
joint business plans with priority customers
that recognise the value of collective action on
sustainability. Our sustainability partnerships
with key retailers have four main pillars:
1. Packaging innovation
We are designing more sustainable packaging for
both physical outlets and e-commerce platforms.
We work with Amazon to develop Climate Pledge
Friendly (CPF) recognised products with lighter,
more sustainable packaging. We continue to
innovate to reduce virgin plastic content in our
packaging by incorporating more recyclable
post-consumer recycled (PCR) plastic and non-
plastic alternatives, such as the paper-based
stand-up pouch for Finish, which reduces the
product’s plastic usage by 75%. Other innovations
include evaluating circular economic systems
by delivering our brands in reusable packaging
with refill solutions, such as Dettol powder-to-
liquid handwash in India, and Veja Power Nature
in Brazil. We also work closely with our peers
through the Consumer Goods Forum (CGF)
and the World Business Council for Sustainable
Development on more sustainable packaging
and reducing plastic waste. These groups are
critical for developing impact at scale across many
different product sectors via brands and retailers.
For further details see
Plastics and packaging
2. Better ingredients
We assess the sustainability of our ingredients using
our Sustainable Innovation Calculator. We aim to
include more sustainable chemical components
without diminishing efficacy and innovate to
introduce safe, effective products using natural
ingredients. Our focus here is on reducing chemical
footprints, increasing biodegradability and using
more regenerative materials. This year for instance,
Lysol introduced fully biodegradable and
compostable disinfecting wipes made from plant
fibres in Canada and Dettol launched a hard surface
cleaner with plant-based active ingredients.
For further details see
Sustainable product innovation
3. Climate action and responsible sourcing
On climate, Reckitt has both science-based
targets for 2030 and an ambition to be net
zero by 2040. We now sell more than 322 CPF
labelled products on Amazon. We are active
members of Walmart’s Project Gigaton as well as
Carrefour’s Food Transition Pact, which targets
a 20-megaton reduction in GHG emissions by
C A S E S T U DY
TEAMING UP WITH
AMAZON TO DELIVER
FOR CONSUMERS
AND THE PLANET
We have forged a powerful and highly
functioning partnership with Amazon over the
last 10 years. We work closely with them in
many key areas to find better ways to connect
with our consumers. These collaborations
help us improve the user and shopping
experience, protect our brands, optimise
advertising campaign effectiveness, progress
our sustainability agenda and manage supply
chain issues. We’re also increasing our focus
on our business customers by teaming up
with Amazon Business, and by marketing our
products through its integrated website.
When Amazon launched its Climate Pledge
commitment to reach net zero by 2040,
Reckitt was one of the first partners globally
to sign up. That commitment continues.
We’re progressing towards our 2030
Sustainability Ambitions and have already
achieved our 2030 science-based operations
target with a two-thirds reduction in carbon
emissions. The Climate Pledge encourages
us to develop more sustainable packaging
and products. Our Fair Rubber Association
latex for Durex will carry CPF recognition
online and the Fair Rubber logo on pack.
Our global relationship with Amazon across CPF
labelling, retail management and advertising
means we consult on innovation, brand and
packaging and share our thinking on market
challenges and opportunities. We co-create
tests to identify and scale up best practices
that expand the reach of our brands. Our use
of full-funnel marketing techniques and new
ad product is allowing us to reach consumers
in innovative and exciting new ways.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 22 PUTTING
CONSUMERS FIRST
Putting consumers and people first is a guiding
principle for our business. Today’s consumers
want quality and value, but they also want to
know that the products they buy and the
businesses they buy from reflect their values.
How we engage
By reaching more people in more places, we grow
our business and increase our impact. We do that
by gaining and retaining people’s trust. We work
to forge emotional connections with consumers
through brands that reflect their values.
Consumers want products that are safe, effective
and give value for money, but they also want
to be reassured that they’re sustainable and
responsibly sourced. We are helping consumers
make smart choices both for themselves and
the environment by encouraging subtle shifts
in behaviour that collectively can have a big
impact through our purpose-led brands. Air
Wick’s focus on biodiversity, Vanish’s focus on
more sustainable clothing and Finish’s campaign
to use water wisely are all nudging consumer
behaviour in a more sustainable direction.
Sustainability is increasingly relevant for shoppers.
Our innovation programme, driven by ongoing
scientific research and consumer insight, continues
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2030. We are active in forums that amplify our
Sustainability Ambitions and concerns. We work
closely with peers and retail customers via the
CGF on topics such as avoiding deforestation
and protecting human rights. Our collaboration
this year in the Climate and Health Coalition,
along with Walgreens Boots Alliance and
other organisations, highlighted the interlinked
crises of climate change and public health.
For further details see
Human rights across our value chain
For further details see
Biodiversity and ecosystems
4. Purpose-led brands
We partner with retailers to build shopper
awareness and engagement with sustainability
through our purpose-led brands. We work
together to encourage purpose-led behaviour
change, enabled by our innovation programme,
whilst raising the profile of our purpose-led
products. For Finish’s #SkipTheRinse campaign
we joined forces with retailers to provide display
materials which, in line with the brand’s purpose
of saving water, encourage people to skip pre-
rinsing dishes to reduce water use. With Air Wick,
we’ve worked with retailers alongside WWF
to build consumer engagement with nature,
strengthening ecosystems and seedbanks.
to strengthen efficacy and quality, whilst also
delivering our Sustainability Ambitions in ways
that have further impact when people use our
brands. This also allows consumers to play their
own part in sustainability and contributes to an
overall sense of value for money. We continue
to strengthen our consumer insights, helping
us innovate to meet future demands, better
meet consumers’ expectations and delight
people with products that provide new ways
to help their health, hygiene and nutrition.
Purpose-led brands
Rooting our brands in purpose supports our
Sustainability Ambitions. We want to improve
the lives of the people we serve, our consumers,
their families and their communities through
better hygiene, health and nutrition. Our purpose-
led brands are at the front line of that fight.
More than 30 million of our products are
sold worldwide every day. On that scale
even small changes in consumer behaviour
can have a big impact. We’re reducing and
improving our packaging and the chemicals
in our products. We’re strengthening our
commitments on climate change, biodiversity,
human rights and the circular economy.
Durex combines pleasure with purpose, with
products that destigmatise sexual wellbeing
and support intimate wellness. The Vanish
purpose of giving clothes longer life supports
sustainable consumption. Its products save
energy as well as money on replacement clothing.
Consumers can wash at lower temperatures
and keep clothes wearable for longer.
For further details see
Our sustainability ambitions
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23 EMBEDDING A
PURPOSE-LED CULTURE AND
DEVELOPING OUR PEOPLE
Our people are the heart of our business.
Success in fulfilling our Purpose to protect, heal
and nurture in the relentless pursuit of a cleaner,
healthier world depends on our colleagues. And
creating an inclusive and supportive high
performance workplace is vital for them to
perform at their best. Achieving that success
depends on how we create the space and
opportunities for our people to make a
difference and do the right thing, always.
How we engage
Our diverse team of around 40,000 includes
people of all ages, backgrounds, identities,
and beliefs, who come from 125 nationalities.
This diversity enriches our thinking and our
actions. We sustain it by promoting an inclusive
culture where everyone is heard, every voice
matters and everyone contributes. For more
on this see Culture and Inclusion on page 9.
We speak directly, but with respect, and foster
honest conversations between colleagues.
We actively try to find out what’s on our
people’s minds and what they need, whether
that’s through in-depth conversations or
Group-wide surveys. We act on what we hear.
In 2022, we continued to establish grassroots
networks of underrepresented communities
through our Employee Resource Groups (ERGs).
These help people support each other and share
the challenges they face with the wider business
to increase awareness and foster greater empathy.
We launched our global Disability Employee
Resource Group in 2022 to raise awareness of
disability and support employees who have
disabilities themselves or who care for friends
or family with disabilities. Our global ‘Stronger
Together’ conversations provide an opportunity
to highlight and discuss issues including disability,
race and ethnicity, and mental health.
Developing our people
It’s critical that our people have the right skills,
capabilities and behaviours to achieve our Purpose,
and that they feel empowered and enabled to
perform at their best every day. On-the-job learning
and continuous development happen throughout
the year, with all employees having a formal annual
performance review of personal development
and business objectives. This is also a chance to
Listening to our people
We ran our annual global Employee Engagement
Survey in August 2022, using the LinkedIn survey
tool, Glint. In addition to survey questions asking
for feedback on all aspects of working at Reckitt
we included optional additional diversity questions
in 14 key markets (covering 60% of the employee
population) to help us better understand
engagement through the lens of diversity.
Some 83% of employees responded to the
survey. Over three-quarters (76%) agreed they
would ‘recommend Reckitt as a great place to
work’. Overall, our people are proud to work
for us, identify strongly with our culture of
achievement, and appreciate our investments
in wellbeing and sustainable high performance.
They also believe our leaders are performing
well, especially when it comes to integrity,
purpose and speaking directly with respect.
The survey also highlighted where we can
improve. For example, whilst our people support
our push for inclusivity, they also want us to do
more on equal opportunities for development
and better recognition of their efforts.
For further details see
Our people
For further details see
Inclusion
discuss their ongoing development plan, career
ambitions and potential to take on different roles.
We offer learning opportunities through our
digital learning platform and in-person workshops,
programmes and coaching. Global Functional
Development Academies and Leadership
Development Programmes support people’s
development at all levels. By the end of 2022, we
had launched eight Global Functional Academies.
Employees also have access to a range of
learning initiatives on inclusion and wellbeing.
Communication
The challenging working environment of the
last three years has emphasised the importance
of internal communication and engagement.
Our senior leaders encourage communication
as a way to build connections with our people,
helping them to understand Reckitt’s strategy and
direction. It also gives leaders the opportunity to
listen to and understand employees’ concerns.
Nicandro Durante, our CEO, sets the tone with
global townhalls including live-streamed Q&As.
Accessible to all, these are attended on average
by more than 9,000 employees. Nicandro also
hosts informal townhalls during market visits,
allowing employees to hear from him directly,
raise questions and make sure they understand
the strategic direction for the business.
Our Global Executive Committee (GEC) members
host quarterly townhalls with their teams to ensure
that we continue the conversation around purpose,
people, and performance throughout the business.
We support ‘always-on’ global communication
with content and conversation on our intranet,
Rubi. In 2022, we introduced Workplace, a richer
more tailored communication platform for
employees to share updates, insights and news.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Smaller suppliers don’t always have the
capabilities or resources to spot issues,
understand their root causes or implement the
changes it will take to address them. Where
needed, we work with them through our
capability building programme to help improve
their processes and raise standards. We have
partnered with Oxfam Business Advisory Service
to create a practical toolkit to help suppliers to
develop and implement site-level grievance
mechanisms. The toolkit was piloted with suppliers
in India, Pakistan, China, Peru and the UK across
the manufacturing and agricultural sectors and
has now been published on our website.
For further details see
Human rights across our value chain
For further details see
Biodiversity and ecosystems
C A S E S T U DY
WORKING WITH SMALLHOLDERS
TO PROTECT ELEPHANTS
In Surat Thani, Thailand, from where we source
latex for condoms, we have been working with
smallholder farmers who live around Tai Rom
Yen National Park to develop a proportionate
response to the frequent elephant incursions
which had been damaging their crops. We
worked with the Department of National Parks
to get patrolling kits to volunteer smallholder
groups to keep the elephants at bay. We have
also been providing financial aid to support
data collection and knowledge sharing
activities. This helped prevent damage and
reduced the risk of conflict, but more needed
to be done. We encouraged the smallholders
to formalise their activities and build up their
understanding of elephant behaviour to
facilitate more targeted responses. They set
up the Kon Chang Pa (Elephant and Forest)
association, which qualifies for government
funding. This has developed a comprehensive
cohabitation strategy, which includes
planting replenishable food sources, such
as wild fruit plants and grasses, to encourage
elephants to remain within the forest.
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24 BUILDING A RESPONSIBLE
AND RESILIENT SUPPLY CHAIN
Maintaining healthy long-term relationships
with our suppliers not only helps us protect
business continuity, it lays important
foundations for innovation and helps
deliver our Sustainability Ambitions.
Our supply chain touches more than 60 countries.
We work with manufacturing units, distributors
and various other organisations from rural
farms to huge raw material and packaging
material suppliers.
How we engage
We are embedding environmental, social and
governance (ESG) objectives in core business
activity by ensuring our supplier relationships
are founded on purpose. This is not just about
protecting ourselves reputationally, it also
gives us the opportunity to improve standards
globally, whether that’s making farming practices
more sustainable or ensuring fair treatment
for workers. We are centralising more supplier
relationships and procurement activity to
strengthen controls and improve efficiency.
We audit suppliers and require them to adhere to
six responsible sourcing principles that prioritise
sustainability. They must ensure labour and
human rights are respected, provide a safe and
healthy work environment, source natural raw
materials responsibly, protect the environment
and reduce environmental impact, use ever
safer and more sustainable ingredients, and
conduct business with honesty and integrity.
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25 EXPERT KNOWLEDGE
Insights from academics and scientists help
us understand long-term trends. We use that
knowledge to build action programmes, guide
innovation and develop the expertise and
capabilities to meet future challenges.
How we engage
We engage with healthcare professionals
internationally to exchange information, share
best clinical practice and sponsor research. We
also share our expertise in professional journals
and at presentations for international symposiums
and congresses. Our nine science platforms
focus on foundational disciplines for our business
(see more on page 31). We commission and
collaborate with scientists and academics to
advance scientific understanding in these areas.
Reckitt’s long-term collaboration with the
London School of Hygiene & Tropical Medicine
(LSHTM) has advanced hygiene best practice.
We co-developed science-based, hygiene
protocols, which helped keep delegates safe
from COVID-19 at COP26 in Glasgow. In 2022,
we published joint research with findings on the
increased risk, because of climate change, that
the next pandemic will be triggered by pests.
The opening of the Reckitt Hygiene Forum in June
2022 marked the next phase in this partnership.
The Forum occupies state-of-the-art hygiene
research and teaching facilities in LSHTM’s Keppel
Street building. It aims to foster hygiene science
innovation and support collaboration between
industry leaders and experts in the field.
The Forum is funding two seed grants for health
and hygiene research. It finances one-year
research projects for early-career scientists
who are examining links between hygiene and
health. Over the next three years, research
programme topics will include the dynamics
of behaviour change, safe-surface science,
and work on the mechanical transmission of
disease. There are four new PhD studentships
for hygiene research scientists working
on projects in sub-Saharan Africa.
We work closely with the Nature-based Insetting
team, a spin-off from the University of Oxford,
to help us understand and measure our impact on
biodiversity in key supply chains. This collaboration
began when we were researching the biodiversity
impact of our latex supply chain in Thailand. Our
work on this led to us being invited to join the
Taskforce on Nature-related Financial Disclosures
(TNFD) to help develop mechanisms for wider
adoption. At the same time, we have been
working with Risilience Climate and Enterprise
analytics technology, founded on the influential
frameworks pioneered by the Cambridge Centre
for Risk Studies, to help identify and respond to our
climate-related financial risks and opportunities.
26 PARTNERING
WITH INNOVATORS
The best ideas can come from anywhere and
high-impact solutions are often better delivered
by networks than individual organisations: two
great reasons for encouraging collaborative
projects with like-minded innovators.
Collaborative projects and ventures
We collaborate with independent, purpose-driven
entrepreneurs whose objectives chime with our
own. That’s why we set up Access VC. This well-
capitalised venture provides funding for startups.
It’s designed to be agile, flexible and a great
partner for purpose-led initiatives. Access VC also
manages our existing Reckitt minority stake assets,
including the Founders’ Factory investments.
We work with Founders’ Factory to accelerate
early-stage startups. For companies at a later
stage in their journey, we provide funds, resources
and knowledge.
Access VC offers more than just venture capital:
it’s a cooperative enterprise. Purpose-driven
entrepreneurs get access not just to funds but
to Reckitt’s experts, brands, resources, scale
and global reach.
We reach out to external partners in numerous ways
to promote innovation. We tap external knowledge
to apply inventions and import capabilities.
In 2022, we launched IGNITE with Reckitt,
an innovation hub to connect with smart
partners who can help us tackle big global
challenges. IGNITE invites innovative proposals
with technologies related to our existing
products and portfolio or related to the
development of new products, processes
and packaging adjacent to our business.
We’re reaching out to entrepreneurs, academics,
healthcare professionals and innovators to
partner with us to make a real difference.
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27 WORKING WITH
GOVERNMENTS, INDUSTRY
PARTNERS AND NGOS
As a partner to governments, we can operate
on a broader platform and predict and respond
to upcoming regulatory developments. Where
impact at scale through collective action is
needed, we’re working with our peers to
introduce new, more sustainable business
models. We’re leveraging our participation
in trade associations to advance best practice
and encourage the transition towards more
sustainable activity.
How we engage
We’re active in the Consumer Goods Forum,
which drives positive change on climate change
and key issues through collaborative action with
customers and peers. We are members of its
Forest Positive Coalition of Action, Plastic Waste
Coalition of Action and Human Rights Coalition.
We work with NGOs and government bodies that
coalesce around areas of common interest. With
the Ellen MacArthur Foundation, we’re pursuing
joint initiatives to reduce the use of plastics
and developing infrastructure, systems and
standards to support a circular plastic economy.
Our partnership with WWF on water and nature
provides insights for our own work on biodiversity,
programmes that strengthen ecosystems in
the Amazon and the Ganges, and an additional
communication channel with consumers
where we can promote behaviour change
and encourage more sustainable practice.
C A S E S T U DY
OH YES! NET ZERO
Founded by Reckitt, Hull City Council,
University of Hull and Marketing Humber,
the Oh Yes! Net Zero campaign aims to
make Hull one of the UK’s first net zero
cities by inviting individuals, businesses
and institutions to work together to
reduce the city’s carbon footprint.
Cities can play a crucial role in energy
reduction, climate protection and climate
adaptation. Hull’s location makes that
even more important. The Humber region
is one of the UK’s six largest industrial
clusters, responsible for around 37%
of the country’s CO2 emissions.
By demonstrating how we make net
zero happen in Hull and sharing what
we learn, this campaign can help lead
the UK to a cleaner, greener and more
prosperous future.
Through the Global Self-Care Federation, we work
with our peers in the self-care industry to raise
international standards and help key policy makers
and decision-makers embrace self-care, recognise
its value and use its broad range of benefits
as building blocks to deliver better and more
sustainable health outcomes for all. We are also a
member of AISE, Europe’s International Association
for Soaps, Detergents and Maintenance Products.
We actively support its sustainable cleaning
agenda. These memberships inform our own
approach on aligning product development
with policy and regulatory development.
Corruption and illicit trade continue to
threaten economic growth, innovation and
sustainable development. We are active
members of the Transnational Alliance to
Combat Illicit Trade. We were one of the
top-scoring organisations in our peer group in
Transparency International’s 2022 UK Corporate
Anti-Corruption Benchmark assessment.
We are a member of the World Business
Council for Sustainable Development (WBCSD).
The WBCSD comprises nearly 200 companies
which are committed to innovating to make
tangible progress on tackling the triple threat
of climate change, nature in crisis and mounting
inequalities for a more sustainable world.
We are specifically involved in work to protect
and promote health as well as on plastics.
Reckitt remains committed to the UN Global
Compact and its principles in the areas of
human rights, labour, the environment and
anti-corruption. The social and environmental
impacts we create through our purpose-led
brands and our work to support a healthier
planet and fairer society help advance the
broader development aims of the United Nations,
particularly the 17 Sustainable Development Goals
(SDGs). These are detailed in our sustainability
policies and reports at www.reckitt.com.
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28 INFORMING INVESTORS
Our investors provide the financial capital,
equity or debt that underpins our business and
allows us to execute our strategy. In return,
they expect good financial returns as dividends,
capital appreciation or interest. Our investment
community includes current and potential
shareholders, mainly institutional and retail
investors, as well as ‘sell-side’ research analysts,
banks and ratings agencies. We also have a
significant employee-shareholder community.
How we engage
During the year, we held quarterly investor/
analyst conference calls and presentations.
The CEO and CFO participated in post-results
roadshows with investors and conducted
fireside chats hosted by high-calibre analysts.
The CFO also hosted analyst round-table
meetings and an investor dinner in November.
The investor relations team held numerous
ad hoc meetings with investors to address
strategy, operational, ESG and modelling queries.
It also attended investor conferences hosted
by brokering banks, with senior management
participating at more high-profile events. Our CEO,
CFO, and the Presidents of Hygiene and Health
attended investor conferences during the year.
In February 2022, our CEO hosted a presentation
at the Consumer Analyst Group of New
York Conference. We also hosted an ESG
investor seminar event in May, led by Group
Executive Committee (GEC) members
and our Group Head of Sustainability.
In addition, the Chairman had separate
meetings with certain investors to discuss the
CEO transition. After taking up this position,
Nicandro Durante also held meetings with
certain investors to set out his plans, with
the emphasis on business continuity.
Investor priorities
In 2022, our investors primarily wanted to
understand progress in the company’s journey
of rejuvenating sustainable growth. Inflation, and
its effect on our margin outlook, was a recurring
topic. Investors were keen to understand actions
taken to mitigate inflationary impacts on our cost
base during the year. They also wanted to know
about the effects on our brands, particularly
in Europe, of consumer down-trading and
the trend towards private-label products.
Investors are tracking carefully how our
disinfection business is performing as COVID-19-
related demand recedes and the business
normalises. There was particular interest this year
in our response to the infant formula shortage
issues in the US caused by the unexpected
shutdown of a competitor’s plant.
ESG is an increasingly material topic for investors,
with ESG ratings incorporated into investment
decision-making. They wanted to find out more
about how our Sustainability Ambitions would
be achieved and the effect on performance
of embedding sustainability into our core
business model.
29 INVESTING
IN COMMUNITIES
We are taking the fight to make access to
the highest-quality hygiene, wellness and
nourishment a right not a privilege into new
communities. We aim to reach half the world
with our purpose-led brands, engage two billion
people through our programmes, partnerships
and campaigns, and have a measurable, positive
impact on 10 million people by 2030.
How we engage
We fight for access to high-quality hygiene,
wellness and nourishment through our brands and
by working with partners on the ground. We’re
empowering people to make small changes in
their lives that contribute to the wellbeing of the
wider community and help bring about a cleaner,
healthier world. In 2022, we renewed our focus on
our long-term goals of sustainability and growth,
whilst protecting those communities most at risk.
We maximise our impact through our purpose-
led brands, the way we do business across our
value chain, and the partnerships and social
investments we make, especially through our
Fight for Access Fund (FFA). This focuses on core
health and hygiene, maternal and child health,
and water and sanitation. FFA programmes
extend our brands’ impact, help to address
public health impacts from climate change and,
in the longer term, promote self-sufficiency
through economic and social development.
For further information see the
Social Impact Investment Report 2022
Seed, scale and sustain
We support people and ideas to create systemic
change and contribute to tackling some of the
world’s greatest challenges through our brands
and through social impact programmes. Our
three-stage social impact model underpins our
approach. This seeds, scales and sustains social
enterprise to build self-reliance in communities.
We support individuals, ideas and infrastructure.
We back social enterprise locally with investment
and mentorship. We provide funding and advice
to develop projects. We connect innovative
businesses and programmes through our global
network to help them to build scale across
communities and borders. We equip them
with the resources and know-how to help their
projects become self-sustaining and deliver
lasting social impact.
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C A S E S T U DY
FIGHT FOR ACCESS
ACCELERATOR
In 2022, we announced the first twelve social
enterprises receiving financial support and
expert mentorship under our Fight for Access
Accelerator programme which launched in
South Africa and Brazil in partnership with
Yunus Social Business. The programme has
identified the most promising water, sanitation
and hygiene (WASH) innovation projects in
each country and is supporting their scale-up
to ensure communities benefit from lasting
access to clean water, sanitation and hygiene.
In South Africa, Kusini Water won support
for its work combining nanotechnology and
macadamia nut shells to build water treatment
systems for rural communities. Also in Africa
is Rhiza Babuyile, a non-profit that focuses
on water and sanitation in nurseries and
early childhood development centres. In
Brazil, LiaMarinha and Piipee were supported.
LiaMarinha develops ecological technologies
to improve water quality, focusing on water
remediation in the mining, agro-industry
and sanitation sectors. Piipee promises
to save money and reduce the amount of
water needed for urine disposal by up to
100% using herbal extracts, nanotechnology
and biodegradable components.
Women-led enterprises have a greater positive
impact on the societies they serve, yet they
receive just 2% of all venture capital funding.
The Health Innovation Exchange and Reckitt
have teamed up to change that with the launch
of the Women in Innovation Fund (WiNFUND).
The WiNFUND seeks to invest in women-led,
health innovation startups. It raises capital via
innovative financing mechanisms such as NFT
sales together with philanthropic donor funding.
These startups are democratising access to
healthcare in their communities, creating six times
more jobs and improving health outcomes.
working with Water.org to get people clean water
and sanitation services, delivering emergency
relief with the British Red Cross and other national
Red Cross/Red Crescent societies, and restoring
water and wildflower habitats alongside WWF.
We aim to progress all 17 SDGs but focus
more resources where our impact is greatest.
We’ve identified SDG2, SDG3, SDG5, SDG6
and SDG13 as our high-priority goals.
We have long experience in building health
and hygiene literacy. Our partners help us
get these messages across with impact.
Active where we make the biggest impact
For the biggest challenges, collaboration is key. We
develop strong partnerships and invest where we
can make the most difference. Examples include
We support the poorest communities, where
hunger, disease and poor sanitation are most
prevalent, and where the worst effects of
climate change are often felt first. The emphasis
is on women and girls. We have set a target
that at least 50% of our beneficiaries should
be women. We expect to exceed that.
Our programmes focus on three main areas:
– Clean water, sanitation and hygiene: we fight
for universal access to clean water and a safe,
hygienic environment
– Sexual health and rights: programmes that
empower women and girls around their sexual
rights through access, knowledge and disease
prevention
– Maternal and child health: nutritional and
wellness programmes for new mothers and
children to give them the best start in life
Clean water, sanitation and hygiene
Our extended partnership with Water.org
continues to strengthen access to safe water and
sanitation. Our joint programmes have now helped
more than 1.8 million people across India, Indonesia
and Kenya. In September 2022, to coincide with a
UN General Assembly on sustainable development,
we shared our thoughts in a Newsweek article,
co-authored with Water.org, on the need and
rationale for increased capital investment
connecting communities to safe water sources.
With Dettol, we are improving hygiene
and wellbeing through the Hygiene Quest.
This interactive educational programme
is promoting good hygiene behaviours in
schools. It uses gamification, behavioural
nudges and motivational reward systems
to support long-lasting behavioural change.
The programme reached over 1.9 million
people across five pilot countries creating over
$4.2 million of societal value from reduced
absenteeism rates and lower disease burden.
In Nigerian schools, the programme realised
a 7.3% reduction in diarrhoeal disease.
In Italian primary schools, the incidence of
COVID-19 fell by 14%. This year, Dettol Nigeria
is partnering with the Wellbeing Foundation
Africa (WBFA) to deliver the Hygiene Quest
programme across multiple states in Nigeria.
The programme targets new mothers and young
school children in rural communities. It aims to
change children’s hygiene habits and reduce
the incidence of sick days away from school.
Sexual health and rights
Since 2012 we have encouraged young people in
South Africa to take control of their sexual health.
This means increasing access to education and
improving their knowledge of how to protect
against sexually transmitted infections. In 2022,
the Connect-ED programme was active in 505
schools in Gauteng, providing education and
support to students, each of whom now has
access to a ‘Connect-Ed Buddy’, a trusted online
confidant for anonymous, confidential discussions.
The programme has engaged 606,154 young
people in 2022 and continues to change lives.
Maternal and child health
Our Reach Each Child programme, delivered
in partnership with Plan India, prioritises
adequate nutrition for children within the
first 1,000 days of life through locally led
initiatives, with community nutrition workers
supplying information and services. In 2022,
we worked with 2,458 women and admitted
458 children suffering from severe acute
malnutrition to rehabilitation centres, significantly
improving their chances of a healthy life.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT relationship between planetary health and public
health. These discussed the global implications
of water stress, the growing threat of insect-
borne disease and the effects of urbanisation.
They explored the benefits of a people-centred
approach to net zero transition and how
coordinated action by governments, NGOs and
the private sector could help build resilience.
We also published a white paper that focused
on how the private sector can help deliver
positive outcomes for climate and health.
Advancing towards net zero
Reckitt has pledged to reach net zero by 2040,
a decade ahead of the Paris Accord commitments.
We continue to promote practical steps within
the company, across our supply chain and in
society at large that reduce greenhouse gas
emissions and combat climate change.
This year, we maintained our emission reduction
performance of 2021, continuing to report a 66%
reduction in Scope 1 and 2 emissions against a
2015 baseline, exceeding our science-based target
reduction of 65% by 2030. Scope 1 & 2 emissions
remained relatively stable year-on-year due to
higher use of natural gas as we increased infant
formula production in the US market, which offset
some of the emissions savings associated with
our energy efficiency improvements. We continue
to focus on energy efficiency projects at our
sites and have reduced energy intensity per
tonne of production by 3% vs our 2015 baseline.
Improving energy efficiency is an important
step on our journey to net zero. We’re focused
on the processes that use the most energy in
our factories. On our sites, compressed air is
widely used in manufacturing, but it’s energy
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In the US, our Better Starts for All programme,
delivered in partnership with March of Dimes
and Enfamil, is bridging gaps in access to
obstetric services in maternity care deserts
across the US, focusing on underserved
communities in Ohio and Washington DC.
Emergency relief
We continue to do everything we can to help
those affected by the war in Ukraine. We have
committed more than £1 million through a mixture
of corporate and employee-matched fundraising
efforts. We have been working with the British
Red Cross to organise temporary accommodation,
medical support and essential supplies for those
who are displaced. We have also committed
to maintaining the salaries of our colleagues
in Ukraine at least until mid-2023. Hundreds of
colleagues organised resources to help those
fleeing the war, with teams in neighbouring
countries especially active in their support.
The devastating floods in Pakistan have affected
more than 33 million people. Reckitt committed
to support the most vulnerable by donating
£460,000 to the relief efforts via the British Red
Cross Pakistan Floods Appeal, The Pakistan Red
Crescent Society, and local NGO partner, The
Citizens Foundations (TCF). We are continuing
to donate Mortein and Dettol products to
protect as many flood victims as possible.
For further details see
Partnering for social impact
210 OUR SHARED PLANET
The COVID-19 pandemic has driven home the link
between people’s health and planetary health.
Infectious diseases, new vectors of transmission,
increased respiratory illness and water-borne
disease are all connected to climate change.
Safeguarding the planet, protecting biodiversity
and acting to limit climate change serve all
our interests.
Healthy people on a healthy planet
Human health and the health of our planet are
intimately interconnected. It is increasingly
evident, as we deal with the causes and
consequences of the climate crisis, that this
is also a health crisis. Increased temperatures,
closer proximity in urban settings, reduced
biodiversity and increased water stress
can all be detrimental to public health.
Dealing with this systemic issue requires
coordinated action. We are forging alliances
across the private sector and with governments
and civil society to increase our impact.
This year, we joined the Climate and Health
Coalition alongside international sustainability
non-profit Forum for the Future and leading
healthcare businesses. The Coalition researches
links between climate change and health.
It identifies gaps in public understanding and
brings evidence-backed data into the public
arena to focus attention on these issues. It aims
to develop detailed guidance on how different
sectors can work together more effectively to
deliver integrated climate and health strategies.
We hosted events at high-profile international
forums, including regional UN Climate Weeks
and the COP27 summit in Egypt, exploring the
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S TA K E H O L D E R E N G AG E M E N T CO N T I N U E D
hungry. It can account for more than 10% of a
site’s energy use. In the Philippines, the Makati
team reviewed its compressed air system
and found significant energy was being lost
through leaks and when it wasn’t in operation.
A simple, three-step remediation process
yielded significant energy and cost savings,
and this has been replicated at other locations.
At our Nutrition sites, dryers are major energy
users. The Tuas Singapore team has been
working on ways to optimise the process. They
achieved a 13% energy-intensity improvement
this year. This saved more than 700kWh
across the year, a £144,000 cost saving.
In terms of renewable energy, 93% of the
electricity used across our sites is renewable
through a combination of on-site generation
and renewable energy certificates.
We are continuing to evaluate where we can
switch from fossil fuels such as gas for heat.
The energy supply situation in Europe during
2022 raised additional challenges as continuity
of energy supply became more of a priority.
We are evaluating alternatives such as heat
pumps, increasing our current use of renewable
landfill gas and replacing diesel fuel with
recycled vegetable oil for road haulage.
Beyond our operations
This year, we signed up to Ad Net Zero, the
advertising industry’s initiative to reduce the
combined carbon cost of developing, producing
and running advertising campaigns to net zero.
In committing to its five-point action plan, we
added our weight to an international roster of
global advertisers and leading media owners.
In March 2022, we launched Oh Yes! Net Zero,
our high-profile campaign to make Hull one
of the UK’s first net zero cities. By the end of
with the aim of helping our consumers to save
water. In 2022, Finish US announced its ambition
to save billion of gallons of water each year
by encouraging consumers not to pre-rinse
before dishwashing.
Finish’s Journey of Water campaign is the next
milestone in the brand’s mission to fulfil its
purpose of helping people save water. The brand
has partnered with WWF in a global campaign,
which seeks to restore and replenish freshwater,
whilst educating consumers. A UK educational
programme launched this year is helping young
people understand where water comes from,
why that makes it a precious resource and what
they can do at home to save it. It follows recent
research that found that 26% of UK primary school
children believed water came from the sea and
24% thought it was delivered to their door.
For further details see
Water
Biodiversity
We seek to understand and mitigate our impact
on ecosystems.
We focus mainly on key raw materials that
originate from the areas of greatest biodiversity.
Priority commodities include latex, palm oil, natural
fragrances, dairy and timber. We’re also reviewing
our use of other natural raw materials that are
typically used in smaller amounts, such as soy
and cocoa.
Our work with the Nature-based Insetting (NBI)
team from Oxford University looks at our key
value chains and their effect on ecosystems.
The NBI team has developed a framework
which uses science-based metrics to measure
the biodiversity impacts on local ecosystems
of our activities. This allows us to quantify both
positive and negative impacts and develop new
the year, around 120 businesses employing
over 40,000 people locally had signed up.
For further details see
page 53
For further details see
Climate change and TCFD
Water stress
We have set out a strategic ambition of halving
our total water footprint by 2040 (versus 2015).
Where we operate in water-stressed areas
(17 sites) we plan to be water-positive by 2030.
Our progress on water reduction remained flat
year-on-year due to challenges in our supply
chain. Since 2015, we’ve reduced our water
use per tonne of production by 5%. Beyond
our own operations, the water footprint of our
products (the water it takes to produce and use
our products) increased by 17% in 2022 vs 2015
due to an increase in production volumes.
In 2022, we continued to develop our
activities around water catchments to support
local communities. In Hosur, India we have
invested in rainwater harvesting and helped
reinstate local water courses. In 2022, the
site was independently certified as water
neutral. We are progressing more projects
in India, as well as in Pakistan and Mexico.
In Mexico, water stress has become an
increasingly important subject. We are now
working with the charity Agua Capital to
increase water availability. In the communities
surrounding our Tlalpan and Atizapán sites we
are supporting nine schools and community
centres with rainwater harvesting projects.
Finish has been partnering with various
organisations since 2020 to stop people from
wasting water, with particular focus on water-
stressed areas. Its #SkipTheRinse campaigns in
Turkey and Australia promoted behaviour change
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT C A S E S T U DY
TRANSFORMING OUR LATEX
WASTE INTO FLIP-FLOPS
Our focus on right-first-time-manufacturing
highlights the impact of waste. Millions of
pounds are wasted and tonnes of stock go to
landfill every year because of material errors,
batch write-offs, and rejections or returns.
We continuously look at ways to reduce this
through quality improvement programmes,
but we are also considering ways to recycle
and reuse rejected stock.
One of the huge range of transformative
productivity programmes proposed this year
involved flip-flops. Our site in Bangpakong,
Thailand, which manufactures Durex condoms,
used to send all of its unwanted latex to waste
management companies for incineration.
Now over a third (142+ tonnes) of our waste
latex is being upcycled to make flip-flops.
The first batch was donated to a local school.
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ways of working with suppliers and farmers that
take account of this. Botanica’s partnership with
WWF aims to help restore wildflower habitats
across the world in 10 countries, including the US,
the UK, Mexico, Australia and Poland. Together,
we have restored almost 2,000 hectares
and conserved numerous plant species. The
biodiversity plan is tailored to the needs of the
local environment in each country. In the US, we
focused on reseeding the Northern Great Plains,
whilst in Mexico we are protecting the Monarch
butterfly and other pollinators by engaging with
local communities to preserve wild flowering
plants on Monarch butterfly migration routes.
For further details see
Biodiversity and ecosystems
Plastics and packaging
We’ve set ourselves stretching sustainability
targets to lower our use of virgin plastic. Our
ambition is for all our plastic packaging to be
recyclable or reusable by 2025, with at least
a quarter coming from recycled materials.
By 2030, we plan to halve our use of virgin plastic
for packaging.
Achieving these targets within this timeframe
depends in part on there being a consistent,
industry-wide approach to packaging and
recycling based on circular economic principles,
but policies and practices currently differ
between territories. We have joined cross-industry
initiative RecyClass, which is working to advance
plastic packaging recyclability and to establish a
harmonised European approach for the calculation
and full traceability of recycled content. RecyClass
will conduct technical audits of our packaging
to assess effective recyclability for particular
geographic areas. These audits will inform our
packaging design decisions and will be integrated
into our Sustainable Innovation Calculator,
which captures when packaging is not just
theoretically recyclable but is actually recycled.
The world urgently needs to reframe how it uses
plastics so that it curtails production and combats
pollution. Balanced international regulation is
essential. We have joined the Business Coalition
for a Global Plastics Treaty, a group of more
than 80 organisations, convened by the Ellen
MacArthur Foundation and WWF. Its members
include businesses in the plastics value chain,
financial institutions and NGOs. We are calling
for a global treaty that accelerates progress
in three critical areas: the reduction of the
production and use of plastic through a circular
economics approach, increased circulation of
all necessary plastics, and the prevention and
remediation of micro- and macro-plastic leakage.
For further details see
Plastics and packaging
Reducing waste in manufacturing
Doing more with less is good for the planet and
makes sense economically. Our global productivity
initiative is identifying savings at specific
manufacturing centres. By sharing best practice
internationally, we are reducing waste, limiting
energy use and improving operating efficiency.
We have moved closer to our 2025 target of
a 25% waste reduction compared to the 2015
baseline. We reduced waste in manufacturing
relative to production by 21% in 2022 (2021: 14%).
This year, 94% of our sites achieved zero waste
to landfill, compared to 96% in 2021. We’re
working to find alternatives to landfill where
they don’t exist close to our factories in the US,
and at the same time reducing waste overall.
For further details see
Reducing waste
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TCFD S U M MA RY
OUR TCFD SUMMARY
In line with the FCA Listing Rule (LR 9.8.6R(8)), we confirm
that this statement includes material climate-related financial
disclosures, consistent with the recommendations of the
Financial Stability Board’s Task Force on Climate-related
Financial Disclosures (TCFD).
Our plan to achieve full compliance in relation to strategy
disclosures (a) and (b) are included in the following
summary statement.
Comprehensive detail on our scenario modelling and
analysis, emissions data and net zero roadmap is published
in our Climate Change Insight.
For further detail, see our
Climate Change Insight and full TCFD report
Compliance statement
For strategy disclosures (a) and (b), further
work is underway to enhance the identification,
impact and reporting of climate-related risks and
opportunities across our entire business, and how
these map over the short, medium and long term.
Our analysis will continue in 2023 and beyond,
assessing key risks in greater detail including the
relative impacts across raw materials, facilities and
potential changes in consumer use. We will also
assess the impact of our sustainability and climate
strategy to provide insights into the efficacy and
contribution of various climate mitigation initiatives.
This will help us to focus activity where we can
create greatest impact and to capitalise on potential
opportunities associated with a low-carbon
transition that support our business resilience
and growth in a future low-carbon economy.
We are working towards full compliance in the
following areas:
– Assessment by geography and sector: our current
analysis is presented for our whole business
however it often considers specific geographies
for supply chain risks and sectors for market-level
risks and opportunities (TCFD Strategy (a)).
we continue to evaluate the response of our
consumers but due to variations from market
to market and demographic to demographic,
particularly in a time of cost-of-living pressures,
we will continue to assess the level of risk
and opportunity associated with this area.
Our sustainable product innovation programme
does take such issues into account alongside
transition risks, within our product innovation
activity (TCFD Strategy (b)).
– Assessment of climate related issues in
terms of acquisitions or divestments. We are
developing processes to strengthen our
approach (TCFD Strategy (b)).
– Assessment of climate-related issues in terms of
access to capital where there is apparently
limited initial impact (TCFD Strategy (b)).
– Further development of our decarbonisation
roadmap alongside the initial interim milestones
noted for our 2025, 2030 and 2040 targets and
ambitions (TCFD Strategy (b)).
– The development of our internal carbon pricing
approach and modelling which will inform future
programmes (TCFD Strategy (b)).
– Assessment of climate-related issues in terms of
consumer response to products, both in terms of
risk and opportunity, and in different geographies:
We are working to implement all recommendations
in full and will report further progress in our next
TCFD Statement.
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TC F D S TAT E M E N T CO N T I N U E D
Recommendation
Reference
Summary of approach and progress in 2022
Governance
a. Describe the Board’s
oversight of climate-related
risks and opportunities
b. Describe management’s role
in assessing and managing
climate-related risks
and opportunities
Governance
framework, page 97
CRSEC Report,
pages 120-125
Directors’
Remuneration Report
pages 126-155
– Our approach to climate change risk falls within our governance framework. The Board, supported by the Corporate Responsibility, Sustainability, Ethics and
Compliance (CRSEC) Committee and the Risk, Sustainability & Compliance Committee (RSCC), has responsibility for oversight of our climate change strategy.
These committees meet and report quarterly.
– The strategy is delivered through our Executive Committee and management team. Our Corporate Affairs & Sustainability function leads sustainability-related
strategy development and compliance, whilst programmes are implemented by our Brands, Supply Chain, R&D, and Safety, Quality and Regulatory Compliance
teams.
– In 2022 we introduced two new ESG measures under the LTIP to align with our 2030 Sustainability Ambitions, net revenue from more sustainable products, and
reduction in Greenhouse Gas (GHG) emissions in operations.
– The Board engaged on our sustainability agenda through routine review of progress via the CRSEC and through a specific Board review of sustainability activity,
progress and the prevailing operating environment in its meeting in May. This reaffirmed the approach underway, and supporting a review of future carbon
price mechanisms that might impact the business.
Strategy
a. Describe the climate-related
risks and opportunities the
organisation has identified
over the short, medium
and long term
b. Describe the impact
of climate-related risks
and opportunities
on the organisation’s
business, strategy and
financial planning
c. Describe the resilience of
the organisation’s strategy,
taking into consideration
different climate-related
scenarios, including a 2°C
or lower scenario
Our shared planet,
pages 56-58
– Whilst we operate five scenarios, we primarily focus our modelling and analysis on a 3°C and 1.5°C scenarios. These are considered to most highlight the
variation in risks and opportunities directly, and in comparison with our climate change aims for achieving our science-based targets by 2030 and ambition
for net zero by 2040.
– In the short to medium term, the most significant impacts for Reckitt are likely to arise from transition risks, specifically policy-driven carbon price increases
which are greatest in a 1.5°C scenario. Should such measures be applied to all Scope 1, 2 and 3 emissions by 2025, and considering additional transition factors
beyond policy such as consumer preference and technological change, the impact on all businesses could be significant. A more likely, phased policy approach
and changes in preference, alongside our ongoing mitigation activity in supply networks and products, would not be material for Reckitt.
– In the longer term, increases in the frequency and severity of extreme weather events (physical risks), water stress and higher ambient temperatures will
impact sites, supply networks and consumer value chains, whilst changes to regional climates may lead to chronic changes to costs, the availability of natural
raw materials, and the nature of products that are most viable in certain regions. Our progressive work on water catchment area management, product
innovation and supply chain resilience help mitigate these risks.
– We have prioritised our activities associated with achieving net zero in our own operations by focusing on the sourcing of renewable energy as well as
optimisation of our processes to increase energy efficiency.
– We continue to use our Sustainable Innovation Calculator (SIC) to understand the impacts of our products and inform new and existing product development. This
enables us to design for lower carbon and water footprints in use, helping mitigate physical risks in the marketplace and meeting emerging consumer preference.
– We have also started to engage our suppliers through our partnership with Manufacture 2030 focusing on measuring, tracking and reducing supplier-related
carbon emissions.
– Our near-to-medium-term analysis included piloting a cumulative five-year view which supports our financial and operational planning. We focus activity
through routine business and financial planning within our brands and supply chain, in annual and three-year cycles, in order to manage risks and deliver against
our Sustainability Ambitions. For example, capital allocation for environmental improvements on carbon is built into current five-year planning and is within
existing external disclosures.
– Our targets for 50% of net revenue to be derived from more sustainable products, 50% product footprint reduction, and 65% reduction in operational carbon
emissions, all by 2030, collectively enable Reckitt’s brand portfolio and supply chain to become more resilient.
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TC F D S TAT E M E N T CO N T I N U E D
Recommendation
Reference
Summary of approach and progress in 2022
Risk management
a. Describe the organisation’s
process for identifying and
assessing climate-related risks
b. Describe the organisation’s
process for managing
climate-related risks
c. Describe how processes for
identifying, assessing, and
managing climate-related
risks are integrated into
the organisation’s overall
risk management
Metrics & Targets
a. Disclose the metrics used by
the organisation to assess
climate-related risks and
opportunities in line with
its strategy and risk
management process
b. Disclose Scope 1, Scope 2,
and if appropriate, Scope 3
greenhouse gas (GHG)
emissions, and the
related risks
c. Describe the targets used by
the organisation to manage
climate-related risks
and opportunities and
performance against targets
Risk management,
pages 80-86
– At Group level, sustainability (including climate change) is classed as a principal risk. We consider climate-related risk over the short term (up to 3 years) in line
with our Group risk assessment, over the medium term (3- 5 years) in line with our strategic planning cycle, and over the longer term (10 years+) through our
ongoing work with Risilience Climate and Enterprise analytics technology, founded on frameworks pioneered by the Cambridge Centre for Risk Studies.
– At the product level, climate-related risks are identified, assessed and managed on an ongoing basis, and with a forward horizon in excess of 10 years.
– We have conducted scenario analysis to consider the longer-term impacts of climate change on our business in partnership with Risilience. We continued to
develop a digital twin of our business, and used this to build and test scenarios for low-carbon transition and physical risks across our value chain. The Risilience
analysis produces a five-year, quantitative earnings value at risk estimation across physical and transition risks, consistent with the emissions pathways and
scenarios specified by the Intergovernmental Panel on Climate Change (IPCC). The Risilience analysis also gives a long-term qualitative risk outlook, across
physical and transition risks, up to 20 years.
– In 2022, we continued to embed climate risk into our activities and risk management framework, refine our climate risk analysis through the digital-twin model
and focused on further aligning the model to the TCFD recommendations.
Non-financial
Information Statement,
page 67
– We have established sustainability metrics and indicators including our science-based targets on climate change and our Sustainability Ambitions for 2030.
– The metrics we use to measure progress against our net zero ambitions can be found in our net zero roadmap, which includes energy, emissions, water, waste
and packaging-related metrics. We are also working on developing a set of metrics for biodiversity in 2023.
– We participate in the annual CDP Climate Change disclosure and report our performance against the CDP climate indicators. Our response can be found at
www.reckitt.com/sustainability/policies-and-reports
– Reckitt has two key climate-related targets to drive performance in areas both directly controlled and across our value chain. These targets are validated by
the Science Based Targets initiative (SBTi):
• Reduce absolute Scope 1 and 2 GHG emissions by 65% by 2030 from a 2015 base year.
• Reduce our product carbon footprint (Scope 3 GHG emissions) by 50% by 2030 from a 2015 base year, which will help to mitigate the impact of transition
risks, such as changing consumer preference in favour of low impact products.
– Supporting these goals is our commitment to RE100 and increasing the use of renewable electricity to 100% by 2030. We also aim to improve energy efficiency
across our operations by 25% by 2025 from a 2015 base year.
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S 172 STATE M E NT
OUR SECTION 172
STATEMENT
This statement shows how our Directors have acted
in a way that they consider, in good faith, would be
most likely to promote the success of the company
for the benefit of its members as a whole, having
regard to stakeholders, including matters under
Section 172(1)(a)-(f) of the Companies Act 2006,
during 2022. The statement has been prepared
in response to the obligations set out in the
Companies (Miscellaneous Reporting) Regulations
2018, and the UK Corporate Governance Code 2018.
C AT H E RY N O ’ R O U R K E
G EN ER A L CO U NS EL &
CO M PA N Y S ECR E TA RY
Our business can only
grow and prosper if
we act in the long-term
interests of all our key
stakeholders, namely
our people, consumers
and customers, investors,
our communities and
the environment.
Understanding the needs and expectations of our
stakeholders is fundamental to our Purpose: to
protect, heal and nurture in the relentless pursuit
of a cleaner and healthier world. We recognise that
our business can only grow and prosper by acting
in the long-term interests of our key stakeholders,
namely our people, our consumers and customers,
our investors and partners, the communities in
which we operate and the environment. The Board
considers our key stakeholders and the matters
set out under Section 172 of the Companies Act
2006 in its discussions and decision-making. The
following table sets out key examples of how
the Board has considered matters under Section
172 during the year in performing its duties.
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Section 172
Overview
a. The likely consequences of
any decision in the long term
b. The interests of our people
The Board strives to act in the long-term interests of its key stakeholders, and this frames its oversight
of corporate strategy, which is founded on creating long-term shareholder value. During 2022, this has
included a focus on the Group’s strategic imperatives as well as managing the CEO transition process.
It has also included various material capital expenditure decisions, including to increase production
capacity at the Group’s Nowy Dwór factory.
The Group’s risk management framework, including the Group’s Principal Risks, further underpin the
Board’s long-term approach. The Board and its Committees are responsible for risk governance, and
oversight is achieved through several mechanisms including strategy reviews, Committee meetings and
deep dives into selected risk areas. Throughout the year, the Board has also received regular updates on
Group strategy and the progress of the Group’s productivity and transformation programmes.
Our employees are fundamental to our success as a business, and evolving a vibrant, inclusive and
collaborative culture is central to delivering on our Purpose. As well as receiving briefings on the Group’s
regular employee ‘pulse’ surveys, at the September Board meeting, the Board undertook round-table
sessions with small groups of Reckitt colleagues to further understand current employee sentiment
and company culture at Reckitt. In addition, Mary Harris, the Designated NED for engagement with the
company’s workforce, has maintained regular engagement with various employee groups, including the
Group’s Employee Resource Groups (ERGs).
In response to the events in Ukraine, our primary concern has been the safety and security of our people.
The Board has maintained oversight of the support provided to our colleagues and their families who
have been impacted, and we are immensely proud of the resourcefulness and collective spirit shown
by our colleagues around the world to help those impacted.
Relevant disclosures
Our growth strategy
Page 12
Chief Executive Officer’s Statement
Pages 7 to 8
Stakeholder Engagement
Board Activities During 2022
Risk Management at Reckitt
Focus on: Execution Resilience
Pages 47 to 58
Pages 99 to 101
Pages 80 to 86
Pages 33 to 35
Focus on: Meeting the Growing Digital Demands
Pages 36 to 38
Focus on: Our Productivity Journey
Pages 39 to 40
Culture and Inclusion
and 50
Pages 9 to 11
Building Partnerships with Stakeholders
Pages 47 to 58
Chair’s Introduction to Governance
Pages 88 to 90
c. The need to foster
business relationships
with our key stakeholders
The Board understands the importance of fostering business relationships with key stakeholders.
During 2022, the Board received detailed briefings focusing on competitive dynamics and consumer
perspectives. In July, the Board held Listening Sessions on self-care. At the sessions, external
stakeholders presented differing perspectives on the topic.
Building Partnerships with Stakeholders
Pages 47 to 58
The Directors engage with investors both online and in face-to-face meetings to communicate progress
on strategy and update on trading activities. During the year, the Directors presented quarterly investor/
analyst calls and presentations. The CEO and CFO participated in post-results roadshows with investors
and conducted fireside chats with analysts. In addition, the Chair held separate meetings with certain
investors to discuss the CEO transition.
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S 1 7 2 S TAT E M E N T CO N T I N U E D
Section 172
Overview
Relevant disclosures
d. The impact of Reckitt’s
operations on the
community and the
environment
Sustainability is central to our Purpose. Our Sustainability Ambitions to 2030 focus on our impact through
our purpose-led brands and innovative products; sustaining a healthier planet through our work on
climate change, natural resources and biodiversity; and enabling a fairer society through our activity
in our own business and across our value chain.
We understand as a business the effects our operations have on the environment and the need to
embed sustainability to create positive impacts both for communities and the wider society in which we
operate, as well as for our business. Our Board is responsible for overseeing, considering and reviewing
the Group’s environmental, social and governance (ESG) strategy The Board delegates regular oversight
of sustainability to the Corporate Responsibility, Sustainability, Ethics and Compliance (CRSEC)
Committee. The CRSEC Committee reviews our sustainability objectives and progress against our
targets, and reports on these to the Board. The Board also receives direct updates on the progress
against the Group’s Sustainability Ambitions.
e. The desirability of
maintaining a reputation
for high standards of
business conduct
The Board is responsible for monitoring our culture and values, and the delivery of our strategy can only
be achieved with the highest standards of business conduct. All Directors must act with integrity, lead by
example, and promote the company’s culture and values. We aim to create the space and opportunities
to help our employees make a difference and do the right thing, always. The CRSEC Committee reports
to the Board after each of its meetings, to provide an update on Reckitt’s ethics and compliance
priorities, including the Group’s Speak Up programme.
Chief Executive Officer’s Statement
Pages 7 to 8
Our Sustainability Approach and Performance
Pages 16 to 17
Key Performance Indicators
Stakeholder Engagement
Our TCFD Summary
Pages 18 to 19
Pages 47 and 58
Pages 59 to 61
Focus on: Human Health and Planetary Health
Pages 41 to 43
Board Activities During 2022
Pages 99 to 101
Non-Financial Information Statement
Pages 65 to 67
CRSEC Committee Report
Culture and Inclusion
Pages 120 to 125
Pages 9 to 11
Chair’s Introduction to Governance
Pages 88 to 90
Corporate Governance Report
Pages 97 to 108
f. The need to act fairly
as between Reckitt’s
shareholders
The 2022 Annual General Meeting (AGM) provided an opportunity for the Board to engage directly
with shareholders. The AGM was held in person, with shareholders invited to attend and ask the
Board questions.
Stakeholder Engagement
Pages 47 to 58
Chair’s Introduction to Governance
Pages 88 to 90
Following the launch of our investor seminar series in 2021, we were pleased to invite investors to a
seminar on the topic of ESG. Our CEO, CFO, Head of Corporate Affairs and Chief Sustainability Officer,
and Group Head of Sustainability presented on our ESG ambitions, governance and progress update.
A total of 120 individuals joined the webcast which included a number of investors. Investors were invited
to ask questions and engage directly with the presenters.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 65
Reckitt Annual Report and Accounts 2022
N O N - FI N A N CIA L I N FO R M ATI O N STATE M E NT
Sustainability reporting frameworks,
guidance and future regulation
We are actively monitoring global developments
in relation to sustainability reporting regulations,
standards and metrics. As a UK-listed business
we are focused on satisfying UK reporting
requirements. However, we also recognise the
interest surrounding the EU Taxonomy as well
as other emerging regulation and laws globally,
and have established a cross-functional team
to map out the extent of their impact on our
operations. We will disclose further information
in due course, progressively working towards full
disclosure aligned with regulatory timelines.
While we wait for a consistent set of sustainability
standards for reporting to be released, we
continue to report against relevant standards
and frameworks, including the Sustainability
Accounting Standards Board (SASB) Household
and Personal Products standard, and the
Task Force on Climate-related Financial
Disclosures (TCFD), and provide progress
updates against the Sustainable Development
Goals (SDGs) via the UN Global Compact.
This statement provides a summary of key topics
and related reporting references on non-financial
matters, in line with Sections 414C(7), 414CA
and 414CB of the Companies Act 2006. Material
environmental, social and governance information
is included throughout the Strategic Report and
wider reporting suite in line with our Purpose,
business model and strategy.
Assurance approach
Independent assurance plays an important role in
our reporting. We engaged ERM CVS to provide
independent limited assurance over selected
sustainability disclosures. Their independent
assurance statement can be found online
and includes further details on the scope,
responsibilities, work performed, limitations
and conclusion.
The principles and methodologies we have
used in reporting our sustainability performance
data for 2022, along with our statement of
directors’ responsibilities in preparing the
information, can be found in our Reporting
Criteria and Basis of Preparation document.
Further information on non-financial and
sustainability matters can be found within
our reporting suite
See www.reckitt.com/sustainability/
policies-and-reports
See www.reckitt.com/sustainability/
performance-data/
Reporting
requirements
Relevant policies and
risk management processes
Additional information
Environmental
matters
– Environmental Policy
– Sourcing for Sustainable
Employees
Growth Policy
– Group Environmental
Management System1
– Code of Conduct
– Our Values
– Speak Up Policy
– Sourcing for Sustainable
Growth Policy
– Group Occupational Health &
Safety Management System1
Human rights
– Policy on Human Rights and
Responsible Business
– Modern Slavery Statement
Commitments to international
standards
Our Sustainability
Performance
Our Shared Planet
Task Force on Climate-related
Financial Disclosures (TCFD)
Page 18
Pages 56-58
Pages 59-61
Culture and Inclusion
Our Sustainability
Performance
People
CRSEC Committee Report
Gender Pay Gap Report²
Pages 9-11
Page 19
Page 50
Pages 120-125
Supply Chain
Partners
Our Shared Planet
Page 51
Page 53
Pages 56-58
Social and
community
matters
– Product Safety Policy
– Responsible Marketing Policy
– Breast-Milk Substitute (BMS)
Marketing Policy
Our Sustainability
Performance
Communities
Social Impact Report²
Anti-bribery and
anti-corruption
– Code of Conduct
– Speak Up Policy
Policy embedding, due diligence and outcomes
People
CRSEC Committee Report
Risk Management
CRSEC Committee Report
Principal risks and impact of business activity
Description of business model
Non-financial key performance indicators
1. Information not in the public domain
2. Reports available online at www.reckitt.com
Reckitt policies are available at
www.reckitt.com/sustainability/policies-and-reports
Page 19
Pages 54-56
Page 50
Pages 120-125
Pages 80-86
Pages 120-125
Pages 80-86
Page 13
Pages 18-19
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
66
Reckitt Annual Report and Accounts 2022
N O N - F I N A N C I A L I N F O R M AT I O N S TAT E M E N T CO N T I N U E D
Our policies
Anti-bribery and Corruption
Our policy is that all Reckitt companies, employees and contractors must comply with the anti-bribery, anti-corruption and competition laws of all countries in which they operate. Directors and managers must
ensure that the employees and contractors they supervise are aware of and comply with this policy. All employees and contractors must certify annually that they have complied with our Code of Conduct,
and the Audit Committee reviews internal audit findings in relation to this.
Employee Policies
Reckitt’s Code of Conduct governs standards of conduct in relation to our employees, as well as our stakeholders. In addition, Reckitt has policies committing to equal opportunities at work and to providing
a safe and healthy working environment. Health and safety performance is monitored through our Group Occupational Health and Safety Management system, enabling us to investigate any incidents and take
any necessary action. We have a Speak Up policy and process, allowing any employee or third party to confidentially report a violation of the Code of Conduct, local law or regulation, or unethical behaviour.
Environmental Policy
This sets out our objectives for reducing our environmental impacts. It requires us to comply with relevant legislation, consider environmental issues in key decisions, and engage with multiple stakeholders for
better environmental performance.
Product Safety Policy
The purpose of this policy is to assure our stakeholders of the safety of our products by describing our approach to safety assurance for Reckitt products. We have a responsibility to develop products that are
as safe and nourishing as they can be; to monitor their in-use safety and listen to feedback from users; and if things change, to react quickly and effectively to mitigate harm.
Responsible Marketing Policy
In March 2022, we launched our Responsible Marketing Policy. This sets out clear requirements for anyone involved in preparing marketing communications and activities on behalf of Reckitt. The policy covers
the full marketing lifecycle of our products and applies to all marketing communications touchpoints and channels. It applies to everyone at Reckitt and anyone we engage externally to carry out marketing
communications and activities on our behalf. We have rolled out the policy across the organisation and invested in a training and change management module for employees most impacted by the Responsible
Marketing Policy. Completion of the Responsible Marketing training is mandatory for all marketeers and available to all Reckitt employees. In order to provide reasonable assurance that this policy is appropriately
implemented we perform ongoing audits and adherence checks. We monitor consumer, customer and employee feedback on our marketing on an ongoing basis, for example through our consumer care lines or
our Speak Up Line.
Sourcing for Sustainable Growth Policy
The policy sets out Reckitt’s human rights, health & safety, environment and sourcing requirements we expect our business partners to meet. It encompasses principles of the International Bill of Human Rights
and the International Labour Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work. We also follow the UN Guiding Principles on Business and Human Rights and Organisation for Economic
Co-operation and Development (OECD) Guidelines for Multinational Enterprises. The policy details the Framework which sets out standards to drive us to conduct business with honesty and integrity, respect
human rights, provide a safe and healthy working environment, use safe and sustainable ingredients, source raw materials responsibly, and protect the environment.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 67
Reckitt Annual Report and Accounts 2022
N O N - F I N A N C I A L I N F O R M AT I O N S TAT E M E N T CO N T I N U E D
Greenhouse Gas (GHG) emissions information
Metric
Total Scope 1 emissions
Scope 2 emissions (market-based)
Scope 2 emissions (location-based)
Total Scope 1 & 2 emissions (market-based)
Total Scope 1 & 2 emissions (location-based)
Emissions intensity1 (market-based)
Unit
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
2022
20212
121,275
117,172
9,448
12,857
237,471
232,234
130,723
130,029
358,746
349,406
tCO2e per tonne
of production
0.04
0.04
Energy consumption resulting in above GHG emissions
MWh
1,278,643
1,257,499
Proportion of energy consumption arising from UK operations %
Proportion of GHG emissions arising from UK operations
%
11
11
13
18
Energy efficiency measures
In 2021, we launched our 2030 Sustainability Ambitions which included a holistic set of targets to help
tackle climate change and reach net zero by 2040. We have a target to increase our operational energy
efficiency by 25% by 2025 (against a 2015 baseline). This relates to energy use within our manufacturing
sites and warehouse facilities and includes all energy associated with Scope 1 & 2 emissions.
We continue to look for ways to improve our energy efficiency and how we use energy in our facilities.
Specifically, we focus on high energy processes in our manufacturing sites, including boiler optimisation,
heating, ventilation and air conditioning, and compressed air.
In 2022 our energy efficiency performance remained flat. While we focused on optimising energy at
many sites, including detecting and repairing leaks and installing more energy efficient equipment,
product mix changes and regulatory requirements in some of our markets resulted in us delivering no
improvement compared to 2015. We remain committed to our 2025 goal and have plans in place to drive
energy efficiency in 2023.
Further detail on our energy efficiency initiatives can be found on
pages 56-57
1. The scope of our GHG emissions per unit (tonne) of production KPI is for manufacturing and warehousing. Including R&D
and offices the GHG emissions intensity per unit of production in 2022 and 2021 would be 0.04 tCO2e
Further information on our 2030 Sustainability Ambitions, our sustainability KPIs and 2022 performance can be found in our
Sustainability Insight Report
2. Data restated due to removal of divested sites and data reporting improvements. See our Reporting Criteria for more detail
at www.reckitt.com/sustainability/policies-and-reports
Methodology and basis of calculations
We have reported on emission sources required under the Companies Act 2006 (Strategic Report
and Directors’ Reports) Regulations 2013 and the Streamlined Energy and Carbon Reporting (SECR)
requirements covering the 2022 reporting year (1 January–31 December).
Emissions have been calculated in line with the WRI/WBSCD GHG Protocol – Corporate Accounting
and Reporting (revised edition). We report our Scope 2 emissions on both a market and
location-based approach.
For Scope 3 emissions, please refer to our
2022 Climate Change Insight
Our GHG emissions and energy data includes emissions and energy consumption from operations
covered by the Group Financial Statements for which we have operational control. Where we acquire
new businesses, we include their emissions and energy consumption from the first full calendar year
of our ownership onwards.
For further information on the methodologies used to calculate our emissions and energy metrics please see our
Reporting Criteria Basis of Preparation
Gender diversity1
Definition: the percentage of women in our global workforce.
Target: 50% of women at all levels of management by 2030.
Board Directors
8 (2021: 7) male
All managers2
All employees3
7,893 (2021: 7,913) male
20,071 (2021: 20,491) male
4 (2021: 5) female
7,960 (2021: 7,715) female
15,888 (2021: 16,172) female
1. Diversity data is taken as of 31 December 2022 for active Reckitt employees (excluding contractors)
2. Manager Levels included: Executive Committee Member, Group Leadership Team, Senior Management Team,
Middle Manager, Manager
3. 23 persons with undisclosed gender
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 68
Reckitt Annual Report and Accounts 2022
G RO U P FI NA N CIA L R E V I E W
BIGGER BUSINESS,
STRONGER BRANDS
J E F F C A R R
C H I E F F I N A N C I A L O F F I C E R
A year of strong revenue,
profit and free cash
flow delivery.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 69
Reckitt Annual Report and Accounts 2022
G R O U P F I N A N C I A L R E V I E W CO N T I N U E D
Group net revenue of £14,453m grew by
+7.6% on a LFL basis in 2022, reflecting price
/ mix improvements of +9.8% and volume
decline of -2.2%, driven by continued broad-
based growth and momentum. Excluding the
negative impact of Lysol and positive impact
from US Nutrition, volume growth was +1.3%.
Total net revenue on an IFRS basis was up
+9.2%, reflecting net M&A impact of -3.8%
and foreign exchange tailwinds of +5.4%.
In 2022, the Group is +28% larger than 2019 on a
LFL net revenue basis with around 18% price / mix
improvements and around 10% volume growth,
with growth being broad-based across our
three GBUs (Hygiene +24%, Health +32%,
and Nutrition +27%).
Our in-market competitiveness remains strong.
62% of our Core Category Market Units (CMUs)
held or gained share. In Hygiene it was 43% and
in Health and Nutrition it was 62% and 100%,
respectively (weighted by net revenue).
70% of the portfolio less sensitive to Covid
dynamics have two consecutive years of mid-
single digit growth. During the year, these brands
grew high-single digits. Excluding the positive
impact from US IFCN, growth was mid-single
digits driven by continued innovation, in-market
execution and pricing across the portfolio.
E-commerce net revenue grew by +14% in 2022.
It has more than doubled over the past three years
on an LFL basis, and now accounts for 13% of
Group net revenue.
The IFRS operating profit was £3,249m (2021:
£804m loss). In 2022, the IFRS operating profit
was impacted by the non-cash impairment of
our Biofreeze acquisition. The IFRS operating
loss in 2021 included a pre-tax loss of £3,353m in
relation to the strategic review and disposal of
IFCN China and pre-tax losses of £234m from the
sale of Scholl and EnfaBebé brand in Argentina.
Total adjusted diluted EPS was 341.7p in 2022
(IFRS: 324.7p), +18.4% above 2021 due to growth
in net revenue and operating margins, and
the positive impact of foreign exchange.
Full year dividend increased by 5% to 183.3p
(2021: 174.6p) per share, with the aim to deliver
sustainable dividend growth in future years,
subject to any significant internal or external
factors. Final dividend 110.3p (2021: 101.6p)
per share.
Free cash flow was £2,031m in 2022 (2021:
£1,258m). The improvement is due primarily
to growth in adjusted operating profit. Capital
investment to support our growth and margin
ambitions was £443m, 3.1% of Group net
revenue (2021: 3.4% of Group net revenue).
Net debt ended the year 2.1x adjusted EBITDA
(2021: 2.6x adjusted EBITDA).
Adjusted gross margin was 57.8% (2021: 58.5%
excluding IFCN China), a reduction of -70bps. The
reduction in gross margin was principally driven
by around 17% inflation in our cost of goods base
(-660bps), significantly mitigated by productivity
efficiencies (+230bps) and other factors including
pricing and positive product mix (+360bps).
Brand equity investment (BEI) (excluding IFCN
China) increased by +5.7% on an actual basis
as we continue to invest behind the long-term
strength of our brands. Our BEI percentage of net
revenue was 11.8% (2021: 12.6%). The reduction
of 80bps in 2022 was driven by a combination
of leverage from the strong growth in both our
OTC and US Nutrition businesses, cessation of
investment in Russia, and productivity efficiencies.
Adjusted operating profit (excluding IFCN China)
was £3,439m (2021: £2,944m) at an adjusted
operating margin of 23.8% (2021: 22.9%). The
increase of +90bps was principally driven by
strong top line growth, strong productivity and
positive mix. This drove BEI (+80bps) and fixed
cost (+80bps) leverage and efficiencies, offset
by modest gross margin decline (-70bps).
A non-cash goodwill impairment charge of
£152m was recognised during the year, in respect
of our Biofreeze acquisition, as a result of a
short-term category slowdown and increased
discount rates due to current macroeconomic
conditions. Good progress has been made in
the second half of the year and we expect
continued momentum for Biofreeze in 2023 and
beyond. Our growth plans remain in line with our
expectations. Further details of the impairment
are set out on page 196 of this statement.
N E T R E V E N U E
£13.2bn as of 2021
A DJ U S T E D O P E R AT I N G P R O F I T
£14.5bn
£3.4bn
£2.0bn
F R E E C A S H F LOW
£2.9bn as of 2021
£1.3bn as of 2021
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
70
Reckitt Annual Report and Accounts 2022
G R O U P F I N A N C I A L R E V I E W CO N T I N U E D
HYGIENE
2022 performance
Hygiene net revenue declined -3.1% on a LFL basis
to £5,960m for the full year (excluding Lysol, LFL
net revenue grew +5.1%). Volume declined by
-12.6% driven by high comparatives in disinfection
and some market softness in the air care category.
Price / mix increased by +9.5% in the year with
price increases taken to mitigate the impact of
inflation. 43% of Core Hygiene CMUs (weighted
by net revenue) gained or held share in 2022.
In 2022, Hygiene was +24% larger than 2019 on a
LFL net revenue basis (+7.6% three-year CAGR),
with each of its core categories growing at
mid-single to double digit CAGR.
Lysol net revenue declined around -25%, but
performance improved sequentially throughout
the year, and is around +45% higher than 2019
levels, driven by expansion in both core and
new markets and adjacent categories over the
past three years. Consumer hygiene behaviours
also remain well above pre-pandemic levels.
Importantly, Lysol continues to outperform
the market and has gained +300bps global
market share since 2019. We now have a
larger, stronger portfolio, and following a year
of consumption normalisation, are targeting
the return to a growth trajectory in 2023.
Finish delivered low-double digit growth in LFL
net revenue. Growth was particularly strong
in Europe and Developing Markets driven
by our continued focus on category growth
through consumer preferred innovation,
premiumisation, and penetration.
Air Wick is broadly holding share in a declining
market post confinement. Vanish and Harpic
showed strong double digit growth benefiting
from innovation and improved execution,
both demonstrating strong growth in our
Developing Markets.
Adjusted operating profit for Hygiene at
£1,214m was down -17.9% on a constant FX
basis and -13.3% on an actual basis. Adjusted
operating margin was 20.4%, down -330bps
due to the unprecedented inflationary impact
on our cost of goods sold as well as volume
de-leverage from Lysol. These were partially
mitigated by productivity and pricing.
N E T R E V E N U E
F Y 2 0 2 2
£5,960m
Volume
Price/Mix
LFL1
Net M&A
FX
Actual
A DJ U S T E D O P E R AT I N G
A DJ U S T E D O P E R AT I N G
P R O F I T 1
£1,214m
-12.6%
Constant FX (CER)1
+9.5%
Actual
-17.9%
-13.3%
P R O F I T M A R G I N 1
20.4%
Actual
-330bps
-3.1%
–
+3.9%
+0.8%
1. Adjusted measures are defined on page 75
P E R C E N TAG E O F G R O U P N E T
R E V E N U E I N 2 0 2 2
41%
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 71
Reckitt Annual Report and Accounts 2022
G R O U P F I N A N C I A L R E V I E W CO N T I N U E D
HEALTH
2022 performance
Health net revenue grew +14.7% on a LFL basis
to £5,992m for the full year. Volume increased
+6.5%, with strong growth in our OTC portfolio.
Price / mix improvements were +8.2%.
Growth was driven by strong performances
in our OTC brands, VMS and Intimate Wellness
portfolio, with a stable performance from
our Dettol Germ Protection portfolio.
In 2022, Health was +32% larger than 2019 on a
LFL net revenue basis (+9.0% three-year CAGR,
reflecting a significantly larger Dettol business,
the combination of higher incidences of cold and
flu and strong market share gains in our upper
respiratory portfolio (Mucinex and Strepsils)
and a larger Intimate Wellness portfolio.
62% of Core Health CMUs (weighted by net
revenue) gained or held share during the year.
Our OTC portfolio of brands, including Mucinex,
Nurofen, Strepsils and Gaviscon grew by over
35% in the year. This very strong performance
reflected both a longer and stronger cold and
flu season which was approximately 13% above
a three-year average season in the US (on a
category unit volume basis), and strong share
gains across most of the portfolio. Mucinex further
grew penetration in the sore throat category with
Mucinex InstaSoothe lozenges and has achieved
6% penetration in the 18 months since launch.
Dettol net revenue of £1.4bn was broadly flat
in 2022 on a LFL basis, and around +40% above
pre-pandemic levels. Innovation launches
included Dettol Cool in India, and Dettol Laundry
Sanitiser 4in1 Pods in China. We increased total
distribution points share by +70bps in India,
with penetration building initiatives such as a
tenth year of Banega Swasth (‘Clean up India’).
Growth in adjacent categories and new
geographies have all contributed to building
a larger, stronger health disinfection portfolio
from which we plan to grow in 2023.
The Biofreeze acquisition is our entry into the pain
relief category in the US, the world’s largest pain
relief market. Following some supply challenges
in the first half, we grew market share in the
second half from leveraging Reckitt’s strong US
infrastructure and go-to-market capability with
increased consumer facing activities and innovation
launches such as our new overnight patches.
In addition, we commenced our international
roll-out programme with the commercial relaunch
of Biofreeze products in France in Q4. In spite
of some short-term category slow down, we
are targeting double-digit growth for Biofreeze
in the near and medium term, underpinned by
category growth, innovation and improved
execution in the US market, combined with
international rollouts in select markets.
N E T R E V E N U E
F Y 2 0 2 2
£5,992m
Volume
Price/Mix
LFL1
Net M&A
FX
Actual
A DJ U S T E D O P E R AT I N G
A DJ U S T E D O P E R AT I N G
P R O F I T 1
£1,648m
+6.5%
Constant FX (CER)1
+8.2%
Actual
+24.3%
+32.7%
P R O F I T M A R G I N 1
27.5%
Actual
+290bps
+14.7%
-1.5%
+5.4%
+18.6%
1. Adjusted measures are defined on page 75
Intimate Wellness delivered mid-single digit growth
in 2022. Growth was driven by the execution of our
Durex lifestyle campaign, which drove distribution
gains across multiple channels. Developing
Markets growth was negatively impacted by Covid
related lockdowns in China throughout the year.
Our Vitamins, Minerals and Supplements portfolio
grew high-single digits, led by Airborne and
Neuriva in the US and Move Free in China.
Adjusted operating profit for Health at £1,648m
increased +24.3% on a constant FX basis and
+32.7% on an actual basis. Adjusted operating
margin was +27.5%, an increase of +290bps year-
on-year. Cost inflation was more than offset by
a combination of operating leverage on mid-
teens top line growth, positive product mix from
a strong performance in our high margin OTC
portfolio, productivity efficiencies and pricing.
P E R C E N TAG E O F G R O U P
N E T R E V E N U E I N 2 0 2 2
42%
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 72
Reckitt Annual Report and Accounts 2022
G R O U P F I N A N C I A L R E V I E W CO N T I N U E D
NUTRITION
2022 performance
Nutrition net revenue grew by +22.9% on a LFL
basis to £2,501m for the full year. Underlying
growth was approximately +5.4% with the
impact from the competitor supply shortage
adding approximately +17.5% to growth in the
year (+2.5% growth for the Group). Volume
growth was +8.1% driven by strong demand
in the US and price / mix was +14.8%. In 2022,
Nutrition was +27% larger than 2019 on LFL net
revenue basis (+8.1% three-year CAGR).
Market share performance was strong, with 100%
of our Core Nutrition CMUs – of which seven of
these ten CMUs are outside of North America –
holding or gaining market share for the year.
US net revenue grew around +40% on a LFL basis
in the year, with strong growth across both our
core Infant Formula and Specialty segments.
Significant market share growth was driven
by strong execution in response to increased
demand. Our Enfamil brand is currently the
Number One Recommended Infant Formula
by Paediatricians and the Number One Trusted
by Consumers in the US.
Our focus remains on doing everything possible
to put more infant formula products on shelves,
addressing concerns of parents across North
America, while safeguarding quality and safety.
The competitor supply shortages in the US
started to reduce in Q4, which resulted in a lower
benefit from WIC sales in states where Reckitt
does not hold the government contract. We exit
2022 in the US with a larger, stronger business,
and as the market leader in Infant Formula.
Our Developing Markets business grew net
revenue mid-single digits for the year, and for the
first time since the acquisition of Mead Johnson,
with market share improvements in our
key markets.
The net effect of M&A was a -21.8% reduction in
net revenue, representing the disposal of IFCN
China and EnfaBebé in Argentina during 2021.
Adjusted operating profit (excluding IFCN China)
for Nutrition at £577m was +122.2% higher on a
constant FX basis and +146.6% higher on an actual
basis. Adjusted operating profit margin (excluding
IFCN China) was 23.1%, up +710bps year-on-year
reflecting the positive leverage benefit from the
competitor supply shortage during the year.
N E T R E V E N U E
F Y 2 0 2 2
£2,501m
Volume
Price/Mix
LFL1
Net M&A
FX
Actual
A DJ U S T E D O P E R AT I N G
A DJ U S T E D O P E R AT I N G
P R O F I T 1
£577m
+8.1%
Constant FX (CER)1
+14.8%
Actual
+122.2%
+146.6%
P R O F I T M A R G I N 1
23.1%
Actual
+22.9%
-21.8%
+9.1%
+10.2%
P E R C E N TAG E O F G R O U P N E T
R E V E N U E I N 2 0 2 2
17%
23.1%
A DJ U S T E D O P E R AT I N G
P R O F I T M A R G I N 1 E X I F C N C H I N A
+1,280bps
Actual
+710bps
1. Adjusted measures are defined on page 75
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 73
Reckitt Annual Report and Accounts 2022
G R O U P F I N A N C I A L R E V I E W CO N T I N U E D
ADDITIONAL FINANCIAL
COMMENTARY
The IFRS tax rate was 23.2% (2021: -80.0%). The IFRS ETR in 2021 benefited from the effect of non-taxable
net foreign exchange gains on the liquidation of subsidiaries, the deferred tax effect of disposals in the
period, and the impact of the UK tax rate change on deferred tax on intangible assets.
Discontinued operations
The Group recognised a loss from discontinued operations of £7 million (2021: income of £31 million),
in relation to the Group’s disposal of the RB Pharmaceuticals business (now Indivior plc).
Earnings per share (EPS)
Total adjusted diluted EPS was 341.7 pence (2021: 288.5 pence). The increase of 18.4% was driven by
higher adjusted operating profit and the positive impact of foreign exchange.
The following section should be read in conjunction with the full-year financial review from page 68 and
the alternative performance measures section from page 75.
Total IFRS diluted EPS was 324.7 pence (2021: loss per share of 4.5 pence). The loss per share in 2021
resulted from the net loss incurred in relation to the IFCN China strategic review.
Group operating profit
Adjusted operating profit was £3,439 million (2021: £2,877 million) at an adjusted operating margin of
23.8%, 210bps higher than the prior year (2021: 21.7%) or 90bps higher excluding IFCN China. The increase
of 90bps was principally driven by strong top line growth, strong productivity and positive mix. This
drove BEI (+80bps) and fixed cost (+80bps) leverage and efficiencies, offset by modest gross margin
declines (-70bps). Adjusted operating profit in both 2022 and 2021 also included the favourable effect of
adjustments to trade spend and operational expenditure accruals, certain of which were subject to
significant estimation uncertainty when originally recorded, in part due to the ongoing effect of the
COVID-19 pandemic.
IFRS operating profit was £3,249 million (2021: £804 million IFRS operating loss) at an IFRS operating
margin of 22.5% (2021: -6.1%). IFRS operating profit in 2022 was impacted by a charge of £152 million
from impairment of goodwill relating to the acquisition of Biofreeze. IFRS operating loss in 2021 included
a pre-tax loss of £3,353 million in relation to the strategic review and disposal of IFCN China.
Net finance expense
Adjusted net finance expense was £256 million (2021: £220 million). Adjusted net finance expense was
higher in 2022 due to rising interest rates and foreign exchange losses on certain financing liabilities.
Adjusted net finance expense in 2021 included a credit on revaluation of a put option liability.
IFRS net finance expense of £161 million (2021: net finance income of £547 million) includes a gain of £69
million from translational foreign exchange gains resulting from the liquidation of subsidiaries to simplify
the Group’s legal entity structure (2021: £766 million net gain).
Tax
The adjusted effective tax rate (ETR) was 21.9% (2021: 22.0%). Both the current and prior year included a
benefit from the reassessment of uncertain tax positions following progress on and conclusions of tax
authority audits.
Balance sheet
At 31 December 2022, the Group had total equity of £9,483 million (31 December 2021: £7,453 million).
Current assets of £5,278 million (31 December 2021: £4,862 million) increased by £416 million, due to
foreign exchange appreciation of non-Sterling assets and reflecting higher inventory values as a result
of increased input costs.
Current liabilities of £8,341 million (31 December 2021: £8,088 million) increased by £253 million.
This increase is primarily driven by the reclassification of £722 million of uncertain tax provisions from
non-current to current liabilities during the year. Whilst the underlying disputes may take several years
to resolve, the presentation of uncertain tax provisions has been reassessed to reflect that there is not
an unconditional right to defer settlement of these liabilities. This increase was offset by lower short-
term borrowings, which decreased by £764 million. At 31 December 2022, the Group had £413 million of
bonds due within one year (31 December 2021: £2.4 billion) in addition to £1.2 billion of commercial paper
(31 December 2021: £nil).
Non-current assets of £23,457 million (31 December 2021: £21,941 million) primarily comprise goodwill
and other intangible assets of £20,203 million (31 December 2021: £18,868 million) and property, plant
and equipment. The increase of £1,516 million is predominantly due to the foreign exchange retranslation
of USD-denominated assets.
Non-current liabilities of £10,918 million (31 December 2021: £11,405 million) have decreased by
£487 million. This is principally due to the reclassification of uncertain tax provisions to current liabilities,
offset by adverse foreign exchange movements on USD-denominated debt.
Net working capital
During the period, net working capital decreased by £347 million from negative £1,882 million to negative
£1,535 million. Net working capital as a percentage of 12-month net revenue is -11% (31 December 2021:
-14%) due to higher inventory values resulting from input cost inflation only being partially offset by lower
trade and other payables (as a percentage of net revenue) driven by lower non-product cost liabilities.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 74
Reckitt Annual Report and Accounts 2022
G R O U P F I N A N C I A L R E V I E W CO N T I N U E D
Cash flow
Adjusted operating profit
Depreciation, share-based payments and gain on disposal of fixed assets
(net of proceeds)
Capital expenditure
Movement in working capital and provisions
Cash flow in relation to adjusting items
Interest paid
Tax paid
Free cash flow
Free cash flow conversion
521
(443)
(408)
(38)
(209)
(831)
2,031
83%
410
(450)
(356)
(86)
(222)
(915)
1,258
61%
Free cash flow (FCF) is the amount of cash generated from continuing operating activities after net
capital expenditure on property, plant and equipment and intangible software assets. 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 increased by £773 million due to higher operational profit being converted into cash. Free
cash flow conversion was 83% (2021: 61%), largely driven by lower tax paid in the year, as 2021 included
tax paid as a result of the sale of IFCN China. In 2021, excluding the cash outflows and transaction costs
relating to the sale of IFCN China, FCF conversion was 71%. In 2022, a greater proportion of net income
was converted into free cash, due to higher non-cash charges in the year.
Net cash generated from operating activities has increased by £700 million to £2,397 million (2021: £1,697
million), reflecting higher operating profits and lower tax paid in the period.
Net debt
Opening net debt
Free cash flow
Shares reissued
Acquisitions, disposals and purchase of investments
Dividends paid
New lease liabilities in the period
Exchange and other movements
Cash flow attributable to discontinued operations
Closing net debt
31 Dec 2022
£m
31 Dec 2021
£m
(8,378)
2,031
54
220
(1,284)
(134)
(500)
7
(7,984)
(8,954)
1,258
80
694
(1,263)
(109)
(82)
(2)
(8,378)
31 Dec 2022
£m
31 Dec 2021
£m
3,439
2,877
At 31 December 2022, net debt was £7,984 million, a decrease of £394 million from 31 December 2021, as
free cash flows of £2.0 billion were offset by £1.3 billion of dividends and unfavourable foreign exchange
movements on USD-denominated debt. This decrease results in net debt being 2.1 times adjusted
EBITDA at 31 December 2022 (31 December 2021: 2.6 times).
The Group regularly reviews its banking arrangements and currently has adequate facilities available to it.
The Group has committed facilities totalling £4,500 million (31 December 2021: £4,500 million), £4,450
million of which expire after more than two years, which are undrawn and available to draw. The Group
remains compliant with its banking covenants. The committed borrowing facilities, together with cash
and cash equivalents, are considered sufficient to meet the Group’s projected cash requirements.
Dividends
The Board of Directors recommends a final 2022 dividend of 110.3 pence (2021: 101.6 pence). The
ex-dividend date will be 6 April 2023 and the dividend will be paid on 24 May 2023 to shareholders
on the register at the record date of 11 April 2023. The last date for election for the share alternative
to the dividend is 2 May 2023. The final 2022 dividend will be accrued once approved by shareholders.
Return on Capital Employed (ROCE)
ROCE in 2022 was 13.2% (2021: 10.1%), an increase of 310bps from 2021, as adjusted operating profit has
increased against lower average capital employed. The lower capital employed reflects the disposal of
IFCN China over a full year, following its removal from capital employed in September 2021.
Capital returns policy
Reckitt 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, in order to deliver sustainable growth in net revenue and improving
earnings per share over time.
In managing the balance sheet, we intend to maintain key financial ratios in line with those expected
of an A-grade credit-rated business. This will broadly define acceptable levels of leverage over time.
Repatriating cash to shareholders through a growing dividend remains a long-term goal of the business.
In February 2020, the Board committed to maintain the dividend at 2019 levels as investments were made
to benefit long-term sustainable growth. The Board has updated its dividend policy and now aims to
deliver sustainable dividend growth in future years, subject to any significant internal or external factors.
Accordingly, the 2022 dividend has been increased by 5% in line with this objective.
We will return surplus cash to shareholders as appropriate.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 75
Reckitt Annual Report and Accounts 2022
G R O U P F I N A N C I A L R E V I E W CO N T I N U E D
ALTERNATIVE
PERFORMANCE MEASURES
The financial information included in this Annual Report is prepared in accordance with International
Financial Reporting Standards (IFRS) as well as information presented on an adjusted (non-IFRS) basis.
Financial information presented on an adjusted basis excludes certain cash and non-cash items. These
items have a pattern of recognition that is largely uncorrelated with the trading performance of the
business. Management reviews the business on this basis for the purpose of making operating decisions
and showing these adjusted measures in addition to the IFRS measures provides useful additional
information on trading performance to the users of the Financial Statements. These adjusted measures
should not be considered in isolation from, as substitutes for, or superior to the financial measures
prepared in accordance with IFRS.
The following items (adjusting items) are excluded from IFRS earnings in calculating adjusted earnings.
– Impact of business combinations where IFRS accounting results in the recognition of certain costs
that are not comparable with those for internally generated assets (although the net revenues and
other costs of these business combinations are not adjusted for):
• Amortisation of (a) acquired brands, trademarks and similar assets and (b) certain other intangible
assets recorded as the result of a business combination;
• Inventory fair value adjustments;
• Professional and advisor costs recorded as the result of a business combination; and
• Changes to deferred tax liabilities relating to (a) acquired brands, trademarks and similar assets
and (b) certain other intangible assets recorded as the result of a business combination as the
amortisation or profit on disposal of these brands would be treated as an adjusting item.
– Profits or losses relating to the sale of brands and related intangible assets as the continued active
management of our portfolio results in the recognition of profits or losses relating to disposals of
brands and related intangible assets which are largely uncorrelated with the trading performance of
the business.
– Re-cycled foreign exchange translation reserves upon the sale, liquidation, repayment of share
capital or abandonment of a subsidiary previously controlled by the Group, as the gain or loss relates
to mainly exchange movements in previous periods rather than the current period.
– The reclassification of finance income/(expenses) on tax balances into income tax expense, to align
with the Group’s tax guidance. As a result, the income/(expenses) are presented as part of income tax
expense on an adjusted basis.
– Other individually material items of expense or income. Some of these items are resolved over
a period of time such that the impact may affect more than one reporting period.
Adjusted measures
– Adjusted Operating Profit and Adjusted Operating Profit margin: Adjusted operating profit
reflects the IFRS operating profit/(loss) excluding items in line with the Group’s adjusted items policy.
See page 78 for details on the adjusting items and a reconciliation between IFRS operating profit/(loss)
and adjusted operating profit. The adjusted operating profit margin is the adjusted operating profit
expressed as a percentage of net revenue.
– Adjusted tax rate: The adjusted tax rate is defined as the adjusted continuing income tax expense
as a percentage of adjusted profit before tax.
– Adjusted diluted EPS: Adjusted diluted EPS is the IFRS diluted EPS excluding items in line with the
Group’s adjusted items policy. See page 78 for details on the adjusting items and a reconciliation
between IFRS net income/(loss) and adjusted net income. The weighted average number of shares
for the period is the same for both IFRS diluted EPS and adjusted diluted EPS.
– Adjusted EBITDA (earnings before interest depreciation and amortisation): Adjusted operating
profit less depreciation and amortisation (excluding adjusting items).
Other non-GAAP measures
– Like-for-like (LFL): Net revenue growth or decline at constant exchange rates (see below) excluding
the impact of acquisitions, disposals and discontinued operations. Completed disposals are excluded
from LFL revenue growth for the entirety of the current and prior years. Acquisitions are included in LFL
revenue growth twelve months after the completion of the relevant acquisition. LFL growth also
excludes countries with annual inflation greater than 100% (Venezuela).
– Constant exchange rate (CER): Net revenue and profit growth or decline adjusting the actual
consolidated results such that the foreign currency conversion uses the same exchange rates as were
applied in the prior period.
– Brand Equity Investment (BEI): BEI is the marketing support designed to capture the voice, mind and
heart of our consumers.
– Net working capital (NWC): NWC is the total of inventory, trade and other receivables and trade and
other payables less interest accrued on tax balances. NWC is calculated as a % of last twelve months
net revenue to compare changes in NWC to the growth of the business.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 76
Reckitt Annual Report and Accounts 2022
G R O U P F I N A N C I A L R E V I E W CO N T I N U E D
– Net Debt: The Group’s principal measure of net borrowings being a total of cash and cash equivalents,
short-term and long-term borrowings, lease liabilities and derivative financial instruments on debt.
Reconciliation of IFRS to Like-for-Like Net Revenue (by GBU)
For the year ended 31 December
– Free Cash Flow and Free Cash Flow Conversion: The Group’s principal measure of cash flow
defined as net cash generated from continuing operating activities less net capital expenditure.
A reconciliation of cash generated from operations to Free Cash Flow is shown on page 77. The Group
tracks Free Cash Flow as a % of adjusted net income to understand the conversion of adjusted profit
into cash.
Other definitions and terms
– Category Market Unit (CMU): Reckitt analyses its market share by CMUs, which represent country and
either brand or category, e.g., US Lysol. This allows us to analyse the components of market share
growth taking into account both geography and brand/category. Management has identified those
Core CMUs that are the most strategically important. The list of Core CMUs is kept under continual
review and will change over time based on strategic decisions. Currently, Core CMUs cover c.65%
of Group net revenue and between c.55% to c.80% of each Global Business Unit’s (GBU) net revenue.
As a measure of competitiveness, management tracks the percentage of Core CMUs holding or
gaining market share, weighted by net revenue.
Net revenue
2021 IFRS
M&A
Exchange
2021 Like-for-like
2022 IFRS
M&A
Exchange
2022 Like-for-like
Like-for-like growth
Hygiene
£m
5,911
–
–
5,911
5,960
–
(231)
5,729
(3.1%)
Health
£m
5,053
(142)
–
4,911
5,992
(90)
(268)
5,634
14.7%
Nutrition
£m
2,270
(403)
–
1,867
2,501
–
(206)
2,295
22.9%
Adjusted measures excluding IFCN China (Group)
– E-commerce: E-commerce channel net revenue is direct sales from Reckitt to online platforms or
directly to consumers. Estimates of total e-commerce sales as a percentage of Group net revenues
are calculated by adding e-commerce channel net revenue to an estimate of e-commerce sales
achieved by our brands through omnichannel distributors and retailer websites.
– Discontinued operations: Includes credits or charges related to the previously demerged RB
Pharmaceuticals business that became Indivior plc. Net (loss)/income from discontinued operations
is presented as a single line item in the Group Income Statement.
Net revenue
Adjusted operating profit
Adjusted operating margin
Adjusted operating margin vs prior year excluding
IFCN China
Adjusted measures excluding IFCN China (Nutrition)
2022 Adjusted
£m
2021 Adjusted
£m
13,234
2,877
21.7%
14,453
3,439
23.8%
90bps
2022 Adjusted
£m
2021 Adjusted
£m
Net revenue
Adjusted operating profit
Adjusted operating margin
Adjusted operating margin vs prior year excluding
IFCN China
2,501
577
23.1%
710bps
2,270
234
10.3%
– Return on Capital Employed (ROCE): 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. Total assets has been adjusted to add back
impairments of Goodwill except where the impaired asset has been disposed or partially disposed
Current liabilities exclude legal provisions recorded as a result of exceptional items and current tax.
– Net revenue attributable to ‘more sustainable’ products: A product is defined as ‘more sustainable’
when it scores ‘better’ on one of the five parameters (carbon, water, plastics, packaging and
ingredients) at time of launch using our Sustainable Innovation Calculator (a streamlined Lifecycle
Assessment tool that models the environmental impacts of products). The net revenue from ‘more
sustainable’ products is expressed as a percentage of total net revenue. The calculation is done on the
basis of a 12 month period ending September (to allow assembling the related data).
Group
£m
13,234
(545)
–
12,689
14,453
(90)
(705)
13,658
7.6%
2021 Adjusted
ex. IFCN China
£m
12,851
2,944
22.9%
2021 Adjusted
ex. IFCN China
£m
1,887
301
16.0%
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 77
Reckitt Annual Report and Accounts 2022
G R O U P F I N A N C I A L R E V I E W CO N T I N U E D
Reconciliation of operating cash flow to free cash flow
Cash generated from continuing operations
Less: interest paid
Less: tax paid
Less: purchase of property, plant & equipment
Less: purchase of intangible assets
Plus: proceeds from the sale of property, plant & equipment
Free cash flow
Free cash flow conversion
12 months Adjusted EBITDA to Net Debt
Adjusted EBITDA
Operating profit/(loss)
Less: adjusting items
Adjusted operating profit
Less: adjusted depreciation and amortisation
Adjusted EBITDA
Net debt
Cash and cash equivalents (inc. overdrafts)
Financing liabilities
Net debt
Adjusted EBITDA/Net debt (times)
31 Dec 2022
£m
31 Dec 2021
£m
Dividend Cover
3,430
(209)
(831)
(362)
(81)
84
2,031
83%
Interim dividend paid in year
Final dividend proposed
Total dividends
Adjusted net income
Dividend cover (times)
ROCE Calculation
2,836
(222)
(915)
(373)
(77)
9
1,258
61%
31 Dec 2022
£m
31 Dec 2021
£m
3,249
190
3,439
402
3,841
(804)
3,681
2,877
362
3,239
31 Dec 2022
£m
31 Dec 2021
£m
1,156
(9,140)
(7,984)
2.1
1,259
(9,637)
(8,378)
2.6
Adjusted operating profit
Less: taxation on adjusted operating profit
Adjusted net operating profit after tax
IFRS total assets
IFRS total current liabilities
IFRS total assets less current liabilities
Less IFRS items not included in capital employed:
Short-term borrowings
Current tax liabilities
Legal provisions
Interest accrued on tax balances
Cash and cash equivalents
Current tax recoverable
Retirement benefit surplus
IFRS balances included in capital employed
Add: impact back unrealised impairments
Less: goodwill due to deferred tax on intangibles
Impact of average in year vs closing balance
Average capital employed
Return on capital employed
Net Working Capital
Inventories
Trade and other receivables
Trade and other payable
Less: Interest accrued on tax balances
Net working capital
Net working capital as percentage of 12-month net revenue
31 Dec 2022
£m
31 Dec 2021
£m
523
789
1,312
2,452
1.9
521
726
1,247
2,059
1.7
31 Dec 2022
£m
31 Dec 2021
£m
3,439
(753)
2,686
28,742
(8,341)
20,401
1,721
791
90
105
(1,157)
(155)
(294)
21,502
3,490
(4,385)
(289)
20,318
13.2%
2,877
(633)
2,244
26,946
(8,088)
18,858
2,485
93
86
–
(1,261)
(155)
(355)
19,751
3,143
(4,133)
3,442
22,203
10.1%
31 Dec 2022
£m
31 Dec 2021
£m
1,825
2,082
(5,547)
105
(1,535)
(11%)
1,459
1,926
(5,267)
–
(1,882)
(14%)
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Commentary on 2022 IFRS to Adjusted measures reconciliation
Impact of business combinations of £33 million relates principally to amortisation
of acquired intangible assets recognised through historical business combinations.
Income tax relates to an £11 million tax credit in relation to this amortisation.
Gain on disposal of brands and related intangible assets of £14 million relates to the
disposal of Dermicool (£49 million loss) and E45 and related brands (£63 million gain).
Included within income tax expense is a deferred tax credit of £28 million arising on the
derecognition of deferred tax liabilities, offset by a £21 million tax charge incurred in
relation to the disposals.
Reclassified foreign exchange translation on liquidation of subsidiaries of £69 million is
the gain following the liquidation of legal entities as part of simplification of the Group’s
legal entity structure.
Reclassification of finance income of £26 million relates to the reclassification of net
interest income on income tax balances from net finance expense to income tax.
Other individually material items of income and expense of £171m is composed of:
– £152 million expense relating to the impairment of Biofreeze goodwill.
– £14 million expense relating to the reorganisation of the Nutrition business subsequent
to the disposal of IFCN China in 2021.
– £5 million expense relates to costs incurred regarding the Korean HS issue.
Included within income tax expense is a £12 million net tax charge in relation to the
IFCN China strategic review.
Adjusted
£m
14,453
(6,092)
8,361
(4,922)
3,439
(256)
(21)
3,162
(691)
2,471
(19)
–
–
–
171
171
–
–
171
12
183
–
78
Reckitt Annual Report and Accounts 2022
G R O U P F I N A N C I A L R E V I E W CO N T I N U E D
The table below reconciles the Group’s IFRS measures to its adjusted measures for the year ended 31 December 2022.
Adjusting items
Reclassified
foreign
exchange
translation on
liquidation of
subsidiaries
£m
Other
individually
material
items of
income and
expense
£m
Finance
income
reclass
£m
Impact of
business
combinations
£m
Gain on
disposal
of brands
£m
Net revenue
Cost of sales
Gross profit
Net operating expenses
Operating profit
Net finance expense
Share of loss and impairment of equity-accounted
investments
Profit before income tax
Income tax charge
Net income from continuing operations
Less: Attributable to non-controlling interests
Net income from continuing operations
attributable to owners of the parent company
Net loss for the period from discontinued
operations
Total net income for the year attributable
to owners of the parent company
Earnings per share (EPS)
Continuing operations1
Basic
Diluted
Discontinued operations1
Basic
Diluted
Total operations1
Basic
Diluted
IFRS
£m
14,453
(6,092)
8,361
(5,112)
3,249
(161)
(21)
3,067
(711)
2,356
(19)
2,337
(7)
2,330
326.7
325.7
(1.0)
(1.0)
325.7
324.7
1. EPS is calculated using 715.3 million shares (basic) and 717.5 million shares (diluted)
–
–
–
33
33
–
–
33
(11)
22
–
22
–
22
3.1
3.1
–
–
3.1
3.1
–
–
–
(14)
(14)
–
–
(14)
(7)
(21)
–
–
–
–
–
–
(69)
–
(69)
–
(69)
–
(21)
(69)
–
–
(21)
(69)
(2.9)
(2.9)
–
–
(2.9)
(2.9)
(9.6)
(9.6)
–
–
(9.6)
(9.6)
–
–
–
–
–
(26)
–
(26)
26
–
–
–
–
–
–
–
–
–
–
–
183
2,452
7
–
190
2,452
25.5
25.4
342.8
341.7
1.0
1.0
–
–
26.5
26.4
342.8
341.7
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 79
Reckitt Annual Report and Accounts 2022
G R O U P F I N A N C I A L R E V I E W CO N T I N U E D
The table below reconciles the Group’s IFRS measures to its adjusted measures for the year ended 31 December 2021.
Adjusting items
Reclassified
foreign
exchange
translation on
liquidation of
subsidiaries
£m
Other
individually
material
items of
income and
expense
£m
Finance
income
reclass
£m
Impact of
business
combinations
£m
Loss on
disposal
of brands
£m
Commentary on 2021 IFRS to Adjusted measures reconciliation
Impact of business combinations is composed of:
– Amortisation of acquired intangibles of £61 million relates to the amortisation of certain
intangible assets recognised through historical business combinations. Included within
income tax expense is a £14 million tax credit in respect of this amortisation.
– Acquisition advisor costs relate to acquisition related costs of £19 million as a result
Adjusted
£m
of acquisitions in 2021, £3 million of which has been charged to cost of sales. Included
within income tax expense is a £4 million tax credit in relation to these costs.
Net revenue
Cost of sales
Gross profit
Net operating expenses
Operating (loss)/profit
Net finance income/(expense)
Share of loss of equity-accounted investments
(Loss)/profit before income tax
Income tax credit/(charge)
Net (loss)/income from continuing operations
Less: Attributable to non-controlling interests
Net (loss)/income from continuing operations
attributable to owners of the parent company
Net income from discontinued operations
Total net (loss)/income for the year attributable
to owners of the parent company
Earnings per share (EPS)
Continuing operations1
Basic
Diluted
Discontinued operations1
Basic
Diluted
Total operations1
Basic
Diluted
IFRS
£m
13,234
(5,558)
7,676
(8,480)
(804)
547
(3)
(260)
208
(52)
(11)
(63)
31
–
14
14
77
91
–
–
91
170
261
–
261
–
–
–
–
234
234
–
–
234
(117)
117
–
117
–
–
–
–
–
–
(766)
–
(766)
–
(766)
–
(766)
–
(32)
261
117
(766)
(8.8)
(8.8)
4.3
4.3
(4.5)
(4.5)
36.6
36.6
–
–
36.6
36.6
16.4
16.4
–
–
16.4
16.4
(107.3)
(107.3)
–
–
(107.3)
(107.3)
1. EPS is calculated using 713.8 million shares (basic) and 713.8 million shares (diluted)
–
–
–
–
–
(1)
–
(1)
1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
13,234
(5,544)
– Inventory fair value adjustment of £11 million relates to the amount charged to cost of
sales for the fair value step-up of acquired inventories as these inventories are sold.
Included within income tax expense is a £1 million tax credit in relation to these charges.
–
3,356
3,356
–
–
3,356
(846)
2,510
–
7,690
(4,813)
2,877
(220)
(3)
2,654
(584)
2,070
(11)
2,510
(31)
2,059
–
2,479
2,059
351.6
351.6
288.5
288.5
(4.3)
(4.3)
–
–
347.3
347.3
288.5
288.5
– Changes to deferred tax liabilities of £189 million relate principally to the revaluation of
deferred tax liabilities for acquired intangible assets due to the change in the UK
corporate tax rate, which was substantively enacted during the year.
Losses related to disposals of brands and related intangible assets: the pre-tax loss of
£234 million relates to the disposal of Scholl (£165 million) and the disposal of EnfaBebé
(£69 million). Included within income tax expense are associated tax credits of £94 million
in relation to these disposals, and a deferred tax credit of £23 million on classification of
the E45 brand as held for sale at 31 December 2021.
Reclassified foreign exchange translation on liquidation of subsidiaries of £766 million is
the net gain following the liquidation of legal entities as part of simplification of the Group’s
legal entity structure.
Reclassification of finance income of £1 million relates to the net interest income on tax
liabilities that is shown within the adjusted tax charge.
Other individually material items of income and expense principally relate to charges in
relation to the strategic review of IFCN China, which resulted in the disposal of the IFCN
China business, the closure of factories in Australia dedicated to IFCN China and the
subsequent re-organisation of the remaining Reckitt Nutrition business.
Amounts charged to IFRS operating loss in relation to the IFCN China strategic review include:
– Loss on disposal of IFCN China of £3,284 million;
– Impairment of the Australian factory assets, £48 million along with associated
termination fee £3 million; and
– Costs of £18 million relating to the subsequent restructuring of the Reckitt
Nutrition business.
Included within income tax expenses is a £846 million net tax credit in relation to the
IFCN strategic review.
Also included within the IFRS operating loss is a charge of £3 million in relation to the
Korea HS issue.
Income from discontinued operations of £31 million relates to amounts agreed with
Indivior plc to settle indemnity claims relating to the DoJ settlement in 2019.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 80
Reckitt Annual Report and Accounts 2022
R IS K MAN AG E M E NT
RISK MANAGEMENT
AT RECKITT
Taking and managing risk
is essential to operating
and growing our business
safely, effectively
and sustainably.
Reckitt’s integrated risk management framework
provides consistency and the right level of
oversight to ensure we understand and are
effectively managing the risks we face.
Risk governance
The responsibility for risk governance, including
strategic guidance and oversight of our principal
risks, rests with the Board and its Committees.
Oversight is achieved through several mechanisms
which include strategy reviews, Committee
meetings and deep dives into selected risk areas.
Risk, Sustainability & Compliance Committees (RSCC)
oversee risk management within the Global Business
Units with significant risks escalated to the Group
RSCC, the Group Executive Committee (GEC) and
Board. The Audit Committee approves the design
of the integrated risk management framework and
monitors its application across the organisation.
Integrated risk management framework
The integrated risk management framework sets
out clear roles, responsibilities and standards to
ensure risks are consistently assessed and reported
across Reckitt. The Board and GEC use a top-
down approach to identify risk at a strategic level.
These are Reckitt’s principal risks and represent
the most significant risks facing the business.
Ownership and accountability for these principal
risks and their corresponding mitigation actions
sits with one or more members of the GEC.
Our Global Business Unit and functional teams
are responsible for the day-to-day identification,
assessment, management, monitoring and reporting
of risks. They identify new and emerging risks,
escalate where appropriate and take action to ensure
risks are managed as required. They also conduct
an annual assessment of the key risks they face.
Risk management occurs across the Group
through our Three Lines of Defence model. Line
management within the First Line own and manage
risks through a series of internal control measures
whilst the Second Line, made up of global oversight
functions, provides the policies and frameworks
and undertakes monitoring activities. A number of
transformation programmes are underway across
the business to build out and strengthen Reckitt’s
second lines in key risk areas. Finally, independent
assurance across the first and second lines is
provided by Internal Audit (Third Line), external
audit and a variety of independent regulators.
Changes to principal risks
In 2022, two risks were elevated to the list of principal
risks, Geopolitical (an evolution of the previously
reported China risk) and Economic Volatility.
With COVID-19 moving behind us, we have
successfully embedded new ways of working
and strengthened our operational resilience.
Whilst we will continue to monitor the potential
emergence of new variants, we do not expect to
experience significant levels of disruption and have
dropped this risk below the principal risk set.
Other changes to the principal risks include an
increase in the likelihood of the Cyber Security
risk, reflecting the heightened cyber-threat
environment the organisation is facing, and an
increase in the People principal risk, largely driven
by the increasingly competitive labour markets
in which we operate. Adherence to Product
Quality Standards has decreased relative to 2021,
however it remains a key focus area given the
changing regulatory environment. The Group’s
2022 Principal risks can be found on page 81.
Emerging risks
Emerging risks are also considered throughout
the year. Sector consolidation and activism,
the continued emergence of environmental
tax instruments on materials, packaging and
other environmental, social and governance
(ESG) areas, and the potential disruptive impact
of emerging science and technology on the
current portfolio remain emerging risks.
Reckitt’s Three Lines of Defence model
S E N I O R M A N AG E M E N T
B OA R D A N D I TS CO M M I T T E E S
F I R S T L I N E O F D E F E N C E
S E CO N D L I N E O F D E F E N C E
T H I R D L I N E O F D E F E N C E
Business operations
(Risk ownership)
Day-to-day ownership
and management of risks
and controls
Oversight functions
(Risk challenge)
Internal Audit
(Risk assurance)
Ensures controls and risk
management processes of the
First Line are working as intended
Responsible for the
implementation and
development of control and
risk management processes
Establishes policy and frameworks
and provides support, monitoring
and challenge on risk and
compliance-related activities
Regular, independent
monitoring and assessment
of the appropriateness
and effectiveness of the
governance, control and risk
management processes
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 81
Reckitt Annual Report and Accounts 2022
R I S K M A N AG E M E N T CO N T I N U E D
OUR PRINCIPAL RISKS
1
P R O D U C T SA F E T Y
Robust processes, systems, data and culture for
the development and assessment of product
safety are not in place or operating effectively
leading to safety risk to consumers.
2 S U P P LY D I S R U P T I O N
Disruption across our supply chain, including
shortages of critical materials, reliance on key
manufacturing sites and logistics constraints
resulting in global supply shortages.
3 C Y B E R S E CU R I T Y
Increasingly sophisticated cyber-attacks resulting
in disruption to our labs, manufacturing sites,
critical third party suppliers/partners and
destruction or loss of our information assets.
4 E M P LOY E E H E A LT H & SA F E T Y
Work accidents leading to death, injury or illness
of Reckitt employees wherever they are working;
and other workers on Reckitt premises or premises
under Reckitt supervision.
5 S U S TA I N A B I L I T Y
Failure to address existing and emerging ESG
and sustainability risks across our products, the
environment and society resulting in underlying
risk to business resilience, reputation, growth and
share price performance.
6 P R O D U C T Q UA L I T Y
1 2 TA X D I S P U T E S
Non-compliance with applicable quality
regulations, guidelines and internal/external
standards across the product lifecycle leading
to consumer safety or product quality issues
in-market.
7 I N N OVAT I O N
Our innovation pipeline does not meet the
changing needs of our consumers and new
go-to-market channels, impacting organic
growth and gross margin accretion.
8 CO M M E R C I A L
Failure to respond, adapt and evolve our business
and go-to-market strategy to changes in the
commercial environment in which we operate
impacting our operating profit and market share.
9 G E O P O L I T I C A L
Adverse geopolitical events leading to
unanticipated and, in some cases, rapid
disruption to our business.
1 0 E CO N O M I C VO L AT I L I T Y
The increasingly challenging economic
environment in which we operate adversely
impacts our cost base, pricing strategies,
profitability and market share.
1 1 P E O P L E
Inability to attract, develop and retain talent
in a highly competitive market and a changing
workplace environment, impacting our ability
to achieve our strategic objectives.
Increasing global tax rates, alongside tax authority
challenges in key markets, impacting our global
operating model and tax footprint.
1 3 P R O D U C T R E G U L AT I O N S
Non-compliance with product regulations,
guidelines, internal standards and/or registrations
across the supply chain and the product lifecycle
leading to supply disruption and potential
regulatory enforcement.
1 4 L E G A L & CO M P L I A N C E
Non-compliance with relevant laws and regulations
resulting in potential financial penalties and damage
to Reckitt’s reputation.
1
E
C
N
A
I
L
P
M
O
C
15
14
13
12
F
I
N
A
N
C
I
A
L
4
3
OPERATIO
N
A
L
6
2
11
5
10
9
7
8
C
I
G
E
T
A
R
T
S
PE O P L E
1 5 SOUTH KO R E A H U M I DI FI E R SAN ITIS E R (HS)
Risk likelihood
Financial and reputational risk as a result of the
health issues caused by consumers inhaling
a humidifier sanitiser previously sold by Oxy,
which Reckitt acquired in 2001. The product
was withdrawn in 2011.
Remote
Possible
Likely
Highly likely
Change
Direction of movement
Financial impact
Minor
Moderate
Major
Critical
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 82
Reckitt Annual Report and Accounts 2022
R I S K M A N AG E M E N T CO N T I N U E D
Grow brands and innovate
Drive superior execution
Invest in capabilities
Increase productivity
Embed sustainability
Actively manage the portfolio
P R O D U C T SA F E T Y
1
S U P P LY D I S R U P T I O N
2
C Y B E R S E CU R I T Y
3
Risk movement:
No change
Risk movement:
No change
Risk movement:
Increasing
What is the risk?
Robust processes, systems, data and culture for the development
and assessment of product safety are not in place or operating
effectively leading to safety risk to consumers.
What is the risk?
Disruption across our supply chain, including shortages of critical
materials, reliance on key manufacturing sites and logistics
constraints resulting in global supply shortages.
What is the risk?
Increasingly sophisticated cyber-attacks resulting in disruption to
our labs, manufacturing sites, critical third party suppliers/partners
and destruction or loss of our information assets.
Potential impact
– Product safety issues may lead to reputational damage with
Potential impact
– Supply shortages arising from scarcity of critical materials and
consumers, customers or regulators
reliance on single sites of manufacture
– Significant financial losses could arise from supply disruption,
product recalls, delayed launches, penalties and a loss of
consumer trust
– Possible criminal liability for senior management
How are we managing the risk?
– Global Safety Assurance (GSA) team embedding product safety
into each of the Global Business Units and markets, whilst
providing centralised oversight and assurance services
– A robust quality management system is in place underpinned
by clear policies and supporting systems, and is subject to
comprehensive and independent regular audit review
– Product safety training undertaken by all employees
– Adverse and critical events procedure and dedicated vigilance
group to monitor and report adverse events
– Proactive engagement and advocacy with regulators and
participation in industry groups to ensure we stay abreast of
new and emerging safety concerns
– Importation barrier issues, leading to loss of sales and market share
– Increased levels of cost pressure and volatility across energy,
commodities, freight and labour impacting our ability to serve
customers and eroding our cost competitive advantage
– Inability to accurately forecast arising from higher levels of
Potential impact
– Significant business disruption, both across our network and
our partners, leading to constraints in delivering the global
business strategy
– Theft, ransom or destruction of Reckitt and consumer data
– Loss of consumer confidence in our brands leading to
reputational damage
– Regulatory non-compliance resulting in potentially significant
market volatility
financial penalties
– Labour and network capacity constraints impacting the availability
of product in market
How are we managing the risk?
– End-to-end Supply Chain Planning programme underway to
strengthen the resilience of our supply chain
How are we managing the risk?
– Continued focus on reducing cyber risk whilst improving the
maturity of our security posture, upgrading our capabilities,
and supporting business agility, innovation and the strategic
growth agenda
– Focus on de-risking our supply of critical materials by reducing the
– Cyber transformation programme developed to tackle current
total mono sourced spend across each GBU
and emerging cyber risks
– Qualification of multiple manufacturing sites for critical products
– Increased regionalisation of manufacturing and supply chains
to improve our agility, proximity and responsiveness to any
unforeseen disruptions
– Application of industry standards, including ISO and National
Institute of Standards and Technology (NIST) across the cyber
control framework
– Targeted training rolled out to all employees
– Global Safety transformation project underway to elevate
– Deployment of the Reckitt Production System across all
Reckitt’s global safety approach across safety culture, processes,
systems and data. Estimated completion in Q4 2023
manufacturing sites to drive sustainable manufacturing performance
– Asset protection through Highly Protected Risk (HPR status)
Oversight Committee: Executive ownership resides with the Chief
R&D Officer, who drives activity through each of the Global Business
Unit (GBU) executive leadership teams. Board oversight is provided
by the Corporate Responsibility, Sustainability, Ethics & Compliance
(CRSEC) Committee.
via our insurers and business continuity planning
Oversight Committee: Executive ownership resides directly with the
Chief Supply Officer. Board oversight is provided by the main Board.
Oversight Committee: Executive ownership resides directly with
the Chief Information & Digitisation Officer. Board oversight is
provided by the main Board.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 83
Reckitt Annual Report and Accounts 2022
R I S K M A N AG E M E N T CO N T I N U E D
Grow brands and innovate
Drive superior execution
Invest in capabilities
Increase productivity
Embed sustainability
Actively manage the portfolio
E M P LOY E E H E A LT H & SA F E T Y
4
S U S TA I N A B I L I T Y
5
P R O D U C T Q UA L I T Y
6
Risk movement:
No change
Risk movement:
No change
Risk movement:
Decreasing
What is the risk?
Work accidents leading to death, injury or illness of Reckitt
employees wherever they are working; and other workers on Reckitt
premises or premises under Reckitt supervision.
Potential impact
– Loss of life or debilitating injury
– Ongoing damage to our brands’ and company reputation
– Reduced operational efficiencies from factory closure or
significant supply disruption
– Impaired financial performance resulting from lost sales, fines
or remediation costs
How are we managing the risk?
– Group Employee Health & Safety (EH&S) policy and supporting
standards in place and enforced through an audit compliance
programme
– Group ISO 45001 certification is complete across all in-scope sites
– EH&S training provided at all sites including commercial offices
– Key risk indicators tracked and reported on a monthly basis,
and actions taken where measures are out of tolerance
What is the risk?
Failure to address existing and emerging ESG and sustainability
risks across our products, the environment and society resulting in
underlying risk to business resilience, reputation, growth and share
price performance.
Potential impact
– Increased scrutiny on our operations from customers, consumers,
What is the risk?
Non-compliance with applicable quality regulations, guidelines
and internal/external standards across the product lifecycle leading
to consumer safety or product quality issues in-market.
Potential impact
– A consumer safety incident
– Loss of sales through product reworks, licence suspensions
NGOs and ESG-focused investors
or recalls
– Loss of market share
– Omission from established sustainability indices
– Increased non-financial reporting and disclosure requirements,
– Operational disruption through extreme weather events
How are we managing the risk?
– Embedding our sustainability strategy and targets within R&D
and our supply chain, and across each of the GBUs, through
customer-facing programmes, ingredient management, our
decarbonisation and water usage roadmap, packaging and
sustainable sourcing programmes
– Reduced operational efficiency through factory closures or
supply disruption
– Regulatory failures resulting in potential financial penalties
– Potential civil/criminal actions against individuals
How are we managing the risk?
– Quality standards defined and communicated across manufacturing
sites and embedded in standard operating procedures
– Quality and GxP (‘good practice’) audit programme to
assess compliance with Reckitt’s Quality standards across
manufacturing sites
– Continued investment in key Quality transformation programmes,
– Application of the Sustainable Innovation Calculator across all
including QualityOne and LabEx
– Possible criminal liability for senior management
and potential regulatory penalties
– COVID-19 policies and return to work protocols in place across
new and existing product development
– Supplier audits and inspection of incoming materials performed
our sites
– Ongoing EH&S behaviour and culture development through
Culture Days, targeted surveys and specific training initiatives
undertaken throughout the year
Oversight Committee: Executive ownership resides directly with
the CEO, Global Business Unit Presidents and Chief Supply Officer.
Board oversight is provided by the CRSEC Committee.
– Taskforce on Climate-related Disclosures (TCFD) partnership
with Cambridge University to model the impact of climate risk,
and Taskforce on Nature-related Financial Disclosures (TNFD)
partnership with Oxford University to better understand the
impact of our footprint on biodiversity loss
for critical suppliers/ingredients. Global Supplier Quality
Programme to be rolled out in 2023
– Microbiological monitoring in place for micro-sensitive
product production
– Quality key performance indicators and metrics routinely tracked
– Expansion of our Human Rights programme to assess and address
and reported
human rights impacts along Reckitt’s value chain
– Development of stronger data and improved reporting capabilities
Oversight Committee: Executive ownership resides directly with the
CEO and the Chief Marketing, Sustainability and Corporate Affairs
Officer. Each Global Business Unit is responsible for its respective
deliverables. Board oversight is provided by the CRSEC Committee.
Oversight Committee: Executive ownership resides directly with
the CEO, Global Business Unit Presidents and Chief Supply Officer,
who drive activity through each of the Global Business Unit
executive leadership teams. Board oversight is provided by the
CRSEC Committee.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 84
Reckitt Annual Report and Accounts 2022
R I S K M A N AG E M E N T CO N T I N U E D
Grow brands and innovate
Drive superior execution
Invest in capabilities
Increase productivity
Embed sustainability
Actively manage the portfolio
I N N OVAT I O N
7
CO M M E R C I A L
8
G E O P O L I T I C A L
9
Risk movement:
No change
Risk movement:
No change
Risk movement:
New risk
What is the risk?
Our innovation pipeline does not meet the changing needs of
our consumers and new go-to-market channels impacting organic
growth and gross margin accretion.
What is the risk?
Failure to respond, adapt and evolve our business and go-to-market
strategy to changes in the commercial environment in which we
operate impacting our operating profit and market share.
Potential impact
– Missed innovation opportunities ‘in new spaces’ arising from
Potential impact
– Loss of market share to insurgent competitors, disrupting with
changing consumer wants, needs and behaviours
purpose-led products and innovations
What is the risk?
Adverse geopolitical events leading to unanticipated and, in some
cases, rapid disruption to our business.
Potential impact
– Disruption to Reckitt’s global operations, including divestment
or confiscation of Reckitt’s assets, caused by changes in foreign
policy or changes in local regulatory environments
– Loss of market share to smaller and more agile insurgent
– Reduced consumer brand affiliation through resurgence of private
– Disruption to our global supply chains including shortages of
competitors leveraging new channels and digital
label and proliferation of smaller brands
critical materials and interruption to freight and logistics corridors
– Delays/terminations/execution slippage impacting expected
financial benefits, including incremental net revenue growth
and planned return on investment
– Growing pressure from e-commerce and discounters, impacting
innovation, supply chain and brand and customer support models
– Danger to and displacement of our people
– Increasing commodity prices attributed directly or indirectly to
– Consolidation of the offline retail sector impacting our offline
geopolitical instability
– Failure to capitalise on external partnerships
pricing and margin models
How are we managing the risk?
– Ongoing investment in new tools and resources to enhance our
innovation, brand purpose, packaging and design capability
– Establishment of our science platforms for longer-term superior
and differentiated solutions, leading with claims, purpose and
consumer relevant information
– Strengthened digital foundations and digital capabilities to
enhance innovation efficiency, effectiveness, and quality
by design
– Reliance on key distributors in priority markets
How are we managing the risk?
– Evolution of our Omnichannel model to drive superior consumer-
centric retail experiences
– Increasing cyber security threats
– Disruption caused by sanctions imposed as a result of
geopolitical events
How are we managing the risk?
– Active identification and analysis of any political or regulatory
– Continued investment in capability and technology, enabling
uncertainty through our External Affairs network
us to harness the power of all platforms, all brands, in all markets
– Establishment of our capability centres to enable best practice
– Diversification and regionalisation/onshoring of our supply chains
– Dedicated crisis management teams with external advisors
sharing across the Group
engaged in critical markets
– Pursuit of external partnership opportunities to identify, incubate
– Identification of security threats facing the business through the
– Targeted recruitment activity to strengthen internal technical
and launch new brands and ventures, driving future growth
Corporate Security programme
capability across key areas
– Targeted internal and external initiatives to increase e-commerce
– Enhanced external partnership capability, through our IGNITE
platform, to drive co-creation of innovation through greater
external orientation and new partnership opportunities
– Enhanced consumer data and insights capability to support faster
and more accurate innovation modelling
Oversight Committee: Executive ownership resides directly with
the CEO, Global Business Unit Presidents and the Chief R&D Officer.
Board oversight is provided by the main Board.
capability and drive incremental growth
Oversight Committee: Executive ownership resides with the Group
Executive Committee. Board oversight is provided by the main Board.
Oversight Committee: Executive ownership resides with the Group
Executive Committee. Board oversight is provided by the main Board.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 85
Reckitt Annual Report and Accounts 2022
R I S K M A N AG E M E N T CO N T I N U E D
Grow brands and innovate
Drive superior execution
Invest in capabilities
Increase productivity
Embed sustainability
Actively manage the portfolio
E CO N O M I C VO L AT I L I T Y
1 0
P E O P L E
1 1
TA X D I S P U T E S
1 2
Risk movement:
New risk
Risk movement:
Increasing
Risk movement:
No change
What is the risk?
The increasingly challenging economic environment in which
we operate adversely impacts our cost base, pricing strategies,
profitability and market share.
What is the risk?
Inability to attract, develop and retain talent in a highly competitive
market and a changing workplace environment impacting our ability
to achieve our strategic objectives.
Potential impact
– Increasing operating costs attributed to rising commodity prices
Potential impact
– Inability to attract and retain talent in an increasingly competitive
and sustained inflation across major economies
labour market
– Pricing and margin adjustments
– Reduced volumes and loss of market share in some of our biggest
markets as consumers switch to cheaper alternatives in light of
decreased purchasing power
– Increasing levels of attrition across the organisation impacting
bench strength and talent pipeline
– Loss of critical skills and knowledge as experienced colleagues
leave the organisation
– Volatility in global financial markets, impacting future borrowing
– Capacity constraints arising from a significant volume of
costs and hedging activities
transformation projects
– Potential government interventions that have the potential to
impact the growth and profitability of our local operations
– Disruption to our globally interconnected supply chains
How are we managing the risk?
– Continued focus on productivity savings across the value chain
How are we managing the risk?
– Talent identification, mapping and calibration for critical senior
management positions, helping to optimise both talent
management and succession planning processes
through the X-Seed programme and enhancements to both supply
and financial planning processes
– Ongoing review of portfolio pricing and sizing guidelines, value
management positions, including regular retention risk analysis
– Capacity mapping undertaken for all transformation initiatives
– Annual review of the Group’s compensation programmes and
Employee Value Proposition (EVP)
What is the risk?
Increasing global tax rates, alongside tax authority challenges in key
markets impacting our global operating model and tax footprint.
Potential impact
– Potential increase in our tax liability as a result of changes in
domestic tax rates in key markets
– If our filing positions around transfer pricing are not considered
in any country to be compliant or our operating model is not
sufficiently communicated, implemented and embedded, both
internally and externally, tax authorities may successfully challenge
our tax return filings with a potentially significant financial impact
on the Group.
How are we managing the risk?
– Ongoing timely and robust responses to progress outstanding
disputes and continual monitoring of progression in relation to
Advanced Pricing Agreements (APAs) and subsequent operating
model tax audits
Group Tax, country finance directors and external advisors
– Balance Sheet reviews and reconciliation of key complex items
by the Reckitt tax function, country finance directors and
external advisors
– Retention measures and succession planning in place for key
– Review of inspection activities and outcomes in each market by
claims and support models; alongside channel shift opportunities
and acceleration of targeted innovation. The breadth of our
product portfolio and geographic reach help to mitigate our
exposure to any localised risk
– Learning & Development and Leadership Development
programmes to support our people in getting the most out of
their careers at Reckitt
– Partnerships with external advisors to understand and remediate
the tax implications of changes in organisational structure and the
impact of any regulatory or other legislative changes
– Treasury risk management to mitigate against any adverse
– Internal initiatives to champion diversity and inclusion, social
– Central provisioning for anticipated exposures
movements in financial markets
impact and employee wellbeing
– Identification and analysis of any political or regulatory uncertainty
through our External Affairs network
Oversight Committee: Executive ownership resides with the Group
Executive Committee. Board oversight is provided by the main Board.
Oversight Committee: Executive ownership resides directly with
the Chief Human Resources Officer, who drives activity through each
of the Global Business Unit executive leadership teams. Board
oversight is provided by the main Board.
Oversight Committee: Executive ownership resides directly
with the Chief Financial Officer. Board oversight is provided
by the Audit Committee.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 86
Reckitt Annual Report and Accounts 2022
R I S K M A N AG E M E N T CO N T I N U E D
Grow brands and innovate
Drive superior execution
Invest in capabilities
Increase productivity
Embed sustainability
Actively manage the portfolio
P R O D U C T R E G U L AT I O N S
1 3
L E G A L & CO M P L I A N C E
1 4
S O U T H KO R E A H U M I D I F I E R SA N I T I S E R ( H S )
1 5
Risk movement:
No change
Risk movement:
No change
Risk movement:
No change
What is the risk?
Financial and reputational risk as a result of the health issues caused
by consumers inhaling a humidifier sanitiser previously sold by Oxy,
which Reckitt acquired in 2001. The product was withdrawn in 2011.
The South Korea Humidifier Sanitiser issue was a tragic event.
The Group continues to make both public and personal apologies
to victims.
Potential impact
– Additional exposure arising from an increased volume of civil
claims against Reckitt Benckiser Korea (RBK)
– Expansion of liability arising from recognition of additional HS
injuries and reduced burden of proof to establish that injury or
illness is caused by HS exposure
– An increase in contributions to the Industry Relief Fund (IRF)
required by the Korean government
What is the risk?
Non-compliance with product regulations, guidelines, internal
standards and/or registrations across the supply chain and the
product lifecycle leading to supply disruption and potential
regulatory enforcement.
Potential impact
– Potential safety or efficacy risks to consumers
– Supply disruption as a result of potential regulatory enforcement
– Adverse financial impact attributed to loss of sales, cost of fines
What is the risk?
Non-compliance with relevant laws and regulations resulting in
potential financial penalties and damage to Reckitt’s reputation.
Potential impact
Reckitt is subject to laws and regulations in areas such as product
safety and claims, trademarks, patents, anti-corruption, competition,
employee health and safety, data privacy, the environment,
corporate governance, listing and disclosure, employment and taxes.
Non-compliance with these laws and regulations may result in:
and remediation activities
– Damage to company brand and reputation
– Potential civil/criminal liability
How are we managing the risk?
– Continued roll-out of key quality and regulatory transformation
programmes, such as an integrated quality management system,
for improved change management
– Increased investment to ensure product claims are more data
focused with stronger substantiation
– Strengthening of REACH reporting capabilities via a transformed
IT platform
– Enhanced reporting with improved metrics to evaluate deviations
and root causes to a more detailed level, driving process
improvements
– Active Regulatory Intelligence programme to proactively identify
changes in regulation and trends in enforcement practice
Oversight Committee: Executive ownership resides directly
with the Chief R&D Officer, who drives activity through the Global
Business Unit executive leadership teams. Board oversight is
provided by the CRSEC Committee.
– damage to Reckitt’s reputation;
– significant potential fines or sanctions; and/or
– possible civil or criminal liability for Reckitt companies and/or
senior management.
How are we managing the risk?
– Embedded legal and compliance teams supported by external
legal experts as needed. Litigation is supervised by the senior legal
team with oversight of significant matters by the General Counsel
How are we managing the risk?
– Continued efforts by RBK to address legal claims and restore trust
– Global Ethics & Compliance programme including Code of
among consumers in South Korea
Conduct, compliance policies and procedures, annual training,
Speak-up hotline, targeted risk and control assessments and
third-party due diligence process
– Regular review meetings continue with the Group, to monitor
issues as they arise
– RBK participation in the HS mediation committee with claimant
– Data privacy professionals embedded into jurisdictions with the
groups and industry companies
highest risk profile
– Competition law risk and control assessments completed for key
markets and supported by action plans
Oversight Committee: Executive ownership resides with the
General Counsel & Company Secretary together with the Chief
Ethics & Compliance Officer, with each Global Business Unit
responsible for its respective deliverables. Board oversight is
provided by the CRSEC and Audit Committees to ensure full and
appropriate coverage of the Compliance programme.
– The Group has encouraged RBK to seek a broader resolution
involving all responsible parties on a basis that provides fair
compensation to legitimate victims, with each responsible party
contributing its fair share
Oversight Committee: Executive ownership of the risk at a Group
level resides directly with the General Counsel & Company
Secretary. Board oversight is provided by the main Board.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 87
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O U R V IA B I LIT Y STATE M E NT
THE ASSESSMENT PROCESS
AND KEY ASSUMPTIONS
The Board’s Viability Review is
based on the Group’s strategy,
its long-term financial plan and
its principal risks.
A financial forecast covering a five-year period
was prepared (the base case). This period was
selected as it is the period covered in the Group’s
long-term forecasting process, based on the
budget and projections for the following years and
covers the introduction to market of the current
new product pipeline. The period also covers the
majority of Reckitt’s debt repayment profile.
funds to trade, settle its liabilities as they fall
due, remain compliant with financial covenants,
and remain viable. Moreover, the Group has
access to external debt markets on account of
its credit rating together with a well-diversified
supplier network, customer base and product
range, and geographical activities with a strong
innovation pipeline, and dividend cover.
The financial forecast is based on a number of
key assumptions aligned to the Group’s growth
strategy, planned capital spending, and capital
allocation policy. The assessment of viability takes
into account the Group’s cash flow, its currently
available banking facilities and interest cover
ratios in relevant financial covenants, and does
not assume the raising of additional new debt
or equity finance. If Reckitt performs in line with
the base case forecasts, it will have sufficient
Assessment of principal risks and viability
To further test the robustness of the base case
forecast, further analyses were prepared to
consider the viability of the business in the
event of adverse unexpected circumstances.
Such adverse circumstances were modelled
primarily upon the crystallisation of the Group’s
principal risks (see pages 81 to 86, including how
we are managing the risk). Principal risks have
the potential to create adverse circumstances
for the Group and can occur individually or in
combination with each other. The assessment
of viability considered the implications of
crystallisation of each principal risk, assigning
each an estimated annual monetary value and
estimating the impact on interest cover ratios
and headroom over available borrowing facilities.
These principal risks were aggregated to create
two scenarios which model plausible downside
scenarios of increasing severity based on:
(i) crystallisation of principal risks deemed to have
the most relevant potential impact on viability
(see risks mapped as likely and highly likely on
page 81); and (ii) crystallisation of all principal risks
and the impact of adverse movements in foreign
exchange and interest rates. The principal risks
that were evaluated also include the failure to
address existing and emerging sustainability risks,
including those relating to climate change, and the
changing societal and stakeholder expectations
of businesses in addressing these. Further
information is contained within our TCFD Summary
on page 59. The analysis indicated that even with
unexpected events occurring immediately and
in combination, Reckitt would still have sufficient
funds to trade, settle its liabilities as they fall due,
and remain compliant with financial covenants.
Viability Statement
The Board believes that the Group is well
positioned to manage its principal risks
successfully. The Board’s belief is based on
consideration of the historic resilience of
Reckitt and has taken account of its current
position and prospects, the actions taken to
manage the Group’s debt profile, risk appetite
and the principal risks facing the business
in unexpected and adverse circumstances.
Mitigating actions, should they be required,
are all within management’s control and
could include reduced capital expenditure or
temporary suspension of dividend payments.
Conclusion
As a result of the Viability Review, the Board
has a reasonable expectation that the Group
will be able to continue in operation and meet
its liabilities as they fall due over the five-year
period covered in the Viability Review.
The Strategic Report, as set out on pages 2
to 87, has been approved by the Board.
On behalf of the Board
C AT H E RY N O ’ R O U R K E
CO M PA N Y S E CR E TA RY
Reckitt Benckiser Group plc
28 February 2023
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Reckitt Annual Report and Accounts 2022
CO R PO R ATE GOV E R NA N CE R E PO RT
CHAIR’S INTRODUCTION
TO GOVERNANCE
C H R I S S I N C L A I R
CH A I R
Reckitt’s effective corporate
governance underpins its
Purpose – to protect, heal
and nurture in the relentless
pursuit of a cleaner and
healthier world.
Dear shareholder,
On behalf of the Board, I am pleased to present
Reckitt’s Corporate Governance Report for the
financial year ended 31 December 2022. The Board
is responsible for the effective leadership of the
Group and for promoting its long-term sustainable
success, generating value for shareholders and
contributing to wider society.
The Board provides leadership by setting
the company’s Purpose, strategy and values,
overseeing implementation of the strategy
by management and monitoring culture to
ensure its alignment with the company’s
Purpose and values. The Board ensures there
are appropriate processes in place to manage
risk, and monitors the company’s financial and
operational performance against objectives.
Board focus and oversight
Our key areas of Board focus during the year
included operational matters such as product
safety, supply, cyber security and employee health
and safety; strategic matters such as innovation, IT
and digital transformation, sustainability and M&A
activity; and financial, legal and compliance
matters material to the Group.
In addition, there have been several significant
events in the company’s external environment this
year which formed part of the Board’s focus. Those
included: the war in Ukraine and our humanitarian
response; the infant formula shortage in the
US; and the impact of raw material availability
for Reckitt products. These matters were also
discussed by the Corporate Responsibility,
Sustainability, Ethics and Compliance (CRSEC)
Committee. Matters discussed and considered
by the CRSEC Committee can be found in the
CRSEC Committee Report from page 120 to 125.
The Board also kept under review the economic
challenges that are affecting businesses and
consumers, such as increasing commodity prices,
most acutely energy costs; rising inflation; volatility
in global trade and financial markets; and the
impact of changing local economic conditions.
Further details can be found on matters
considered by the Board and our activities
throughout the year on pages 99 to 101.
Our approach to sustainability
During 2021, we launched our Sustainability
Ambitions, for a cleaner, healthier world, which
set out new ambitions to 2030. Our ambitions
align with Reckitt’s Purpose and our strategy for
sustainable growth and focus on three areas:
purpose-led brands, healthier planet and fairer
society. We began our sustainability agenda in 2012
and since then we have made significant progress.
But as the world’s social, health, and environmental
needs have intensified, so will the role we play as
a business. Our approach aims to create impact
for society together with impact for our business.
We engage and contribute on global issues.
At COP27 we continued to emphasise the impact
of climate change on people’s health whilst
demonstrating opportunities to address this in
public health and by combating climate change
through our brands, in our value chain and with
consumers globally. Further details on our work
on self-care, health literacy and the impacts of
climate change can be found on pages 47 to
58. We recognise that collaboration is critical
to building these actions and creating impact
at scale. We continue to develop new and
stronger partnerships with like-minded partners
to drive meaningful, sustainable change. Our
work with both governments and international
agencies and civil society through organisations
such as WWF and Water.org are examples
of this. More information on our partnerships
and progress towards our Sustainability
Ambitions can be found on pages 16 to 17.
Culture and values
Our culture and values define the way that Reckitt
does business and this starts with our employees.
We aim to create the space and opportunities to
help our employees make a difference and do the
right thing, always. Being diverse and inclusive
is not an additional principle for us, it is integral
to the way we think and act. It is our collective
responsibility to build inclusion into everything
we do, whilst ensuring we represent the people
we are and the global community we serve.
Our Code of Conduct reinforces our principles
of business conduct and is communicated to all
employees each year with mandatory training.
Our values underpin our Code of Conduct and
were further enhanced in 2020 with our renewed
Purpose, Fight and Compass. It sets out the level
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CO R P O R AT E G OV E R N A N C E R E P O R T CO N T I N U E D
of conduct expected from all Reckitt employees,
contractors, outsourced personnel and joint
ventures as well as the Board of Directors.
Culture and inclusion
We are evolving a vibrant, inclusive and
collaborative culture to deliver on our Purpose.
We build sustained business performance by
encouraging behaviours that promote and
embed our purpose-led culture. In embedding
inclusivity, all colleagues should feel free to
participate fully, bring their authentic self to work
and realise their full potential. Internally we are
strengthening our inclusive culture by focusing
on leadership, people and policy. Externally, our
inclusive approach to procurement, brands and
partnerships aligns what we do with who we are.
Further details on our people, culture and inclusion
can be found on pages 9 to 11 and page 50.
UK Corporate Governance Code 2018
The Board considers compliance with the
Code of utmost importance. Any instances
of non-compliance are only allowed through
the authority of the Board if it can be shown
that the spirit of the Code and good corporate
governance within the company generally
continues. This Corporate Governance Report
demonstrates how we have applied the principles
and complied with the provisions of the Code
during the year. Our statement of compliance
with the Code can be found on page 90.
Section 172 and ESG reporting
Effective engagement with our shareholders,
our employees and wider stakeholders is key to
Reckitt’s sustainable success. Under Section 172
of the Companies Act 2006 (CA 2006), Directors
must act in a way that they consider, in good
faith, would be likely to promote the success of
the company for the benefit of its shareholders
as a whole. In its decision-making, the Board
also considers wider stakeholder interests.
Our key stakeholders include our employees,
shareholders, customers, consumers, partners,
and the communities in which we operate and
the environment. Our Section 172 Statement,
which explains how the Directors have discharged
their responsibilities during the year under
review, can be found on pages 62 to 64.
For further information on environmental, social
and governance (ESG) matters, please see our
Highlights section on page 3 and our Task Force
on Climate-related Financial Disclosures (TCFD)
Summary on pages 59 to 61.
Board composition and succession planning
In February 2022, Alan Stewart joined Reckitt as
a Non-Executive Director and member of the
Remuneration Committee. Alan brings significant
corporate finance and accounting experience
from a variety of industries, as well as executive
leadership experience within a listed company
environment. He replaced Mary Harris as Chair
of the Remuneration Committee when she
stepped down from the role at the conclusion of
the 2022 Annual General Meeting (AGM) in May.
I would like to thank Mary for her hard work and
contribution as Remuneration Committee Chair.
During the year, having signalled her intention
to leave the business, Sara Mathew did
not seek re-election as a Non-Executive
Director at the AGM. I would like to take the
opportunity to thank Sara for her contribution
to the Board and Audit Committee.
Laxman Narasimhan stepped down as Chief
Executive Officer (CEO) on 30 September,
after three years with Reckitt. Laxman
decided, for personal and family reasons,
to relocate back to the US. On behalf of the
Board, I would like to thank Laxman for his
contribution to Reckitt during his tenure as
CEO; he led a successful rejuvenation of the
company’s strategy, execution and functional
capabilities and led the business through an
unprecedented global health pandemic.
Nicandro Durante was appointed as CEO
Designate in September and became CEO
on 1 October. Nicandro joined Reckitt in 2013
as a Non-Executive Director and became our
Senior Independent Director (SID) in 2019. He
is deeply familiar with the business and its
leadership function and is well positioned to
lead the execution of the company’s strategy
and transformation. Nicandro previously held the
position of CEO of British American Tobacco plc
for eight years. Upon his appointment as CEO
Designate, Nicandro ceased to be the SID and
stepped down as a member of the Nomination,
Remuneration and CRSEC Committees, as a matter
of good corporate governance. At the same time,
Andrew Bonfield, a Non-Executive Director and
the Chair of the Audit Committee, was appointed
as SID, to hold the role for an interim period.
On 1 November, we welcomed Jeremy Darroch to
the Board as Non-Executive Director. With effect
from 1 November, Jeremy became a member of
the Remuneration and Nomination Committees
and was also appointed as the SID, taking over
from Andrew Bonfield. Jeremy has substantial
leadership experience and knowledge of the
consumer retail sector and I am delighted that
Jeremy has joined Reckitt. We also announced
on 1 November that Olivier Bohuon had been
appointed as a member of the CRSEC Committee.
On 13 December, we announced that
Tamara Ingram OBE would be joining the
Board and Audit Committee on 1 February
2023. Tamara has considerable expertise
in advertising, marketing and digital
communication and a deep understanding
of consumer brands and digital strategy.
Biographies of the members of our Board can
be found on pages 91 to 94.
Further details on the induction process for the
new Non-Executive Directors can be found in the
Nomination Committee Report on pages 109 to 112.
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CO R P O R AT E G OV E R N A N C E R E P O R T CO N T I N U E D
Group Executive Committee (GEC) changes
During the year there were also several changes
to the GEC membership. As I reported to you
in last year’s Annual Report, in February 2022
Catheryn O’Rourke joined us as General Counsel
& Company Secretary. In April, Fabrice Beaulieu
was appointed to the role of Chief Marketing,
Sustainability and Corporate Affairs Officer. In June,
Miguel Veiga Pestana, Group Head of Corporate
Affairs and Chief Sustainability Officer, left after
five years with the company. In September,
Nicandro Durante also became a member of the
GEC upon his appointment as CEO Designate.
Further details on Board and GEC’s succession
planning, including the recruitment process
and selection criteria, can be found in the
Nomination Committee Report on pages
109 to 112. Biographies of the members of
the GEC can be found on pages 95 to 96.
Board performance review
The Board undertakes an annual review of its
own and its Committees’ performance and
effectiveness. Following a similar format to 2021,
the Board performance review was facilitated
by Lintstock Ltd, as part of its ongoing Board
Development Programme. Details of this year’s
Board performance review, together with our
progress against the outcomes from our 2021 Board
performance, can be found on pages 107 to 108.
Annual General Meeting and shareholder voting
The Annual General Meeting (AGM) is an important
event as it provides the Board with an opportunity
to update shareholders on the company’s
performance and strategic priorities. It also offers
an opportunity for shareholders to meet the Board
and put forward any questions to the Directors.
Owing to the COVID-19 restrictions that were in
place during 2020 and 2021, shareholders were
restricted from attending the AGM in person.
As a result of legal restrictions being lifted earlier
in 2022, we held a physical AGM in May 2022 and
shareholders were invited to attend the meeting
in person. Shareholders were given the option to
submit questions in advance of the AGM or ask
questions during the meeting, enabling the Board
to engage and interact directly with shareholders.
At the date of publication of this report,
we intend that the 2023 AGM will be held
as a physical meeting.
Conclusion
I am extremely proud of the Board and all
our Reckitt employees for their continued
commitment to creating value for our shareholders
and for contributing to the good governance
and stewardship of our business, on behalf of
all our stakeholders.
C H R I S S I N C L A I R
C H A I R
Reckitt Benckiser Group plc
28 February 2023
How we comply with the Code
1. Board leadership and
company purpose
Our Board of Directors
Group Executive Committee
Page
91-94
95-96
Reckitt’s approach to governance
97-98
Board activities during 2022
99-101
Our Purpose, strategy,
values and culture
102
CRSEC Committee Report
120-125
2. Division of responsibilities
How we are governed
3. Composition, succession
and evaluation
Board performance review
and effectiveness
103-106
107-108
Nomination Committee Report
109-112
4. Audit, risk and internal control
Audit Committee Report
5. Remuneration
Remuneration Committee Report
113-119
126-155
UK Corporate Governance Code 2018
Statement of Compliance
For the year ended 31 December 2022, the
company complied with all the provisions of
the Code, which is available to view on the
Financial Reporting Council’s (FRC) website
www.frc.org.uk, and the Disclosure Guidance
and Transparency Rules requirements to
provide a corporate governance statement.
In accordance with Section 4, Principle N,
Provision 27 of the Code the Board considers
that, taken as a whole, this Annual Report and
Accounts is fair, balanced and understandable
and provides the information necessary for
shareholders to assess the company’s position,
performance, business model and strategy.
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BOA R D LE A D E RS H I P A N D CO M PA N Y PU R POS E
OUR BOARD
The Board of Reckitt:
experienced, diverse
and balanced.
Biographical details of the Directors
as at 31 December 2022.
Detailed biographies for all Board members can be found
at www.reckitt.com/about-us/our-leadership/
C O M M I T T E E K E Y
Chair
R
Remuneration
N
C
Nomination
A
Audit
Corporate Responsibility,
Sustainability, Ethics and Compliance
C H R I S S I N C L A I R ( 7 2 )
C H A I R O F T H E B O A R D
N
R
C
N I C A N D R O D U R A N T E ( 6 6 )
C H I E F E X E C U T I V E O F F I C E R
J E F F C A R R ( 6 1 )
C H I E F F I N A N C I A L O F F I C E R
Nationality American
Nationality Brazilian/Italian
Nationality British
Appointment
Appointed as a Non-Executive Director in February
2015 and as Chair of the Board and Nomination
Committee in May 2018.
Appointment
Appointed as Chief Executive Officer in October
2022, having been appointed as a Non-Executive
Director in December 2013.
Skills and competencies
Chris brings strong leadership skills and
valuable strategic insight to the Board,
through his experience as CEO and Chair of
other large companies. He also has a strong
understanding of international consumer-
focused businesses. He is the former Chair and
CEO of Mattel, Inc and previously served as
CEO for various companies including Caribiner
International, Quality Food Centers, Pepsi-Cola
Co. and PepsiCo Foods and Beverages.
Current external appointments
None
Skills and competencies
Nicandro has strong leadership skills, developed in
various senior positions held throughout his career.
He has a strong background in the consumer goods
industry and has strong international business
experience, bringing a global perspective to his
role. He started his career at British American
Tobacco in 1981, holding senior positions in the
UK, Hong Kong and Brazil, and progressing to the
role of Chief Executive Officer from 2011 to 2019.
Current external appointments
Chair of TIM Participações S.A. and Chair of the
Compensation Board
Appointment
Appointed as Chief Financial Officer in April 2020.
Skills and competencies
Jeff brings extensive experience across
consumer and retail companies. He has a record
of transformational, strategic and operational
leadership, consistent performance delivery
and strong capital allocation discipline; all of
which lead to longer-term shareholder value
creation. He was the CFO and Management
Board member at Ahold Delhaize, CFO of First
Group plc and easyJet plc and held senior
finance roles at Associated British Foods plc.
Current external appointments
Chair of the Audit Committee and Non-Executive
Director of Kingfisher plc
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B OA R D L E A D E R S H I P A N D CO M PA N Y P U R P OS E CO N T I N U E D
J E R E M Y DA R R O C H ( 6 0 )
S E N I O R I N D E P E N D E N T D I R E C TO R
N
R
A N D R E W B O N F I E L D ( 6 0 )
N O N - E X E C U T I V E D I R E C TO R
A
N
PA M K I R B Y ( 6 9 )
N O N - E X E C U T I V E D I R E C TO R
C
N
A
A L A N S T E WA R T ( 6 2 )
N O N - E X E C U T I V E D I R E C TO R
R
N
Nationality British
Nationality British
Nationality British
Nationality British
Appointment
Appointed as Senior Independent Non-Executive
Director and a member of the Remuneration and
Nomination Committees in November 2022.
Appointment
Appointed as a Non-Executive Director in July 2018
and as Chair of the Audit Committee in
January 2019.
Appointment
Appointed as a Non-Executive Director in February
2015 and as Chair of the CRSEC Committee in
July 2016.
Appointment
Appointed as a Non-Executive Director in February
2022 and as Chair of the Remuneration Committee
in May 2022.
Skills and competencies
Jeremy is an outstanding leader with considerable
expertise in the consumer retail environment.
He has a proven track record of driving business
performance and a unique insight into what
motivates consumers. He is the former Executive
Chairman and Group CEO of Sky and prior to that
Group Finance Director of DSG International plc.
He has also held board positions with Burberry
Group plc and Marks and Spencer Group plc.
Current external appointments
Chair, National Oceanography Centre
WWF Ambassador
Senior Advisor, Bain Capital and the
Multichoice Group
Non-Executive Director of Ahren Acquisition Corp
Skills and competencies
Andrew brings more than three decades of
financial expertise to the Board. He is a strong
leader, with experience gained in large, complex
organisations and has a history of driving strong
financial performance in the UK and globally.
These skills are valuable to the Board and to his
role as Chair of the Audit Committee. He is CFO
of Caterpillar Inc, was Group CFO of National
Grid plc, CFO of Cadbury plc and Executive Vice
President and CFO at Bristol Myers Squibb.
Current external appointments
Chief Financial Officer of Caterpillar Inc.
Skills and competencies
Pam brings to the Board extensive knowledge of
the healthcare sector and a wealth of international
business and pharmaceutical experience. These
skills are highly valuable to her role as Chair
of the CRSEC Committee. She has served as
Chairman of SCYNEXIS, Inc., CEO of Quintiles
Transnational Corporation and held senior
positions in the international healthcare industry
at AstraZeneca plc and Hoffman-LaRoche.
Current external appointments
Non-Executive Director of Bunzl plc
Member of the Supervisory Board of AkzoNobel N.V.
Skills and competencies
Alan brings to the Board significant corporate
finance and accounting experience from a variety
of industries, including retail, banking and travel,
as well as executive leadership experience
within a listed company environment. He was
CFO of Tesco PLC where he played a key role in
the turnaround of Tesco. Prior to this he was also
CFO of Marks and Spencer Group plc, CFO of
AWAS, Group Finance Director of WH Smith PLC
and CEO and CFO of Thomas Cook Holdings.
Current external appointments
Non-Executive Director of Diageo plc
Non-Executive Director of Burberry Group plc
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B OA R D L E A D E R S H I P A N D CO M PA N Y P U R P OS E CO N T I N U E D
O L I V I E R B O H U O N ( 6 4 )
N O N - E X E C U T I V E D I R E C TO R
R
C
M A R G H E R I TA D E L L A VA L L E ( 5 7 )
N O N - E X E C U T I V E D I R E C TO R
A
M A R Y H A R R I S ( 5 6 )
D E S I G N AT E D N E D F O R E N G A G E M E N T
W I T H W O R K F O R C E
R
TA M A R A I N G R A M , O B E ( 6 2 )
N O N - E X E C U T I V E D I R E C TO R
A
Nationality French
Nationality Italian/British
Nationality British/Dutch
Nationality British
Appointment
Appointed as a Non-Executive Director in
January 2021.
Skills and competencies
Olivier is a successful leader, with many years’
experience as CEO of a large, global company.
Olivier has a wealth of experience in healthcare
products and markets and brings great insight
to the Board. He was the CEO of Smith &
Nephew plc and of healthcare, cosmetology
and pharmaceutical company Laboratoires
Pierre Fabre, and Corporate Executive Vice
President of Abbott Laboratories and President
of their pharmaceutical products division.
Current external appointments
Chairman of Majorelle
External Director of Takeda Pharmaceutical
Company Limited
Member of the Supervisory Board of Virbac SA
Co-Founder and Board member of
AlgoTherapeutix SAS
Appointment
Appointed as a Non-Executive Director in July 2020.
Skills and competencies
Margherita has extensive experience of financial
markets and digital technologies. She is an
experienced leader in business in both developed
and developing markets. Prior to becoming interim
CEO and Chief Financial Officer of Vodafone, she
held numerous senior finance roles within the
business. These skills, together with her strong
leadership background, are valuable to the Board
and her membership of the Audit Committee.
Current external appointments
Interim CEO and Chief Financial Officer of Vodafone
Group Plc
Appointment
Appointed as a Non-Executive Director in February
2015. Mary was Chair of the Remuneration
Committee and member of the Nomination
Committee from November 2017 to May 2022.
She remains a member of the Remuneration
Committee. Mary was appointed as Designated
NED for Engagement with the company’s
workforce in July 2019.
Skills and competencies
Mary has substantial experience in consumer and
retail businesses across China, Southeast Asia and
Europe. She brings to the Board a top-level strategic
outlook, with an international and consumer focus.
Her previous experience in other Non-Executive
Director roles, and as Chair of other Remuneration
Committees, is invaluable to the Board and her
membership of the Remuneration Committee.
Appointment
Appointed as Non-Executive Director in
February 2023.
Skills and competencies
Tamara has had an extensive career in advertising,
marketing and digital communications and has a
deep understanding of consumer brands and digital
strategy. She was Global Chair of Wunderman
Thompson and also held various leadership roles
at WPP plc. She also served as CEO of McCann
Worldgroup and Saatchi & Saatchi in London.
Current external appointments
Non-Executive Director of Marks and Spencer
Group plc
Non-Executive Director of Intertek Group plc
Non-Executive Director of Marsh & McLennan
Companies, Inc.
Current external appointments
Non-Executive Director of ITV plc
Member of the Remuneration Committee of
St. Hilda’s College, Oxford University
Supervisory Director of HAL Holding N.V.
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B OA R D L E A D E R S H I P A N D CO M PA N Y P U R P OS E CO N T I N U E D
DIVERSE LEADERSHIP
M E H M O O D K H A N ( 6 5 )
N O N - E X E C U T I V E D I R E C TO R
C
E L A N E S T O C K ( 5 8 )
N O N - E X E C U T I V E D I R E C TO R
A
Nationality American/British
Nationality American
Appointment
Appointed as a Non-Executive Director in July 2018.
Skills and competencies
Mehmood is a highly skilled medical practitioner
and researcher. Mehmood has been Chief
Executive Officer of Hevolution Foundation since
October 2020. He was previously CEO of Life
Biosciences Inc, and before that served as Vice
Chairman and Chief Scientific Officer, Global
Research and Development at PepsiCo Inc. He
has extensive experience in both developing
and developed markets, adding value to the
CRSEC Committee through his knowledge
of creating sustainable initiatives and past
experiences of leading research and development
efforts to create breakthrough innovations.
Current external appointments
Chief Executive Officer of Hevolution Foundation
Executive Chairman of Life Biosciences Inc
Chairman of VCAT, US National Institute of
Standards and Technology
Appointment
Appointed as a Non-Executive Director in
September 2018.
Skills and competencies
Elane has held various senior leadership positions
including Chief Executive Officer of ServiceMaster
Brands, Group President at Kimberly-Clark
International and Kimberly-Clark Professional
and as a director of Yum Brands!. Elane brings
great sector-relevant experience and insight of
consumer goods products to the Board, particularly
in personal care and wellness. She also brings vast
knowledge of emerging markets and the changing
channels of trade and consumer preferences.
Current external appointments
None
Other Directors who served during the year
– Laxman Narasimhan, CEO, stepped down
on 30 September 2022
– Sara Mathew, Non-Executive Director, resigned
following AGM on 20 May 2022
1
B OA R D M E M B E R S
S K I L L S OV E RV I E W 2
Core skill
Secondary skill
Financial expertise
46%
54%
Strategy
100%
Consumer Goods & retail
85%
15%
Healthcare & pharmaceuticals
38%
62%
Leadership
100%
33%
G E N D E R 1
67%
3
T E N U R E 1
5
3
Male
Female
Under 3 years
3-6 years
6-9 years
9+ years
1
1
5
N AT I O N A L I T Y 1
1
1
1
1
E T H N I C
D I V E R S I T Y 1
2
11
British
American
Brazilian/Italian
Non-ethnic minority group
Italian/British
Ethnic minority group
British/Dutch
French
American/British
1. As at 31 December 2022
2. Board skills as at
28 February 2023
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B OA R D L E A D E R S H I P A N D CO M PA N Y P U R P OS E CO N T I N U E D
GROUP EXECUTIVE
COMMITTEE
21
24
27
22
25
28
23
26
29
21 0
21 1
Detailed biographies for
all Executive Committee
members can be found at
www.reckitt.com/about-us/
our-leadership/
N I C A N D R O D U R A N T E ( 6 6 )
C H I E F E X E C U T I V E O F F I C E R
21
J E F F C A R R ( 6 1 )
C H I E F F I N A N C I A L O F F I C E R
22
Nationality Brazilian/Italian
Nationality British
Experience
Nicandro was appointed as Chief Executive Officer
in October 2022, having previously been appointed
as a Non-Executive Director in December 2013 and
as Senior Independent Director in January 2019.
Nicandro started his career at British American
Tobacco in 1981, holding senior positions in the
UK, Hong Kong and Brazil, and progressing to the
role of Chief Executive Officer from 2011 to 2019.
Experience
Jeff joined Reckitt as CFO in April 2020. He
was CFO and Management Board member
at Ahold Delhaize, and held the role of CFO
at First Group plc and easyJet plc and held
senior finance roles at Associated British Foods
plc. Jeff brings extensive experience across
consumer and retail companies. He has a record
of transformational strategic and operational
leadership, consistent performance delivery,
strong capital allocation discipline; all of which
lead to longer-term shareholder value creation.
K R I S L I C H T (4 6 )
P R E S I D E N T H E A LT H &
C H I E F C U S TO M E R O F F I C E R
23
V O L K E R K U H N ( 5 5 )
P R E S I D E N T H Y G I E N E
24
Nationality American
Nationality German
Experience
Kris joined Reckitt in November 2019 as Chief
Transformation Officer, and in July 2020 became
President Health & Chief Customer Officer.
He has held a number of senior strategic and
operational positions at PepsiCo, and was a
Partner at McKinsey & Company working in the
consumer, health and retail practices. He brings
strong operational and strategic experience.
Experience
Volker joined Reckitt in August 2020 as Chief
Transformation Officer, and in May 2021 became
President Hygiene. Prior to joining Reckitt,
Volker spent 26 years with Procter & Gamble
in a range of international finance, marketing,
and senior general management roles.
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B OA R D L E A D E R S H I P A N D CO M PA N Y P U R P OS E CO N T I N U E D
PAT S LY (4 7 )
P R E S I D E N T N U T R I T I O N
25
R A N J AY R A D H A K R I S H N A N ( 5 2 )
C H I E F H U M A N R E S O U R C E S O F F I C E R
26
FA B R I C E B E A U L I E U (4 9 )
C H I E F M A R K E T I N G , S U S TA I N A B I L I T Y
A N D C O R P O R AT E A F FA I R S O F F I C E R
27
S A M I N A F FA K H ( 5 2 )
C H I E F S U P P LY O F F I C E R
28
Nationality American
Nationality Indian
Nationality French
Nationality French
Experience
Pat joined Reckitt in 2017 as part of the Mead
Johnson Nutrition acquisition. He was appointed
as Chief Operating Officer, Nutrition in July 2021
and became President Nutrition in February 2022.
Pat has more than 20 years of experience in
senior leadership roles in general management,
marketing and sales across North America,
Europe, Asia Pacific and Latin America.
Experience
Ranjay joined Reckitt as Chief Human Resources
Officer in March 2020. Ranjay has 30 years’
experience in the human resources function
across different geographies and industries.
Prior to joining Reckitt, Ranjay was the Chief
Human Resources Officer at InterContinental
Hotels Group plc and spent over two decades
at Unilever in senior leadership roles.
Experience
Fabrice was appointed Chief Marketing,
Sustainability and Corporate Affairs Officer in
April 2022. Fabrice joined Reckitt in 1999, and has
held several senior management roles in France,
the UK, Benelux and Russia. He brings a wealth of
experience in marketing, operations and leadership.
Experience
Sami joined Reckitt as Chief Supply Officer
in July 2020 and is responsible for global
supply chain operations, including planning,
procurement, manufacturing and logistics.
Since January 2021 he has also been responsible
for Reckitt’s Quality, Environmental Health
& Safety and Quality Compliance teams.
He has 30 years of broad international
leadership experience in fast-moving
consumer goods companies.
A N G E L A N A E F, P h D (4 7 )
C H I E F R & D O F F I C E R
29
F I L I P P O C ATA L A N O ( 5 0 )
C H I E F I N F O R M AT I O N &
D I G I T I S AT I O N O F F I C E R
21 0
C AT H E R Y N O ’ R O U R K E ( 5 0 )
G E N E R A L C O U N S E L &
C O M PA N Y S E C R E TA R Y
21 1
Other Group Executive Committee members
who served in the year
Nationality American
Nationality Italian
Nationality American
Experience
Angela joined Reckitt as Chief R&D Officer in
September 2020 and is responsible for elevating
Reckitt’s science capability and platforms as well as
for driving external partnerships. She is focused on
enabling the Research & Development organisation
to deliver meaningful solutions addressing the
mega trends and sustainability to deliver growth.
Experience
Filippo joined Reckitt as Chief Information
& Digitisation Officer in April 2021. Filippo
is responsible for building and maintaining
Reckitt’s competitive leading-edge IT, Data
and Digital capabilities. Filippo brings to
Reckitt extensive leadership experience in
defining and shaping IT, digital portfolios and
technology-enabled new business models
across leading consumer goods organisations.
Experience
Catheryn joined Reckitt in February 2022 and is
responsible for legal matters across the Group.
She brings to Reckitt more than 20 years
of professional expertise in running global
legal and compliance teams, managing
litigation and corporate transactions, advising
on financial reporting and disclosure as
well as supporting Board governance.
– Rupert Bondy
General Counsel & Company Secretary, joined
Reckitt in January 2017 and left February 2022
– Miguel Veiga Pestana
Head of Corporate Affairs & Chief Sustainability
Officer, joined Reckitt in 2017 and left June 2022
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B OA R D L E A D E R S H I P A N D CO M PA N Y P U R P OS E CO N T I N U E D
RECKITT’S
APPROACH
TO GOVERNANCE
Leadership at Reckitt
There is a clear and effective leadership
structure in place at Reckitt. The Board has
established four Board Committees to assist in
the execution of its responsibilities. These are
the Nomination Committee, Audit Committee,
Remuneration Committee and CRSEC Committee.
Each Committee operates under terms of
reference approved by the Board. The terms
of reference are reviewed regularly, with the
last review taking place in November 2022,
and can be found on the company’s website,
at www.reckitt.com/investors/corporate-
governance. The current Committee membership
of each Director is shown on pages 91 to 94.
There are also three supporting Management
Committees: the Disclosure Committee; the
Group Executive Committee (GEC), and the Risk,
Sustainability & Compliance Committee (RSCC).
O U R B OA R D
The Board is collectively responsible for the overall leadership of the Group and for promoting its long-term sustainable success whilst focusing
on its strategic direction, Purpose, values and governance with the highest regard to the principles of the Code. There is a clear division of
responsibilities between the Board, its Committees and Management Committees.
N O M I N AT I O N CO M M I T T E E
Chaired by Chris Sinclair
AU D I T CO M M I T T E E
Chaired by Andrew Bonfield
REMUNER ATION COMMITTEE
Chaired by Alan Stewart
C RS E C CO M M I T T E E
Chaired by Pam Kirby
Responsible for making
recommendations to the
Board on suitable candidates
for appointment to the
Board, its Committees and
senior management and to
regularly review and refresh
their composition to ensure
that they comprise a diverse
group of individuals with the
necessary skills, knowledge
and experience to effectively
discharge their responsibilities,
whilst keeping in mind the
importance of diversity.
Responsible for monitoring the
integrity of Reckitt’s Financial
Statements and for ensuring
effective functioning of internal
audit, internal financial control
and risk management. It is also
responsible for managing the
company’s relationship with its
External Auditor.
Responsible for supporting the
Board in reviewing, monitoring
and assessing the company’s
approach to responsible,
sustainable, ethical and
compliant corporate conduct
and to assist the Board in
upholding its values of honesty
and respect.
Responsible for assisting the
Board in fulfilling its oversight
responsibility by ensuring
that the Remuneration Policy
and practices reward fairly
and responsibly, are linked
to corporate and individual
performance and take account
of the generally accepted
principles of good governance.
The Committee is responsible for
determining the remuneration
for the Chair, Executive Directors
and senior management.
More details are set out in the
Nomination Committee Report
on pages 109 to 112
More details are set out in the
Audit Committee Report on
pages 113 to 119
More details are set out in the
Remuneration Committee
Report on pages 126 to 155
More details are set out in the
CRSEC Committee Report on
pages 120 to 125
D I S C LOS U R E CO M M I T T E E
Chaired by Nicandro Durante or
Jeff Carr
Responsible for ensuring accuracy and
timeliness of disclosure of financial and
other public announcements.
G R O U P E X E CU T I V E CO M M I T T E E (G E C )
Chaired by Nicandro Durante
Responsible for overseeing Reckitt’s
management and ensuring collaboration
between GBUs, functions and in-market
operations. It recommends and implements
the strategy and related budget as approved
by the Board. The GEC drives business and
cultural transformation, reviews business
performance and approves business
development plans and major investments. It
plays a critical role in talent management and
development and oversees the integration of
sustainability within business operations.
R I S K , S U S TA I N A B I L I T Y &
CO M P L I A N C E CO M M I T T E E ( RS CC )
Chaired by Nicandro Durante
Provides oversight of risk across the
organisation and makes recommendations
to the CRSEC Committee for actions to
be taken in respect of the Group’s legal
compliance and ethics, sustainability,
external affairs, employee health and safety,
quality, consumer safety and regulatory
matters, including compliance strategies,
policies, programmes and key activities.
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B OA R D L E A D E R S H I P A N D CO M PA N Y P U R P OS E CO N T I N U E D
Board attendance during 2022
In 2022, there were five scheduled Board
meetings. An additional five Board meetings were
held during the year relating to various matters
including: review and approval of the preliminary
results announcement; approval of the Reckitt
2021 Annual Report and Notice of 2022 Annual
General Meeting (AGM) and confirmation of AGM
arrangements; updates on Reckitt’s people and
operations in Ukraine and Russia; review and
approval of the half-year results; and approval of
Board and Committee membership changes.
The formal meetings in September each year
are strategy sessions which are normally held
overseas, to allow the Board to immerse itself
in the Group’s operations, to visit local sites and
meet the local workforce. This year the September
2022 strategy sessions were held in person
in Amsterdam. During the three-day strategy
sessions, the Board received presentations on the
company’s strategy, including on functional areas,
innovation and transformation programmes. The
Board also met informally with senior leadership
from the Hygiene GBU and hosted employee
engagement sessions. A fireside CEO chat was
broadcast to provide Reckitt employees with
an update on recent leadership changes, with
an opportunity to ask the CEO questions.
Following the conclusion of each scheduled
Board meeting, the Chair held a session with the
Non-Executive Directors, without the Executive
Directors present. There were four scheduled (and
one additional) Audit Committee meetings, three
scheduled (and one additional) Remuneration
Committee meetings, three scheduled (and two
additional) Nomination Committee meetings, and
four scheduled CRSEC Committee meetings.
The following table sets out the attendance by
Directors at the scheduled Board and Committee
meetings that each Director was eligible to attend.
Directors who were not members of individual
Board Committees were also invited to attend one
or more meetings of those Committees during the
year. Where a Director is unavoidably absent from
a Board or Board Committee meeting, they still
receive and review the papers for the meeting and
typically provide verbal or written input ahead of
the meeting, usually through the Chair of the Board
or the Chair of the relevant Board Committee, so
that their views are considered at the meeting.
Given the nature of the business to be conducted,
some of the additional Board meetings were
convened at short notice, which can make it
difficult for some Directors to attend due to
prior commitments and their home locations.
Board
Audit
Committee
Remuneration
Committee
CRSEC
Committee
Nomination
Committee
5
scheduled
meetings
4
scheduled
meetings
3
scheduled
meetings
4
scheduled
meetings
3
scheduled
meetings
Andrew Bonfield
Olivier Bohuon1
Jeff Carr
Jeremy Darroch2
Margherita Della Valle3
Nicandro Durante4
Mary Harris
Mehmood Khan
Pam Kirby
Sara Mathew5
Laxman Narasimhan6
Chris Sinclair
Alan Stewart
Elane Stock
5/5
5/5
5/5
1/1
5/5
5/5
5/5
5/5
5/5
1/2
4/4
5/5
5/5
5/5
4/4
4/4
3/4
4/4
1/2
4/4
3/3
1/1
2/2
3/3
3/3
3/3
1/1
3/3
4/4
4/4
4/4
3/3
1/1
3/3
3/3
3/3
1/2
3/3
3/3
1. Olivier Bohuon became a member of the CRSEC Committee on 1 November 2022
2. Jeremy Darroch joined as a Non-Executive Director and member of the Remuneration and Nomination Committees on
1 November 2022
3. Margherita Della Valle was unable to attend one of the scheduled Audit Committee meetings owing to an external
commitment
4. Nicandro Durante resigned as a member of the Nomination, Remuneration and CRSEC Committees on 1 September 2022
5. Sara Mathew resigned as a Non-Executive Director and Audit Committee member on 20 May 2022, when she did not stand for
re-election at the AGM
6. Laxman Narasimhan resigned as CEO and left the company on 30 September 2022
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B OA R D L E A D E R S H I P A N D CO M PA N Y P U R P OS E CO N T I N U E D
BOARD ACTIVITIES
DURING 2022
How Board meetings are structured
Board meetings are conducted in an open
atmosphere conducive to challenge and debate.
Agendas are tailored to the requirements of the
business and agreed in advance by the Chair and
CEO with the support of the Company Secretary.
The Board receives operating and financial
reports from the CEO and CFO on strategic
and business developments, as well as financial
performance and forecasts at each meeting.
Specific presentations are also made by non-
Board members on material matters to the Group.
In addition, the Chairs of the Audit, Remuneration,
CRSEC and Nomination Committees update the
Board on the proceedings of those meetings,
including key topics and areas of concern.
At the conclusion of every scheduled Board
meeting, the Chair holds a session with the other
Non-Executive Directors, without the Executive
Directors present, providing further opportunity
for the Non-Executive Directors to assess the
performance of management and individual
Executive Directors and help drive future agenda
items. Details of each Director’s attendance at
Board meetings can be found on page 98.
The Board uses its meetings as a way of
discharging its responsibilities, including as set
out in Section 172 of CA 2006 to promote the
success of the company for the benefit of its
members as a whole.
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B OA R D L E A D E R S H I P A N D CO M PA N Y P U R P OS E CO N T I N U E D
OUR ACTIVITIES DURING THE YEAR
F I N A N CI A L OV E RS I G HT
S T R AT EGY A N D PL A N N I N G
Group plans and budgets
– In November, reviewed the Group’s financial
plan for 2023 and individually for the GBUs and
supply function
– Reviewed forecasts and key performance
targets, including assumptions, scenarios
and projections
Business updates
– Reckitt business reviews, including at Group
and GBU level, functional reviews of certain
business areas and capability centres and
status updates on transformation programmes
– Deep dives of functions such as Finance, HR,
Supply, IT & Digital
Strategy
– Board members met in person for a three-day
meeting in September 2022 to discuss
strategy and the innovation pipeline
Sustainability strategy
– Reviewed the Group’s sustainability strategy
and approach, including progress against
delivery of our Sustainability Ambitions
– Received updates on competitive
– Received updates on sustainability activities
environment and broader
market developments
and initiatives
Mergers and acquisitions
– Sold the E45 brand and related sub-brands to
Karo Pharma as part of Reckitt’s strategy to
actively manage its portfolio
– Oversight of potential merger and acquisitions
(M&A) activities and portfolio strategy
Customers
Employees
Partners
Communities
Government and industry associations
Consumers
Shareholders
Reporting
– Reviewed and approved Reckitt’s Annual
Report and Financial Statements including
compliance with reporting requirements
– Reviewed and approved Reckitt’s
half-year results
Going concern
– Reviewed going concern and
liquidity considerations
Financial resources
– Reviewed the company’s financial position,
Group debt and funding arrangements
– Provided results presentations to investors
and employees during the year
Interim and final dividend payments
– Approved the final 2021 and interim 2022
dividend payments
LE A D E RS H I P A N D G OV E R N A N CE
Board and Committee performance review
– Conducted the annual Board performance
review, identified areas for improvement and
recommended actions
– Considered and proactively addressed actions
Shareholders and stakeholders
– Held the 2022 AGM as a physical meeting.
Shareholders had the opportunity to pre-
submit questions as well as ask them during
the meeting
from the 2021 Board performance review
– Held Board and employee engagement
Talent, succession and board composition
– Oversight of Group talent planning and
succession, including senior management
succession and retention
– Considered and approved Board changes,
including the appointment of CEO, SID and
new Non-Executive Directors, and Committee
membership changes, as detailed on page 111.
meetings, to understand employee views, as
part of September strategy meetings
Compliance
– Reviewed and approved governance matters,
such as the Schedule of Matters Reserved for
the Board, Committee terms of reference,
Directors’ conflicts of interest and compliance
with the Code and best practice
– Approved Reckitt’s 2021 Modern Slavery
and Human Trafficking Statement, as
recommended by the CRSEC Committee
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B OA R D L E A D E R S H I P A N D CO M PA N Y P U R P OS E CO N T I N U E D
R I S K M A N AG E M E NT A N D I NT E R N A L CO NT RO L
Risk appetite
– The Board is responsible for compliance with
the Code and the FRC’s Guidance on Risk
Management, Internal Control and Related
Financial and Business Reporting. The sectors
and environment within which Reckitt
operates are dynamic and fast-moving and, in
some areas, highly regulated and so controls
are kept under review. The system is designed
to assess and manage, rather than eliminate,
risks to our business objectives. The Board
relies on these controls insofar as they are
able to provide reasonable, but not absolute,
assurance against material misstatement or
loss. The Group’s principal and emerging risks
and mitigating actions are detailed on pages
80 to 86
– As part of our risk management process,
we regularly evaluate risks to achieving
objectives, and the likelihood of such risks
materialising and impacting the ability of the
Group to cope with the circumstances should
they occur. In doing so, we are inherently
considering our risk appetite through the
actions taken, controls implemented and
processes followed to reduce the likelihood
of risk events taking place, mitigating the
potential impact and ensuring that the
cost of doing so is proportionate to the
benefit gained
Principal risks and internal controls
– Conducted an annual review of Reckitt’s
principal and emerging risks and
internal controls
– Reckitt is committed to maintaining strong
internal controls and further enhancing these.
Further information on internal control
activities during the year can be found on
pages 117 to 118 of the Audit Committee
Report. In 2022 this included the monitoring
of management’s response to the 2021
investigation into the creation, utilisation and
release of certain operational expenditure and
trade investment accruals within the Hygiene
GBU in 2020 and 2021
– Functional and operational management meet
to discuss performance measured against
strategic aims and goals, with risks and risk
controls incorporated into the discussions.
During the year, the Directors undertook
a robust assessment of the principal and
emerging risks facing the company, including
those that could threaten Reckitt’s business
model, future performance, solvency and
liquidity. Each principal and emerging risk
is overseen by the Board, or a designated
Committee of the Board, and is subject to
formal deep-dive reviews as appropriate at
Board, GEC and GBU meetings. More details
on the Group’s principal strategic risks and
uncertainties can be found in the Strategic
Report on pages 80 to 86
– The Board confirms that reviews and
monitoring of the appropriateness and
effectiveness of the system of internal control
and risk management throughout the financial
year and up to the date of approval of the
Annual Report and Accounts have been
satisfactorily completed with no significant
failings or weaknesses identified. Reckitt’s
ongoing controls transformation programme,
in preparation for internal controls changes
arising from the Department for Business,
Energy & Industrial Strategy (BEIS)
consultation, has identified certain control
improvement opportunities that management
is currently undertaking
Viability Statement
– Considered and approved the 2022
Annual Report Viability Statement upon
recommendation of the Audit Committee
COVID-19
– Received updates on the continued
consequences of COVID-19 on the business,
including focus on supply and consumer
demand, the workforce and risk management
Treasury policies
– Reviewed and approved the Group’s
Treasury policies
Climate-related risk and environmental, social
and governance (ESG) matters
– The Board oversees, considers and reviews
the Group’s ESG strategy and has oversight
of climate-related risks and opportunities.
As part of the Board’s annual review of our
principal and emerging risks, sustainability
was considered. The Board’s focus included,
both ESG performance, and the introduction
of the Task Force on Climate-related Financial
Disclosures (TCFD) climate reporting
regulation that impacts the way we report
key metrics. More information on sustainability
can be found on pages 16 to 17. Our TCFD
Statement can be found on pages 59 to 61
– The CRSEC Committee supports the Board
in reviewing, monitoring, and assessing the
company’s approach to sustainability,
which includes climate change. The CRSEC
Committee reports to the Board regularly
at Board meetings, providing an update on
sustainability objectives and progress against
our targets. Further details on the activities of
the CRSEC Committee can be found on pages
120 to 125
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B OA R D L E A D E R S H I P A N D CO M PA N Y P U R P OS E CO N T I N U E D
OUR PURPOSE, STRATEGY,
VALUES AND CULTURE
Our Purpose, Fight and Compass are fundamental
to Reckitt’s culture and values. Our success as
a business is founded on our strong, distinctive
culture. We want all our employees to have a
sense of belonging and take personal pride
in what they do. Our approach is anchored by
our Purpose: to protect, heal and nurture in the
relentless pursuit of a cleaner and healthier world.
Our Compass sets out our values and behaviours.
At its heart is the goal of always doing the right
thing, putting consumers and people first, seeking
out new opportunities, striving for excellence
and building a culture of shared success.
To evolve our culture and achieve sustainable
outperformance, Leadership Behaviours are key.
Our Leadership Behaviours set out how we expect
each of our leaders to behave and define what
good leadership looks like. Reckitt’s leaders are
expected to Own, Create, Deliver and Care, and
in doing so, live our Purpose, Fight, and Compass,
actively listen, learn, seek new opportunities,
and focus on what matters. We have been
proactively assessing our culture, including not
only the role of our leaders but also the efforts of
our employees. More information on our culture
can be found on pages 9 to 11 and page 50.
How the Board monitors culture
A key focus of the Board is to monitor culture and
ensure alignment between our Purpose, values,
and behaviours. Our culture and values at Reckitt
are defined by the Board and the GEC. Regular
interactions with employees help the Board
monitor culture and are detailed in the table.
Ensuring employees
are informed
Staying informed
of legal &
compliance matters
How we monitor culture
Board interactions and engagement to monitor culture throughout the year
Connecting directly
with our employees
Monitoring employee
perceptions
Creating a forum for
employees to be heard
Board members meet with employees regularly. As part of this year’s
September Board meeting schedule, Board members met informally with
senior leadership from the Hygiene GBU and hosted employee engagement
sessions. The Board reviewed feedback from the round-table discussions.
Regular global all-employee surveys include questions to gauge employees’
perceptions and understanding of leadership, inclusion and wellbeing at
Reckitt, and identify areas which require greater attention. This year’s survey
highlighted that employees would recommend Reckitt as a place to work;
they feel there is a culture of achievement at Reckitt; they are proud to
work for Reckitt; and value the commitments Reckitt makes. Similar to last
year, responses from the survey also identified areas that need further
improvement, such as: creating an even more inclusive workplace with more
transparency on equal opportunities and career progression; improving
processes and automation of manual tasks; and investing in and developing
people. The Board will continue to monitor progress against these areas.
Employee Resource Groups (ERGs) are employee networks that aim to raise the
visibility of underrepresented communities. They provide a space for colleagues
to connect and support each other and are also represented on the Global
Inclusion Board. In addition, throughout the year, Mary Harris, the Designated
NED for engagement with the company’s workforce, has maintained regular
engagement with various employee groups, including the ERGs.
Quarterly all-employee global live-streaming results broadcasts were held by
the CEO and CFO to present the company results and employees are invited
to ask questions and interact directly with presenters.
At each Board meeting, the CRSEC Committee reports to the Board on legal
compliance and ethics matters, including the Group’s Speak Up programme,
which provides safe communication channels for employees wishing to raise
concerns on potential violations of regulations, internal policies or any
misconduct observed at Reckitt.
Maintaining open
communication
During the September Board meeting schedule, a fireside CEO chat was
broadcast to update Reckitt employees on recent leadership changes and
to provide employees with an opportunity to ask questions.
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D IV IS I O N O F R ES PO NS I B I LITI ES
HOW WE ARE
GOVERNED
Defining roles and responsibilities
The Board consists of a balance of Executive and
Non-Executive Directors who, together, have
collective accountability to Reckitt’s shareholders
and stakeholders as well as responsibility for the
overriding strategic, financial and operational
objectives and direction of Reckitt. The Board
manages the overall leadership of the Group
with reference to its formal Schedule of Matters
Reserved for the Board. This schedule is reviewed
annually, with the last review undertaken
in November 2022, and broadly covers:
– Matters which are legally required to be
considered or decided by the Board, such
as approval of Reckitt’s Annual Report and
Financial Statements, declaration of dividends
and appointment of new Directors
– Matters recommended by the Code to be
considered by the Board, such as terms of
reference for the Board and its Committees,
review of internal controls and risk management
– Compliance with regulations governing
UK publicly listed companies, such as the UK
Listing Rules, the Disclosure Guidance and
Transparency Rules and the Prospectus
Regulation Rules
– Matters relating to developments in, or changes
to, the Group’s strategic direction, material
corporate or financial transactions
The full Schedule of Matters Reserved for the
Board is available on the Reckitt website at
www.reckitt.com/investors/corporate-
governance.
Board roles and responsibilities
To ensure the Board performs effectively, there is
a clear division of responsibilities, set out in writing
and agreed by the Board, between the leadership
of the Board and the executive leadership of the
business. The key roles are defined in greater
detail below.
N O N - E X ECUT I V E
The Chair
– Leading the Board and taking responsibility for
the Board’s overall effectiveness in directing
the company
– Upholding the highest standards of integrity
and ethical leadership, leading by example
and promoting a culture of openness and
debate, based on mutual respect, both in and
outside the boardroom and in line with our
Purpose, values, strategy and culture
– Chairing Board, Nomination Committee
and shareholder meetings and setting
Board agendas
– Encouraging constructive challenge and
facilitating effective communication between
the Board, management, shareholders and
wider stakeholders, while promoting a culture
of openness and constructive debate
The Senior Independent Director
– Acting as a sounding board for the Chair on
Board-related matters
– Acting as an intermediary for other Directors
as necessary
– Evaluating the Chair’s performance on an
annual basis
– Chairing Board and Nomination Committee
meetings in the absence of the Chair
– Ensuring an appropriate balance is maintained
between the interests of shareholders and
other stakeholders
– Leading the annual performance review
process for the Board and its Committees
and addressing any subsequent actions
– Promoting the highest standards of
corporate governance
– Building a well-balanced, diverse and highly
effective Board
– Ensuring Directors receive accurate, timely
and clear information
– Ensuring there are appropriate induction
and development programmes for all
Board members
– Ensuring the long-term sustainability of
the company
– Being available to shareholders and
stakeholders to address any concerns that
they have been unable to resolve through
normal channels
– Leading the search and appointment process
for a new Chair, when necessary
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D I V I S I O N O F R E S P O N S I B I L I T I E S CO N T I N U E D
Non-Executive Directors
– Providing independent input into Board
decisions through constructive challenge
and debate, strategic guidance and
specialist advice
– Setting and approving the company’s
long-term strategic, financial and
operational goals
– Ensuring there are effective systems of
internal control and risk management and that
these are continually monitored and reviewed
– Setting appropriate levels of remuneration
for Executive Directors and ensuring
performance targets are closely aligned
with shareholder interests
– Examining the day-to-day management of
the business against the performance targets
and objectives set, ensuring that management
is held to account
– Development of succession planning
and the appointment and removal of
senior management
– Taking into account and responding to
– Reviewing financial information and ensuring
shareholders’ views
it is complete, accurate and transparent
Designated Non-Executive Director for engagement with the company’s workforce
– Overseeing the Board’s engagement with the
– Providing an employee voice in the
company’s workforce together with
management, to understand more about
engagement and the culture of the company
boardroom and reporting on matters
relating to company culture, purpose
and improvements
– Developing and implementing employee
engagement initiatives
E X ECUT I V E
The Chief Executive Officer
– Principally responsible for the day-to-day
management of Reckitt, in line with the
strategic, financial and operational objectives
set by the Board
– Chair of the GEC, consisting of the CEO,
the CFO and senior management executives,
who together are responsible for execution
of the company’s strategy and achieving its
commercial aims
– Effective development and implementation of
strategy and commercial objectives as agreed
by the Board
– Maintaining relationships with investors and
advising the Board accordingly
The Chief Financial Officer
– Supporting the CEO in developing and
implementing the company’s strategy
– Leading the global finance function,
and developing key talent and planning
for succession
– Responsible for establishing and maintaining
adequate internal controls over financial
reporting and for the preparation and integrity
of financial reporting
– Managing Reckitt’s risk profile and establishing
effective internal controls
– Ensuring there are effective communication
flows to the Board and the Chair, and
that they are regularly updated on key
matters, including progress on delivering
strategic objectives
– Regularly reviewing the organisation structure,
developing a Group Executive team and
planning for succession
– Providing clear leadership to promote the
desired culture, values and behaviours to
inspire and support the company’s workforce
– Ensuring the long-term sustainability of
the business
– Ensuring the Board receives accurate, timely
and clear information in respect of the Group’s
financial performance and position
– Developing and recommending the long-term
strategic and financial plan
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D I V I S I O N O F R E S P O N S I B I L I T I E S CO N T I N U E D
The Company Secretary
– Providing advice and support to the Chair
– Facilitating an induction programme for all
and all Directors
Board members
– Advising and keeping the Board up to
date on all relevant legal and governance
requirements and ensuring the company
is compliant
– Ensuring the Board receives high quality,
timely information in advance of Board
meetings to ensure effective discussion
– Ensuring there are policies and processes in
place to help the Board function efficiently
and effectively
– Keeping abreast of shareholders’ views
A full description of the roles and responsibilities
of the Chair, Chief Executive Officer and Senior
Independent Director can be found in the
Corporate Governance section of our website:
www.reckitt.com.
How we manage conflicts of interest
Directors have a duty under the CA 2006 to
avoid interests, direct or indirect, which might
conflict with the interests of the Group. Under the
terms of the company’s Articles of Association,
such conflicts can be authorised by the Board.
Procedures are in place to manage and, where
appropriate, approve such conflicts. Any
authorisations granted by the Board are recorded
by the General Counsel & Company Secretary
in a Register of Conflicts, together with the
date on which the conflict was authorised. Any
conflicts authorised during the year are reviewed
annually by the Nomination Committee and the
Board. In addition, each Director certifies on
an annual basis that the information contained
in the Register of Conflicts is correct.
The Board considered and approved additional
external commitments taken on by Mehmood
Khan, Pam Kirby and Alan Stewart.
The company indemnifies the Directors and
Officers of the company and any Group subsidiary
to the extent permitted by the CA 2006 and the
Listing Rules in respect of the legal defence costs
for claims against them and third-party liabilities.
The indemnity would not provide cover for a
Director or Officer if that individual was found to
have acted fraudulently or dishonestly.
Additionally, Directors’ and Officers’ liability
insurance cover was maintained throughout the
year at the company’s expense.
Managing time commitment and ‘overboarding’
On appointment, Non-Executive Directors are
made aware of the need to, and are required to
confirm that they will, allocate sufficient time
to their role to discharge their responsibilities
effectively. They are also required to seek
agreement from the Chair before taking on
additional commitments, and to declare any
actual or potential conflicts of interest. Non-
Executive Directors are engaged under the
terms of a letter of appointment. Initial terms
of appointment are for three years with three
months’ notice, with all Directors standing for
election or re-election at every AGM. The Board
has reviewed the length of service of each
Director and considers that the Chair and each
Non-Executive Director standing for re-election
or election at this year’s AGM is independent.
The Board considers all Non-Executive Directors
who served during the year to be independent.
The Board and Directors are confident that each
Director individually has the expertise and relevant
experience required to perform the role of a
Director of a listed company and to contribute
effectively to the Board and Committees to which
they are appointed. The company recognises
the developmental advantages of an external
non-executive role on a non-competitor board
and Executive Directors are permitted to seek
such a role, provided that they do not take on
more than one non-executive directorship in,
nor become the Chair of, a FTSE 100 company.
Nicandro Durante is currently Chair of TIM
Participações S.A. and Jeff Carr is currently a
Non-Executive Director of Kingfisher plc and Chair
of its Audit Committee.
Board support
The General Counsel & Company Secretary
is responsible for organising Board meetings,
as well as collating any papers for the Board
to review and consider. Board and Committee
papers are accessible to all Directors through
a secure and confidential electronic document
storage facility. This facility is maintained by
Reckitt’s Secretariat function and additionally
holds other information which the Chair, the CEO
or the General Counsel & Company Secretary
may deem useful to the Directors, such as press
releases and pertinent company information.
All Directors have individual access to advice
from the General Counsel & Company Secretary
and a procedure exists for Directors to take
independent professional advice at the company’s
expense in furtherance of their duties.
Board induction, training and development
Reckitt has a comprehensive induction
programme for new Directors. The programme
covers Reckitt’s business, together with the legal
and regulatory requirements of Directors, and
includes one-to-one presentations from senior
executives across the Group covering topics
such as strategy, investor relations, finance, and
CRSEC Committee matters, including a focus
on ESG matters, supply and the company’s
three GBUs – Hygiene, Health and Nutrition. The
induction programme has several aims and serves
multiple purposes. It provides new Directors
with an understanding of Reckitt, its businesses
and the markets and regulatory environments
in which it operates: it provides an overview of
the responsibilities for Non-Executive Directors
of Reckitt; and it builds links to Reckitt’s people
and stakeholders. Incoming Board members
will also have meetings with the Group’s legal
and compliance teams and an open offer to
meet with the Group’s External Auditor.
Alan Stewart’s induction included meetings
with key management across the business. He
attended virtual meetings with the CEO, CFO
and General Counsel & Company Secretary. He
also met with the Presidents of the three GBUs.
In addition, he had meetings with members of
the GEC, including the Chief R&D Officer, Chief
Supply Officer, Chief HR Officer, Chief Information
& Digitisation Officer and Head of Corporate
Affairs & Chief Sustainability Officer. Alan became
a member of the Remuneration Committee on
appointment to the Board and had meetings
with Mary Harris, Chair of the Remuneration
Committee, and the Group Head of Reward.
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D I V I S I O N O F R E S P O N S I B I L I T I E S CO N T I N U E D
Jeremy Darroch’s induction, following his
appointment as a Non-Executive Director and
as a member of both the Remuneration and
Nomination Committees, included a combination
of in-person and virtual meetings over several
days. Jeremy met with the CEO, CFO and General
Counsel & Company Secretary, as well as the
Presidents of the three GBUs. Jeremy also had
meetings with Mary Harris, as the Designated
Non-Executive Director for engagement with
the company’s workforce, the Committee
Chairs, the GEC members and the Group Head
of Reward and SVP Head of Investor Relations.
Both Non-Executive Directors’ inductions
covered legal compliance matters, including
disclosure of conflicts of interest and persons
closely associated, the UK Market Abuse
Regulation and Reckitt’s share dealing code.
The Directors received copies of the Board
and Committee terms of reference; Reckitt
Benckiser Group plc Articles of Association;
past Board and Committee effectiveness
review summaries; the latest Annual Report and
Sustainability Report; and company policies.
We aim to have one Board strategy meeting
held at an off-site business location each
year. This gives new Directors an opportunity
to engage directly with employees and
key personnel in other jurisdictions.
The Chair has overall responsibility for ensuring
that the Directors receive suitable training
to enable them to carry out their duties. As
part of their role, Directors are also expected
to personally identify any additional training
requirements they feel would benefit them in
performing their duties to the company. Ongoing
training arranged by the company covers a
wide variety of sector-specific and business
issues, as well as legal and financial regulatory
developments relevant to the company and the
Directors. Training is also provided by way of
briefing papers or presentations at each scheduled
Board meeting, as well as meetings with senior
executives or other external sources. The Directors
may, at the company’s expense, take independent
professional advice and are encouraged to
continually update their professional skills and
knowledge of the business and wider industry.
During the year, training materials have been
made available for Board members to view,
including materials relating to Directors’ duties.
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CO M POS ITI O N , S U CCESS I O N A N D E VA LUATI O N
BOARD PERFORMANCE
REVIEW AND EFFECTIVENESS
Performance review of the Board
The Board undertakes an annual review of its
own and its Committees’ performance and
effectiveness, with a formal externally facilitated
performance review of the Board conducted
at least every three years. In 2020, we engaged
Lintstock Ltd (Lintstock) to facilitate a three-
year Board Development Programme, which
was extended for an extra year in 2022. In this
third year of the four-year Board Development
Programme with Lintstock, a survey-based
review was conducted, consisting of an online
questionnaire sent to all Directors. The 2022
Board performance review considered the
effectiveness of the Board, as well as that of each
Board Committee and the individual Directors.
The areas of focus included Board composition,
stakeholder oversight, Board dynamics and
support, management and focus of meetings,
Board Committees, strategic oversight, risk
management and internal control, succession
planning and people oversight and priorities
for change. A report, with action points and
recommendations for the Board to consider,
was distributed to Directors and the results
of the review were subsequently discussed
by the Board at its November meeting.
In addition, the Chair’s performance was
considered by the Senior Independent Director
with input from his fellow Non-Executive
Directors and discussed following the November
Board meeting without the Chair present. The
discussion concluded that the Chair continued
to devote sufficient time to his role and
continued to lead the Board constructively,
demonstrating objective judgement and
encouraging a culture of openness and debate.
Lintstock is independent of and has no other links
with the company or its Directors in connection
with the performance review. Actions taken to
address the findings of the 2021 review are also
outlined below.
2021 recommendations
Action taken during 2022
Board composition and succession planning
The Board’s composition was rated highly.
Considering board composition and renewal
over the next three to five years in line
with Reckitt’s strategic goals, the need for
further digital and marketing expertise was
highlighted, as was the importance of ensuring
appropriate geographical representation,
including UK representation on the Board.
Competitive dynamics and consumer focus
The need to ensure the Board’s understanding
and awareness of the views and requirements of
key stakeholder groups was highlighted, including
on competitive dynamics and consumer choices.
People and culture
The importance of monitoring employee
sentiment and culture throughout the
organisation was highlighted.
The Nomination Committee met throughout the
year to discuss and review profiles of potential new
Non-Executive Directors, taking into consideration
feedback from Directors and the skills required
on the Board. The appointments of Alan Stewart,
Jeremy Darroch and Tamara Ingram OBE have
brought strong UK-based leaders onto the Board
and ensured effective succession in relation to
the roles of Senior Independent Director and
Chair of the Remuneration Committee. The
Nomination Committee also continues to have
oversight of the CEO succession process.
During 2022, the Board received detailed
briefings focusing on competitive dynamics
and the perspective of consumers. In addition,
in July the Board undertook Listening Sessions
in relation to self-care, where the Board heard
perspectives from key stakeholders, including
NGOs, providers and regulatory authorities.
In addition to receiving briefings on the Group’s
regular employee ‘pulse’ surveys, at the September
board meeting, the Board undertook roundtable
sessions with small groups of Reckitt colleagues
to have Listening Sessions to further understand
current employee sentiment and company
culture at Reckitt. In addition, throughout the
year, Mary Harris, the Designated Non-Executive
Director for engagement with the company’s
workforce, maintained regular engagement
with various employee groups, including the
Group’s Employee Resource Groups (ERGs).
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CO M P OS I T I O N , S U CC E S S I O N A N D E VA L UAT I O N CO N T I N U E D
2021 recommendations
Action taken during 2022
Oversight of strategy and transformation
Whilst the clarity of Reckitt’s strategy was highly
rated overall, the benefits of ensuring more
detailed oversight of the Group’s transformation
and productivity programmes were noted.
Risk management and internal controls
The Board’s focus on risk was generally seen to
be appropriate, although the scope for more in-
depth focus on specific areas of risk was noted.
Throughout the year, the Board received
regular updates on Group strategy and the
progress of the Group’s productivity and
transformation programmes, in particular, in
relation to the ongoing programmes relating
to Supply, IT & Digital and Cyber Security.
During 2022, the Board received updates
on the Group’s principal and emerging risks
and also approved the refresh of the Group’s
risk management framework to ensure a
closer alignment with the commercial and
operational activities of the business.
The 2022 review of the Board’s performance
and that of its Committees concluded that the
Board, its Committees and individual Directors
were performing effectively. The composition of
the Board was considered appropriate in terms
of its size, range of skills and expertise and level
of diversity. Board members were considered to
work well together to achieve objectives, with
a sufficient degree of support and challenge
provided by Directors. Whilst Board composition
was rated highly, it was noted that ensuring
appropriate geographical representation, gender
diversity and recruiting Non-Executive Directors
with IT/digital and marketing experience would
be beneficial to the Board. The key priorities for
the Board over the coming year were identified to
include talent and succession planning including
CEO succession, strategy, oversight of execution
and delivery, risk management, investment in the
capabilities and systems to deliver the strategy,
and with a particular focus on Supply, IT & Digital
and Cyber Security. The principal outcomes of
the review will be reviewed and reassessed as
part of the Board’s 2023 performance review.
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NOMINATION
COMMITTEE
REPORT
Member
Chris Sinclair (Chair)
Chair and member for the whole year
Andrew Bonfield
Member for the whole year
Pam Kirby
Member for the whole year
Mary Harris
Member until 20 May 2022
Alan Stewart
Member from 20 May 2022
Jeremy Darroch
Member from 1 November 2022
Nicandro Durante
Member until 1 September 2022
Meetings
attended
53/3
53/3
53/3
52/2
52/2
51/1
52/2
C H R I S S I N C L A I R
C H A I R O F T H E
N O M I N AT I O N CO M M I T T E E
With the departure of Laxman
Narasimhan, our focus during
the latter part of the year has
been the smooth transition
of responsibilities to Nicandro
Durante, and the search to
identify the best long-term
candidate to take Reckitt on
the next phase of its growth
and transformation journey.
Highlights from the year
– Alan Stewart appointed to the Board as a
Non-Executive Director, joined the Nomination
Committee and became Chair of the
Remuneration Committee
– Jeremy Darroch joined the Board as Senior
Independent Non-Executive Director
and member of the Remuneration and
Nomination Committees
– Nicandro Durante appointed as Chief Executive
Officer (CEO)
– Tamara Ingram appointed to the Board
as Non-Executive Director and member
of the Audit Committee, with effect from
1 February 2023
Key focus for 2023
– CEO succession planning
– Induction programme for newly appointed
Non-Executive Directors
– Continue to monitor succession planning for
Board members nearing their nine-year term
Committee membership
Members of the Committee are appointed by
the Board. Membership comprises the Chair, the
Senior Independent Non-Executive Director and
the Chairs of each of the Board’s Committees.
In accordance with the principles of the UK
Corporate Governance Code 2018 (the Code),
the Committee is made up of a majority of
independent Non-Executive Directors. The
General Counsel & Company Secretary acted
as Secretary to the Committee during the year.
The membership of the Committee is reviewed
annually by the Chair as part of the annual
performance review of the Committee.
All Directors are required to seek election
or re-election each year at the Annual
General Meeting (AGM). Biographical details
of the Directors, including their skills and
experience, can be found on pages 91 to 94.
Meetings
Meetings of the Committee are held as needed
but are required to take place at least once
a year. In 2022, the Committee held three
scheduled meetings and two additional meetings.
Meetings usually take place ahead of Board
meetings and the Chair of the Committee
reports formally to the Board on its proceedings.
Attendance at Committee meetings is set
out in the Board meeting attendance table on
page 98 of the Corporate Governance Report.
Role and responsibilities
The role of the Committee is to ensure that
there is a formal, rigorous and transparent
procedure for the appointment of new
Directors to the Board and to lead the process
for Board appointments. The Nomination
Committee has principal responsibility for
making recommendations to the Board on new
appointments and the composition of the Board
and its Committees. The Committee also assists
the Board in succession planning for senior
management. The role of the Committee includes,
but is not limited to, the following matters:
– Regularly reviewing the composition (including
skills, experience, independence, knowledge
and diversity) of the Board and making
recommendations to the Board with regards
to any changes deemed necessary, taking
into account the length of service of the
Board as a whole and the need to regularly
refresh membership
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N O M I N AT I O N CO M M I T T E E R E P O R T CO N T I N U E D
– Reviewing the composition of each of the Board
Committees and evaluating the performance
and effectiveness of each Director
– Keeping under review the leadership
capabilities of the company, covering
both executive, non-executive and senior
management positions, ensuring plans are in
place for orderly succession, with a view to
ensuring the continued ability of the company
to compete effectively in the markets in which
it operates. It is noted that the Committee
considers management succession planning
to be so important that it is reviewed by the
full Board
– Ensuring that all newly appointed Directors
undertake an appropriate induction programme
to ensure that they are fully informed about the
strategic and commercial issues affecting the
company and the markets in which it operates,
as well as their duties and responsibilities as
a Director of the Board and member of a
Board Committee(s)
– Keeping under annual review and continually
monitoring potential conflicts of interest, and,
if appropriate, authorising situational conflicts of
interest, whilst ensuring the risk of unacceptable
influence resulting from any conflict of interest
is minimised
Key activities during 2022
Chief Executive Officer (CEO) succession planning
In September, Laxman Narasimhan stepped down
as CEO, having decided to relocate back to the
US for personal and family reasons. Since his
appointment in September 2019, Laxman led a
successful rejuvenation of the company’s strategy,
execution and foundational capabilities. We would
like to take this opportunity to thank Laxman for
leading the organisation over the last three years.
Upon Laxman stepping down as CEO, Nicandro
Durante, previously the Senior Independent Non-
Executive Director, stepped into the role as CEO
whilst the Committee identifies the best long-
term candidate to take Reckitt on the next phase
of its growth and transformation journey. Nicandro
has a wealth of experience at Reckitt, having
joined as a Non-Executive Director in December
2013 and was appointed Senior Independent
Non-Executive Director in January 2019. Upon
his appointment as CEO, Nicandro ceased to
be Senior Independent Non-Executive Director
and also stepped down from the Nomination,
Remuneration and CRSEC Committees. Having
worked closely with Nicandro since he joined
the Board, the Committee is confident he will
provide the leadership needed for Reckitt.
The Committee has commenced the search
for the best long-term leader to succeed
Nicandro. The Committee is overseeing the CEO
succession process, internally and externally, and
has instructed Egon Zehnder International Ltd,
an independent search agency, to assist with
the search process. Egon Zehnder undertakes a
number of executive (as well as non-executive)
searches for the Group and is a signatory of the
Voluntary Code of Conduct for Executive Search
Firms in the UK to address diversity and best
practice relating to Board appointments. It does
not have any connection or provide any other
services to the company or its individual Directors.
Senior Independent Non-Executive Director (SID)
search, appointment, and induction
In September, upon Nicandro Durante’s
appointment as CEO, he ceased responsibilities
as SID. Andrew Bonfield was appointed as SID for
an interim term, to manage responsibilities until
Jeremy Darroch joined the Board in November.
Upon joining the Board, Jeremy Darroch was
appointed as SID. Jeremy joins the Board as
former Executive Chairman and Group Chief
Executive of Sky. He has extensive experience
in leadership positions and the Committee
was delighted at his decision to join the Board.
Information on Jeremy’s induction process can
be found on page 106 of the Governance Report.
New Director appointment process
The process for Board appointments is led by
the Committee. The Committee conducts a
rigorous search for suitable candidates with the
objective of ensuring there is a diverse talent
pool on the Board with a mix of experience and
skills required to achieve the objectives of the
business. The Committee supports diversity
in its widest sense and seeks to appoint Board
members from different backgrounds who will
contribute differing perspectives to the Board.
For new Board appointments, the Committee
considers the following matters:
– The purpose, values and culture of the business
and the company’s strategic priorities
– The key skills and experience which may be
required on the Board and its Committees
– The importance of diversity including
gender, personal strengths, and social
and ethnic backgrounds
Non-Executive Director succession planning
During the year, the Committee conducted
a search for new Non-Executive Directors to
diversify the skills and expertise of the Board.
In sourcing new Non-Executive Directors,
the Committee considered the tenure of the
existing Board members and the impact on the
composition of the Board and its Committees.
The Committee identified specific desirable
skills in the search for new Non-Executive
Directors including the need for individuals
with digital expertise, the importance of
additional experience in emerging markets and
increased UK representation on the Board.
We instructed Egon Zehnder to carry out a
search for new Non-Executive Directors. Upon its
recommendation, we reviewed a list of candidate
profiles considering their skills, experience,
expertise and overall fit with Reckitt’s culture, and
the Committee Chair had exploratory meetings
with potential candidates. After shortlisting
potential candidates, individual meetings were
held with each of the Committee members
and the CEO. During the recruitment process,
the Committee followed a formal, rigorous and
transparent assessment with due regard to
diversity, skills, knowledge and level of experience.
All potential candidates are considered with
regard to potential conflicts of interest and the
level of time required for other appointments,
in making recommendations to the Board.
In January 2022, we announced that Mary
Harris would be stepping down as Chair of
the Remuneration Committee and as member
of the Nomination Committee upon the
conclusion of the 2022 AGM. Mary remains
on the Remuneration Committee and as
the Designated Non-Executive Director for
engagement with the company’s workforce.
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N O M I N AT I O N CO M M I T T E E R E P O R T CO N T I N U E D
We were delighted that Alan Stewart joined the
Board as a Non-Executive Director and member
of the Remuneration Committee in February.
At the conclusion of the 2022 AGM, Alan became
Chair of the Remuneration Committee and a
member of the Nomination Committee. Alan
brings to the Board significant corporate finance
and accounting experience from a variety of
industries including retail, banking and travel,
as well as executive leadership experience
within a listed company environment.
Sara Mathew signalled her intention not to
stand for re-election at the 2022 AGM and to
resign from the Board and Audit Committee
upon the conclusion of the AGM. We would
like to take this opportunity to thank Sara for
her services since joining the company.
During the year we announced two new
Non-Executive Director appointments. Jeremy
Darroch became a Non-Executive Director and
member of the Remuneration Committee in
November, and in December we announced
that Tamara Ingram OBE would be joining the
Board and Audit Committee in February 2023.
Renewal of existing Directors
Non-Executive Directors are initially appointed
for a three-year term and generally continue to
serve one or more further terms. All Directors are
nominated for appointment by the Committee,
which is subsequently approved by the Board.
During the year, the Committee considered the
renewal of existing Non-Executive Directors.
The Committee recommends that all existing
Board members have their appointments
renewed, and as such, resolutions to this
effect will be proposed to shareholders for
approval at the forthcoming AGM.
Details of the specific reasons each Director
contributes to and continues to be important
to Reckitt’s long-term success are set out in
the Notice of AGM, available at www.reckitt.
com/investors/annual-general-meetings.
N O N - E X ECUT I V E D I R ECTO R A PP O I NT M E NT PRO CE S S
STEP 1
STEP 2
STEP 3
STEP 4
STEP 5
The Committee
reviews the
composition of
the Board and
its Committees
to identify
the skills,
experiences
and expertise
required
The Committee
outlines a role
specification
and engages
an external
consultant to
conduct a search
for potential
candidates
The Committee
evaluates the
potential
candidates and
considers the
shortlist for
meetings and
interviews
Following the
conclusion of
interviews, the
Committee’s
recommendation
is submitted to
the Board for
consideration
Once the Board
has approved the
recommendation,
the appointment
is announced in
line with the FCA’s
Listing Rules
and a formal
induction process
commences
Group Executive Committee (GEC) changes
The GEC changes during the year reflect the
Committee’s focus on succession planning
and the alignment of our functional leaders
with Reckitt’s strategic priorities and growth
opportunities. Whilst the Committee’s terms
of reference include management succession
planning, this is considered so important as to
be reviewed and overseen by the full Board.
Following the departure of Rupert Bondy,
in February, we were pleased to welcome
Catheryn O’Rourke as General Counsel &
Company Secretary and as a member of the
GEC. In her role, Cathy is responsible for legal,
company secretarial and legal compliance
matters across Reckitt. Cathy joins the GEC with
more than 20 years of professional expertise
in running global legal and compliance teams,
managing litigation and corporate transactions;
overseeing financial reporting and disclosure
as well as supporting Board governance.
In June, Miguel Veiga Pestana, Head of
Corporate Affairs & Chief Sustainability Officer,
left Reckitt. Upon the announcement of
Miguel’s departure, in April, Fabrice Beaulieu
was appointed Chief Marketing, Sustainability
and Corporate Affairs Officer. In his new
role, Fabrice has joined the GEC and taken on
responsibility for the corporate affairs and
sustainability functions as well as retaining
ongoing oversight of Marketing Excellence.
Fabrice brings a wealth of experience to the GEC,
having joined Reckitt in 1999. He has served in
roles in France, the UK, Benelux and Russia and
has extensive knowledge of the business.
Biographical details of GEC members can be found
on pages 95 to 96.
Review of Committee terms of reference
The terms of reference for the Committee are
reviewed on an annual basis. During the year,
the Committee’s terms of reference were
reviewed and considered to be fit for purpose,
in-line with best practice. The current terms of
reference for the Nomination Committee are
available on our website at www.reckitt.com.
Review of potential conflicts of interest
During the year, the Committee reviewed Board
members’ potential conflicts of interest. The
Committee reviewed a schedule of external
appointments and other potential situational
conflicts as disclosed by each Director. Having
reviewed the schedule, the Committee concluded
that the appointments did not affect any
Director’s ability to perform his or her duties and
recommended that the Board authorises each
Director to continue in each of his or her external
commitments. Each Director standing for election
or re-election at the forthcoming AGM of the
company has individually provided assurances
that they remain committed to their roles and can
dedicate sufficient time to perform their duties.
Composition
The Committee regularly evaluates the Board and
its Committees, and considers the composition,
balance of skills and experience, diversity and
how effectively Directors work together to
achieve Reckitt’s objectives. The Committee
ensures that plans are in place for orderly
succession of the Board and senior executive
management, overseeing a diverse pipeline
of succession. This ensures that the Board and
GEC benefit from fresh perspectives as well as
the experience of longer-serving members.
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N O M I N AT I O N CO M M I T T E E R E P O R T CO N T I N U E D
Diversity and inclusion
The Board and Committee fully recognise the
importance of diversity, including gender and
ethnicity, at Board and senior management
level in compliance with the Code. Inclusion is
core to Reckitt’s purpose to ‘protect, heal and
nurture in the relentless pursuit of a cleaner
and healthier world’. We recognise that it
is critical for us to have a diverse employee
population and a Board and senior management
team that is reflective of the markets we
operate in and the consumers we serve.
We do not have a written Board diversity
policy but the Committee and the Board are
committed to recruit members of the Board
on the strict criteria of merit, skill, experience
and cultural fit of any potential candidates, and
to seek diversity of gender, social and ethnic
backgrounds, cognitive and personal strengths.
This commitment is demonstrated through
our Board composition which comprises six
nationalities, and four women. Notably Pam Kirby
is the Chair of the CRSEC Committee and Mary
Harris is the Designated Non-Executive Director
for engagement with the company’s workforce.
I am pleased to report that as at 31 December
2022, 33% of our Board members are women,
which exceeds the 25% target set by the Davies
Review and we have achieved the 33% target
as outlined in the Hampton-Alexander Review.
We also meet the requirements of the Parker
Review published in October 2017. Our Board
consists of one member from an ethnic minority,
in line with the Parker Review recommendation.
Percentage of women Board members as at
31 December 2022
33%
67%
Women
Men
Our GEC, comprising the most senior management
level in the business, represents seven different
nationalities from across the globe, embodying
our truly multinational focus. The company’s
wider global leadership community holds over
49 nationalities between them, representing a
broad background of collective skills, cultures
and experience. This widens our understanding
of our consumers, who themselves come from
the broadest possible backgrounds allowing
us to be best placed in serving their needs.
As at 31 December 2022, representation of women
within the GEC was just under 20%, and within
the GEC and their direct reports was 28%. While
progress has been made, we are cognisant of the
gap in performance towards the 40% for women
in leadership within the GEC as detailed in the
Hampton-Alexander Review (and in Provision
23 of the Code). We are working to improve this
and gender balance at all management levels.
We recognise that women’s representation at our
most senior levels needs improvement, and the
Committee continues to make a commitment to
increase women’s representation at this level.
We were delighted that in February, Catheryn
O’Rourke joined the company and the GEC
as General Counsel & Company Secretary.
As at 31 December 2022, women employees
accounted for 44% of our global workforce and
make up 50% of our manager population.
We are committed to equality of opportunity in
all areas of employment and business, regardless
of personal characteristics. We always recruit
the best and most suitable candidates for
any role, and we strive for a well-balanced
representation of backgrounds, nationalities,
cultures, skills and experiences, at all levels
across the Group. Ultimate responsibility and
sponsorship for this policy rests with the GEC.
Senior management is accountable, and all
Reckitt employees are responsible for ensuring
that our diversity policies and programmes
are actively implemented and followed.
We continue to put diversity and inclusion at
the core of everything we do. Further details
can be found at pages 9 to 11 and in our
stakeholder engagement section from page 47.
Performance review
Committee performance review
This year, the Committee participated in the main
Board performance review conducted by Lintstock
Ltd. Further details on the Board evaluation
process can be found on pages 107 to 108.
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AUDIT
COMMITTEE
REPORT
A N D R E W B O N F I E L D
C H A I R O F T H E
AU D I T CO M M I T T E E
During the year, the Committee
continued to focus its oversight
of the enhancement of internal
controls and risk management
framework, to ensure readiness
for the anticipated corporate
governance and audit reforms.
On behalf of the Board, I am pleased to present
the Audit Committee Report for the financial
year ended 31 December 2022.
This report details how the Committee has
discharged its role, duties and performance during
the year under review in relation to internal control,
financial and other reporting, risk management,
the internal audit function, and our relationship
and interaction with the External Auditor.
Committee priorities for 2023
– Maintaining oversight and providing assurance
to the Board on Reckitt’s risk management and
internal control procedures, including monitoring
key areas in the context of risk and control, such
as IT and tax
– Sustaining a strong culture of risk management
and embedding and strengthening internal
controls across the Group
– Holistically monitoring potential legislative and
regulatory changes which may affect the work
of the Committee, including as a result of the
Department for Business, Energy & Industrial
Strategy (BEIS) consultation
– Keeping abreast of emerging risks, both
domestic and international, arising from the
current geopolitical and economic landscape
Committee membership
The Chair of the Committee is a Chartered
Accountant with recent and relevant financial
experience. He is currently Chief Financial
Officer of Caterpillar Inc. and has previously
held CFO roles for other listed companies.
– All Committee members are independent
Non-Executive Directors who have financial,
economics and/or business management
expertise in large companies.
– As Chair of the CRSEC Committee, Pam Kirby’s
membership of the Audit Committee ensures
that relevant issues, such as risk, whistle-
blowing and compliance are shared and
coordinated between the two Committees.
– Committee members are expected in particular
to have an understanding of:
– The Group’s operations, policies and internal
control environment
– The principles of, and recent developments in
financial reporting
– Relevant legislation, regulatory requirements
and ethical codes of practice
– The role of internal and external audit and
risk management
The Board is satisfied that, in compliance with
the UK Corporate Governance Code 2018 (the
Code), Committee members as a whole have
competence relevant to the company’s sector
(consumer goods). The relevant financial and
sectoral experience of each Committee member
is summarised in the table on page 114.
During the year, Sara Mathew did not stand
for re-election at the AGM in May 2022, and
accordingly stepped down as a Director and
as a member of the Committee on that date.
We announced in December 2022 that Tamara
Ingram OBE would be joining the Committee on
her appointment as a Director of the company
on 1 February 2023. Tamara is an outstanding
leader with considerable expertise in global
marketing services, and a deep understanding
of consumer brands and digital strategy.
Committee appointments are generally made for a
three-year period. Members of the Committee are
appointed by the Board on the recommendation
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 114
Reckitt Annual Report and Accounts 2022
AU D I T CO M M I T T E E R E P O R T CO N T I N U E D
Committee membership
Composition
Member from
Meetings
attended1
Recent and relevant financial
experience
Sectoral experience relevant
to Reckitt’s operations
Andrew Bonfield (Chair)
July 2018
54/4
Pam Kirby
March 2016
Margherita Della Valle2
July 2020
Elane Stock
October 2021
Sara Mathew3
July 2019 to
May 2022
54/4
53/4
54/4
51/2
– Consumer goods
– Pharmaceuticals/
healthcare
– Financial expert
– Chartered Accountant
– Currently CFO of a global
US Fortune 100 company
– Has held numerous CFO
roles at other large
companies, including
those in the consumer
goods sector
– Sits on another
– Pharmaceuticals/
FTSE 100 company’s
Audit Committee
healthcare
– Technology
– Financial expert
– Currently interim
CEO and CFO of a
FTSE 100 company
– Holds a Master’s degree
in Economics
– Has held senior finance
roles and CFO roles at
other large companies
– Holds Master’s degrees
in Finance
– Consumer goods
– Technology
– Consumer goods
– Emerging markets
– Financial expert
– Holds Master’s degrees
– Consumer goods
– Pharmaceuticals/
healthcare
in Finance and
Accounting
– Has held senior finance
roles and CFO roles at
other large companies
1. There were five (four scheduled and one additional) Committee meetings during the year
2. Margherita was unable to attend one meeting owing to a prior commitment
3. Sara did not stand for re-election as a Director at the Company’s AGM on 20 May 2022 and therefore retired as a Director
(and as a member of the Committee) on the same date
of the Nomination Committee, which reviews
membership in terms of skills, experience,
knowledge and diversity of gender, social and
ethnic backgrounds, and cognitive and personal
strengths. On joining the Committee and during
their tenure, members receive additional training
tailored to their individual requirements. Such
training includes meetings with management
covering internal audit, risk management,
legal, tax, treasury and financial matters, as
well as meetings with the External Auditor.
All members of the Committee receive
regular briefings from management on
matters covering governance and legislative
developments, accounting policies and
practices, and tax and treasury.
During the year, the Head of Secretariat acted
as Secretary to the Committee.
Meetings
During 2022, the Committee held five meetings
at times aligned to the company’s reporting
cycle. Of the five meetings held during the
year, one non-scheduled meeting was held via
videoconference, as permitted by the company’s
Articles of Association and the Committee’s
terms of reference. Committee meetings
usually take place ahead of Board meetings
and the Committee Chair provides an update
to the Board on the key issues discussed at
each meeting. Committee papers are provided
to all Directors in advance of each meeting,
including a copy of the Committee minutes.
Meetings are attended by senior representatives
of the External Auditor, and by the Group
Head of Audit, Chief Financial Officer (CFO)
and SVP Corporate Controller. The Chair of
the Board and the Chief Executive Officer are
also invited to attend. Other management
attend when deemed appropriate by the
Committee. Time is allocated at the end of
each meeting for private discussion with the
internal audit team and the External Auditors
without other invitees being present, as well as
a private session of the Committee members.
Committee member meeting attendance during
the year is set out in the table opposite.
Role and responsibilities
The Committee is part of the Group’s governance
framework and supports the Board in fulfilling
its oversight responsibilities in ensuring the
integrity of the Group’s financial reporting, internal
controls and overall risk management process,
and relationship with the company’s External
Auditor. There were no significant changes to the
Committee’s role and responsibilities during the
year. The Committee’s role and responsibilities
are set out in its terms of reference, which are
available on our website at www.reckitt.com.
Committee meetings cover matters set out in
its terms of reference related to the reporting
and audit cycle, including: half- and full-year
results; internal and external audit work plans
and reports; and regular updates from financial
management and the External Auditor.
Activity during the year
Standing agenda items reviewed by the
Committee throughout the year
– Received reports from the SVP Corporate
Controller, internal audit function and
External Auditor
– Considered tax and treasury matters, including
provisioning for uncertain tax positions and
compliance with statutory reporting obligations
– Considered legal matters, including provisioning
and compliance risk
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AU D I T CO M M I T T E E R E P O R T CO N T I N U E D
– Kept abreast of changes in financial reporting
and governance matters by way of technical
updates throughout the year
– KPMG’s half-year review report findings
to 30 June 2022 and management
representation letter
– Annual review of risk management and internal
– KPMG’s assessment of its objectivity
controls including in-depth review of risks
across Group functions, and of integrated risk
management framework
and independence
– KPMG’s strategy for the 2022 audit
– Monitored the Group’s risk assessment processes
– Received regular reports on internal
controls and the company’s controls
transformation programme
Other items considered by the Committee
at meetings during the year
– Review of the 2021 preliminary results
announcement, draft unaudited Financial
Statements and recommendation for approval
by the Board
– Review of the 2021 Annual Report and Accounts,
the going concern basis of preparation and
Viability Statement, including whether the
Committee could recommend that the Board
approve the 2021 Annual Report and Accounts
– KPMG’s 2021 audit findings report, observations
on Reckitt’s internal controls for the 2021
financial year, management representation
letter and report on the 2021 Annual Report
and Accounts
– KPMG’s final non-audit fees for 2021 and
approval of KPMG’s 2022 audit fees
– Review of the 2022 half-year results
announcement, including the going concern
basis of preparation, and recommendation for
approval by the Board
– KPMG’s interim IT control findings relating to the
2022 audit cycle and audit strategy update
– Work undertaken in respect of the 2021 internal
audit plan and monitoring the 2022 internal
audit plan
– Annual review of IT general controls, cyber
security and IT operations
– Annual review of legal and compliance controls
– Review of risk management and
business continuity
– Annual review and approval of Group
Treasury policies
– Review of the Committee’s 2023 standing
agenda and terms of reference
– Results of the performance reviews of the
Committee, the internal audit function and
external audit
Significant and key financial reporting matters
The key matters reviewed and evaluated by the
Committee during the year were as follows.
The Committee is responsible for reviewing and
approving the appropriateness of the interim and
annual Financial Statements and related
announcements, including:
– Recommending that, in the Committee’s view,
the Financial Statements are fair, balanced and
understandable. In addition to the detailed
preparation and verification procedures in
place for the 2022 Annual Report and Financial
Statements, management continued its
focus on narrative reporting and clear written
and visual messaging to communicate the
Group’s strategy
– Reviewing the appropriateness of the
accounting policies, judgements and estimates
used as set out from page 181 to 188 and
concluding that the judgements and
assumptions used are reasonable
– Reviewing the Group’s policy relating to,
and disclosure of, alternative performance
measures (APMs)
Areas of significant financial judgement
The areas of significant financial judgements in
relation to the 2022 Group Financial Statements
considered by the Committee, together with a
summary of the actions taken, were as follows:
Recoverability of goodwill and other
intangible assets
Under International Financial Reporting Standards
(IFRS), goodwill and indefinite-life assets must be
tested for impairment on at least an annual basis.
Impairment testing is inherently judgemental and
requires management to make multiple estimates,
for example around future price and volume
growth, future margins, terminal growth rates and
discount rates. The Group’s impairment testing
utilised cash flow projections included within
one-year budgets and three- to five-year strategic
plans. Cash flows beyond the five-year period
were projected using terminal growth rates.
its Biofreeze cash-generating unit (2021: no
impairment charge) and £15 million (2021: no
impairment charge) relating to other CGUs.
Management determined that the Group’s
other goodwill and indefinite-lived intangible
assets remained recoverable at 31 December
2022 and no other impairment charges were
required (2021: no impairment charges).
In November 2022 and February 2023, the
Committee reviewed the detailed results of the
impairment testing for Biofreeze, and challenged
the key assumptions which underpinned the
Biofreeze recoverable amount, including
anticipated market share improvement, the
commercial success of new product launches
and international market expansion. The
Committee confirmed the key judgements and
estimates made by management including market
expansion and discount rate, and reviewed
the sensitivity of the Biofreeze impairment
model to changes in key assumptions.
Following the impairment of Biofreeze, no
headroom exists between its recoverable
amount and carrying value. As required under
IFRS, management has included disclosures
in the Financial Statements in relation to
its Biofreeze impairment assessment. The
disclosures for Biofreeze includes the key
estimates underpinning the Biofreeze
recoverable amount, and the sensitivity of the
Biofreeze recoverable amount to reasonable
changes in key estimates. The Committee has
reviewed these disclosures, included within
Note 9, and considers them appropriate.
As a result of impairment testing performed
in 2022, management recorded a £167 million
impairment charge in relation to goodwill,
comprising a charge of £152 million relating to
Tax provisioning
From time to time, the Group may be involved in
disputes in relation to ongoing tax matters in a
number of jurisdictions around the world where
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AU D I T CO M M I T T E E R E P O R T CO N T I N U E D
the approach of the local authorities is particularly
difficult to predict. The amount of uncertain tax
position liabilities recorded in relation to these
investigations is an area where management and
tax judgement are important. The Committee
reviewed the key judgements made with
management, including relevant professional
advice that may have been received in each
case, and considers the level of uncertain tax
position liabilities recognised to be appropriate.
As required under IFRS, management has included
disclosure in the Financial Statements outlining the
amount of uncertain tax position liabilities and the
methodology by which they have been recognised
and the sources of estimation uncertainty in
relation to these uncertain tax position liabilities
or the rationale for why sensitivity disclosure is
not meaningful and has not been provided in
the Financial Statements. The Committee has
reviewed these disclosures, included within
Notes 1 and 22, and considers them appropriate.
Trade spend accruals
Trade spend is a significant cost for the Group,
with the principal accounting judgements
relating to trade accruals, specifically the
timing of recognition and the determination of
management’s best estimate of the amount of
trade spend which will ultimately be incurred.
The Audit Committee focused on the level of
trade spend accruals at the year end to ensure
they are sufficient and appropriate. In addition,
the Committee evaluated the accuracy of
management’s estimation of trade spend accruals
through reviewing the subsequent utilisation
of trade spend accruals which were originally
recorded in the 2021 Financial Statements, in
part due to the continuing increased uncertainty
and judgement in the estimation of trade spend
accruals since the COVID-19 pandemic.
period of the Group’s long-term forecasting
process and covers the various business cycles.
Legal liability provisioning
At 31 December 2022 a provision of £221 million
(2021: £180 million) was held on the Group’s
Balance Sheet in relation to regulatory, civil
and criminal investigations as well as litigation
proceedings, including a provision in respect of
the South Korea Humidifier Sanitiser (HS) issue.
The Committee has reviewed the status of
potential legal and constructive liabilities during
the year, and at the year end, in relation to the HS
issue, Necrotizing Enterocolitis (NEC) and other
significant matters. The Committee challenged
management on legal judgements made in
determining the level of provisions recognised and
was satisfied with the level of provisioning and
associated disclosure for the HS issue, Necrotizing
Enterocolitis (NEC) and other significant matters.
Other key financial reporting matters
Other key matters reviewed and evaluated in
relation to the 2022 Group Financial Statements
considered by the Committee, together with a
summary of the actions taken, were as follows.
Going concern and Viability Statement
A viability review was undertaken by
management, encompassing its going concern
review. The Committee reviewed and challenged
the key assumptions used by management in its
Viability Review and going concern assessment, as
well as the scenarios applied and risks considered.
Based on its review, the Committee considers
that the application of the going concern basis
for the preparation of the Financial Statements
was appropriate and confirmed the suitability
of the Viability Statement covering a five-year
period, as set out on page 87. The use of a
five-year period for the Viability Review is the
Fair, balanced and understandable
The Committee reviewed the 2022 Annual
Report and Financial Statements to ensure
that it is fair, balanced and understandable
and provides sufficient information to enable
shareholders to assess the Group’s position,
performance, business model and strategy.
The Annual Report project team was primarily
comprised of individuals in Reckitt’s company
secretarial, finance, investor relations, internal
audit, reward, corporate communications and
sustainability teams. Individuals from those
teams with sufficient knowledge and experience
undertook the drafting of the relevant sections
of this Annual Report. The overall governance
and coordination of the Annual Report was
managed by an Annual Report Project Manager, in
conjunction with the corporate communications
team. The project team held regular meetings in
person and via telephone or videoconference and
accountability was ensured by obtaining internal
sign-off from key stakeholders in the project
team for the section(s) they were responsible for.
Each section was drafted in accordance with an
agreed standard operating procedure, ensuring
that facts, figures and statements contained
within the Annual Report were verified. The
Committee determined that the preparation
and verification processes were robust.
The Directors, individually and collectively, were
provided with drafts of the Annual Report at key
stages. The Disclosure Committee met three times
to ensure sufficient oversight of the preparation
and verification processes and to review drafts
ahead of these being reviewed by the Board.
The Committee reviewed the form, content and
consistency of narrative within the 2022 Annual
Report and Financial Statements, the disclosures
contained in the Financial Statements and the
underlying processes and controls, which were
confirmed as appropriate. The Committee
also reviewed KPMG’s audit findings report,
draft audit opinion and draft management
representation letter. Following the Committee’s
review, the Committee was satisfied that the
2022 Annual Report and Financial Statements,
taken as a whole, met its objectives and
accordingly we recommended to the Board
that the 2022 Annual Report and Financial
Statements be approved and we supported the
Board in making its statement on page 160.
Financial Reporting Council correspondence
During 2022, correspondence was received from
the Financial Reporting Council (FRC) which
confirmed that the FRC had conducted a review
of the Group’s Annual Report and Financial
Statements for the year ended 31 December 2021.
The FRC did not raise any formal comments
which required a response from the company.
Instead the FRC noted certain matters which
the company should consider in the preparation
of its Annual Report and Financial Statements
for the year ended 31 December 2022.
The company has considered the matters noted
by the FRC and has included certain additional
information and disclosures, where material
and relevant, in the 2022 Annual Report and
Financial Statements. The Committee reviewed
management’s response to the matters noted
by the FRC, and considers the additional
information and disclosure included in the 2022
Annual Report and Accounts to be appropriate.
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AU D I T CO M M I T T E E R E P O R T CO N T I N U E D
Risk management
The Committee supports the Board in fulfilling its
oversight responsibilities in ensuring the integrity
of the Group’s financial reporting (including the
Annual Report and Financial Statements), internal
controls and overall risk management process,
and the relationship with the External Auditor.
The Committee makes recommendations to
the Board in relation to approval of the Annual
Report and Financial Statements. In monitoring
the adequacy and effectiveness of the system
of risk management and internal controls, the
Committee reviewed compliance procedures
and Reckitt’s overall risk framework (including
the Group’s whistle-blowing arrangements) and
considered financial, operational risk and internal
control processes at Group, Global Business
Unit (GBU), corporate and functional levels.
There were no significant failings or weaknesses
during the year meriting disclosure in this report.
As outlined below (see Internal Controls) Reckitt’s
ongoing controls transformation programme
in preparation for internal controls changes
arising from the BEIS consultation has identified
certain control improvement opportunities
that management is currently undertaking. The
Committee reported to the Board in February
2023 that it considers the internal control
framework to be functioning appropriately, to
enable the Board to meet its obligations under
section 4 of the Code, to maintain sound risk
management and internal control systems, and
to report to shareholders on these in the Annual
Report (see page 101). The Committee also
reviewed the ‘three lines of defence’ framework
and the Group’s principal and emerging risks.
Reckitt’s finance function, headed by the CFO, has
implemented policies, processes and controls to
enable the company to review and fully comply
with changes in accounting standards and relevant
financial regulations. These policies, processes
and controls are kept under review on an ongoing
basis to ensure both internal and external
developments are reviewed and responded to.
The basis for the preparation of the Group
Financial Statements is set out on page 181 under
Accounting policies.
The company’s External Auditor’s report, setting
out its work and reporting responsibilities, can
be found on pages 161 to 176. The terms, areas of
responsibility and scope of the External Auditor’s
work are agreed by the Committee and set out
in the External Auditor’s engagement letter.
More information on the Group’s principal and
emerging risks and strategy for growth and
achieving targeted goals is detailed in the
Strategic Report, which can be found on pages 80
to 86.
The Viability Statement can be found on page 87.
The Statement of Directors’ Responsibilities
on page 160 details the going concern
statement as required by the Listing Rules
and the Code and the Directors’ responsibility
for the Financial Statements, for disclosing
relevant audit information to the External
Auditor and for ensuring that the Annual
Report is fair, balanced and understandable.
Internal controls
Internal control processes are implemented
through clearly defined roles and responsibilities,
supported by clear policies and procedures,
delegated to the Group Executive Committee
(GEC) and senior management. Reckitt operates
a ‘three lines of defence’ model in monitoring
internal control systems and managing risk.
1. Management in the first line ensures that
controls, policies and procedures are followed
in dealing with risks in day-to-day activities.
Such risks are mitigated at source with
controls embedded into relevant systems
and processes. Supervisory controls, either
at management level or through delegation,
ensure appropriate checks and verifications
take place, with any failures dealt with promptly.
Throughout Reckitt, a key responsibility for any
line manager is to ensure the achievement of
business objectives with appropriate risk
management and internal control systems.
2. Each function and GBU has its own management
which acts as a second line of oversight. This
second line sets the local level policies and
procedures, specific to its own business
environment, subject to Group policy and
authorisation. The second line further acts in
an oversight capacity over the implementation
of controls in the first line. The financial
performance of each function and GBU is
monitored against pre-approved budgets and
forecasts ultimately overseen by the executive
management and the Board. As part of the
second line, the corporate control team
identifies financial risks and mitigates these
with appropriate internal controls, set out
through minimum expected financial control
requirements. The effectiveness of the global
financial control framework is reviewed annually.
Further, the Group’s compliance controls
include the operation of an independent and
anonymous ‘Speak Up’ whistle-blowing hotline,
annual management reviews and the provision
of training specific to individual needs within
the business.
3. The third line of defence is provided by the
internal audit team which provides independent
and objective assurance to the Committee
and management on the adequacy and
effectiveness of risk management systems
and internal controls operated by the
first and second lines of defence. Internal
audit also facilitates the integrated risk
management process.
Reckitt’s internal control framework provides
assurance that business objectives are
achieved, that business is conducted in an
orderly manner and in compliance with local
laws, that records are accurate, reliable
and free from material misstatement, and
that risks are understood and managed.
The corporate control team is accountable
for managing global control policies and
frameworks and for monitoring the effectiveness
of the Group’s internal control environment.
Local markets conduct an annual controls
self-assessment comprising over 150 system-
agnostic controls across key financial processes.
Corporate control is responsible for reporting
and monitoring controls at local, GBU and
global levels, working with markets to improve
risk and controls capability and to support
the development of remediation plans and
corrective actions for control weaknesses.
In preparation for internal control changes from
the BEIS consultation the company has established
a multi-year controls transformation programme.
In 2022 the controls transformation programme
has developed an updated standardised and
risk-focused controls framework for financial
and IT general controls. This framework has been
tested in three pilot markets during the year
ahead of global roll-out in 2023. In future periods,
assurance over the operating effectiveness
of controls in the revised framework will be
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AU D I T CO M M I T T E E R E P O R T CO N T I N U E D
provided by controls testing conducted by
the financial second line of defence team.
At each meeting, the Committee reviews
a report outlining the status of the controls
transformation programme, and other notable
controls activity since the previous meeting. In
2022 this included the Committee’s monitoring of
management’s response to the 2021 investigation
into the creation, utilisation and release of certain
operational expenditure and trade investment
accruals within the Hygiene GBU in 2020 and 2021.
The Committee reviewed management’s response
plan, including its comprehensive communication
and training programme, targeted balance
sheet assurance programme, enhancement of
the finance second line and acceleration of the
company’s existing record-to-report and controls
transformation programmes. The Committee
satisfied with the progress made in 2022.
Internal audit
The Committee is responsible for reviewing and
monitoring the effectiveness of the internal
audit function. The Group Head of Audit reports
to the Chair of the Committee and to the CFO
for administrative matters and updates the
Committee at each meeting. The internal audit
function is responsible for impartially assessing
the key risks of the organisation and appraising
and reporting on the adequacy and effectiveness
of Reckitt’s risk management and internal
controls in financial, information systems and
other business and operational areas in order
to develop and improve the effectiveness
of the Group’s risk management control and
governance processes and strategies. The
independence of the Group Head of Audit and
the internal audit function is considered as part
of the annual internal audit effectiveness review.
Further details can be found on page 119.
The internal audit plan is prepared on a half-
yearly basis under an agreed rotation and scope
policy and reflects a risk-based approach. Audit
locations are selected based on a number
of factors including the risks related to the
business as well as the period since the last
audit. Information systems, change programmes
and activities of Group functions also fall within
internal audit’s remit and are subject to audit.
Following each audit, findings are reviewed
and reported to management and to the
Committee, together with recommendations
and updates. Resulting management actions
are tracked until they are satisfactorily closed.
In 2022 internal audit retired the series of
‘operational resilience reviews’ adopted in
response to the COVID-19 pandemic and
reinstated its pre-pandemic approach of
on-site, where permitted, risk-based scope
audits of Reckitt’s commercial businesses
and manufacturing facilities. Routine internal
audit work delivered audits which covered
£5.5 billion (by net revenue) of Reckitt’s
global commercial business and £549 million
(by industrial sales) of global manufacturing
facilities. Internal audit also continued with IT
audits, programme assurance and risk-based
process reviews, designed to provide broader
assurance on a top-down/thematic basis. Audits
that identified significant weaknesses in the
control environment normally receive a follow-
up audit within six to 18 months as appropriate.
External Auditor
The Committee is responsible for maintaining the
relationship with the External Auditor on behalf
of the Board. The company’s External Auditor is
KPMG LLP (KPMG). Following a competitive tender
undertaken in 2017, KPMG was formally appointed
as the Group’s External Auditor by shareholders in
2018. The company will be required to conduct its
next external audit tender no later than 2027. For
the year ended 31 December 2022, the company
has complied with the Competition and Markets
Authority Order: The Statutory Services for Large
Companies Market Investigation (Mandatory
use of Competitive Tender Processes and Audit
Committee Responsibilities) Order 2014.
The Committee considers and makes a
recommendation to the Board in relation to
the appointment, reappointment and removal
of the External Auditor, taking into account
independence, effectiveness, lead audit
partner rotation and any other relevant factors,
and oversees the tendering of the external
audit contract. The Committee approves the
External Auditor’s terms of engagement and
remuneration and reviews the strategy and
scope of the audit and the work plan. The
Committee also monitors the rotation of the
lead audit partner every five years in accordance
with the FRC’s Ethical Standard. The current
lead audit partner, Andrew Bradshaw, has
completed his first year as lead audit partner.
During the year, KPMG’s reports to the Committee
included the following matters:
– Audit strategy, materiality and scope
(and regular updates)
– Audit findings and half-year review findings
(and any updates) including identification of any
significant risks to the audit and other key
accounting and reporting matters
– Review of going concern and the
Viability Statement
– Draft audit opinion
– Draft management representation letters
– Draft engagement letter
– Review of KPMG’s 2022 Audit Quality Inspection
Report issued by the FRC
– Analysis of non-audit services provided
– IT and other control findings
Besides the annual evaluation of the External
Auditor, the Committee continually reviews
the External Auditor’s effectiveness through
means such as the monitoring of its progress
against the agreed audit plan and scope. KPMG
reports to the Committee annually with an audit
quality scorecard, providing a holistic view of,
and their investment in, audit quality and how
they measure their audit quality progress.
The Committee reviews the nature and level of
non-audit services undertaken by the External
Auditor during the year to satisfy itself that there
is no impact on its independence. The Committee
is required to approve all non-audit services. The
Board recognises that in certain circumstances the
nature of the service required may make it timelier
and more cost-effective to appoint an auditor
that already has a good understanding of Reckitt.
The total fees paid to KPMG for the year ended
31 December 2022 were £23.0 million, of which
£3.5 million related to non-audit and audit-related
work (to which KPMG was appointed principally for
the above reasons). The Group’s internal policy on
non-audit fees (effective 1 January 2017) states
that, on an annual basis, non-audit fees should
not exceed 50% of the Group’s external audit and
audit-related fees for the year. The Board confirms
that, for the year ended 31 December 2022, non-
audit and audit-related fees were 17.9% of the
audit fees. Details of services provided by the
External Auditor are set out in Note 4 on page 190.
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AU D I T CO M M I T T E E R E P O R T CO N T I N U E D
Reckitt has a formal policy in place to safeguard
the External Auditor’s independence. In addition,
as part of its audit strategy presentation to
the Committee in May 2022, KPMG identified
its own safeguards in place to protect its
independence and confirmed its independence
in February 2023 to the Committee.
The Group has a policy that restricts the
recruitment or secondment of individuals
employed by the External Auditor into positions
that provide financial reporting oversight
where they could exercise influence over the
financial or regulatory statements of the Group
or the level of audit and non-audit fees.
The External Auditor is a key stakeholder in
helping the Committee fulfil its oversight role
for the Board. The Committee remains satisfied
with the External Auditor’s independence and
effectiveness and believes KPMG is best placed
to conduct the company’s audit for the 2023
financial year. KPMG has expressed a willingness
to continue as External Auditor of the company.
Following a recommendation by the Committee,
the Board concluded, on the Committee’s
recommendation, that it was in the best interests
of shareholders to appoint KPMG as the company’s
External Auditor for the financial year ending
31 December 2023. In accordance with Section
489 of the Companies Act 2006, resolutions
to propose the reappointment of KPMG as the
company’s External Auditor and to authorise the
Committee to fix its remuneration will be put
to shareholders at the AGM on 3 May 2023.
Other than the provision of advisory services
to a Director in their personal capacity, KPMG
had no connection with the Directors during
the financial year.
Governance
Committee performance review
This year, a performance review of the Committee
was conducted as part of the Board’s external
performance review, conducted by Lintstock Ltd.
The performance review of the Committee
utilised a bespoke questionnaire, sent to
Committee members. Matters evaluated by
Committee members included time management
and composition, Committee processes and
support, and the work of the Committee and its
priorities for change. All areas received ‘good’
or ‘excellent’ scores overall, with reporting
to the Committee scoring the highest.
The Board, having had sight of the results of the
Committee’s performance review, considers
the Committee to be operating effectively.
Internal audit evaluation
The annual internal audit effectiveness review
was conducted in two parts. An internal audit
and risk management survey was circulated
to internal stakeholders including Committee
members, the GEC and GBU, functional and
regional leadership teams. The internal audit
team also performed a peer review for audits
completed during the year to request feedback.
The evaluation of the internal audit function
covered the following areas: risk management
– objectives, skills and experience, process and
key opportunities; and internal audit – skills and
experience, quality, audit scope, audit cost,
audit communication, independence, change
catalyst and key opportunities. The effectiveness
review reported strong, positive feedback which
demonstrated that the internal audit function was
trusted and respected. Key highlights are that
the internal audit function: has a broad range of
skills and expertise; provides clear, concise and
consistent audit reports with opportunities to
share learnings and good practices across the
business; and has opportunities to continue to
deepen business understanding and awareness. It
is also noted that the integrated risk management
framework is driving a better understanding of
risk, with an opportunity for the internal audit
function to use this ‘risk intelligence’ to move
towards a risk-based approach and broader
range of strategic and operational audits.
Overall, The Committee remains satisfied
with the External Auditor’s independence,
effectiveness, review and challenge and
believes KPMG is best placed to conduct the
company’s audit for the 2023 financial year.
A N D R E W B O N F I E L D
C H A I R O F T H E AU D I T CO M M I T T E E
Reckitt Benckiser Group plc
28 February 2023
The independence of the Group Head of Audit
and the internal audit function was confirmed.
The Committee considered the effectiveness
review and the work carried out by the
internal audit function as reported at every
Committee meeting and concluded that it is
an effective operation, and the Committee
remains satisfied that the resourcing,
quality, experience and expertise of the
function is appropriate for the company.
External audit evaluation
The annual evaluation of the External Auditor was
carried out in early 2022 and the results reported
to the Committee in May 2022. The assessment
of the External Auditor was conducted using a
survey circulated to the Board, Group Executive
Committee, GBU, finance and other functional
leadership, and local finance management.
The survey covered the four competency
areas in the FRC’s Guidance on Audit Quality:
practice aid for Audit Committees (published in
December 2019): Judgement; Quality Control;
Skills and Knowledge; and Mindset and Culture.
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CORPORATE
RESPONSIBILITY,
SUSTAINABILITY, ETHICS
AND COMPLIANCE
COMMITTEE REPORT
Member
Pam Kirby (Chair)
Chair and member for the whole year
Nicandro Durante
Member until 1 September 2022
Mehmood Khan
Member for the whole year
Chris Sinclair
Member for the whole year
Olivier Bohuon
Member from 1 November 2022
Meetings
Attended
54/4
53/3
54/4
54/4
51/1
On behalf of the Board, I am pleased to present
the Corporate Responsibility, Sustainability, Ethics
and Compliance (CRSEC) Committee Report for
the financial year ended 31 December 2022.
This report details how the Committee has
discharged its role and responsibilities during
the year in relation to monitoring and assessing
the company’s approach to responsible,
sustainable, ethical and compliant corporate
conduct in accordance with the company’s
Purpose, Compass, culture and values, the Group’s
purpose-led strategy and societal responsibility.
PA M K I R BY
C H A I R O F T H E CO R P O R AT E
R ES P O N S I B I L I T Y,
S U S TA I N A B I L I T Y, E T H I C S
A N D CO M PL I A N C E CO M M I T T E E
In our continued commitment to
good corporate governance – and
doing the right thing, always – the
Committee reviewed a broad range
of CRSEC topics throughout the
year and provided robust challenge.
Committee priorities for 2023
– Oversee and make recommendations to the
executives and the Board for actions to be
taken in respect of the Group’s corporate
responsibility and sustainability, ethics and
compliance strategies, policies, programmes
and activities
– Take a proactive approach in anticipating and
preparing for legislative or regulatory changes
and reviewing processes to ensure compliance
– Review our sustainability objectives and
chart progress against our targets, including
overseeing the Group’s conduct with regard
to its corporate and societal obligations as
a responsible global citizen on behalf of all
stakeholders
– Monitor and review the processes for risk
assessment as regards corporate responsibility
(including human rights and product safety),
sustainability and compliance matters (including
regulatory and quality risk assurance and
restrictive trade practices) and ethical conduct
– Continue focus on delivering the safety, quality,
and compliance agenda
– Maintain responsiveness to global events
impacting consumers, where Reckitt can
provide support and assistance
– Keep abreast of market access conditions and
maintenance of products, given the current UK
political and wider economic landscapes
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CO R P O R AT E R E S P O N S I B I L I T Y, S U S TA I N A B I L I T Y, E T H I C S A N D CO M P L I A N C E CO M M I T T E E R E P O R T CO N T I N U E D
Committee membership
Members of the Committee are appointed by the
Board on the recommendation of the Nomination
Committee, which reviews membership
in terms of skills, knowledge, diversity and
experience. The Board is satisfied that each
member of the Committee is independent and
that Committee members collectively have
competence relevant to the company’s sector
and the industries in which it operates. On
joining the Committee and during their tenure,
members receive additional training tailored
to their individual requirements. Such training
includes meetings with internal management
covering CRSEC matters. All members of the
Committee receive regular briefings from senior
executives on matters covering governance,
regulatory and legislative developments,
product safety and corporate responsibility,
sustainability and ethics-related matters, and
Reckitt practices and policies in these areas.
During the year, the Assistant Company Secretary
acted as Secretary to the Committee.
Meetings
The Committee is expected to meet at least
three times per year. In 2022, the Committee
held four meetings. Meetings usually take place
ahead of Board meetings and the Chair of the
Committee reports formally to the Board on the
Committee’s proceedings. The CEO, CFO, Chief
R&D Officer, Group Head of Audit, General Counsel
& Company Secretary, Chief Supply Officer, Group
Chief Ethics and Compliance Officer, Global Head
of External Communications & Affairs, Group
Head of Sustainability, Chief Safety Officer, SVP
Head of Global Quality and the Global Director
of Health & Safety, Quality and Compliance and
Corporate Security regularly attend meetings.
Other Board members are invited to attend all
meetings. Other senior management attend when
deemed appropriate by the Committee. Time is
allocated at each meeting for private discussion
with the Chief R&D Officer, Group Chief Ethics
and Compliance Officer, Chief Supply Officer,
Global Head of External Communications & Affairs,
Group Head of Sustainability and Group Head
of Audit without other invitees being present,
as well as a private meeting of the Committee
members. All Board members are provided with
copies of Committee papers and minutes.
In addition to reviewing matters at Committee
meetings, the Committee Chair held regular
meetings with our CEO, Chief R&D Officer,
Chief Supply Officer, Global Head of External
Communications & Affairs, Group Head of
Sustainability and Group Chief Ethics and
Compliance Officer, to review progress against
the strategy and to represent the Board in
supporting the efforts in these critical areas.
Role and responsibilities
The Committee is part of the Group’s
governance framework and supports the
Board in fulfilling its oversight responsibilities in
ensuring the integrity of the Group’s corporate
responsibility and sustainability, ethics and
compliance strategies, policies, programmes
and activities. Its role and responsibilities are
set out in its terms of reference, which can
be found at www.reckitt.com. We review
our terms of reference annually. During the
year, the Committee’s terms of reference
were reviewed and considered to be fit
for purpose, in-line with best practice.
established by management to identify
and monitor risks identified by the CRSEC
Committee. The Committee liaises with the
Audit Committee and the Chair of the CRSEC
Committee is a member of the Audit Committee.
– Agreeing targets and KPIs for corporate
responsibility, sustainability and compliance
and ethical conduct. Reviewing internal and
external reports on progress towards set
targets and KPIs
Standing agenda items reviewed by the
Committee throughout the year
The Committee has several standing agenda
items which it considers in-line with its terms
of reference:
– Receiving reports from management
committees in respect of corporate
responsibility, sustainability, ethics, and
compliance and investigating and taking action
in relation to issues raised or reported
– Reviewing the constitution, terms of reference
and performance of the Committee
Specific matters which were considered by the
Committee at its meetings during the year include:
– Assessment, benchmarking and
– Product safety evaluation and product
recommendations on policies, processes
and procedures for corporate responsibility,
sustainability and compliance and
ethical conduct
– Overseeing the Group’s conduct with regard
to its corporate and societal obligations as a
responsible global citizen on behalf of all its
stakeholders, including reviewing the company’s
statement on Modern Slavery and Trafficking
– Reviewing and monitoring implementation and
lifecycle management
– Regulatory matters review and
remediation programmes
– Quality performance and risks
– Employee health and safety performance
and risks
– Assets safety
– Supply chain resilience and continuity risks
compliance with the company’s Speak Up!
Policy and review of reports
– Market access and maintenance of products,
including raw material sourcing
– In conjunction with the Audit Committee,
– 2022 compliance and ethics priorities
reviewing the company’s whistle-blowing, fraud
and compliance arrangements, including the
adequacy and security for the workforce to
raise concerns, procedures for detecting fraud,
systems and controls for the prevention of
bribery and modern slavery
– Ethics and compliance maturity evolution and
communication plan
– Annual compliance training and Code
of Conduct
– Data privacy maturity assessment
– Trade sanctions compliance
– External affairs activity, including public policy
and advocacy and issues and crisis management
The Audit Committee has a monitoring function
in respect of risk management and internal
control systems, especially financial controls,
which also includes the assurance framework
– Monitoring and reviewing processes for risk
assessment for corporate responsibility,
sustainability, and compliance and
ethical conduct
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CO R P O R AT E R E S P O N S I B I L I T Y, S U S TA I N A B I L I T Y, E T H I C S A N D CO M P L I A N C E CO M M I T T E E R E P O R T CO N T I N U E D
– Reporting on social impact and gender pay gap
– Ukraine and our humanitarian response
– IFCN progress, including position on sugars and
response to the US infant formula shortage
– Sustainability matters and target tracking,
including sustainable sourcing programme, the
environment and climate change programme
activity, product stewardship, plastics
and packaging
Some of the key achievements in the reporting
period follow.
Other items considered by the Committee
during the year
Sustainability
2022 saw further development of our
environmental social and governance (ESG)
and sustainability agenda. We continued work
across the three pillars of our 2030 Sustainability
Ambitions: purpose-led brands, a healthier planet
and a fairer society. We also shared our priorities
and various roadmaps on activity such as climate
change with different stakeholders in our first
ESG-focused capital markets day in May 2022.
Our ambitions on sustainable products, climate
action, inclusion and human rights contribute
to delivering the United Nation’s Sustainable
Development Goals (SDGs), helping to address
the premise of both our double materiality
approach and our business agenda, impact
on issues that matter for our company and
for wider society. They are supported by
significant partnerships such as those with
WWF and the Fair Rubber Association, helping
us achieve greater scale and impact.
We have continued to work with governments
and international agencies to raise awareness
of the impact of climate change on people’s
health. This is at the heart of our business and
was particularly visible at COP27 in Egypt.
Our programme engaged many governments,
the World Health Organisation, our peers, and
both civil society and academic partners with
contributions from those we are already working
with including Water.org and the London School
of Hygiene & Tropical Medicine. Our business’
engagement through our brands in helping to
protect people’s health against the impact of
climate change continues to gather importance.
COP27 also saw the further development
of our work on ecosystems and biodiversity.
Our programme with Nature-based Solutions
Initiative at the University of Oxford measured
the biodiversity and carbon impacts within key
value chains for latex and more recently palm
oil. This work also led us to be invited to join
the established Taskforce on Nature-related
Financial Disclosures. We have also continued
our established partnership with Risilience
at the Cambridge Centre for Risk Studies.
This partnership has contributed to a further
review of climate-related financial risk and our
updated disclosures in this Annual Report.
Our climate change programme continued
use of renewable electricity and evaluated
further fuel-switching to reduce carbon impact.
Examples include the use of landfill gas instead
of natural gas in our Evansville, US site and our
pilot of recycled vegetable oil as a replacement
for diesel fuel in road haulage in the UK. Future
implementation will be evaluated based on the
ongoing relative cost as, during 2022, we and many
others experienced fuel supply volatility which
demanded a pragmatic response. We continue
to develop our decarbonisation roadmap and are
prioritising projects by impact for implementation
over the remainder of this decade and beyond.
For our science-based target on product
carbon footprint, we continue to expand the
use of our Sustainable Innovation Calculator
(Calculator). This led to new Nutrition business
innovations that are more sustainable. Whilst
our overall revenue from more sustainable
products did not increase due to changes in
product mix, the foundations for future growth
have been strengthened by this broader use of
the Calculator in assessing the environmental
footprints of new products for our global brands.
Larsen, with extensive leadership experience
from the pharmaceutical, biotech and ingredients
industries, was onboarded in September.
Reckitt ‘Human Harm Risk Manual’
In November 2022 we launched the Reckitt ‘Human
Harm Risk Manual’. This describes and guides
our teams at all levels on how we control and
reduce the risk of human harm from our products
throughout the product lifecycle – how we keep
our consumers safe. Overall, this will bolster our
alertness to potential safety issues and misuse of
products as well as help ensure all levels within the
organisation take the right action to reduce risks.
In 2022 we maintained our sustainable sourcing
activity with a focus on key ingredients including
palm oil and latex. We increased our use of
certified sustainable palm oil and saw the first
deliveries of Fair Rubber Association certified
latex. Our Durex brand will carry labelling to this
effect beginning in 2023. These programmes
complement our biodiversity agenda.
Investing in safety assurance in Nutrition
In 2022 we continued to implement new
Safety Standards in our Nutrition business
unit, which enabled us to demonstrate the
safety of imported infant formula mixes to
the US authorities. Overall, product safety
evaluations within the Nutrition business have
been upgraded and made more robust.
Our ESG and sustainability agenda was a continuing
element of the Committee’s work, but also
supported wider Board engagement with a detailed
update on the overall sustainability programme.
Safety, quality, regulatory and compliance
R&D
Functional integration between regulatory
and safety
Over the past years, we have transformed our
organisational structure, elevating the safety and
regulatory functions in the organisation. In 2022 we
further strengthened the set-up by integrating the
safety and regulatory functions to ensure optimal
corporate oversight and seamless collaboration
between core compliance and risk management
organisational units. A new SVP for Regulatory
Affairs & Global Safety Assurance, Jan Vindberg-
Strengthening our regulatory intelligence efforts
A new, proactive regulatory intelligence
programme was launched, capturing both
legislative initiatives and trends in enforcement
practice. This is fundamental for our ambition
of compliance ‘anytime and anywhere’ and
has ensured passing all competent authority
regulatory inspections during the year.
Product Lifecycle Management (PLM)
PLM is the capability to manage the formulation
and packaging details of Reckitt products and
automates the flow of product information into
the supply manufacturing systems to ensure
products are manufactured as designed. PLM has
been deployed across 14 sites and associated
Global Functions and has completed a successful
upgrade. Learnings from the deployments are
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being applied to the implementation design
programme approach moving forward to ensure
that Reckitt’s cross-functional process, data
and technology landscape is constructed to
enable end-to-end compliance benefits and
wider business value creation opportunities.
Supply
– Quality: QualityOne has now been launched for
change and deviation management. As planned,
work has commenced on scoping the next
phases of the programme – documentation
and supplier and audit management. Progress
continues on both leading and lagging indicators
across business units
– Transformation in Consumer Relations: this
reached its conclusion in Q1 2022 and has
provided us with data from our consumers
to drive improvements
– Employee health and safety: we continue
to make progress embedding enhanced
programmes at factories maintaining strong
performance, with good performance and
growing maturity across R&D. An improving risk
position and solid progress continues across
asset protection
Legal and compliance
During 2022 we strengthened processes or took
actions to mitigate specific compliance risks,
in particular:
– Risk of non-compliance with trade sanctions
where we operate
– Risk of third-party non-compliance leading
to operational disruption, legal liabilities and
reputational damage against Reckitt
– Risk of bribery and corruption, including in
the context of interactions with healthcare
professionals and healthcare entities
– Risk of non-compliance with increasingly
stringent data privacy laws and with individuals’
expectations of their privacy rights
– Risk of non-compliance with competition
laws given the inflationary environment in
some markets
Mitigation progress in 2022
The ethics and compliance programme has been
strengthened through the implementation of
controls or actions across the risk areas noted above.
Risk of third-party non-compliance
In 2022, we concluded the roll out of our enhanced
third-party compliance risk management process.
The process tailors our preliminary due diligence
assessments to the inherent risk profile of the third
parties who we are considering engaging with and
allows for additional follow-up when necessary.
We understand that the execution of third-
party due diligence assessments is only one
of the components of an effective third-party
risk management programme. To further
augment our ability to mitigate the risk of
third-party non-compliance, we are beginning
to use automation to screen third parties.
Risk of non-compliance with trade sanctions
In February 2022, the US, EU, UK and other
countries implemented sanctions against Russia.
Actions taken in response to this situation include:
– Issuance of communications to the
employee base with guidance for trade
sanctions compliance
– Implementation of a cross-functional operating
model to address questions and provide
operational advice related to complying
with sanctions
– Screening third parties against sanctions
lists, reviewing red flags and terminating
engagements in compliance with sanctions
Risk of bribery and corruption
We continued to take action to counter the
risk of bribery and corruption in our dealings
with government officials and third parties.
Notable efforts undertaken include:
– Issuing several reminders to our employees
on the risks involved in exchanging gifts and
entertainment throughout the year, which
drove a 46% increase in the number of gift
and entertainment disclosures from the
previous year
– Rolling out training on how to manage bribery
risks in the context of interactions with
healthcare professionals and healthcare entities
– Benchmarking our anti-corruption
programme by taking part in Transparency
International’s Corporate Anti-Corruption
benchmark assessment
– Strengthening the processes through which job
applicants, employees and third parties are
asked to disclose conflicts of interests in their
dealings with Reckitt
Risk of non-compliance with data privacy laws
To counter the risk of non-compliance with data
privacy laws, we:
– Strengthened our privacy operating model in
Europe, extending our privacy lawyers’ remit
across all business units. The team is responsible
for proactively assessing potential privacy risks
arising from the business’ activities and
recommending suitable safeguards to mitigate
stated risks ‘by design’
– Continued roll-out of our data privacy
programme globally, with focus on jurisdictions
such as Europe and Brazil, adopting new and/or
more stringent laws
– Assessed more than 100 projects to identify
privacy risks and recommend data protection
controls to manage stated risks from the onset
– Worked with our marketing excellence function
to establish Responsible Consumer Data
Principles (for deployment in early 2023) to help
ensure that personal data is handled in-line with
individuals’ expectations of their privacy rights
and our ethical values
Risk of non-compliance with competition law
In addition, we deployed training and guidance
notes regarding price negotiations and
competition law compliance in Europe and North
America in response to market conditions.
Increased maturity of our baseline controls
Further to taking action to manage and mitigate
our principal compliance risks, we also improved
ways of working across the ethics and compliance
programme. Notable efforts included:
– Drafting updated and simplified ethics
and compliance policies with supporting
infographics to better illustrate compliance
and other requirements (for release in 2023)
– Strengthening our culture of integrity through
the release of updated mandatory training
modules on Code of Conduct, Anti-Bribery
and Corruption, Competition Law, Data Privacy,
Cyber Security and Product Safety
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– Executing an ethics and compliance
– Educating over 28 million students on
communications plan to remind employees of
how to mitigate against our principal risks
– Building our compliance monitoring
capabilities, for example by beginning
to use data analytics techniques
Speak Up! service
Throughout 2022, we continued to raise
awareness of our confidential Speak Up! service,
which encourages employees and third parties
to ask questions and raise concerns about
potential misconduct. We investigate issues
promptly and independently. Substantiated
investigations can lead to both changes in
working practice and disciplinary action.
External affairs
Policy and advocacy
Social impact 2022
Our social impact report for 2022 has shown
that we have achieved our greatest ever social
impact. We have invested the equivalent of £32
million across 45 countries and donated over
19 million products. With this, in 2022 alone we
have delivered educational messaging to more
than 500 million people, brought high quality
hygiene education to an additional 8.9 million
pupils and have made measurable improvements
to health and school attendance through our
global school programmes. This also means we
have met our goal of investing the equivalent
of 1% adjusted net profit in social impact
programmes and committed almost twice the
average of our peers. Specific examples of
where these investments have gone include:
– Increasing access to water and sanitation
for over 1.8 million people, in partnership
with Water.org
hand hygiene
– Launching the Fight for Access Accelerator
globally, with 18 enterprises being supported
in six countries
COP27
For nearly three decades, the United Nations
(UN) has brought together almost 200 countries
for annual global climate summit, known
as the Conference of the Parties, or ‘COP’.
COP27 took place in Egypt in November. We
built on the momentum established during
COP26, to continue profiling our commitment
to sustainability and maintain our place at the
forefront of the conversation on climate and
health. We hosted six events, including working
closely with the WHO and UAE government,
which are the incoming hosts of COP28. COP28
will take place in 2023 and for the first time
ever it is expected to make health a formal part
of the conference agenda, with a dedicated
‘Health Day’. This represents a significant step
forward in the argument Reckitt has been making
that climate and health are intrinsically linked
and that planetary health is public health.
Board Listening Sessions
In line with Section 172 of the Companies Act
2006 (CA 2006), we undertake Listening Sessions
with the Board each year. From 2022 onwards, we
have focused on the world’s biggest problems
as featured in our business strategy. The sessions
are designed to seek insight and perspectives
from four key external stakeholders: consumers;
retailers; subject matter experts; and customers
and conclude with recommendations and
guidance on what we can do to be more effective
with regards to the societal challenges under
discussion. In 2022 we focused on self-care.
Our commitment to Hull
In March, Reckitt launched the Oh Yes! Net Zero
initiative in Hull, supporting economic growth
for the Humber region, with our founding
partners – Hull City Council, Hull University and
Marketing Humber. The campaign supports the
government’s net zero and ‘levelling up’ priorities
for the UK economy. As of December 2022, more
than 130 companies have joined our campaign.
One element of the campaign is an education
project (designed to address the lack of climate
change resources in schools) that has been
rolled out to 13 secondary schools in Hull which
accounts for around 16,000 pupils. In addition,
we have partnered with Citizens Advice Hull &
East Riding (CAHER) to support more pupils in
Hull through the cost of living and energy crises.
United Nations General Assembly (UNGA)
and Reckitt’s presence
The 77th session of UNGA took place in
September, at the UN New York headquarters.
This was the first time that Reckitt was both
heavily involved and hosted key sessions,
bringing together world leaders to debate
various issues and highlighting the crucial role
we play to overcome these. Partnering with key
stakeholders including the UN and WHO, we:
– Relaunched our partnership with Water.org.
Together with our co-founders, we have enabled
access to clean water and sanitation to 1.8 million
people across India, Kenya and Indonesia
– Announced the launch of the Women and NFTs
for Health – WiNFund. Further information on
WiNFund is provided below
– Accelerated access to water, sanitation
and hygiene (WASH) as we talked through
the launch of the Reckitt’s Fight for
Access Accelerator
WiNFund and non-fungible tokens (NFTs)
Reckitt and Health Innovation Investment
Exchange (HIEx) co-founded and launched the
WiNFund at UNGA in September. This initiative
accelerates social business, improving access to
health and hygiene in Reckitt priority countries.
The WiNFund employs innovative finance
leveraging NFTs and philanthropic capital to
invest in women-led, health startups leveraging
innovation to improve healthcare access in
communities. Our first African inspired NFT
collection is designed in collaboration with
Rwandan artist, Christella Bijou, and weaves in
key health themes. Upon launching the open
call for innovators to apply, we have received
over 300 applications from more than seven
African countries. We aim to launch the public
mint on International Women’s Day on 8 March
2023. We strive to improve access to health
to 1.5 million people across the globe.
Greater transparency
Gender pay reporting
In 2020, Reckitt became one of the first FTSE
companies to go beyond UK gender pay reporting
requirements, increasing its scope to five markets:
China, India, Mexico, the UK and the US. In 2021
and 2022, we expanded to nine global markets (in
addition to the UK) representing almost 70% of our
global Reckitt workforce. This year we will expand
to include the work on diversity and inclusion
profiling our ERGs (Employee Resource Groups
on diversity, disabilities etc.). We wish to be more
transparent and foster greater trust with our
external stakeholders from government to media
and from retail partners to potential recruits.
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Workforce Disclosure Initiative (WDI)
In 2022, Reckitt was one of over 170 companies
that took part in the WDI, leading the way
on transparency around workforce issues. It
represents the fifth year Reckitt has submitted
data to WDI. The latest annual scorecard puts
Reckitt well above average in terms of disclosure
across all comparative groups (our sector, the
UK, all companies and companies taking part
in the WDI for the same number of years).
2022 Annual Report
External affairs is supporting production of
Reckitt’s 2022 Annual Report in a digital-first way,
to make reading it online easier. We are doing this
through interactive sections, streamlined language
and landscape, rather than portrait, orientation.
Tax reporting
Reckitt recognises the increasing complexity
of tax regulation around the world and
supports efforts to increase trust in and
understanding of the tax system. In December,
we published our annual tax strategy,
including voluntary tax disclosures regarding
our operations in India and Malaysia.
FTSE4Good continued accreditation
In June, FTSE4Good confirmed our continued
accreditation, with an improvement in our
ESG rating to 4.4 (out of 5). We have been
accredited by this prestigious index since 2003.
Responsible business practices
IFCN marketing practices
As part of our governance mandate and ensuring
that we monitor the proper implementation
of Reckitt’s policy and procedures on the
marketing of breast-milk substitutes (BMS
Policy), at each Committee meeting, we are
apprised on progress and developments
in the marketing of our BMS products.
In 2022 we again undertook independent
verifications of our IFCN marketing practices
in two countries. The reports for Vietnam and
Peru, as well as our response and corrective
action plan, are available on our website.
Good progress on sugar commitment
In October 2020, we outlined our specific
commitments on sugar for our IFCN portfolio,
to be implemented by March 2024. As of
December 2022, we have achieved 92% of our
commitments, with plans in place to meet our
original target of full compliance by March 2024.
Reckitt’s response to the US infant formula crisis
Reckitt colleagues and partners stepped up to
support parents and caregivers, in response to
the infant formula crisis early in 2022, as a result of
another IFCN manufacturer’s product recall and
US factory closure. We are a major contributor to
ending the crisis. Please refer to the case study
on page 28 for a snapshot of our response. Our
actions, contributions and details of how we are
making a difference are further highlighted on a
dedicated page on our website, www.reckitt.com.
Reckitt Ukraine humanitarian response
We have donated £1.03 million in cash (including
match-funded employee donations) in response
to the war in Ukraine. This includes £600,000
in corporate donations to the British Red Cross
and a range of smaller donations to other
Red Cross societies and other responding
organisations both in the Ukraine and surrounding
countries. We have also donated over £890,000
in product donations. The Red Cross Ukraine
Crisis Appeal has provided vital support to
over five million people affected by conflict
within Ukraine and neighbouring countries.
Committee performance review
In 2022, a performance review of the Committee
was conducted as part of the Board’s external
performance review, conducted by Lintstock Ltd.
The performance review of the Committee utilised
a bespoke questionnaire, sent to Committee
members. The 2022 performance review
focused on the Committee’s time management
and composition, processes and support, work
carried out and its priorities for change. Positive
feedback was received in all areas. Meetings
were managed well in line with the annual cycle
of work. Committee meeting reports and papers
were rated highly by Committee members.
The Board, having had sight of the results of
the Committee’s evaluation, considers the
Committee to be operating effectively.
PA M K I R BY
C H A I R O F T H E CO R P O R AT E R ES P O N S I B I L I T Y,
S U S TA I N A B I L I T Y, E T H I C S A N D CO M PL I A N C E
CO M M I T T E E
Reckitt Benckiser Group plc
28 February 2023
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DIRECTORS’
REMUNERATION
REPORT
A L A N S T E WA R T
C H A I R O F T H E
R E M U N E R AT I O N CO M M I T T E E
Contents of Directors’ Remuneration Report
126
Letter from the Chair
129 Reckitt’s remuneration at a glance
132 Remuneration Committee governance
134 Annual Report on Remuneration
150 Additional remuneration disclosures
Central to our remuneration
philosophy are the principles
of pay for performance and
shareholder, as well as
strategic, alignment.
The members of the Committee meetings
attended during the year were:
Member
Alan Stewart (Chair)
Member of the Committee from
1 February 2022 and Chair from
20 May 2022
Nicandro Durante
Member until 1 September 2022
Olivier Bohuon
Member for the whole year
Mary Harris
Member for the whole year
Chris Sinclair
Member for the whole year
Jeremy Darroch
Member from 1 November 2022
Meetings
Attended
53/3
52/2
53/3
53/3
53/3
51/1
LETTER FROM THE CHAIR
On behalf of the Board, I am pleased to present
the Directors’ Remuneration Report for the
financial year ended 31 December 2022.
Firstly, I would like to thank shareholders for their
approval of our new Directors’ Remuneration
Policy at our AGM on 20 May 2022, which received
a vote in favour of 92%. In addition, our Annual
Report on Remuneration was approved at
the AGM with a strong vote in favour of 92%.
I would also like to thank shareholders for
their time taken in providing feedback to the
Committee as we consulted with them ahead
of the 2022 AGM, and to shareholders whom I
met in October to understand their views in my
new role as Remuneration Committee Chair.
Context for executive remuneration at Reckitt
Reckitt strives for leading global performance.
Our management team is multinational, and
we compete for talent against global peers.
Our remuneration philosophy continues
to be based on the principles of pay for
performance and shareholder, as well as
strategic, alignment. Combined with Reckitt’s
Compass and business model, these principles
define how decisions are made, how people
act and how we assess and reward them.
The majority of the Executive Directors’
remuneration packages continue to be made
up of variable at-risk pay, which are linked to
stretching financial and environmental, social
and governance (ESG) targets that align with our
strategy and shareholder value creation and are
largely delivered in Reckitt shares. In addition, we
continue to have market-leading shareholding
requirements for executives. This approach is
cascaded throughout our senior leadership.
Changes to the Board
During the year, Reckitt announced several
changes to the Board. As announced in September
2022, Nicandro Durante, who had served as a
Non-Executive Director since 2013, was appointed
as CEO to succeed Laxman Narasimhan who
stepped down as CEO on 30 September 2022.
Nicandro ceased to be the Senior Independent
Director and stepped down from the Nomination,
Remuneration and CRSEC Committees of the
Board on 1 September 2022, following which he
was appointed as CEO Designate on 2 September
2022 and took over as CEO on 1 October 2022.
Jeremy Darroch and I joined the Board and the
Remuneration Committee during 2022, and I
was appointed to the position of Remuneration
Committee Chair at the 2022 AGM. I would like
to extend the Board’s and my thanks to Mary
Harris, who had been Chair of the Remuneration
Committee since 2017. Mary will continue to be
a member of the Remuneration Committee.
The remuneration arrangements for outgoing
and incoming directors are in line with the
Remuneration Policy approved by shareholders.
The remuneration for the new CEO was disclosed
at the time of the announcement. On appointment
as CEO Designate, Nicandro received a salary
of £1,100,000 p.a. He did not receive a salary
increase in 2023. He does not receive any pension
allowance, and the APP opportunity and LTIP
award levels are the same as for the former CEO.
Laxman Narasimhan received salary, benefits and
pension up to 30 September 2022. All his unvested
incentive awards lapsed in full. There was no
payment in lieu of notice or other payments
associated with Laxman’s departure, and he will
be subject to the post-employment shareholding
guideline in line with our policy. Further detail is
set out in the Annual Report on Remuneration.
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Annual bonus in respect of 2022 performance
Reckitt operates an annual bonus plan that is
strongly aligned to performance, measured
against stretching targets of net revenue
and adjusted profit before income tax.
From a financial perspective, 2022 marked a very
strong year of growth and profit delivery for
Reckitt, with 7.6% like-for-like (LFL) net revenue
growth, outperforming market expectations and
ahead of the peer group average. We also saw
continued momentum, with two consecutive
years of mid-single-digit revenue growth from
70% of the portfolio less sensitive to COVID-19
dynamics, and market share growth with 62%
of our Core CMUs holding or gaining share.
The adjusted operating profit margin was 23.8%,
in line with guidance, and ahead of our peer
group, with our operating profit at £3.4 billion. The
proposed dividend is 183.3p, an increase of 5% on
last year, as we aim to deliver sustainable dividend
growth in future years. As set out in further detail
on pages 135 to 138, these results reflect very
strong performance ahead of expectations and
demonstrate the success of the transformation
programme over the past three years.
Subsequently performance exceeded the targets
set and the 2022 annual bonus for the CEO and
CFO is 100% of maximum, in line with all other
employees on the same Group-wide measures.
The bonus for Nicandro is pro-rated for the period
as an Executive Director. One-third of bonus
payments to Executive Directors is deferred
into Reckitt shares.
Vesting of the 2020-2022 LTIP
The Reckitt LTIP is designed to align participants
with shareholders through making awards with
stretching performance conditions denominated
in both performance share options and
performance share awards. Vesting of awards
under the 2020 LTIP was dependent on stretching
LFL net revenue growth, earnings per share
(EPS) and Return on capital employed (ROCE)
targets which, as set out in the 2021 Directors’
Remuneration Report, were adjusted for the
disposal of IFCN China, given the size of that
transaction, to ensure that the new targets were no
harder or easier to achieve than the original targets.
As set out on page 139 the resultant vesting
is that 100% of the total award vests, with
vesting in respect of each element reflecting
outperformance of the stretching targets set.
This outturn follows two years of zero vesting and
one year of 21.5% vesting in the last three years.
In line with our policy, there is a further two-
year holding period attached to Jeff Carr’s LTIP
award. As set out earlier, Laxman’s 2020 LTIP
award lapsed when he stepped down as CEO.
Assessment of incentive outcomes
The Committee also carried out a thorough
evaluation of the performance of both the
Group and the Executive Directors in the round
and with regard to broader circumstances
to assess whether the formulaic incentive
outturns are appropriate and justified. The
framework which the Committee applied is
set out on page 133. In addition to the financial
operating performance as summarised above,
as in every year, this year’s assessment included,
amongst others, the following areas:
Strategic delivery: The Committee has
recognised that we entered 2023 as a
strengthened business with enhanced
financial, operational and brand resilience, and
continued growth momentum. After three
years of successful transformation, we are a
bigger business with stronger brands, and are
now realising the benefits of our reinvigorated
innovation pipeline and operational improvements,
including a more agile supply chain and improved
customer relationships. 2022 was a year of
delivery, ending the year as a business 28% larger
than 2019 on a LFL net revenue basis. Despite
cost inflation of almost 20%, in 2022 we grew
our adjusted operating margin by 90bps (excl.
China IFCN). This enabled us to grow adjusted
EPS by 18.4%, significantly exceeding market
expectations, and to increase our free cash
flow by 61% to over £2 billion. The Group enters
2023 as a stronger, more resilient business and
is well placed to deliver its stated medium-
term ambition of mid-single-digit growth.
Competitive performance: The Committee
reviewed financial and market share performance
against competitors. In both cases Reckitt has
performed strongly. There has been strong market
share growth during 2022 with 62% of our Core
CMUs holding or gaining market share; Reckitt’s
LFL net revenue growth of 7.6% is very strong
and is markedly ahead of market expectations.
On a three-year basis, for LTIP purposes, our
growth of 26.8% is equivalent to 8.2% p.a. and
is better than the peer group upper quartile.
People and culture: Last year we continued to
embed our culture change agenda and made
progress on wellbeing and inclusion, recognition,
and Leadership Behaviours. We continued to host
our Stronger Together conversations with an
emphasis on mental health and race and ethnicity.
We also implemented a mid-year global initiative
to support our people in navigating increasingly
difficult personal circumstances due to the cost-
of-living increases, with an overall spend of an
additional £15.8 million across c.18,000 employees.
We were proud to be named a Top Employer 2023
in the UK, the US, Spain, Italy, Canada, China and
South Africa, by the Top Employers Institute.
Sustainability: We improved our performance
in the Dow Jones Sustainability Index with a
household products sector leading score and
presence in the world group and gold class. In
the key ratings of MSCI and Sustainalytics, our
performance was broadly maintained, ranking
at AA and 22 respectively, positioning Reckitt
well above average for our industry group. We
continued our ESG and sustainability agenda,
following the 2021 launch of our Sustainability
Ambitions for 2030, including our first ESG-
focused capital markets day in May 2022 and
a programme to engage on the impact of
climate change on health at COP27 in Egypt.
Challenges: The Committee also reviewed the
challenges that the business faced during the
year and how leadership responded to them.
This included unprecedented cost inflation,
with commodity and freight cost inflation in
the high-teens, as well as COVID-19 restrictions
in China and the ongoing Europe energy crisis
as a result of the Russia-Ukraine conflict. The
Committee also noted the positive revenue
impact of the US Nutrition competitor supply
issue and the work involved to respond to this.
Taking all of the above into account, as well
as the wider stakeholder experience, the
Committee concluded that the level of annual
bonus payout and the total vesting level of the
LTIP are appropriate and justified in this context
and that no discretion would be applied.
2023 remuneration
Salaries for 2023 are £1,100,000 and £760,000 for
the CEO and CFO, respectively. There was no
salary increase for the CEO and a 5.4% increase for
the CFO. The increase for the CFO was determined
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taking into account Group and individual
performance, and salary increases for the wider
workforce. This was below the salary increase
budget of 6% for the UK employee population.
There are no changes to the bonus opportunity
for the CEO and CFO, remaining at 120% and 100%
of salary at target respectively. Performance
measures and weightings for the 2023 annual
bonus will be the same as for 2022, being net
revenue and adjusted profit before tax, with the
addition of a downwards modifier based on net
working capital (NWC). The NWC measure will act
as a downward modifier only and is intended to
hold executives more formally accountable for,
and incentivise delivery of, cash conversion as a
key element of Reckitt’s earnings model. NWC
has been used as a bonus metric for a number of
years for a significant proportion of the business
and the Committee is of the view that aligning
the bonus measures for our Executive Directors,
as well as other senior leaders, with other areas
of the Group, is appropriate. In line with prior
years, the Committee has set the performance
targets at a stretching level having considered the
internal business plan and external expectations.
As in prior years, the Committee will carry out
a thorough assessment of performance in
the round taking into account a wide range of
factors before determining bonus payouts.
There are also no changes proposed to LTIP award
levels for 2023, which have been reviewed in light
of share price performance, Group performance
and individual performance. Nicandro’s 2023 LTIP
award will consist of 150,000 performance share
options and 75,000 performance shares and
Jeff’s award will be 80,000 performance share
options and 40,000 performance shares. These
awards are expected to be made following the
AGM in May 2023. There are no proposed changes
to the performance measures or weightings.
During the year, the Chairman and Non-Executive
Director (NED) fees have been reviewed, taking
into account the time commitment required to
meet the scope and responsibilities of the roles,
the increases given to the wider workforce
and market practice. The fee for the Chairman
has been increased to £660,000, effective
from 1 January 2023, which is now positioned
around the median of the FTSE 30. This is a
5.3% increase, which was below the budgeted
increase of 6% for the broader UK workforce.
The basic NED fee was increased by 4.1% to
£102,000, with effect from 1 January 2023.
25% of the fee continues to be paid in shares.
There are no changes to the additional fees
for the role of Senior Independent Director
(SID), Committee Chair, Committee member,
or Designated Non-Executive Director for
engagement with the company’s workforce.
Context for remuneration of the wider workforce
During the year, we continued to develop
and improve the workforce initiatives that
have been introduced over the last few years
and also developed a global framework to
address the difficulties that the increasing
cost of living has had for our people.
Faced with the particularly challenging economic
environment last year, we implemented a
mid-year global initiative to support markets
in providing additional financial reward (one-
off appreciation bonus or salary increase)
to our people to recognise their ongoing
commitment, demonstrate our care for them, and
acknowledge the increasingly difficult personal
circumstances of cost-of-living increases. 34
markets participated in the framework with an
overall spend of an additional £15.8 million across
c.18,000 employees below senior management
level. In addition, the 2023 global pay review
budget was 70% higher than that for 2022.
We have been an accredited Living Wage
Employer in the UK since 2020. In 2021 and 2022,
we went beyond just the Living Wage and
developed our Sustainable Livelihood Framework
to capture broader work on providing a working
environment that promotes health and wellbeing,
equality, employment rights, long-term financial
security, and skills development to support
ongoing career development for our people.
We now pay all our employees the Living Wage
in our top 10 markets, which covers 67% of our
total full-time employee population. In 2023 this
will be extended to cover all our employees.
We continued to have strong take-up in our all-
employee share plans from the most recent launch
and 45% of our people globally are participating in
one of the plans. Our efforts in building inclusive
and accessible launch campaigns last year have
been recognised as we were short-listed for
the best communication of an employee share
plan at the 2022 ProShare Annual Awards.
We continued to monitor gender equality
within the organisation and again we have
voluntarily disclosed the gender pay gap for
our 10 largest markets by workforce in our
2022 report. We hosted a number of Stronger
Together conversations throughout the year
that focused on diversity and inclusion (D&I)
and belonging topics that matter most to our
people. In partnership with Hintsa, we offered
personal Wellbeing Performance Coaching to all
People Leaders as part of our global wellbeing
programmes. Our people were highly engaged
in providing feedback and we had a response
rate of 83% for our latest all-employee survey,
which showed an improved ‘recommend’ score
of 76% recommending Reckitt as a great place
to work. Through the Global Compass Awards,
we also celebrated role models in excellence of
living our Compass and Leadership Behaviours
which we established and rolled out in 2021.
During the year we also communicated to the
wider workforce details of how executive pay is
set, its alignment with the company’s approach to
the wider company pay policy and how decisions
are made by the Committee, giving employees the
opportunity to ask any questions on these topics.
Lastly, whilst no longer the Remuneration
Committee Chair, Mary Harris continues in
the role of the designated Non-Executive
Director for engagement with the company’s
workforce. In this role she has been involved in
key conversations with the workforce allowing
her to feed back employees’ views to the
Remuneration Committee as well as the Board.
Further information on wider workforce
remuneration, and how this compares to the
remuneration of our Executive Directors, is set out
on pages 143 to 146.
Conclusion
I trust that you will find this report a clear account
of the way in which the Committee implemented
the Remuneration Policy during 2022 and intends
to implement it for 2023, and I look forward to
your support at the upcoming AGM. I will be
available to answer any questions shareholders
may have at the company’s AGM on 3 May 2023.
A L A N S T E WA R T
C H A I R O F T H E R E M U N E R AT I O N CO M M I T T E E
Reckitt Benckiser Group plc
28 February 2023
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D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T CO N T I N U E D
RECKITT’S REMUNERATION
AT A GLANCE
To reinforce our philosophy, the majority
of the Executive Directors’ remuneration
packages are made up of variable at-risk pay,
linked to stretching targets that align with
our strategy and shareholder value creation,
and are largely delivered in Reckitt shares. In
addition, we have market-leading shareholding
requirements for executives. This approach is
cascaded throughout our senior leadership.
As discussed in the Chair’s letter, Reckitt
strives for leading global performance. Our
management team is multinational, and we
compete for talent globally. Central to our
remuneration philosophy are the principles of
pay for performance and shareholder, as well as
strategic, alignment. Combined with Reckitt’s
Compass and business model, these principles
define how decisions are made, how people
act and how we assess and reward them.
Context for remuneration at Reckitt
Reckitt’s Compass
Put consumers
and people first
Build shared
success
Do the
right thing.
Always.
Seek out new
opportunities
Strive for
excellence
Reckitt’s strategic priorities
– Target mid-single-digit top-line growth
– Achieve sustainable increased medium-
term earnings growth
– Maintain disciplined capital allocation
– Embed Sustainability Ambitions
– Deliver sustained shareholder
value creation
Reckitt’s remuneration philosophy
Pay for
performance
Strategic
alignment
Shareholder
alignment
Combining Reckitt’s Compass, strategy and remuneration
philosophy drives Reckitt’s remuneration principles
1
2
H I G H PRO P O RT I O N
O F VA R I A B LE PAY
M A R K E T- LE A D I N G S H A R E
OW N E RS H I P P O LI CY
Maximum
2023 package
Target
2023 package
8%
29%
35%
19%
CEO
64%
12%
9%
24%
Fixed pay
Annual bonus –
deferred shares
Annual bonus – cash
LTIP
Note: Value of the CEO’s target and maximum 2023 package.
Target illustrates fixed remuneration, plus target payout of
annual bonus and threshold vesting of the LTIP. Maximum
illustrates fixed remuneration, plus full payout of the annual
bonus and full vesting of the LTIP awards including 50% share
price growth.
In-employment shareholding requirement
Number
of shares
Value
of shares1
% of 2022
annual salary
200,000 £11,644,000
1050%
100,000 £5,822,000
800%
Post-employment shareholding requirement2
Number
of shares
Value
of shares1
% of 2022
annual salary
100,000 £5,822,000
50,000
£2,911,000
525%
400%
CEO
CFO
CEO
CFO
1. Based on the average closing share price in Q4 2022
of £58.22
2. Reflecting 50% of in-employment shareholding requirement
3
4
AT T R ACT A N D R E TA I N
T H E B E S T G LO BA L TA LE NT
E N S U R E A LI G N M E NT W IT H
S T R AT EGY ACROS S T H E B US I N E S S
– Engage highly performance-driven individuals
– Alignment of performance metrics with
– Reflect global competitive practice across our
strategic priorities
industry peer group
– Alignment across the business of metrics
and ownership
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D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T CO N T I N U E D
Summary of our Remuneration Policy
The table below summarises the current Directors’ Remuneration Policy which can be found on page 160 to 167 of the 2021 Annual Report and is also available on our website in the Corporate Governance section.
The Committee is of the view that the current remuneration framework remains fit for purpose and therefore no changes to the Policy were proposed for 2023.
Element
Key features of operation of policy
How we will implement for 2023
Link to strategy
2023
2024
2025
2026
2027
2028
Salary, benefits and
pension
– Salary increases and pension
contribution set in context of
wider workforce
– Zero salary increase for CEO. CFO
– To enable the total package to support
increase of 5.4%, below that of the
wider UK workforce
recruitment and retention
– Salaries and benefits set competitively
– CEO does not receive a pension. CFO
against peers
pension contribution of 10% of salary in
line with the wider workforce in the UK
Annual bonus (APP)
– Target bonus of 120% of salary for CEO
– Targets set for net revenue and
and 100% for CFO
adjusted profit before income tax
– One-third deferred into awards over
– Net working capital target to act as a
Reckitt shares for three years
downward modifier
– Malus and clawback provisions apply (in
circumstances including material
misstatement of financial results, gross
misconduct, corporate failure)
– Threshold performance results in zero
payout, with maximum of 3.57x target
for truly exceptional performance on
both metrics
– Remuneration Committee assessment
of performance in the round
– To drive strong performance,
with significant reward for
overachievement of annual targets
linked to Reckitt’s strategic priorities
– Use of deferral for longer-term
shareholder alignment
Cash APP
paid
Deferred
APP
vests
LTIP Performance
– Three-year performance period and
– Targets set for LFL net revenue growth
shares and
performance
share options
two-year holding period
– Malus and clawback provisions apply (in
circumstances including material
misstatement of financial results, gross
misconduct, corporate failure) until two
years after vesting
– Options have seven years to exercise
(40% weighting); ROCE (25%
weighting); relative TSR (25%
weighting); ESG (10% weighting, split
equally between two metrics)
– Performance conditions are applied to
both performance share options and
performance shares
post vesting
– Remuneration Committee assessment
of performance in the round
– To incentivise and reward long-term
performance and align the interests
of Executive Directors with those
of shareholders
– Two-year holding period for longer-
term shareholder alignment
Shareholding
requirements
– CEO: 200,000 shares
– Period of eight years from appointment
– Promotes long-term alignment
– CFO: 100,000 shares
to achieve
with shareholders
– Two-year shareholding requirement
– Promotes focus on management of
post-departure
corporate risks
Award
granted
Award
vests
Holding
period
ends
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D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T CO N T I N U E D
Summary of performance achieved vs targets
Annual performance plan
Performance
measure
Threshold
(zero bonus)
Maximum
(3.57x target)
Achieved
Multiplier
Pay outcomes for current Executive Directors in the year
Annual performance plan
The performance outcome for the annual bonus was 100% of maximum. A third of the bonus is deferred,
by way of an award over Reckitt shares.
Net revenue
< £12.58bn
£13.21bn
£13.66bn
1.89x
Threshold
Target
Adjusted profit
before income tax
Total
< £2.66bn
£2.93bn
£2.94bn
CEO
CFO
1.89x
3.57x
Maximum
£1.56m
2/3 paid in cash
1/3 paid in shares £1.56m
2/3 paid in cash
1/3 paid in shares £2.57m
£2.57m
Target range
Achieved
Long-Term Incentive Plan
Performance
measure
Threshold
(20% vesting)
Maximum
(100% vesting)
Vesting
(% of total
award)
Achieved
Target APP
Max APP
Actual APP payout in cash
Actual APP payout in shares
1. The APP for Nicandro Durante is a pro-rated amount for the period from 2 September 2022 as an Executive Director
Long-Term Incentive Plan
The 2020 Long-Term Incentive Plan has vested at 100% of maximum for the CFO, against the
performance conditions over the three year period.
LFL net revenue growth
(3-year CAGR)
(50% weighting)
EPS (final year) on an actual
foreign exchange basis
(12.5% weighting)
EPS (final year) on a constant
foreign exchange basis
(12.5% weighting)
1.9% p.a.
4.9% p.a.
8.2% p.a.
50%
283 pence
318 pence
342 pence
12.5%
Number of
performance
share options
Number of
performance
shares
80,000
80,000
40,000
40,000
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
304 pence
341 pence
349 pence
12.5%
2020 LTIP grant
2020 LTIP vesting
ROCE (final year) on a constant
foreign exchange basis
(25% weighting)
Total vesting
Target range
Achieved
13.5%
14.8%
14.9%
25%
100%
2022 single figure
CEO
CFO
Former CEO
£0.92m
£2.12m
£5.71m
£m
0
1
2
3
4
5
6
Fixed remuneration
Annual bonus (cash)
Annual bonus (shares)
LTIP
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D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T CO N T I N U E D
Remuneration Committee governance
Who’s on the Committee
The Remuneration Committee is made up entirely of Non-Executive Directors who are appointed by
the Board on the recommendation of the Nomination Committee. Membership of the Remuneration
Committee during the year was as follows:
Alan Stewart1 (Chair), Olivier Bohuon, Jeremy Darroch2, Nicandro Durante3, Mary Harris4, Chris Sinclair
1. Joined the Board as a Non-Executive Director on 1 February 2022 and was appointed to the Remuneration Committee on
the same date. Appointed to the position of Remuneration Chair upon confirmation at the 2022 AGM on 20 May 2022
2. Joined the Board as a Non-Executive Director on 1 November 2022 and appointed to the Remuneration Committee on the
same date
3. Stepped down as a member of the Remuneration Committee on 1 September 2022 before being appointed the CEO Designate
on 2 September 2022
4. Stepped down as Chair of the Remuneration Committee on 20 May 2022 but remains a member of the Committee
Our role
The Committee’s purpose is to assist the Board of Directors in fulfilling its oversight responsibility by
ensuring that the Remuneration Policy and practices reward fairly and responsibly, are designed to
support the strategy and long-term success of the company and take account of the generally accepted
principles of good governance.
– takes into account employees’ views on remuneration; and
– when determining Directors’ Remuneration Policy and practices, considers the Code requirements
for clarity, simplicity, risk mitigation, predictability, proportionality and alignment to culture.
The Executive Directors and the Chair of the Board are responsible for evaluating and making
recommendations to the Board of Directors on the remuneration of the Non-Executive Directors.
Meetings
During the year the Committee held three scheduled meetings. The attendance of members at meetings
is set out in the table on page 126. In addition, during the year the Committee considered ad hoc topics
between meetings such as the exit terms for Laxman Narasimhan and the package for Nicandro Durante,
as CEO.
The Chief Human Resources Officer was Secretary to the Committee throughout the year. Meetings
were also attended by the CEO, CFO, General Counsel & Company Secretary and Group Head of Reward
by invitation. Deloitte was the appointed advisor to the Committee throughout the year.
Members of the Remuneration Committee and any person attending its meetings do not participate
in any discussion or decision on their own remuneration.
The key activities at the Committee’s meetings in 2022 are summarised below:
On behalf of, and subject to approval by, the Board of Directors, the Committee primarily:
Meeting
Topic
– regularly reviews and provides feedback on the company’s overall remuneration strategy;
February 2022
– Reviewed final feedback from shareholders in relation to the Directors’
– in respect of the Chair of the Board, the Executive Directors and members of the Group Executive
Committee, sets, reviews and approves:
Remuneration Policy
– Approved the Directors’ Remuneration Policy
• remuneration policies, including annual bonuses and long-term incentives;
– Reviewed performance to 2021 in respect of bonus outcomes and LTIP vesting
• individual remuneration arrangements;
• individual benefits including pension arrangements;
• terms and conditions of employment including the Executive Directors’ service agreements;
• participation in any of the company’s bonuses and LTIPs; and
• the targets and outcomes for any of the company’s performance-related bonuses and LTIPs.
– reviews wider workforce remuneration and related policies and the alignment of incentives and
reward with culture, taking these into account when setting the policy for Executive Director
remuneration and when determining variable pay outcomes;
– Carried out assessment of wider performance of the company and
Executive Directors
– Final approval of 2021 bonus payout
– Final approval of 2019-2021 LTIP vesting
– Approved 2022 LTIP award and performance targets
– Approved changes to the 2020 and 2021 LTIP targets to reflect M&A activity
– Approved APP deferral arrangements for the Group Executive Committee
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D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T CO N T I N U E D
Meeting
Topic
July 2022
– Reviewed 2022 AGM voting
– Reviewed wider market trends
– Considered assessment of performance to date for the 2022 bonus and
2020-2022 LTIP
– Reviewed wider workforce remuneration arrangements
– Reviewed how ethics and compliance are considered in the design of incentives
– Approved changes to the all-employee share plan rules
November 2022
– Reviewed updates to shareholder guidelines and corporate governance
– Determined 2023 remuneration packages for the Executive Directors
– Determined 2023 remuneration packages for Group Executive Committee members
– Determined 2023 bonus measures and targets
– Agreed 2023 LTIP award date, performance measures and weightings
– Reviewed current shareholdings for senior employees with share
ownership requirements
– Approved awards under all-employee share plans for participants outside the UK
– Approved Remuneration Committee terms of reference
– Reviewed Remuneration Committee effectiveness
– Considered assessment of performance to date for the 2022 bonus and
2020-2022 LTIP
Assessment of incentive outcomes
The Committee thoroughly evaluates the performance of both the company and the Executive Directors
in the round to assess whether the formulaic level of annual bonus payout and long-term incentive
vesting are appropriate and justified. The Committee has formalised its approach to this assessment and
the framework which is applied is illustrated below.
W H AT I S T H E F O R M U L A I C O U TCO M E ?
Committee to consider year-on-year change, whether this reflects
performance trend and impact on the single figure outcome
Consider the quality of earnings
Committee to review the results to ensure they reflect the underlying
performance and also consider any exceptional items
Compare outcome against the shareholder experience
Committee to consider absolute and relative shareholder return over the relevant periods, the
dividend payment(s) and the likely shareholder response to results based on broker feedback
Compare outcome with overall company performance
For example, market share, competitor benchmarking, sustainability, people & culture, strategic
progress, wider stakeholder experience and analyst feedback
Consider any events and other input
For example, reputation/risk related, any change of accounting standards etc.
Draw on input from CRSEC Committee, Audit Committee and management functions
and consider the impact of any external head or tailwinds
Compare with historical use of discretion
In addition, consider whether bonus and LTIP outcomes are consistent
F I N A L A P P A N D LT I P O U TCO M E S
Committee to agree whether adjustments are required to formulaic results
and determine the final outcomes for APP payouts and LTIP vesting
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D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T CO N T I N U E D
Reckitt’s Remuneration Policy and the Corporate Governance Code
Reckitt’s Remuneration Policy reflects the philosophy of pay for performance, shareholder alignment
and strategic alignment over the short, medium and long term. When determining the current Policy,
Provision 40 of the UK Corporate Governance Code was taken into account as follows:
Clarity
Simplicity
Risk
Predictability
Arrangements are transparent, and reflect shareholder alignment and Reckitt’s
strategic priorities, thereby effectively engaging with the wider workforce and
shareholders. The Committee consulted with shareholders as part of the design
phase of the Policy and communicated to the wider workforce details of how
executive pay is set, its alignment with the company’s approach to the wider pay
policy, and how decisions are made by the Committee; it also gave employees the
opportunity to ask any questions on these topics.
The Policy is simple and clear, comprising fixed pay, such as salary and benefits,
pension schemes that are offered to most of the workforce, plus variable pay
which incorporates the annual bonus, LTIP (performance share options and
performance share awards), and a clear Share Ownership Policy for senior
members of the business. Variable pay is set against financial targets to incentivise
short- and long-term financial performance and alignment with shareholders.
The malus and clawback provisions which apply to annual bonus and LTIP awards
encourage the right behaviours, which lead to long-term shareholder alignment
and sustained value creation. The Committee has discretion to adjust the formulaic
bonus and LTIP outcomes both upwards and downwards.
The total of fixed pay and variable pay (target and maximum) illustrated in the
scenarios of total remuneration in our Policy provide an estimate of the potential
future remuneration of the Executive Directors, including the total remuneration
if a 50% share price growth is achieved.
Proportionality
There is a clear link between pay for performance and business strategy, with
stretching financial targets applied to annual bonus payouts and LTIP vesting.
Alignment to
culture
Financial targets apply to the annual bonus and LTIP awards across the wider
workforce to drive business performance. These targets are reviewed on an annual
basis. Malus and clawback provisions apply to annual bonus and LTIP, and together
with deferred annual bonus, holding periods and share ownership for the Executive
Directors (and any other relevant senior employees), drive the right behaviours
expected within Reckitt. The remuneration arrangements of the wider workforce
reinforce employee engagement.
ANNUAL REPORT ON REMUNERATION
The rest of this report sets out how we have implemented our Remuneration Policy in 2022, and how we
intend to implement the Policy in 2023.
2022 performance and remuneration outcomes
In reviewing Executive Director remuneration, the Remuneration Committee also took into account
remuneration decisions for the wider workforce and individual performance of the Directors. The
Committee also reviewed market practice, primarily against the FTSE 30 (excluding financial services
companies), and took into account an international remuneration peer group, comprising 21 companies
as set out below. The latter peer group is the same group used to benchmark remuneration of senior
managers across the company. The companies included are Abbott Laboratories, Bayer, Campbell Soup,
Church and Dwight, Clorox, Coca-Cola, Colgate, Danone, GSK, Henkel, Johnson & Johnson, Kellogg,
Kimberly-Clark, Kraft Heinz, Nestlé, Novartis, PepsiCo, Pfizer, Procter & Gamble, Sanofi and Unilever.
From 2023 this will include Haleon.
Arrangements for Nicandro Durante
Upon appointment as CEO Designate on 2 September 2022, Nicandro received a salary of £1,100,000 p.a.
He receives benefits in line with Reckitt’s Remuneration Policy, however he does not receive a pension
allowance. As Nicandro moved to the UK, he is eligible for relocation benefits. He is eligible to participate
in the company’s annual bonus plan with a target opportunity of 120% of salary; in line with our
Remuneration Policy this has a maximum of 3.57 times target, with one-third of any bonus deferred into
Reckitt shares for a period of three years. He received an LTIP grant of 75,000 performance shares and
150,000 performance share options, for the three-year performance period 2022-2024, followed by a
two-year holding period. In line with the Remuneration Policy, bonus payments and LTIP awards will be
pro-rated for time employed.
His share ownership requirement is 200,000 shares and there is a formal post-employment shareholding
requirement, for two years after departure. There were no buyout awards or sign-on bonuses for Nicandro.
Leaving arrangements for Laxman Narasimhan
As set out elsewhere in this report, Laxman stepped down as CEO on 30 September 2022. Laxman was
paid salary, benefits and pension until 30 September 2022. There was no payment in lieu of notice or any
other payments made in connection with his departure. Laxman is not eligible for a 2022 APP award and
all unvested deferred bonus shares and LTIP awards have lapsed in full. These are set out in detail on
pages 153 and 154.
Laxman is subject to the post-employment shareholding requirement for two years following cessation
of employment (to 30 September 2024).
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D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T CO N T I N U E D
Base salary
Base salaries are reviewed taking into account the salary increases for the wider workforce and Group
and individual performance. During 2022, the Remuneration Committee reviewed salaries for 2023. The
CEO did not receive a salary increase and the Remuneration Committee determined that there would be
a 5.4% salary increase for the CFO in 2023, below the salary increase budget for the UK wider workforce.
The 2023 salary increase budget for the UK employee population was 6%.
The table below sets out annual base salaries with effect from 1 January 2023:
Base
salary
x
Target
bonus
x
Performance
multiplier
=
Final
bonus
outcome
Cash
Shares
2/3
+
1/3
– The effect of the multiplicative approach means that a high-performance multiplier can only be
achieved for outperformance on both top-line and bottom-line performance
Executive Director
Nicandro Durante
Jeff Carr
Annual base
salary 2022
Annual base
salary from
1 January 2023
£1,100,000
£1,100,000
£721,000
£760,000
Percentage
increase
0%
5.4%
– Similarly, underperformance in one of the performance metrics will reduce the overall bonus payout,
even in the case of outperformance of the other
– For example, if we grow net revenue above the stretching requirement for maximum performance
but fail to meet the profit threshold, the bonus payout will be zero (i.e. 1.89 x 0)
Annual bonus in respect of 2022 performance
Executive Director 2022 bonus opportunity
In line with the Remuneration Policy, the CEO and the CFO had target bonus opportunities of 120% of
salary and 100% of salary, respectively. Actual payments can range from zero to 3.57x target depending
on performance against the stretching performance ranges as follows:
– For each performance measure a range is set
– A performance multiplier is calculated for each measure, calculated by the extent to which the
performance for that measure is achieved. These multipliers can be up to 1.89x for outperformance of
the stretching range set by the Committee
– The two individual multipliers are then multiplied together to provide the total performance multiplier
– One-third of any APP is deferred into an award over Reckitt shares, to strengthen alignment
with shareholders
2022 performance targets
The Remuneration Committee set targets for the Executive Directors prior to the 2022 financial year.
These were based on net revenue and adjusted profit before income tax targets, both measured in GBP
at a constant exchange rate. They were primarily based on the business plan at the time, with reference
also being made to external expectations of performance and market practice of companies in a similar
stage of the business cycle to Reckitt.
At the time the Committee finalised the targets, consensus expectations were 2.1% for like-for-like
net revenue growth. In setting the targets, the Committee also had regard to competitor performance
with average three- and five-year like-for-like growth in net revenue amongst our peers being 3.3%
and 3%, respectively.
Net revenue
multiplier
(up to 1.89x)
x
Adjusted
profit before
tax multiplier
(up to 1.89x)
=
Performance
multiplier
(Threshold = 0x
Target = 1.0x
Max = 3.57x)
During the year, the Committee reviewed the targets in light of the strategic disposals of E45 and
Dermicool. In line with our current shareholder-approved Remuneration Policy and shareholder views on
adjusting targets, the APP targets were adjusted where needed to ensure that participants are no better
or worse off and in line with shareholder expectations.
– The total performance multiplier can range from zero for performance at threshold or below to 3.57
for truly exceptional performance. The 3.57 multiplier will only be awarded if maximum performance is
achieved on both metrics (i.e. 1.89 x 1.89)
– This total performance multiplier is then applied to the target bonus opportunity to calculate the
overall formulaic bonus outcome. This is different to usual UK market practice whereby performance
measures are assessed independently and payment under one metric may result in payout regardless
of performance in other metrics. In Reckitt the two measures combine to give the resultant payout
2022 financial performance against APP targets
As stated earlier in the Annual Report, 2022 marked a year of very strong growth and profit delivery.
LFL net revenue growth was 7.6% resulting in the bonus metric of £13.66 billion (on a constant foreign
exchange basis), outperforming more than three times market expectations when the targets were set.
This was also a year of strong market share growth with 62% of our Core CMUs holding or gaining share.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 136
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D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T CO N T I N U E D
For 2022, operating margin was 23.8%, in line with guidance, resulting in the bonus metric of adjusted
profit before income tax (on a constant foreign exchange basis) of £2.94 billion which reflects
performance exceeding the top end of the target range set by the Committee at the start of the year.
Competitor performance
Top-line performance significantly better than peers
The chart below illustrates this performance compared to the targets:
Performance
measure
Threshold
(zero bonus)
Maximum
(3.57x target)
Reckitt 2022
Consensus at the time
of target setting
2.1%
7.6%
Achieved
Multiplier
Peer group average1
5.8%
Net revenue
< £12.58bn
£13.21bn
£13.66bn
1.89x
1. Peer group data based on latest data publicly available for FY2022
0%
1%
2%
3%
4%
5%
6%
7%
8%
Adjusted profit
before income tax
Total
< £2.66bn
£2.93bn
£2.94bn
1.89x
3.57x
Continued strong growth in majority of our portfolio
Two consecutive years of mid-single-digit growth from 70% of the portfolio less sensitive
to COVID-19 dynamics
Target range
Achieved
Adjusted operating margin ahead of peers
As illustrated above, 2022 net revenue and adjusted profit before income tax both exceeded the
maximum level of the performance ranges set for the 2022 annual bonus resulting in a formulaic bonus
multiplier of 3.57x of target (100% of maximum).
Reckitt adj. operating margin
Peer group average1
These results reflect very strong 2022 performance, ahead of expectations, with two consecutive years
of mid-single-digit revenue growth from 70% of the portfolio less sensitive to COVID-19 dynamics, and
double-digit adjusted operating profit growth. E-commerce net revenue grew by +14% in 2022. This
business has more than doubled over the past three years, and now accounts for 13% of Group net
revenue. Total adjusted diluted EPS was 341.7p in 2022, +18.4% over 2021, with free cash flow at £2,031
million in 2022, increasing from £1,258 million in 2021. After three years of our successful transformation
programme we are a bigger, strengthened business, with stronger brands nearly 30% larger than in 2019.
The 2022 proposed full-year dividend of 183.3p represents a 5% increase versus 2021, as we aim to
deliver sustainable dividend growth in future years.
Overall Group performance taken into consideration
As it does every year, the Committee thoroughly evaluated the performance of both the Group and the
Executive Directors in the round to assess whether the level of annual bonus payout is both appropriate
and justified. The framework that the Committee applies is set out on page 133 and more details are set
out below:
1. Peer group data based on latest data publicly available for FY2022
0%
5%
10%
15%
Strong market share performance
62% of Core CMUs holding or gaining share
Double-digit growth on adjusted diluted EPS
Reckitt 2022
Peer group average1
0.8%
23.8%
25%
19.0%
20%
18.4%
Peer group upper quartile1
8.5%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
1. Peer group data based on latest data publicly available for FY2022
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 137
Reckitt Annual Report and Accounts 2022
D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T CO N T I N U E D
The Remuneration Committee also reviewed the progress on delivery of the strategy and wider people, culture and sustainability, a summary of which is provided below:
Strategic delivery
People and culture
Sustainability
Continued strong progress on our strategic objective of
rejuvenating sustainable growth
– Delivered LFL net revenue growth of 7.6% with broad-based
growth across most of our categories, offset by the expected
normalisation in our Lysol disinfectant, which was lapping high,
COVID-19 related comparatives
Strong market share performance
– 62% of our top Category Market Units (CMUs) held or gained share
A bigger, stronger business, well placed for further growth
– Strong delivery in 2022 has enabled us to create a business 28%
Pay and recognition
– Implemented a mid-year global initiative to support our
people in navigating increasingly difficult personal
circumstances of cost-of-living increases, in those countries
hardest hit; 34 markets participated, providing a one-off
appreciation bonus or salary increase, with an overall spend of
an additional £15.8m across c.18,000 employees below senior
management level
– Our January 2023 global pay review budget was 70% higher
than that of the previous year
larger (on a LFL net revenue basis) than in 2019
– Continued to be an accredited Living Wage Employer and
– The business enters 2023 stronger and more resilient, and is well
placed to deliver its stated medium-term ambition of mid-single-
digit growth (excluding the lapping impact of the competitor
supply disruption in our US Nutrition business in 2022)
Continued operational progress
– Improved customer service – 100bps improvement in customer
Advantage Group 2022 survey of retailers scores and multiple
customer awards
– Improved execution – 70bps increase in share of total
distribution points
– Further productivity efficiencies – £800m of productivity savings
delivered, enabling us to reach our £2bn target 12 months early
– Stronger, larger innovation pipeline
– Improved agility and resilience in our supply chain with a significant
step-up in output on our OTC and US Nutrition products in the face
of unprecedented demand
paying at least the Living Wage of £10.90 in 2023 to all our UK
employees and contractors
– Reviewed Reckitt’s top 10 markets covering 25,665 employees
(67% of the total full-time employee population). Of these only
38 employees were paid below the Living Wage for their
country, and all were within 4% at the time of the study. We
have addressed this and in 2023 we will roll out the approach
further to all our markets
Inclusion and wellbeing
– Continued with our Stronger Together conversations series
focusing on mental health and race and ethnicity, which have
attracted more than 1,000 participants each time
– New Global Disability Employee Resource Group (ERG)
launched in 2022 and together with other ERGs are
represented on the Global Inclusion Board and provide input on
consumer perspectives which informs our innovation process
– 1in4 of our people have undertaken the Conscious Inclusion
programme that focuses on the role we all play in building an
inclusive culture
– Continued to embed our ‘Future of Work’ approach and
encourage the hybrid working model, and build a welcoming
office environment that enables our people to Connect,
Create, Coach and Collaborate
Sustainability Ambitions for 2030
– Continued work across the three pillars of Our Ambitions: purpose-led
brands, a healthier planet and a fairer society following 2021 launch of
‘For a Cleaner, Healthier World’
– Held our first ESG-focused capital markets day in May 2022 sharing
priorities developed from a new double materiality study together with
various roadmaps on activity including climate change with different
stakeholders
– Our Sustainability Ambitions on sustainable products, climate action,
inclusion and human rights contribute to delivering the United Nation’s
Sustainable Development Goals (SDGs) whilst also creating
opportunities with consumers and increased resilience to contribute
to our business strategy for growth
Raising awareness of the impact of climate change on health
– Continued to work with governments and international agencies to
raise awareness of the impact of climate change on people’s health
– Attended COP27 in Egypt with a programme that engaged governments,
the World Health Organization, peers, and partners including Water.org
and the London School of Hygiene and Tropical Medicine
Further development of our work on ecosystems and biodiversity
– Our programme with Nature-based Solutions at the University of
Oxford has measured the biodiversity and carbon impacts within key
value chains for latex and more recently palm oil
– Invited to join the established Taskforce on Nature-related Financial
Disclosures and contribute to the emerging guidance based on our
landscape and nature-based insetting activity
Climate change
– Continued use of renewable electricity with more on-site generation
together with evaluation of fuel-switching from gas to reduce
carbon impact
– Used renewable landfill gas alongside instead of natural gas in our
spray-drying process at our Evansville infant formula site plant and
evaluated ways to increase this for further decarbonisation
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 138
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D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T CO N T I N U E D
Strategic delivery
People and culture
Sustainability
A year of delivery
– Despite cost inflation of almost 20% we grew our adjusted
People development
– Focused on embedding and bringing to life our Leadership
– Piloted the use of recycled vegetable oil as a replacement for diesel
fuel in road haulage in the UK.
operating margins by 90bps (from 22.9% to 23.8% excl. China
IFCN). This was driven by a combination of positive mix,
productivity initiatives and pricing
Behaviours of Own, Create, Deliver and Care, and celebrated
role models in excellence of living our Leadership Behaviours
and Compass through the Global Compass Awards
– The very strong top-line growth and margin expansion enabled
– Expanded the moment of learning and development for our
us to grow adjusted EPS by around 18% in 2022 at actual FX rates,
exceeding market expectations at the beginning of the year by
over 10%
– Cash conversion of our earnings delivery was also strong. Free
cash flow was over £2bn, an increase of 61% year on year, and a
cash conversion of 82%
– Delevered the Balance Sheet during the year to 2.1x adjusted
EBITDA, a level which is highly sustainable
Dividend increase recommended
– The Board is recommending a 5% increase in the dividend this year,
and announced its aim to deliver sustainable dividend growth in
future years, subject to any significant internal or external factors
people by launching four more functional academies, helping
us build functional capabilities at scale
Employee engagement
– Ran a full Employee Engagement Survey in August 2022
with an 83% response rate and an improved ‘recommend’
score +1 compared to the previous and in line with the
external benchmark
– We were proud to be named a Top Employer 2023 in the UK,
the US, Spain, Italy, Canada, China and South Africa, by the
Top Employers Institute
Continued sustainable sourcing activity
– Continued focus on key ingredients including palm oil and latex with
increased use of certified sustainable palm oil and the first deliveries
of Fair Rubber Association certified latex. Our Durex brand will carry
labelling to this effect beginning in 2023 and the approach has gained
recognition from Amazon’s Climate Pledge Friendly programme
– Continued collaboration on landscape programmes with our suppliers
and with other Consumer Goods Forum members including partner,
Earthworm Foundation
External benchmarks of progress
– Reckitt improved its performance in the Dow Jones Sustainability Index
with a household products sector leading score and presence in the
world group and gold class
– Secured Reckitt’s ongoing position in the FTSE4Good index
– In the key ratings of MSCI and Sustainalytics, our performance was
broadly maintained, ranking at AA and 22 respectively
– CDP rankings were: Climate Change B; Water A-; Forests (Timber, Palm
Oil B) (Cattle Products, Soy B-)
Decision on 2022 bonus outcomes
Taking into account the very strong year of financial performance, significantly ahead of expectations, amidst continued challenging and dynamic market conditions, and the wider assessment of performance as
described above and in the Remuneration Chair’s letter, which shows the benefits of three years of successful transformation, the Committee concluded that the formulaic APP payout based on performance
against targets is justified and no discretion will be applied.
Under the Remuneration Policy, one-third of the annual bonus will be delivered by way of an award over Reckitt shares and deferred for a three-year period. The bonuses are as follows:
Nicandro Durante
Jeff Carr
Base salary
£363,044
£721,000
x
x
x
Target bonus
120%
100%
Performance
multiplier
3.57
3.57
x
x
x
=
=
=
Total bonus
£1,555,279
£2,573,970
Cash
Deferred into
shares
£1,036,853
£518,426
£1,715,980
£857,990
=
=
=
Nicandro was eligible for an APP award pro-rated for the period he was an Executive Director. Laxman Narasimhan was not eligible for a 2022 APP award following his resignation as CEO.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 139
Reckitt Annual Report and Accounts 2022
D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T CO N T I N U E D
Vesting of the 2020 LTIP – performance versus targets
The Reckitt LTIP is designed to align participants with shareholders through making awards with
stretching performance conditions denominated in both performance share options and performance
share awards. Jeff Carr’s award was granted under the previous Remuneration Policy on 1 May 2020.
Laxman Narasimhan was also granted an award at this time; however, this award lapsed (along with his
2021 and 2022 LTIP awards) when he stepped down as CEO. Nicandro Durante was not granted a 2020
LTIP award as he was a Non-Executive Director at the time of grant.
Overall Group performance taken into consideration
As it does every year, the Committee thoroughly evaluated the performance of both the Group and the
Executive Directors in the round to assess whether the level of vesting under the LTIP is both appropriate
and justified. The framework that the Committee applies is set out on page 133. The Committee took
into account the progress on delivery of the strategy and wider people, culture and sustainability in 2022
as disclosed on pages 137 and 138 of this report and over the performance period of the 2020 LTIP,
as disclosed in previous Annual Reports, as well as the shareholder experience.
2020 performance targets
Vesting of awards under the 2020 LTIP was dependent on the performance conditions set out in the
table below. The targets were adjusted for the disposal of IFCN China during 2021 and were disclosed
in detail in the 2021 Directors’ Remuneration Report.
Assessment of performance versus targets
The chart below illustrates performance compared to the targets. As set out below, the strong
performance against all the performance measures over the three-year performance period results
in 100% vesting in respect of each element, and therefore the total award.
Performance
measure
Threshold
(20% vesting)
Maximum
(100% vesting)
Vesting
(% of total
award)
Achieved
LFL net revenue growth
(3-year CAGR)
(50% weighting)
EPS (final year) on an actual
foreign exchange basis
(12.5% weighting)
EPS (final year) on a constant
foreign exchange basis
(12.5% weighting)
1.9% p.a.
4.9% p.a.
8.2% p.a.
50%
283 pence
318 pence
342 pence
12.5%
304 pence
341 pence
349 pence
12.5%
13.5%
14.8%
14.9%
25%
26.8% increase in NR for 2020-2022 LTIP
Reckitt (excluding IFCN China)
Peer group average1
Peer group upper quartile1
26.8%
14%
20%
0%
5%
10%
15%
20%
25%
30%
1. Peer group data based on latest data publicly available for FY2022
Decision on 2020 LTIP vesting outcome
The Committee is satisfied that this outcome is aligned with the shareholder experience and the wider
assessment of performance over the last three years and concluded that the overall vesting level is
justified and appropriate in this context and that no discretion will be applied.
Based on the performance assessment above, the 2020 LTIP award to the CFO will vest as detailed
below. As mentioned previously, Laxman Narasimhan’s award lapsed on his resignation as CEO.
These awards did not accrue dividends during the vesting period.
Interests
held
Exercise
price
Vesting
%
Interests
vesting
Share
price1
Estimated
value
CFO awards – Jeff Carr
Performance shares
Performance share options
40,000
80,000
n/a
£65.20
100%
100%
40,000
80,000
£58.22 £2,328,800
£0
£58.22
ROCE (final year) on a constant
foreign exchange basis
(25% weighting)
Total vesting
Target range
Achieved
Vesting of the LTIP in the last three years is shown below:
2017-2019
0%
2018-2020
0%
2019-2021
21.5%
2020-2022
100%
1. As the share price on the date of vesting is unknown at the time of reporting, the value is estimated using the average market
value over Q4 2022 of £58.22. The actual value at vesting will be disclosed in the 2023 Annual Report
100%
There is a further two-year holding period attached to Jeff Carr’s LTIP award which means that vested
performance shares (net of tax withholding) will not be released to the CFO until 1 January 2025, and the
resultant shares (net of any tax withholding and the exercise cost as appropriate) from the exercise of
any vested performance share options will not be released to Jeff until 1 January 2025.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 140
Reckitt Annual Report and Accounts 2022
D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T CO N T I N U E D
Single total figure of remuneration for Executive Directors (audited)
The table below sets out a single figure for the total remuneration received by each Executive Director
for the year ended 31 December 2022, based on the information set out in the previous sections. This is
compared to the prior year figure:
Executive Directors
Former Executive Director
Nicandro Durante1
Jeff Carr
Laxman Narasimhan2
2022
£
2021
£
2022
£
2021
£
2022
£
2021
£
Base salary
Taxable benefit3
Pension benefit4
Annual bonus5
LTIP6,7
Fixed remuneration
Variable remuneration
Total
363,044
199,346
–
1,555,279
–
562,390
1,555,279
2,117,669
–
–
–
–
–
–
–
–
721,000
16,817
72,100
2,573,970
2,328,800
700,000
16,756
70,000
2,282,000
–
756,000
86,821
75,600
0
0
979,000
95,322
97,900
3,829,848
1,006,523
809,917
4,902,770
786,756
2,282,000
918,421
0
1,172,222
4,836,371
5,712,687
3,068,756
918,421
6,008,593
Shareholding of Executive Directors compared to requirements
The bar chart below illustrates the Executive Directors’ shareholding compared to the company’s
shareholding requirements. Executives have a period of eight years from appointment to achieve the
requirements of 200,000 shares for the CEO and 100,000 for the CFO and both Executive Directors are
showing good progress towards meeting these requirements as reflected below:
CEO
CFO
Shareholding
requirement
Current
shareholding
Shareholding
requirement
Current
shareholding
£0.34m1
£4.12m1
0
25,000
50,000
75,000
100,000
125,000
150,000
175,000
200,000
Shares held2
Shares deferred from annual bonus3
2023 vesting4
1. Appointed CEO Designate on 2 September 2022 and CEO effective from 1 October 2022. Remuneration shown relates to
services as an Executive Director only. Fees relating to his tenure as a Non-Executive Director are detailed on page 152
1. Current shareholding value based on the average closing share price in Q4 2022 of £58.22
2. Includes shares owned outright and shares subject to post-vesting holding restrictions
3. This is the estimated number of shares under the Deferred Bonus Plan, after tax, including those to be deferred from the 2022
annual bonus
4. For Jeff Carr this is an estimate of the number of shares vesting in May 2023 under the 2020 LTIP, after tax
2. Stepped down as CEO and from the Board on 30 September 2022. Remuneration is shown to this date. As detailed elsewhere
in this report, all unvested share awards for Laxman lapsed on his leaving Reckitt. This included his deferred bonus awards
disclosed in previous annual reports as totalling £2.9m. These shares are set out in detail on pages 153 and 154
3. Benefits for Nicandro Durante in 2022 primarily consist of one-off relocation costs including temporary accommodation, home
leave benefits such as flights, the use of a car and healthcare. For Jeff Carr the benefits include a car allowance and healthcare.
Laxman Narasimhan’s benefits included the use of a car, healthcare and tax filing support. Where relevant the costs above
include a gross-up for tax
4. The company paid Jeff Carr and Laxman Narasimhan a cash allowance in respect of pension provision to the value shown in
the table above. These payments reflect the full pension provision outlined in the Policy Table. Directors are only entitled to
pension on a defined contribution (or cash allowance) basis, with no defined benefit accrual. Nicandro Durante does not
receive a pension allowance
5. Annual bonus reflects financial performance at the maximum level of the performance ranges set for the 2022 bonus; the
Committee’s assessment of performance of both the company and the Executive Directors in the round; and the Committee’s
determination of the level of annual bonus payout at 100% of the maximum level in line with the formulaic outcome is
appropriate as set out on pages 135 to 138. One-third of this is deferred into share awards for three years and will vest subject
to continued employment
6. Reflects the estimated value of LTIP performance share options and performance shares granted to Jeff Car in May 2020,
which are due to vest in May 2023 at 100% of maximum. Valued using an average share price over Q4 2022 of £58.22. See
the relevant section on pages 139. For more details. None of this is attributable to share price growth over the vesting period.
The Committee did not apply discretion in determining the remuneration resulting from the 2020 LTIP vesting
7. The value of the 2021 LTIP vesting for Laxman Narasimhan has been restated from last year, which used an average share price
of £59.84 over Q4 2021 to estimate the value of the vesting. The actual value shown above is based on the share price on the
date of vesting of £62.42 on 20 May 2022. None of this value is attributable to share price growth over the vesting period
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 141
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D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T CO N T I N U E D
Executive Directors’ shareholding requirements (audited)
Executive Directors are expected to acquire significant numbers of shares over eight years and retain
these until retirement from the Board, with a portion required to be retained post-employment as
described below.
These shareholding requirements (200,000 shares for the current CEO and 100,000 shares for the current
CFO) are the most demanding in the market and are equivalent to c.1050% and c.800% of salary for the
CEO and CFO, respectively (based on a share price of £58.22). These requirements are also more than
double the current annual LTIP award (using a Black-Scholes valuation of 10% for the performance
share options).
We also have post-employment shareholding requirements for a further two years. The post-
employment shareholding requirement is enforced through a restriction on Executive Directors’ vested
shares, held by our external share plan administrator, which requires company permission before these
shares can be sold. This restriction excludes shares purchased by the Executive Directors.
The two-year post-employment shareholding requirement is 50% of the shareholding requirement
(or actual shareholding on leaving if lower). This represents more than c.525% of salary for the CEO
and c.400% for the CFO and is more stretching than almost all other UK companies’ in-employment
shareholding requirements; it is also greater than the current annual LTIP award.
The table below shows the current shareholding of each Executive Director against their respective
shareholding requirements as of 31 December 2022:
Performance shares
Options held
Total
beneficial
interests
(number
of shares)1
Shares
awarded
under the
Deferred
Bonus
Plan2
Shareholding
requirement
(number of
shares)
Nicandro Durante
Jeff Carr
Laxman Narasimhan4
200,000
100,000
100,000
1,105
30,000
66,074
4,719
19,625
0
To vest
in 20233
–
21,200
0
Unvested,
subject to
performance
Vested
but not
exercised
To vest
in 2023
Unvested,
subject to
performance
75,000
80,000
0
–
–
32,250
–
80,000
0
150,000
160,000
0
1. ‘Total beneficial interests’ includes shares owned outright and shares subject to post-vesting holding restrictions
2. ‘Shares awarded under the Deferred Bonus Plan’ shows the estimated number of shares awarded under the Deferred Bonus
Plan, after tax, including an estimate of those to be deferred from the 2022 annual bonus
3. This is an estimate of the number of shares vesting to Jeff Car in May 2023 under the 2020 LTIP, after tax as detailed on page 139
4. Laxman Narasimhan’s shareholding immediately following cessation of employment on 30 September 2022. Since stepping
down from the role of CEO on 30 September 2022, Laxman Narasimhan has been subject to the post-employment shareholding
requirements of 100,000 shares (or his actual holding on leaving if lower) for two years following cessation of employment (to
30 September 2024). Shares purchased by Laxman Narasimhan and those delivered through his buyout awards are not subject
to the post-employment shareholding requirement
The Remuneration Committee has confirmed that Laxman is compliant with his post-employment
shareholding requirement.
The Executive Directors are also eligible to participate in the all-employee Sharesave Scheme. Details of
options held under this plan are set out on page 154.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 142
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D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T CO N T I N U E D
2022 LTIP awards (audited)
The table below sets out the LTIP awards which were made to Nicandro Durante, Jeff Carr and Laxman Narasimhan. Dividend equivalents accrue on performance shares during the performance period, but will only pay
out on vested performance shares. Vesting of these awards in full requires achievement of stretching performance conditions over the three-year period. In line with the Directors’ Remuneration Policy, for Executive
Directors there is a further two-year holding period commencing after the end of the three-year performance period. Following his resignation from the role of CEO, Laxman Narasimhan’s award lapsed in full.
Performance shares
Nicandro Durante
Jeff Carr
Laxman Narasimhan4
Performance share options
Nicandro Durante
Jeff Carr
Laxman Narasimhan4
Date of grant
6 Sep 2022
20 May 2022
20 May 2022
6 Sep 2022
20 May 2022
20 May 2022
Shares over
which awards
granted
Market price at
date of award1
Exercise price2
Face value3
Face value less
exercise price3
Performance period
Exercise/vesting period
Holding period
75,000
40,000
75,000
150,000
80,000
150,000
£64.58
£62.42
£62.42
£64.58
£62.42
£62.42
n/a
n/a
n/a
£4,843,500
£2,496,800
£4,681,500
£64.77
£63.32
£63.32
£9,687,000
£4,993,600
£9,363,000
n/a
n/a
n/a
£0
£0
£0
1 Jan 2022–31 Dec 2024
1 Jan 2022–31 Dec 2024
1 Jan 2022–31 Dec 2024
May 2025
May 2025
May 2025
1 Jan 2027
1 Jan 2027
1 Jan 2027
1 Jan 2022–31 Dec 2024
1 Jan 2022–31 Dec 2024
1 Jan 2022–31 Dec 2024
May 2025–Sep 2032
May 2025–May 2032
May 2025–May 2032
1 Jan 2027
1 Jan 2027
1 Jan 2027
1. The market price at date of award is the closing share price on the date of grant
2. The exercise price is based on the average closing share price over the five business days prior to the date of grant
3. For performance shares, the face value is based on the share price at the date of award and assumes the stretching performance criteria are met to achieve full vesting. For performance-based share options, the face value in the table above is calculated as the
number of share options multiplied by the market price at date of award. However, the actual value to a participant at the time of exercise will be the difference between market price at that time and the exercise price for the number of share options vesting,
after the assessment of performance against the stretching performance criteria set. It should be noted that the ‘face value’ shown above would therefore only be realised if the stretching performance conditions are met in full and the share price at the time
of exercise is double the exercise price. As at 31 December 2022, as a result of the share price being below the exercise price, the value of the share options if vesting at this date would be £0
4. Following his resignation from the role of CEO, awards granted to Laxman Narasimhan lapsed in full
As disclosed in the 2021 Annual Report, the performance measures and weightings used for the 2022 LTIP were refreshed from the 2021 LTIP award. The 2022 LTIP awards are based 40% on net revenue, 25% on
Return on capital employed (ROCE), 25% on relative total share return (TSR) and 10% on ESG measures.
Net revenue continues to be measured as like-for-like growth over three years. ROCE is measured based on the final year of the performance period and is a measure of how efficient the Group is at converting its
capital into earnings. ROCE is measured in the final year of the performance period and is a measure of how efficient the Group is at converting its capital into earnings. For LTIP purposes ROCE is measured on a
constant currency basis. In addition, LTIP targets include impairments prior to the start of the performance period, whereas in the calculation elsewhere in the annual report total assets have been adjusted to add
back impairments of Goodwill, except where the impaired asset has been disposed or partially disposed. If there are any impairments during the performance period, the Committee will ensure that this does not
lead to an increase in the vesting by adjusting the capital employed accordingly and to ensure a like-for-like comparison to the targets. Relative TSR is measured against a peer group comprising 19 relevant peer
companies. The targets associated with the 2022 LTIP awards were disclosed in the 2021 Annual Report on Remuneration.
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Wider workforce pay arrangements
Reckitt cascades its reward policy fairly and consistently throughout the organisation and the
Remuneration Committee takes into account the arrangements for the wider workforce when setting
Executive Director remuneration. During the year, the Committee considered workforce remuneration
and related policies on several occasions, as well as the alignment of incentives and rewards with culture.
Information reviewed by the Remuneration Committee includes salary structures, bonus design and
targets, the LTIP, share ownership, our global mobility policies, provision of benefits and Reckitt’s
all-employee share plans. The Committee is pleased to note from this review that the company’s
remuneration policies continue to be aligned with those of the Executive Directors, with a cascade
throughout the organisation.
As mentioned in the Chair’s letter, we continue to pay our employees in the UK the Living Wage and
further developed our Sustainable Livelihood Framework to capture broader input on providing a
working environment that promotes health and wellbeing, equality, employment rights, long-term
financial security, and skills development to support ongoing career development for our people. During
the year we also rolled out a global framework to support markets in providing additional financial reward
(one-off appreciation bonus or salary increase) to our people to recognise their ongoing commitment,
demonstrate our care for them, and acknowledge the increasingly difficult personal circumstances of
cost-of-living increases.
We continued to have strong take-up in our all-employee share plans from the most recent launch and
45% of our people globally are participating in one of the plans. Our efforts in building inclusive and
accessible launch campaigns this year have been recognised as we were short-listed for the best
communication of an employee share plan at the 2022 ProShare Annual Awards.
In addition, we continued to implement and develop many of our workforce initiatives that have been
introduced previously. We continued to review and monitor the gender pay gap of our workforce closely.
To increase transparency on this issue, Reckitt voluntarily discloses the gender pay gap for our 10 largest
markets by workforce size, which including the UK, make up around 70% of our global permanent
workforce. We have also continued with the Stronger Together conversation series, focusing on mental
health, race and ethnicity topics this year, and established a new Global Disability Employee Resource
Group (ERG), whose senior leaders and sponsors, together with those from other ERGs and the CEO as
the Chair, lead the diversity and inclusion (D&I) board that focuses on the strategic agenda across Reckitt.
In partnership with Hintsa Performance, we continued to offer personal Wellbeing Performance Coaching
to all people leaders. Hintsa Performance Coaches share information on relevant health and wellbeing
topics in our monthly Wellbeing Boosters and People Leader Q&As that are available to all our people.
We also launched a pilot Caregiver Support Network in the UK in partnership with Heart On My Sleeve, to
support caregivers faced with the mental health challenges of the people they care for. In August 2022
we ran a full Employee Engagement Survey with an 83% response rate and an improved ‘recommend’
score +1 and in line with the external benchmark. In the markets where it was possible to do so, 85% of
people answered voluntary questions about their diversity. This has helped us better understand our
people and inform our inclusion strategy.
As set out earlier in the Annual Report, we continue to focus on maintaining an open, transparent culture
by promoting continuing dialogue across the company. During 2022, Mary Harris’s activity as the
Designated Non-Executive Director for engagement with the company’s workforce has allowed her to
feed back the views of the workforce to the Remuneration Committee as well as the wider Board. Each
year the company holds several round-table discussions with employees and organises site visits during
which townhall meetings and smaller group discussions with our people take place. Details of this
engagement are set out in the Section 172 Statement, which can be found on pages 62 to 64.
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The table below summarises the remuneration structure for the wider workforce:
Implementation below the Board
Salary
Salary increases are determined by line managers based on factors such as individual performance ratings, talent ratings and
local market practice. Country-specific conditions such as inflation are also taken into account. The budget salary increase for
our UK workforce for 2023 was 6%.
The average total pay during 2022 to all employees across the Group is £53,175 and we review pay ratios of the Chief Executive
Officer’s total remuneration to the remuneration of UK employees, as set out on page 147 of this report.
In the UK, Reckitt has been voluntarily paying the Living Wage for a number of years and is accredited by the Living Wage
Foundation as paying a Living Wage to employees and contractors. This certifies our commitment to employees and staff that
they will receive a wage that not only exceeds the minimum wage but also recognises the actual cost of living in the UK.
We have developed a framework that captures the broader work we are doing to provide a working environment that promotes
health and wellbeing, equality, employment rights, long-term financial security, and skills development to support ongoing
career development for our people. In line with our 2030 Sustainability Ambitions, this is how we are articulating how we are
enabling sustainable livelihoods.
In 2022, we reviewed our top 10 markets which covered 25,665 employees (67% of the total full-time employee population).
Of these only 38 employees were identified to be paid below Living Wage for their country and all were within 4% at the time
of the study. We have addressed this and going forward we will roll out the approach in all our markets.
Annual bonus
Our Annual Performance Plan (APP) is operated consistently across the organisation and has approximately 16,000 employees
participating. As employees progress and are promoted their target bonus and maximum multiplier typically increase.
In common with the Executive Directors, bonus payouts are based on Reckitt’s financial performance, with all employees being
incentivised on net revenue and a profit measure, which varies based on role. In addition, some roles have a third measure,
typically related to net working capital or innovation.
We also operate local bonus plans, for example for employees in sales and factories.
Comparison with Executive Director remuneration
Salary increases are normally aligned with those of the wider workforce, which
take into account performance.
Salaries are also set competitively against peers in support of the recruitment
and retention of Executive Directors.
The salary increase for the CFO for 2023 was 5.4% which is lower than the
budgeted salary increase for the wider workforce in the UK. The CEO did not
receive a salary increase for 2023.
Annual bonuses for Executive Directors are directly related to Reckitt’s
financial performance measured by net revenue and adjusted profit before
income tax targets, as well as a net working capital (NWC) measure from 2023
which will act as a downward modifier only. These measures also apply to
other Group employees who participate in the APP.
The bonus for all participants in the APP operates on a multiplicative basis,
in the same way as for the Executive Directors.
One-third of annual bonus payments for Executive Directors are subject
to a three-year deferral into awards over Reckitt shares.
We have malus and clawback and other safeguards in place in order to
manage any potential risk that may arise from the use of the APP.
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Implementation below the Board
Long-term incentives
Comparison with Executive Director remuneration
Reckitt grants LTIP awards to members of the Group Executive Committee, Group Leadership Team and senior management
team to support the remuneration philosophy of incentivising superior long-term business results and shareholder value
creation. Awards are also made to selected high-potential employees below these levels.
The 2023 awards will continue to use the same performance measures and three-year performance period as for the Executive
Directors. Awards are made as a fixed number of share options and shares, with grants applied consistently depending on an
employee’s level in the organisation. Adjustments can be made to the award level based on performance and managers can also
recommend additional awards to key employees.
Executive Directors’ LTIP grants comprise performance share options and
performance share awards (based on a fixed number), which for the 2023
awards will vest subject to the achievement of LFL net revenue, ROCE, relative
TSR and ESG performance targets.
In addition to the LTIP’s three-year performance period, Executive Directors
are subject to an additional two-year holding period commencing at the end
of the performance period.
Pension
A pension/gratuity scheme is offered to more than 80% of our global employees. Exceptions to this are countries where pension
provision is not prevalent in the local market and/or is provided by the state.
In the UK, all Reckitt employees are eligible to receive a company pension contribution of at least 10% of pensionable salary,
irrespective of any personal contribution made.
Under the Policy, our Executive Directors are eligible to receive a company
pension contribution of 10% of salary, in line with the wider workforce in the
UK. They are eligible to take this as a cash alternative. The current CEO is not
eligible for a pension contribution.
All-employee share plans
We operate a global all-employee share plan to foster our culture of ownership amongst employees. This gives employees the
opportunity to save over a three-year period to purchase Reckitt shares at a discount to the share price.
Executive Directors are eligible to participate in the all-employee Sharesave
Scheme on the same basis as all employees.
As well as ensuring individuals feel a sense of ownership, Reckitt is keen to ensure that the plans are inclusive and accessible
to all colleagues, with the plan being offered on equivalent terms to all eligible employees globally, subject to local regulation.
45% of Reckitt employees have signed up to one of our three share plans. Over the last three-year period, 2020-2022, around
4,500 employees saved in one of our plans, making a gain of c.23% over the period1, which was a gain of £1,580 per employee on
average. Someone saving the maximum allowed under the plan would have made a gain of £4,086.
In order to encourage take-up and ensure that the plans are inclusive and accessible to all employees, we utilise around 100 local
champions and provide communications in 26 languages. Champions are responsible for local communications throughout the
offices and factories. Examples include desk drops, webinars, virtual drop-in sessions with specific contacts at each site for
support. These led to another successful launch and strong employee take-up, and we were short-listed for the best
communication of an employee share plan at the 2022 ProShare Annual Awards.
Further, in line with Reckitt’s commitment to diversity and inclusiveness, Reckitt has included and promoted a 12-month savings
sabbatical for employees on maternity leave.
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Implementation below the Board
Share ownership
Comparison with Executive Director remuneration
Reckitt is proud of our ownership culture. In addition to the market-leading participation rates in our all-employee share plans,
members of the Group Executive Committee and Group Leadership Team have shareholding requirements in order to further
align the interests of management and shareholders. These requirements are amongst the most demanding in the market and
we expect participants to meet them within eight years of appointment. There is an annual review of progress by the
Remuneration Committee.
Amongst the Group Executive Committee, the total shareholding requirement is around £41m1 and the average shareholding
requirement among this group excluding the CEO is c.530% of salary. The aggregate actual holding for the Group Executive
Committee is £15m1, equivalent to an average of 230% of salary, which reflects good progress towards the requirement given
the changes to the Group Executive Committee over the past three years.
The Executive Directors have shareholding requirements of 200,000 shares for
the CEO and 100,000 for the CFO, the most demanding requirements in the UK
market2. These are equivalent to c.1050% and c.800% of salary1 respectively.
Executive Directors are additionally subject to a post-employment
shareholding requirement which is enforced through restrictions put in place
by our share plan administrator.
The table on page 140 sets out the progress of the Executive Directors
towards their shareholding requirements.
Overall the total shareholding requirement for all employees with requirements is £79m1, equivalent to an average of 400%
of salary. The current actual holding is £51m1 and the actual average holding is 260% of salary. This also reflects good progress
towards the requirement given the number of new appointments made in light of the company’s strategic transformation goals
and reorganisation of structure.
Benefits
Reckitt regularly reviews the core benefits it provides in each country to ensure they remain appropriate, equally inclusive and in
line with our philosophy of providing market-competitive benefits. In addition to aligning with the local market Reckitt ensures
that there is a core level of benefits provided to all employees. These include:
– Life insurance for all of our global employee population. All of our employees are insured for at least two times base salary
– Global parental leave policy which provides for at least 26 weeks paid and 26 weeks unpaid maternity leave, and four weeks
paid and four weeks unpaid paternity leave, for all employees. Some markets, such as the US, provide a market-leading higher
benefit of 16 weeks paternity leave. The policy recognises that today’s families come in all shapes and sizes, so the same
principles apply to all LGBTQ+ employees, as well as adopting and surrogacy families
– An Employee Assistance Programme is provided in every country, providing valuable assistance to our employees during the
pandemic and beyond
– Reckitt also provides health insurance, where it is not adequately provided for by the state, for most of our global employee
population. In the UK and US our healthcare insurer provides access to a video GP. This allows our employees to speak to a
doctor whenever they want. In a number of markets this also extends to cover spouse and/or children
Reckitt’s unique International Transfer Policy is key to ensuring global mobility, which is a critical part of Reckitt’s career
development and our culture. Employees transfer consistently on a local terms basis, to remove inequities of home/host
practices. Depending on the type of international move additional benefits such as international healthcare, international
pension, school fees, tax return support and home leave may be provided to foster ongoing mobility.
1. Based on the average closing share price in Q4 2022 of £58.22
2. Compared against constituents of the FTSE 30
Executive Directors receive benefits which consist primarily of the provision of
a company car/allowance, risk insurances and healthcare.
In addition, Executive Directors are eligible for the benefits available to the
wider UK workforce, as described in this table.
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Gender pay gap
The Board reviews the company’s gender pay gap and publishes an annual gender pay report that can
be found on our website under the Fairer Society heading of our Sustainability section. To increase
transparency on this issue Reckitt voluntarily discloses the gender pay gap for our 10 largest markets
by workforce size, including the UK, which together make up around 70% of our global permanent
workforce.
In particular, the Remuneration Committee believes the pay ratio is consistent with the Group’s wider
policies on employee pay, reward and progression. Reckitt ensures that employees are paid fairly for
their role, based on the location they work in and their performance in role. As such, the base salary,
annual bonus and benefits are based on the same principles for the identified employees as they are
for the CEO. The median pay ratio has decreased in line with the reduction in the CEO’s single total figure
of remuneration as set out on page 140.
As disclosed in our gender pay gap report, Reckitt has set targets to increase the number of women
in senior leadership positions and has a number of initiatives to increase this representation.
In calculating the ratio we have used Option A, in line with shareholder guidelines. The employees used
in the calculations were selected on 23 February 2023, following the end of the financial year.
A summary of the gender pay statistics is also included below:
– The gender pay gap in the UK for the year to April 2022 is -10.8% at median and 2.4% at mean
– This compares to the year to April 2021 when the gender pay gap was -7.4% at median and 5.0% at mean
Further data and information on the initiatives Reckitt is taking on diversity and inclusion are set out in
our gender pay gap report.
CEO pay ratio
The table below provides pay ratios of the Chief Executive Officer’s total remuneration to the
remuneration of UK employees at the lower quartile, median and upper quartile. This is in line with UK
reporting requirements.
For 2022, the total pay and benefits paid to both Nicandro Durante and Laxman Narasimhan whilst in the
role of CEO have been combined to calculate the total CEO pay for 2022.
For identifying the three employees at the lower quartile, median and upper quartile, the following
methodology has been used:
– All UK employees’ total remuneration as at 31 December 2022 has been considered, excluding leavers
and employees who were absent for more than 20 days during the financial year, as these would
distort the ratio
– Full-time equivalent salary, variable pay, allowances and benefits (using the part-time values and
converting these to full-time equivalent values) have been calculated. In order to calculate the value
of taxable benefits we have taken the P11D value, due to ease of accessing data. Actual pension
contributions have been used, and, where appropriate, converted to full-time equivalents
The table below summarises the identified employees in 2022:
CEO
Year
2022
2021
2020
2019
Method
Option A
Option A
Option A
Option A
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
Total employee pay and benefits
Salary component
1:82
1:170
1:244
1:158
1:61
1:121
1:177
1:115
1:34
1:78
1:100
1:70
In addition, Note 5 to the Financial Statements sets out the total employment costs and average number
of employees globally, during 2022. Based on these, the average global pay during 2022 was £53,175 and
consequently the pay ratio between the CEO and average global employee was 1:57.
25th
percentile
£36,998
£25,580
Median pay
£49,842
£42,025
75th
percentile
£88,128
£58,062
The calculations reflect the application of Reckitt’s reward policy across the organisation as set out in the
section on wider workforce pay arrangements.
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Implementation of Directors’ Remuneration Policy for 2023 outcomes
Salary
As set out earlier in this report, the CEO did not receive a salary increase for 2023 and there was a 5.4%
increase in the CFO’s salary for 2023, taking into account Group and individual performance. This is below
the budgeted average increase of 6% for the UK workforce. The CEO’s salary for 2023 will be £1,100,000
and the CFO’s will be £760,000.
2023 LTIP award will consist of 150,000 performance share options and 75,000 performance shares and
Jeff Carr’s award will be 80,000 performance share options and 40,000 performance shares. These
awards are expected to be made following the AGM in May 2023.
Performance conditions
The LTIP performance metrics and their associated weightings are unchanged from the 2022 LTIP awards
and are as follows:
Pension
The CFO is eligible to receive a pension contribution, or equivalent cash allowance, of 10% of salary,
which is equivalent to the company’s level of contribution for all UK employees. The current CEO does
not receive a pension contribution.
Annual bonus in respect of 2023 performance
There are no changes to the bonus opportunity for the CEO and CFO, remaining at 120% and 100% of
salary at target, respectively. Bonuses for 2023 will remain based on Reckitt’s net revenue and adjusted
profit before income tax targets, measured in GBP at a constant exchange rate, with the outcome under
each of the measures combined multiplicatively to give a maximum bonus outcome of 3.57x the target
bonus opportunity if both targets are met.
In addition, for 2023, a NWC metric will be introduced to the annual bonus. The NWC measure will act as a
downward modifier only (applying on a multiplicative basis to the combined outcome of the net revenue
and adjusted profit before income tax targets, with a maximum multiplier of 1x) and is intended to hold
executives more formally accountable for, and incentivise delivery of, cash conversion as a key element
of Reckitt’s earnings model. NWC has been used as an APP metric for a number of years for a significant
proportion of the business and the Committee is of the view that aligning the bonus measures for our
Executive Directors, as well as other senior leaders, with other areas of the Group is appropriate. The
NWC metric for APP purposes is an Operating NWC and is calculated as a 12-month average.
One-third of any bonus earned will be deferred into Reckitt shares for three years.
As previously noted in the Chair’s letter, as it does every year, the Committee will continue to evaluate
the performance of both the Group and the Executive Directors in the round and with regard to broader
circumstances to assess whether the level of annual bonus payout is appropriate and justified, before
determining the final bonus payout.
We have not disclosed the performance target ranges for 2023 as we consider them to be commercially
sensitive. However, we commit to retrospectively disclosing the performance ranges in the Directors’
Remuneration Report for the year ending 31 December 2023.
2023 LTIP awards
Award levels
There are no changes to the LTIP award levels for the CEO or CFO for 2023. These have been reviewed
in light of share price performance, Group performance and individual performance. Nicandro Durante’s
– LFL net revenue growth (40% weighting)
– ROCE (25% weighting)
– Relative TSR (25% weighting)
– ESG (10% weighting)
The Committee went through a robust process when setting these targets, taking into account a number
of factors and different reference points, and the Committee considers that the targets set are very
stretching. Awards granted in 2023 will vest in line with the descriptions below, which require significant
outperformance of targets.
LFL net revenue growth
Net revenue is measured as LFL growth over three years. As set out earlier in the report, we are a 28%
larger business on a LFL net revenue basis since 2019, including a c.2.5% positive impact from the US
Nutrition competitor supply issue detailed elsewhere, meaning that 2022 is a larger, stronger base year
for this award. At the time these targets were set, market consensus was for c.2% LFL net revenue
growth for 2023 and our stated ambition for LFL net revenue growth is mid-single-digits, excluding the
lapping impact of the competitor supply disruption in our US Nutrition business in 2022. In this context,
the Remuneration Committee believes that the performance ranges are appropriately stretching and
incentivise management to deliver outperformance. 20% of this element will vest for achieving 2.0% per
annum growth increasing to full vesting for achieving 5.0% per annum growth.
ROCE
ROCE is measured in the final year of the performance period and is a measure of how efficient the
Group is at converting its capital into earnings. For LTIP purposes ROCE is measured on a constant
currency basis. In addition, LTIP targets include impairments prior to the start of the performance period,
whereas in the calculation elsewhere in the annual report total assets have been adjusted to add back
impairments of Goodwill, except where the impaired asset has been disposed or partially disposed.
If there are any impairments during the performance period, the Committee will ensure that this does
not lead to an increase in the vesting by adjusting the capital employed accordingly and to ensure a
like-for-like comparison to the targets. 20% of this element will vest for achieving 14.0% increasing to
full vesting for achieving 16.0%.
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Relative TSR
Relative TSR directly aligns LTIP participants with the shareholder experience and will only reward for TSR
outperformance against our peers.
As it does every year, the Committee reviewed the constituents of the peer group to ensure that they
remain appropriate to assess performance against and also considers whether any additional peers
should be added. The outcome of this review was that all of the current peer companies remain
appropriate and that Haleon (which was listed as an independent business in 2022) should be added
to the peer group.
Therefore, the peer group for the 2023 LTIP awards comprises 20 companies with which we compete
for capital and to which shareholders compare us, and is also an appropriate group against which
to incentivise LTIP participants to outperform. The peer companies are primarily drawn from the
constituents of the MSCI World House & Personal Products Index, with others forming part of the broader
‘Fast Moving Consumer Goods’ industry which are subject to similar industry dynamics and market
challenges as Reckitt. The constituents will be reviewed on an annual basis and, in particular, as new
comparators come to the market. The TSR peer group for the 2023 LTIP award is set out below:
Beiersdorf
Danone
Henkel
Church & Dwight
Essity
Clorox
Estée Lauder
JDE
Kao
Lindt
L’Oréal
Mondelēz
Colgate Palmolive
Haleon
Kimberly-Clark
Nestlé
Procter & Gamble
Shiseido
Unicharm
Unilever
Under the relative TSR measure, 20% of the award will vest for TSR at the median of the peer group,
increasing to full vesting for upper quartile performance or above. In line with shareholder guidance,
a common currency will be used for TSR purposes.
ESG
ESG measures were introduced from the 2022 LTIP to align participants with, and incentivise delivery of,
our 2030 Sustainability Ambitions. There are two equally weighted metrics for the 2023 LTIP award.
The ESG targets are based on rigorous methodology, are independently assured and, in the case of
our carbon emissions, support our delivery of externally validated science-based targets on emissions
reduction. Targets are based on achievement in the final year of the performance period and take into
account the plans that we have to achieve the Sustainability Ambitions. The measures and targets are
as follows:
i. Percentage of net revenue from more sustainable products – this has been an annual reporting KPI
since 2012 and supports our ambition of 50% of net revenue being from more sustainable products
by 2030. This is measured using our Sustainable Innovation Calculator (SIC). The calculator evaluates
the sustainability impact of every new product versus existing products and established benchmarks.
It helps measure carbon, water, plastics, ingredients and packaging footprints in new products for our
global brands, targeting their reduction to enable more sustainable products in the future. It includes
Scope 3 product emissions (including the carbon and water impact from consumer use) which is the
most impactful lifecycle stage of our products. We achieved 24.4% of net revenue from more
sustainable products in 2022 and have set the targets for this measure based on the Plan to 2030, such
that 20% of this element will vest for achieving 32% of net revenue from more sustainable products
increasing to full vesting for achieving 35% in 2025.
ii. Percentage reduction in GHG emissions in operations – this supports the delivery of our externally
validated science-based targets for 2030 to help maintain global warming at less than 1.5°C, including
a 65% reduction in GHG emissions in operations against our 2015 baseline. For the purposes of reward
outcomes, any offsetting activities will not count towards achievement of these targets. A total of
20% of this element will vest for achieving a 66% reduction in GHG emissions in operations by 2025,
increasing to full vesting for achieving a 69% reduction. The threshold of a 66% reduction is above
the goal that we set for ourselves by 2030, with the maximum target of a 69% reduction significantly
beyond this, requiring us to exceed our 2030 science-based target ahead of schedule. These targets
are considered stretching taking into account internal forecasts and in the context of a 2022 actual
of 66%.
Summary of 2023 LTIP targets
Performance will be assessed for each measure, at the end of the three-year performance period, on a
sliding scale as set out below:
LFL net revenue growth (3-year CAGR)
(40% weighting)
ROCE (final year) on a constant foreign exchange basis
(25% weighting)
Relative TSR
(25% weighting)
ESG: % of net revenue from more sustainable products (final year)
(5% weighting)
ESG: % reduction in GHG emissions in operations (final year)
(5% weighting)
Threshold
Maximum
(20% vesting)
(100% vesting)
2.0%
5.0%
14.0%
16.0%
Median Upper quartile
32%
66%
35%
69%
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ADDITIONAL REMUNERATION DISCLOSURES
Percentage change in the remuneration of Directors
We are required to publish the annual percentage change in remuneration (salary or fees, benefits and annual bonus) for each Director compared to the annual average percentage change in remuneration for the
employees (excluding Directors) of the Parent Company. Since the CEO is the sole employee of Reckitt Benckiser Group plc, this statutory disclosure is not possible. In the table below we are therefore voluntarily
disclosing the percentage change in remuneration for all UK employees in order to provide a representative comparison.
The company considers UK employees to be an appropriate comparator group as the Executive Directors’ remuneration arrangements are similar in structure to the majority of these employees and it reflects the
economic environment where the Executive Directors are employed. The analysis is based on a consistent set of employees for each comparison, i.e. the same individuals or roles appear in the 2021/22 comparison,
and similarly for the 2020/21 and 2019/20 comparisons.
All UK employees1
Chris Sinclair (Chair of the Board)
Andrew Bonfield3
Olivier Bohuon4
Jeff Carr (CFO)5
Jeremy Darroch6
Nicandro Durante (CEO)7
Mary Harris
Mehmood Khan
Pam Kirby
Sara Mathew8
Laxman Narasimhan (Former CEO)9
Alan Stewart10
Elane Stock
Margherita Della Valle11
2021/22
2020/21
2019/20
Salary/fee
Benefits
Bonus
Salary/fee
Benefits
Bonus
Salary/fee
Benefits
Bonus
4.1%
10.0%
6.2%
2.6%
3.0%
–
178.0%
-3.8%
2.6%
2.0%
-57.2%
-22.8%
–
2.6%
2.6%
2.1%2
–
–
–
0.4%
–
–
–
–
–
–
-8.9%
–
–
–
15.6%
–
–
–
12.8%
–
–
–
–
–
–
-100.0%
–
–
–
5.9%
3.6%
2.4%
–
41.5%
–
1.9%
2.0%
2.7%
2.0%
2.7%
3.1%
–
2.7%
105.4%
6.2%2
–
–
–
37.3%
–
–
–
–
–
–
-62.1%
–
–
–
-8.9%
–
–
–
29.3%
–
–
–
–
–
–
-5.9%
–
–
–
4.5%
10.0%
4.1%
–
–
–
14.1%
14.4%
4.7%
7.3%
109.3%
117.3%
–
4.7%
–
1.5%2
–
–
–
–
–
–
–
–
–
–
-23.4%
–
–
–
505.4%
–
–
–
–
–
–
–
–
–
–
1747.2%
–
–
–
1. The percentages for ‘All UK employees’ reflect the average percentage change in full-time equivalent salary, taxable benefits
and allowances, and bonus for colleagues based in the UK between 2019/20, 2020/21 and 2021/22. It only includes colleagues
employed in both years in the comparison
7. Nicandro Durante was appointed as an Executive Director from 2 September 2022, having stepped down as a Non-Executive
Director on 1 September 2022. The percentage change figures for 2021/22 reflect an aggregate of remuneration paid for both
his Executive and Non-Executive roles during 2022
2. The percentage change in taxable benefits for all UK employees excludes international transfer benefits as this is volatile
from year to year based on each individual’s circumstances
3. Andrew Bonfield held the role of Senior Independent Director on an interim basis from 1 September to 31 October 2022.
The additional fees for this period are included above
4. Olivier Bohuon was appointed to the Board on 1 January 2021 and so no comparison is shown for 2020/21 and 2019/20
5. Jeff Carr joined on 9 April 2020 so no comparison is shown for 2019/20. The percentage change shown for 2020/21 reflects
actual remuneration received during 2020 for service from Jeff Carr’s appointment on 9 April 2020 to 31 December 2020
6. Jeremy Darroch was appointed to the Board on 1 November 2022 and so no comparisons are shown
8. Sara Mathew was appointed to the Board in July 2019 and the comparison for 2019/20 reflects that the 2019 fee was only
received for part of the year. Sara Mathew stepped down from the Board on 20 May 2022 and the comparison for 2021/22
reflects that the 2022 fee was only received for part of the year
9. The percentage change for 2019/20 for Laxman Narasimhan reflects actual salary received during 2019 for service from his
appointment on 16 July to 31 December 2019. Laxman stepped down from the Board on 30 September 2022 and the
comparison for 2021/22 reflects actual remuneration received during 2022 to this date. Laxman was not eligible for an annual
bonus in 2022 and this is reflected in the comparison shown
10. Alan Stewart was appointed to the Board on 1 February 2022 and so no comparisons are shown
11. Margherita Della Valle joined on 1 July 2020 so no comparison is shown for 2019/20. The comparison for 2020/21 reflects that the
2020 fee was only received for part of the year
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 151
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D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T CO N T I N U E D
Relative importance of spend on pay
The table below shows shareholder distributions (i.e. dividends) and total employee pay expenditure for
2021 and 2022, along with the percentage change in both.
Total shareholder distribution1
Total employee expenditure2
2022
£m
1,249
2,408
2021
£m
% change
2021/22
1,246
2,276
0.2
5.8
1. Details of shareholder distribution are set out in Note 28 to the Financial Statements
2. Details of employee expenditure are set out in Note 5 to the Financial Statements
Exit payments made in the year (audited)
Details of Laxman’s leaving arrangements are provided earlier in this report.
Payments to past Directors (audited)
No other benefits or payments were delivered to former Directors in the year in excess of the minimum
threshold of a pre-tax value of £15,000 set by the Remuneration Committee for this purpose.
Performance graph
The graph below shows the TSR of the company and the UK FTSE 100 Index over the period since
1 January 2013. This shows the growth in the value of a hypothetical holding of £100 invested on
31 December 2012. The FTSE 100 Index was selected on the basis that it contains companies of
a comparable size, in the absence of an appropriate industry peer group in the UK.
250
200
150
100
179
201
206
157
127
119
145
120
140
118
211
211
176
196
185
193
168
184
144
149
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Reckitt
FTSE 100
Source: Refinitiv Datastream
The table below sets out the single figure of total remuneration for the role of CEO over the last 10 years.
(£000)
CEO single figure of remuneration
Nicandro
Durante
Laxman
Narasimhan
Rakesh
Kapoor
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
£6,840
£12,787
£25,527
£15,289
£8,999
£14,314
£938
£4,5991
£8,4341
£5,967
£918
£2,118
Annual bonus
(as a
percentage
of maximum)
LTIP vesting
(as a
percentage
of maximum)
100%
72%
100%
0%
0%
84%
12%2
100%
91%
100%4
40%
40%
80%
50%
50%
65%
0%3
0%3
21.5%
100%5
1. Includes buyouts in respect of legacy arrangements from previous employer
2. Zero for Rakesh Kapoor
3. Laxman Narasimhan was not with the Group at the time these awards were granted
4. Laxman Narasimhan was not eligible for a 2022 APP following his resignation as CEO
5. Nicandro Durante was a Non-Executive Director at the time these awards were granted and therefore did not receive an award
and Laxman Narasimhan’s award lapsed following his resignation as CEO
Single total figure of 2022 remuneration for Non-Executive Directors and implementation for 2023
(audited)
The following Non-Executive Director fee policy will apply from 1 January 2023. The table also sets out
the fees that were in place for the year ended 31 December 2022.
Role
Base fees
Chair of the Board
Non-Executive Director
2023 fees
2022 fees
Fee delivered
in Reckitt
shares
Fee delivered
in Reckitt
shares
Cash fee
Cash fee
£495,000
£76,500
£165,000
£25,500
£470,250
£73,500
£156,750
£24,500
Additional fees
Chair of Committee
Member of Committee
Designated Non-Executive Director for engagement
with the company’s workforce
Senior Independent Director
£35,000
£20,000
£20,000
£30,000
–
–
–
–
£35,000
£20,000
£20,000
£30,000
–
–
–
–
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 152
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D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T CO N T I N U E D
The fee for the Chair of the Board has been increased to £660,000, an increase of 5.3%. The base fee for
NEDs has been increased to £102,000, an increase of 4.1%. These increases are below the salary increase
budget across the UK workforce. The proportion delivered in Reckitt shares continues to be 25% of the
base fee, being £165,000 for the Chair and £25,500 for the NEDs.
In addition, NEDs are eligible to receive support from the company to complete a UK tax return, if required.
The table below sets out a single figure for the total remuneration received by each Non-Executive
Director for the year ended 31 December 2022 and the prior year:
Chris Sinclair
Andrew Bonfield1
Olivier Bohuon
Jeremy Darroch2
Nicandro Durante3
Mary Harris
Mehmood Khan
Pam Kirby
Sara Mathew4
Alan Stewart5
Elane Stock
Margherita Della Valle
2022 fees
2021 fees
Cash
Shares
Total
Cash
Shares
Total
£470,250
£113,500
£93,500
£24,667
£95,667
£119,750
£93,500
£128,500
£49,167
£94,458
£93,500
£93,500
£156,750
£24,500
£24,500
£0
£0
£24,500
£24,500
£24,500
£0
£22,458
£24,500
£24,500
£627,000
£138,000
£118,000
£24,667
£95,667
£144,250
£118,000
£153,000
£49,167
£116,916
£118,000
£118,000
£427,500
£106,250
£91,250
–
£141,250
£126,250
£91,250
£126,250
£91,250
–
£91,250
£91,250
£142,500
£23,750
£23,750
–
£23,750
£23,750
£23,750
£23,750
£23,750
–
£23,750
£23,750
£570,000
£130,000
£115,000
–
£165,000
£150,000
£115,000
£150,000
£115,000
–
£115,000
£115,000
Summary of shareholder voting at the 2022 AGM
The following table shows the results of the voting on the 2020 Directors’ Remuneration Report at the
2022 AGM and 2022 Directors’ Remuneration Policy at the 2022 AGM:
Votes for
For
%
Votes
Against
against
%
Total
Votes
withheld
Approve the 2022 Directors’
Remuneration Report
Approve the Directors’
Remuneration Policy
491,189,710
92% 44,291,555
8% 535,481,265
6,993,427
493,637,970
92% 45,472,574
8% 539,110,544
3,364,148
The Remuneration Committee had extensive dialogue with shareholders during 2021 on the proposed 2022
Remuneration Policy, including engaging with shareholders representing more than 50% of our shareholder
register. The majority of shareholders and advisory bodies providing input were supportive of the changes
we are making to our Remuneration Policy and this was demonstrated by the high levels of support received
for both the Policy and Annual Report on Remuneration at the 2022 AGM. Following his appointment as Chair
of the Remuneration Committee, Alan Stewart met with a number of major shareholders.
Directors’ service contracts
Non-Executive Directors have letters of engagement which set out their duties and time commitment
expected. They are appointed for an initial three-year term, subject to election and annual re-election by
shareholders. Appointments are renewable for subsequent three-year terms by mutual consent. Details
are set out below:
1. Andrew Bonfield held the role of Senior Independent Director on an interim basis from 1 September to 31 October 2022.
The additional fees for this period are included above
2. Jeremy Darroch joined the Board on 1 November 2022. Fees shown are paid from this date
3. Nicandro Durante stepped down as a Non-Executive Director on 1 September 2022 and was appointed CEO Designate on
2 September 2022 and CEO effective from 1 October 2022. Remuneration shown relates to services as a Non-Executive
Director only. Fees relating to his tenure as an Executive Director are detailed on page 140
4. Sara Mathew stepped down from the Board on 20 May 2022. Fees shown are paid to this date
5. Alan Stewart joined the Board on 1 February 2022. Fees shown are paid from this date
Travel and expenses for Non-Executive Directors are incurred in the normal course of business; for
example, in relation to attendance at Board and Committee meetings. The costs associated with these
are all met by the company.
Name
Date of appointment
Length of service as
at 31 December 2022
Years
Months
Chris Sinclair
Olivier Bohuon
Andrew Bonfield
Jeremy Darroch
Mary Harris
Mehmood Khan
Pam Kirby
Alan Stewart
Elane Stock
Margherita Della Valle 1 July 2020
10 February 2015 (appointed Chair of the Board on 3 May 2018)
1 January 2021
1 July 2018
1 November 2022
10 February 2015
1 July 2018
10 February 2015
1 February 2022
1 September 2018
7
2
4
0
7
4
7
0
4
2
11
0
6
2
11
6
11
11
4
6
The CEO has been appointed on a contract which is terminable by either party with six months’ notice.
The CFO’s service contract contains a 12-month notice period. Nicandro Durante was appointed as CEO
Designate on 2 September and as CEO from 1 October 2022. Jeff Carr was appointed to the Board as
CFO on 9 April 2020. Directors’ service contracts and letters of engagement are available for inspection
at the registered office.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 153
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D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T CO N T I N U E D
Advisors
Deloitte LLP (Deloitte) was appointed by the Remuneration Committee as independent advisor effective from 1 January 2014 following a review of the advisor in late 2013. The Committee undertakes due diligence
periodically to ensure that Deloitte remains independent of the company and that the advice provided is impartial and objective. Deloitte is a founding member of and signatory to the Code of Conduct for
Remuneration Consultants, details of which can be found at www.remunerationconsultantsgroup.com. During 2022, Deloitte LLP also provided the Group with advice and compliance support in numerous areas,
including corporate, indirect and employment taxes, global mobility, and advisory and technology consulting.
These services were provided under separate engagement terms and the Committee is satisfied that the provision of these services did not impair Deloitte’s ability to advise the Committee independently. Deloitte’s
total fees for the provision of remuneration services were £251,350 on the basis of time and materials. It should be noted that although we are only required to disclose the value of fees for services which materially
assisted the Remuneration Committee, as with previous years, we have disclosed the full value of remuneration services from Deloitte, which includes advice to management and to the Remuneration Committee.
Directors’ interests in shares and options under the LTIP1 (audited)
Grant date
At 01.01.22
Granted during
the year
Exercised/vested
during the year
(including
dividend shares)2
Lapsed during
the year
At 31.12.22
Option price
(£)
Market price at
date of award
(£)
Market price
at date of
exercise/vesting
(£)
Nicandro Durante
Performance-based share options
Performance-based share awards
Jeff Carr
Performance-based share options
Performance-based share awards
Laxman Narasimhan
Performance-based share options
Performance-based share awards
06.09.22
06.09.22
01.05.20
28.05.21
20.05.22
01.05.20
28.05.21
20.05.22
05.08.19
01.05.20
28.05.21
20.05.22
05.08.19
01.05.20
28.05.21
20.05.22
–
–
150,000
75,000
80,000
80,000
–
40,000
40,000
–
150,000
150,000
150,000
–
75,000
75,000
75,000
–
–
–
80,000
–
–
40,000
–
–
–
150,000
–
–
–
75,000
–
–
–
–
–
–
–
–
32,250
–
–
–
16,125
–
–
–
–
–
–
–
–
–
–
–
117,750
150,000
150,000
150,000
58,875
75,000
75,000
75,000
150,000
75,000
80,000
80,000
80,000
40,000
40,000
40,000
–
–
–
–
–
–
–
–
64.77
–
65.20
64.67
63.32
–
–
–
63.72
65.20
64.67
63.32
–
–
–
–
–
64.58
–
–
–
65.70
63.68
62.42
–
–
–
–
59.72
65.70
63.68
62.42
–
–
–
–
–
–
–
–
62.42
–
–
–
–
–
–
–
Exercise/vesting period
May 2025-Sep 2032
May 2025
May 2023-May 2030
May 2024-May 2031
May 2025-May 2032
May 2023
May 2024
May 2025
May 2022-Aug 2029
May 2023-May 2030
May 2024-May 2031
May 2025-May 2032
May 2022
May 2023
May 2024
May 2025
1. Vesting of these awards is subject to performance conditions set by the Remuneration Committee and the awards are subject to an additional two-year holding period commencing at the end of the performance period
2. Dividend equivalents accrue on performance shares during the vesting period for 2022 LTIP awards, and will be disclosed on vesting
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 154
Reckitt Annual Report and Accounts 2022
D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T CO N T I N U E D
Directors’ interests in shares in the Deferred Bonus Plan1 (audited)
Grant date
At 01.01.22
Granted during
the year
Exercised/vested
during the year
Lapsed during
the year
At 31.12.22
Option price
(£)
Market price at
date of award
(£)
Market price at
date of vesting
(£)
Jeff Carr
Deferred Bonus Plan
Deferred Bonus Plan
Laxman Narasimhan
Deferred Bonus Plan
Deferred Bonus Plan2
Deferred Bonus Plan
Deferred Bonus Plan
25.03.21
21.03.22
23.03.20
23.03.20
25.03.21
21.03.22
9,163
–
1,259
3,832
21,124
–
–
13,131
–
–
–
22,038
–
–
–
–
–
–
–
–
9,163
13,131
1,259
3,832
21,124
22,038
–
–
–
–
–
–
–
–
–
–
64.22
57.92
58.35
58.35
64.22
57.92
–
–
–
–
–
–
Vesting period
Mar 2024
Mar 2025
Mar 2023
Mar 2023
Mar 2024
Mar 2025
1. One-third of the annual bonus is delivered in the form of conditional share awards which are deferred for three years
2. One-third of the payment made by Reckitt in respect of the PepsiCo bonus that was forfeited by joining Reckitt. The award was made on the same terms as the other awards under the Deferred Bonus Plan
3. Dividend equivalents accrue on deferred bonus shares during the vesting period and will be disclosed on vesting
Executive employees may also participate in the all-employee Sharesave Scheme on the same basis as all other employees. The table below details options held.
Sharesave Scheme
Jeff Carr
Laxman Narasimhan
Grant date
At 01.01.22
31.08.21
02.09.19
403
379
Granted during
the year
Exercised during
the year
Lapsed during
the year
–
–
–
–
–
379
At 31.12.22
403
–
Option price
(£)
44.56
47.44
Market price
at exercise
(£)
–
–
Exercise period
Feb 25-Jul 25
Feb 23-Jul 23
There have been no changes to the Directors’ interests as set out in the above tables between 31 December 2022 and 28 February 2023.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 155
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D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T CO N T I N U E D
Directors’ interests in the share capital of the company (audited)
The Directors in office at the end of the year and those in office at 28 February 2023 had the following
beneficial interests in the ordinary shares of the company:
Chris Sinclair
Olivier Bohuon
Andrew Bonfield
Jeff Carr
Jeremy Darroch1
Nicandro Durante
Mary Harris
Mehmood Khan
Pam Kirby
Sara Mathew2
Laxman Narasimhan3
Alan Stewart4
Elane Stock
Margherita Della Valle
28 February
2023
31 December
2022
31 December
2021
12,733
931
873
30,000
0
1,105
3,017
833
5,219
–
–
191
2,732
504
12,733
931
873
30,000
0
1,105
3,017
833
5,219
487
66,074
191
2,732
504
11,328
711
639
30,000
–
1,105
2,784
594
4,998
487
56,917
–
2,487
296
1. Jeremy Darroch was appointed to the Board on 1 November 2022
2. Sara Mathew stepped down from the Board on 20 May 2022 and her interest in shares is shown up to this date. Sara Mathew
held her shares in the form of 2,436 American Depositary Receipts (ADR). Five ADRs are equivalent to one ordinary share in
the company
3. Laxman Narasimhan stepped down from the Board on 30 September 2022 and his interest in shares is shown up to this date
4. Alan Stewart was appointed to the Board on 1 February 2022
5. No person who was a Director (or a Director’s connected person) on 31 December 2022 and at 28 February 2023 had any
notifiable share interests in any subsidiary
6. The company’s Register of Directors’ Interests (which is open to inspection) contains full details of Directors’ shareholdings
and options to subscribe for shares
As approved and signed on behalf of the Board of Directors.
A L A N S T E WA R T
C H A I R O F T H E R E M U N E R AT I O N CO M M I T T E E
Reckitt Benckiser Group plc
28 February 2023
This Directors’ Remuneration Report has been prepared in accordance with the provisions of the Companies Act 2006
and Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended).
The report meets the requirements of the FCA Listing Authority’s Listing Rules and the Disclosure Guidance and Transparency
Rules. In this report we describe how the principles of good governance relating to Directors’ remuneration, as set out in the UK
Corporate Governance Code (July 2018) (the Code), are applied in practice. The Remuneration Committee confirms that
throughout the financial year the company has complied with these governance rules and best practice provisions.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 156
Reckitt Annual Report and Accounts 2022
REPORT OF THE
DIRECTORS
Introduction
The Directors present their report, together with
the Financial Statements of the Group for the
year ended 31 December 2022, in accordance
with Section 415 of the Companies Act 2006
(CA 2006). In accordance with Section 414C (11) of
CA 2006 certain matters required to be included
in this Directors’ Report are included in the
Strategic Report on pages 2 to 87. The Strategic
Report includes an indication of the likely future
developments of the business, research and
development activities of the Group and details
of important events affecting the company. The
Corporate Governance Report can be found on
pages 88 to 108 and is deemed to be incorporated
into this Directors’ Report by reference.
Further disclosure requirements contained in CA
2006, Schedule 7 of the Large and Medium-sized
Companies and Groups (Accounts and Reports)
Regulations 2008, Part 3 of the Companies
(Miscellaneous Reporting) Regulations 2018, the
Financial Conduct Authority’s (FCA) Listing Rules
and the Disclosure Guidance and Transparency
Rules, which are deemed to form part of the
management report can be found on the
following pages of the Annual Report for the year
ended 31 December 2022, and are incorporated
into this Directors’ Report by reference:
There is no additional information requiring
disclosure under Listing Rule 9.8.4R.
Acquisitions and disposals
220-221
Awards under employee share
schemes and long-term
incentive schemes
Corporate Governance Statement
including internal control and risk
management statements
Statement of Directors’ Responsibilities,
including disclosure of information
to the Auditor
215-219
80-90
160
Disclosure of Greenhouse Gas (GHG) emissions
67
Employment policy and
employee involvement
158
Engagement with employees,
suppliers, customers and others
47-58; 62-64
Environmental, social
and governance (ESG)
matters
Financial risk management
and financial instruments
Future developments in the business
Post Balance Sheet events
Research and development activities
Shareholder information
Sustainability and
corporate responsibility
Viability Statement
Charitable donations
Subsidiary undertakings
(including overseas branches)
41-43; 47-61
200-206
2-87
221
29-32
268-270
41-43; 47-61
87
41-43
229-240
Information on the Board’s stakeholder
engagement and activities is set out in the
s172 Statement, which can be found on pages 62
to 64.
Results and dividends
The Consolidated Income Statement can be
found on page 177. The profit for the year
attributable to equity shareholders of the
company amounted to £2,330 million.
The Directors resolved to pay an interim
dividend of 73.0 pence per ordinary share
(2021: 73.0 pence), which was paid to
shareholders on 14 September 2022.
The Directors recommend a final dividend
for the year of 110.3 pence per share (2021:
101.6 pence) which, together with the interim
dividend, makes a total dividend for the year
of 183.3 pence per share (2021: 174.6 pence).
During the year no shareholders waived
their right to receive dividend payments.
The final dividend, if approved by the
shareholders at the forthcoming Annual General
Meeting (AGM) of the company, will be paid on
24 May 2023 to shareholders on the register
at the close of business on 11 April 2023.
Directors
Details of the company’s Directors who served
during the financial year ended 31 December
2022 can be found on pages 91 to 94.
The rules governing the appointment and
retirement of Directors are set out in the
company’s Articles of Association (the Articles) and
all appointments are made in accordance with the
UK Corporate Governance Code 2018 (the Code).
Under the terms of reference of the Nomination
Committee, all Director appointments must be
recommended by the Nomination Committee for
approval by the Board of Directors. All Directors
must submit themselves for re-election each
year at the AGM. At the 2023 AGM all Directors
will offer themselves for election or re-election in
compliance with the Code. Details of the Directors
standing for election or re-election can be found
in the 2023 Notice of AGM. Information on the
service agreements of Executive Directors can
be found in the Directors’ Remuneration Report
on pages 126 to 155. The letters of appointment
of the Non-Executive Directors are available for
inspection at the company’s registered office.
Powers of Directors
The Board of Directors is responsible for the
management of the business of the company
and may exercise all powers of the company
subject to the provisions of the company’s
Articles and CA 2006.
The Articles contain specific provisions and
restrictions regarding the company’s power to
borrow money. Powers relating to the alteration
of share capital are also included in the Articles
and shareholders are asked to renew such
authorities each year at the AGM. A copy of the
Articles is available on the company’s website at
www.reckitt.com or can be obtained upon written
request from the Company Secretary or the UK
Registrar of Companies, Companies House.
Directors’ insurance and indemnities
The company indemnifies the Directors and
Officers of the company and any Group subsidiary
to the extent permitted by Section 236 of CA 2006
in respect of the legal defence costs for claims
against them and third-party liabilities. The
indemnity would not provide cover for a Director
or Officer if that individual was found to have
acted fraudulently or dishonestly. The Directors’
and Officers’ liability insurance cover was
maintained throughout the year ended
31 December 2022 at the company’s expense.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 157
Reckitt Annual Report and Accounts 2022
R E P O R T O F T H E D I R E C TO R S CO N T I N U E D
Directors’ interests
A statement of Directors’ interests in the
share capital of the company is shown on
page 155 of the Directors’ Remuneration
Report. Details of Executive Directors’ options
to subscribe for shares in the company are
included on pages 153 and 154 in the audited
part of the Directors’ Remuneration Report.
During the year, none of the Directors had a
material interest in any derivative or financial
instrument relating to the company’s shares.
Details of the Directors’ remuneration are
disclosed in the Directors’ Remuneration Report
on pages 126 to 155.
No Director has a material interest in any
‘contract of significance’ (as defined by the FCA)
to which the company, or any of its subsidiary
undertakings, is a party as at 31 December 2022.
Share capital
As at 31 December 2022, the company’s issued
share capital consisted of 736,535,179 ordinary
shares of 10 pence each of which 715,763,966 were
with voting rights and 20,771,213 ordinary shares
were held in Treasury. Each share carries the right
to one vote at general meetings of the company.
Details of changes to the ordinary shares issued
and of options and awards granted during the
year are set out in Notes 24 and 25 to the Financial
Statements. The rights and obligations attached to
the ordinary shares are contained in the company’s
Articles. There are no restrictions on the voting
rights attached to the company’s ordinary shares
or the transfer of securities in the company
except in the case of transfers of securities:
– That certain restrictions may from time to
time be imposed by laws and regulations
(for example, insider trading laws)
– Pursuant to the Listing Rules of the United
Kingdom Listing Authority whereby certain
employees of the company require the approval
of the company to deal in the company’s
ordinary shares
No person holds securities in the company
which carry special voting rights with regard
to control of the company. The company is not
aware of any agreements between holders
of securities that may result in restrictions on
the transfer of securities or on voting rights.
Allotment of shares
At the 2022 AGM, authority was granted to
the Directors under Section 551 of CA 2006 to
allot shares or grant rights to subscribe for, or
convert any security into shares of the company.
The authority granted to the Directors will
expire at the conclusion of this year’s AGM. At
the 2023 AGM, a resolution will be proposed
to the shareholders to renew the Directors’
authority to allot equity shares representing
approximately one-third of the company’s issued
share capital as at the latest practicable date
prior to the publication of the Notice of AGM.
In accordance with the Investment Association
Share Capital Management Guidelines, Directors
will once again seek authority to allot further
ordinary shares, in connection with a pre-emptive
offer by way of a rights issue, up to a further
one-third of the company’s existing issued share
capital on the same date. The authorities sought
would, if granted, expire at the earlier of six
months after the company’s next accounting
reference date, or at the conclusion of the AGM of
the company held in 2024, whichever is the sooner.
Under Section 561 of CA 2006, shareholders have
a right of first refusal in relation to certain issues
of new shares. A special resolution will also be
proposed to renew the Directors’ power to allot
shares in the capital of the company without
complying with the pre-emption rights in the
CA 06 in certain circumstances up to a maximum
of 10% of the company’s issued share capital.
This disapplication authority sought is in line
with institutional shareholder guidance and,
in particular, with the Pre-Emption Group Principles
issued in November 2022.
This authority will maintain the company’s flexibility
in relation to future share issues, including issues
required to finance business opportunities,
should appropriate circumstances arise.
Authority to purchase own shares
Authority was granted to the Directors at the 2022
AGM for the purposes of Section 701 of CA 2006
to repurchase shares in the market and this
authority remains valid until the conclusion of
this year’s AGM. There were no share repurchases
during 2022.
At the 2023 AGM, the Directors will seek to renew
the authority granted to them. Such authority,
if approved, will be limited to a maximum of
71,590,000 ordinary shares, representing less
than 10% of the company’s issued ordinary share
capital (excluding treasury shares) calculated as
at the latest practicable date prior to publication
of the Notice of AGM, and sets the minimum
and maximum prices which may be paid.
Change of control and significant agreements
There are a number of agreements that take
effect, alter or terminate upon a change of
control of the company following a takeover,
such as commercial contracts, bank agreements,
property lease arrangements and employee share
plans. The shareholder agreement between the
company and JAB Holdings B.V. (JAB) at the time
of the merger in 1999 entitled JAB to nominate
Board Directors. A holding in excess of 20% or
10% of the company’s ordinary shares entitles
JAB to nominate two Directors or one Director
respectively. JAB’s current holding is below this
amount and there is currently no nominated
Director on the Board. None of these are deemed
to be significant in terms of their potential impact
on the business of the Group as a whole.
There are no significant agreements between the
company and its Directors or employees providing
for compensation for loss of office or employment
that occurs because of a takeover bid, except
that provisions of the company’s share plans may
cause options and awards granted under such
plans to vest on a takeover, and if the employment
of an Executive Director or other employee is
terminated by the company following a takeover
then there may be an entitlement to appropriate
notice and/or compensation as provided in
applicable contracts or terms of employment.
There is no information that the company is
required to disclose about persons with whom it
has contractual or other arrangements with, which
are essential to the business of the company.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 158
Reckitt Annual Report and Accounts 2022
R E P O R T O F T H E D I R E C TO R S CO N T I N U E D
Employees
During 2022, the Group employed an average of
40,000 (2021: 41,800) employees worldwide, of
whom 4,870 (2021: 4,670) were employed in the
UK. The Group is committed to the principle of
equal opportunity in employment: no applicant or
employee receives less favourable treatment on
the grounds of nationality, age, gender, religion,
race, ethnicity, disability, sexual orientation
or any other protected characteristics.
Employment applications are considered on
the basis of a person’s aptitude and ability, and
fair consideration is given to all applications
regardless of nationality, age, gender, religion,
race, ethnicity, disability, sexual orientation, or
any other protected characteristics. Where an
employee has an existing disability or becomes
disabled during their employment, every practical
effort is made to assist the employee in continuing
their employment and arranging appropriate
training, All employees, including those with a
disability, are treated in a fair and inclusive way
throughout their careers, whether that means
accessing training, development opportunities
or when seeking career progression. Further
details of our Inclusion and Anti-Harassment
policies can be found at www.reckitt.com.
It is essential to the continued improvement
in performance, efficiency and productivity
throughout the Group that each employee
understands the Group’s strategies, policies and
procedures. Open and regular communication
with employees at all levels is an essential part
of the organisational performance management
process. The Group operates multi-dimensional
two-way internal communications programmes
which include the provision of a Group intranet
and the publication of regular Group newsletters.
Opinions of employees are sought on a variety
of issues through mechanisms including global
surveys, opinion polls, team meetings and
feedback forums. Further information on the
Group’s employee engagement activities is
included on pages 9 to 11 and pages 62 to 64.
A continuing programme of training and
development reinforces the Group’s commitment
to employee development. The Group provides
all employees with equal opportunities and the
Freedom to Succeed at work and recognises
the importance of employee health and
wellbeing. Reckitt’s Leadership Behaviours
create an inclusive environment for employees
to act with integrity, responsibility and
consistency in line with our renewed Purpose,
Fight and Compass set out on pages 9 to 11.
Employee matters, incentives and
share ownership
Group incentive schemes reinforce financial and
economic factors affecting the performance
of the business. Employees typically have
three to five performance objectives which
are directly linked to their job and their specific
contribution to the overall performance of the
Group. In addition, presentations, videos and
Q&A sessions are held for employees around
the world on publication of the Group’s financial
results to provide employees with awareness of
the financial and economic factors affecting the
company’s performance, and so that employee
views are fed back to management and taken
into account when decisions are made.
The company operates three all-employee
share plans. Through these schemes, the Board
encourages employees to become shareholders
and to participate in the Group’s employee
share ownership schemes, should they so wish.
Savings-related share plans covering most of
the world give employees the opportunity to
acquire shares in the company by means of making
regular savings. We currently have 45% of eligible
employees participating. Further details on our
all-employee share plans and awards made under
executive share plans can be found in Note 25 on
pages 215 to 219 of the Financial Statements.
Political donations
During the year, the company and its subsidiaries
did not make any political donations or incur
any expenditure, nor were any contemplated.
In keeping with previous practice, at the
forthcoming AGM shareholders will be asked
in accordance with Sections 366 and 376 of
CA 2006 to approve, on a precautionary basis,
for the company and its subsidiaries to make
political donations and incur political expenditure
for the period ending 31 December 2023.
Financial instruments and risk
The financial risk management objectives and
policies of the Group are set out in Note 15, from
page 200 of the Financial Statements. The Note
sets out information on the company’s policy
for hedging each major type of forecasted
transactions for which hedge accounting is
used, and our exposure to currency, price risk,
credit risk, liquidity risk and cash flow risk in
relation to the use of financial instruments.
Amendment to Articles of Association
The Articles of the company were adopted
in 2012 and amended in 2015 and 2021. Any
amendments to the Articles may be made in
accordance with the provisions of CA 2006
by special resolution of the shareholders.
Independent Auditor
The External Auditor, KPMG LLP (KPMG), has
indicated its willingness to continue in office
and a resolution proposing the reappointment
of KPMG, and to authorise the Audit Committee
to determine its remuneration for the
financial year ending 31 December 2023,
will be proposed at the forthcoming AGM.
In accordance with Section 418(2) of the CA
2006, each of the Directors holding office
at the date of this report confirm that:
– so far as the Director is aware, there is no
relevant audit information of which the
company’s auditor is unaware; and
– he or she has taken all reasonable steps to
ascertain any relevant audit information and to
ensure that the company’s auditor is aware of
that information.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 159
Reckitt Annual Report and Accounts 2022
R E P O R T O F T H E D I R E C TO R S CO N T I N U E D
Substantial shareholdings
As at 31 December 2022, pursuant to DTR 5 of the FCA’s Disclosure Guidance and Transparency Rules and
in accordance with Section 13(C) of Schedule 7 of the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008, the company had received the following notices of substantial
interests (3% or more) in the total voting rights of the company:
Holder
Date of last TR-1
notification
Nature of
interest
% of voting
rights
Massachusetts Financial Services Company
Morgan Stanley Investment Management Limited
16 January 20131
20 October 2022
Indirect
Direct
5.00
4.99
1 Under a Section 793 CA 2006 request, Massachusetts Financial Services Company confirmed on 23 January 2023 that its
aggregate holding had increased. The voting percentage was not disclosed
As at 28 February 2023, the company has not received any further notifications under DTR 5 of the
Disclosure Guidance and Transparency Rules.
Application of the UK Corporate Governance Code 2018
We report against the requirements of the Code issued by the Financial Reporting Council. Details of how
the company has applied the Code principles and provisions can be found in the Corporate Governance
Report on pages 88 to 108.
Annual General Meeting (AGM)
The forthcoming AGM of Reckitt Benckiser Group plc will be held on 3 May 2023 at 2pm at London
Heathrow Marriott Hotel, Bath Road, Hayes, Middlesex, UB3 5AN.
A separate Notice of Meeting, setting out the resolutions to be proposed to shareholders, is available at
www.reckitt.com/investors/annual-general-meeting/. The Board considers that each of the resolutions
is in the best interests of the company and the shareholders as a whole. The Directors unanimously
recommend that shareholders vote in favour of all the resolutions, as they intend to do so in respect
of their own beneficial holdings.
By Order of the Board
C AT H E RY N O ’ R O U R K E
CO M PA N Y S E CR E TA RY
Reckitt Benckiser Group plc
103-105 Bath Road
Slough, Berkshire
SL1 3UH
Company registration number: 6270876
Legal Entity Identifier: 5493003JFSMOJG48V108
28 February 2023
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 160
Reckitt Annual Report and Accounts 2022
STATEMENT OF DIRECTORS’
RESPONSIBILITIES
I N R ES PECT O F TH E A N N UA L R E PO RT
A N D TH E FI N A N CIA L STATE M E NTS
The Directors are responsible for preparing
the Annual Report and the Group and Parent
Company Financial Statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare
Group and Parent Company Financial Statements
for each financial year. Under that law they have
elected to prepare the Group Financial Statements
in accordance with UK-adopted international
accounting standards and applicable law and have
elected to prepare the Parent Company Financial
Statements in accordance with UK accounting
standards and applicable law (UK Generally
Accepted Accounting Practice), including FRS
102 The Financial Reporting Standard applicable
in the UK and Republic of Ireland. The Group,
in addition to complying with its legal obligation
to apply UK-adopted international accounting
standards, has also applied IFRSs as issued by
the International Accounting Standards Board.
Under company law the Directors must not
approve the Financial Statements unless they are
satisfied that they give a true and fair view of the
state of affairs of the Group and Parent Company
and of the Group’s profit or loss for that period.
In preparing each of the Group and Parent Company
Financial Statements, the Directors are required to:
– Select suitable accounting policies and then
apply them consistently
– Make judgements and estimates that are
reasonable, relevant and reliable and, in respect
of the Parent Company Financial Statements
only, prudent
– For the Group Financial Statements,
state whether they have been prepared in
accordance with UK-adopted international
accounting standards and, due to a requirement
of the US SEC, state they have been prepared in
accordance with IFRSs as issued by the IASB;
– For the Parent Company Financial Statements,
state whether applicable UK accounting
standards have been followed, subject to any
material departures disclosed and explained in
the Financial Statements
– Assess the Group and Parent Company’s
ability to continue as a going concern,
disclosing, as applicable, matters related
to going concern, and
– Use the going concern basis of accounting
unless they either intend to liquidate the Group
or the Parent Company or to cease operations,
or have no realistic alternative but to do so
The Directors are responsible for keeping
adequate accounting records that are sufficient
to show and explain the Parent Company’s
transactions and disclose with reasonable
accuracy at any time the financial position of
the Parent Company and enable them to ensure
that its Financial Statements comply with the
Companies Act 2006. They are responsible
for such internal control as they determine
is necessary to enable the preparation of
Financial Statements that are free from material
misstatement, whether due to fraud or error,
and have general responsibility for taking
such steps as are reasonably open to them to
safeguard the assets of the Group and to prevent
and detect fraud and other irregularities.
Under applicable law and regulations, the Directors
are also responsible for preparing a Strategic
Report, Directors’ Report, Directors’ Remuneration
Report and Corporate Governance Statement that
complies with that law and those regulations.
The Directors are responsible for the maintenance
and integrity of the corporate and financial
information included on the Company’s website.
Legislation in the UK governing the preparation
and dissemination of Financial Statements may
differ from legislation in other jurisdictions.
In accordance with Disclosure Guidance and
Transparency Rule 4.1.14R, the Financial Statements
will form part of the annual financial report
prepared using the single electronic reporting
format under the TD ESEF Regulation. The
auditor’s report of these Financial Statements
provides no assurance over the ESEF format.
Responsibility statement of the Directors
in respect of the annual financial report
We confirm that to the best of our knowledge:
– the Financial Statements, prepared in
accordance with the applicable set of
accounting standards, give a true and fair
view of the assets, liabilities, financial position
and profit or loss of the company and the
undertakings included in the consolidation
taken as a whole; and
– the Annual Report and Financial Statements
includes a fair review of the development and
performance of the business and the position
of the issuer and the undertakings included in
the consolidation taken as a whole, together
with a description of the principal risks and
uncertainties that they face.
We consider the Annual Report and Financial
Statements, taken as a whole, is fair, balanced
and understandable and provides the information
necessary for shareholders to assess the Group’s
position and performance, business model
and strategy.
On behalf of the Board
C AT H E RY N O ’ R O U R K E
CO M PA N Y S E CR E TA RY
Reckitt Benckiser Group plc
103-105 Bath Road
Slough, Berkshire
SL1 3UH
28 February 2023
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 161
Reckitt Annual Report and Accounts 2022
I N D E PE N D E NT AU D ITO R ’S R E PO RT
TO T H E M E M B E R S O F R E C K I T T B E N C K I S E R G R O U P P LC
1. Our opinion is unmodified
In our opinion:
– the financial statements of Reckitt Benckiser Group plc give a true and fair view of the state of the
Group’s and of the Parent Company’s affairs as at 31 December 2022, and of the Group’s profit for
the year then ended;
– the Group financial statements have been properly prepared in accordance with UK-adopted
international accounting standards;
– the Parent Company financial statements have been properly prepared in accordance with UK
accounting standards, including FRS 102 The Financial Reporting Standard applicable in the UK and
Republic of Ireland; and
– the Group and Parent Company financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Additional opinion in relation to IFRS as issued by the IASB:
– As explained in Note 1 to the Group Financial Statements, the Group, in addition to complying with
its legal obligation to apply UK-adopted international accounting standards, has also applied IFRSs
as issued by the International Accounting Standards Board (“IASB”).
We have fulfilled our ethical responsibilities under, and we remain independent of the Group in
accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed public
interest entities.
2. Overview of our audit
Factors driving our view of risks
Following our FY21 audit, and considering developments affecting the Group since then, we have
updated our risk assessment.
The macro-economic environment continues to drive our risk assessment as the uncertainty which arose
during the COVID-19 pandemic has evolved into increasing consumer spending pressures associated
with rising inflation and interest rates. As the world started to recover from the Omicron variant in early
2022, the conflict between Russia and Ukraine led to further geopolitical uncertainty which increased
pressure on areas such as inflation, raw material prices and supply chain disruptions. The level of
judgment required to be exercised by the Group in key estimates such as in trade spend arrangements,
uncertain tax positions and recoverability of goodwill and indefinite life intangible asset assumptions,
continue to be a focus area.
Our risk assessment also considered compliance with laws and regulations, specifically those that could
reasonably be expected to have a material effect on the financial statements.
Key Audit Matters
Vs FY21
Item
– In our opinion the Group Financial Statements have been properly prepared in accordance with
Revenue recognition in relation to trade spend arrangements and associated accruals
IFRS as issued by the IASB.
What our opinion covers
We have audited the Group and Parent Company financial statements of Reckitt Benckiser Group plc
(“the Company”) for the year ended 31 December 2022 (“FY22”) included in the Annual Report, which
comprise:
Group (Reckitt Benckiser Group plc and its subsidiaries)
Parent Company (Reckitt Benckiser Group plc)
Group Income Statement, Group Statement of
Comprehensive Income, Group Balance Sheet, Group
Statements of Changes in Equity, Group Cash Flow
Statement and Notes 1 to 31 to the Group financial
statements, including the accounting policies in note 1.
Parent Company Balance Sheet, Parent
Company Statement of Changes in Equity and
Notes 1 to 12, including the accounting policies
in Note 1 to the Parent Company Financial
Statements.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and
applicable law. Our responsibilities are described below. We believe that the audit evidence we have
obtained is a sufficient and appropriate basis for our opinion. Our audit opinion and matters included in this
report are consistent with those discussed and included in our reporting to the Audit Committee.
Recoverability of goodwill and indefinite life intangible assets:
Biofreeze
IFCN
Provisions for uncertain tax positions
Contingent liabilities arising from the amendment to the South Korean Humidifier
Sanitiser (HS) law
Recoverability of the Parent Company’s investment in Reckitt Benckiser Limited
New
4.1
4.2
4.3
4.4
4.5
Audit Committee interaction
During the year, the Audit Committee met five times. KPMG are invited to attend all Audit Committee
meetings and are provided with an opportunity to meet with the Audit Committee in private sessions
without the Executive Directors being present. For each Key Audit Matter, we have set out
communications with the Audit Committee in section 4, including matters that required particular
judgement for each.
The matters included in the Audit Committee Chair’s report on page 113 are materially consistent with
our observations of those meetings.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 162
Reckitt Annual Report and Accounts 2022
2. Overview of our audit continued
Our independence
We have fulfilled our ethical responsibilities and remain independent of the Group in accordance with UK
ethical requirements, including the FRC Ethical Standard as applied to listed public interest entities.
Materiality
(item 6 below)
The scope of our work is influenced by our view of materiality and our assessed risk of material
misstatement.
Apart from the matters noted below, we have not performed any non-audit services during the year
ended FY22 or subsequently which are prohibited by the FRC Ethical Standard.
We have determined overall materiality for the Group financial statements as a whole at £130m
(FY21: £135m) and for the Parent Company financial statements as a whole at £65m (FY21: £65m).
During 2023, we identified that certain KPMG member firms had provided preparation of local GAAP
financial statement services and, in some cases, foreign language translation of those financial statements
over the period 2019 to 2022. Some of those entities to whom services were provided are and have been
in scope for the group audit. The services, which have been terminated, were administrative in nature and
did not involve any management decision-making or bookkeeping. The work in each case had no direct or
indirect effect on Reckitt Benckiser Group plc’s consolidated financial statements.
Consistent with FY21, we determined that normalised profit before tax from continuing operations
(PBTCO) remains the benchmark for the Group. Reckitt Benckiser Group plc is well established and
operates in a stable environment across multiple geographies. Therefore, users of the financial
statements will be primarily interested in the profitability of the Group and its ability to generate a return
for shareholders, of which the most relevant benchmark is normalised PBTCO. As such, we based our
Group materiality on normalised PBTCO, of which it represents 4.% (FY21: 5%).
In our professional judgement, we confirm that based on our assessment of the breach, our integrity and
objectivity as auditor has not been compromised and we believe that an objective, reasonable and
informed third party would conclude that the provision of this service would not impair our integrity or
objectivity for any of the impacted financial years. The audit committee concurred with this view.
We were first appointed as auditor by the shareholders for the year-ended 31 December 2018. The
period of total uninterrupted engagement is for the 5 financial years ended 31 December 2022.
The Group engagement partner is required to rotate every 5 years. As these are the first set of the Group’s
financial statements signed by Andrew Bradshaw, he will be required to rotate off after the FY26 audit.
The average tenure of partners responsible for component audits as set out in section 7 below is 3 years,
with the shortest being 1 and the longest being 5.
Total audit fee
Audit related fees (including interim review)
Other services
Non-audit fee as a % of total audit and audit related fee %
Date first appointed
Uninterrupted audit tenure
Next financial period which requires a tender
Tenure of Group engagement partner
Average tenure of component signing partners
£19.5m
£0.8m
£2.7m
17.9%
3rd May 2018
5 years
FY28
1 year
3 years
Materiality for the Parent Company financial statements was determined with reference to a benchmark
of Parent Company total assets of which it represents 0.45% (FY21: 0.59%).
Group Materiality
Group Performance Materiality
Highest Component Materiality
Parent Company Materiality
Lowest Component Materiality
Audit Misstatement
Posting Threshold
FY22 £m
FY21 £m
130
135
85
75
100
100
65
65
8
8
5
6
0
25
50
75
100
125
150
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTINDEPENDENT AUDITOR’S REPORT CONTINUED 163
Reckitt Annual Report and Accounts 2022
2. Overview of our audit continued
Group scope
(item 7 below)
We have performed risk assessment and planning procedures to determine which of the Group’s
components are likely to include risks of material misstatement to the Group financial statements, the
type of procedures to be performed at these components and the extent of involvement required from
our component auditors around the world.
The Group operates in more than 60 countries across six continents with the largest market being the
United States of America. The Group is organised into three Global Business Units being Hygiene, Health
and Nutrition.
We scoped the audit by obtaining an understanding of the Group and its environment and assessing the
risk of material misstatement at the Group and component level.
We have considered components on the basis of their contribution to Group Net Revenue, total profits
and losses that made up Group profit before tax and Group total assets.
Of the Group’s 406 (FY21: 422) reporting components, we instructed 53 components (FY21: 47) across 23
overseas countries (FY21: 20 countries) to perform full scope audits for Group purposes, one component
was scoped in for specified audit procedures (FY21: 0) and there were no components subject to audit of
account balances (FY21: 1).
The components within the scope of our work accounted for the percentages illustrated opposite.
As shown in the graphs, our scoping provided 79% coverage of net revenue (FY21: 76%), 85% coverage of
total assets (FY21: 84%), and 77% of Group profits and losses that made up Group profit/(loss) before tax
(FY21: 83%).
In addition, we have performed Group level analysis on the remaining components to determine whether
further risks of material misstatement exist in those components.
We consider the scope of our audit, as communicated to the Audit Committee, to be an appropriate
basis for our audit opinion.
Coverage of Group financial statements
23%
GROUP PROFITS
AND LOSSES
THAT MADE UP
GROUP PROFIT
BEFORE TAX
68%
9%
Full scope audits
Specified audit procedures
Remaining components
15%
21%
TOTAL ASSETS
NET REVENUE
85%
79%
The impact of climate change on our audit
In planning our audit, we have considered the potential impact of risks arising from climate change on the
Group’s business and its financial statements. The Group has set out its targets as part of their 2030
Sustainability Ambitions, which include energy, emissions, water, waste and packaging related metrics.
This includes targets to reduce absolute Scope 1 and 2 GHG emissions by 65%, absolute Scope 3 GHG
emissions by 50% both by 2030 from a 2015 base year. Additionally, the targets aim to reduce product
carbon footprint and increase the use of renewable electricity to 100% by 2030, alongside a target for
100% of plastic packaging to be recyclable or reusable by 2025. Further information is provided in the
Strategic Report on page 16 and in the TCFD sections on pages 59 to 61.
Whilst the Group has set these targets, in note 1 to the Consolidated Financial Statements the Directors
have stated that they have considered the impact of climate change risks and that they do not believe
that there is a material impact on the financial reporting judgements and estimates and as a result the
valuations of the Group’s assets and liabilities have not been significantly impacted by these risks as at
31 December 2022.
As a part of our audit we have performed a risk assessment to determine if the potential impacts of
climate change may materially affect the financial statements and our audit. We did this by making
enquiries of management and inspecting internal and external reports in order to independently assess
the climate-related risks and their potential impact. We held discussions with our own climate change
professionals to challenge our risk assessment.
The most likely potential impact of climate risk and plans on these financial statements would be on the
forward-looking assessments of non-current assets.
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Reckitt Annual Report and Accounts 2022
2. Overview of our audit continued
We have considered the sensitivity of the assumptions used in the impairment testing of goodwill and
indefinite-life intangible assets. Given that the climate change related assumptions are not considered a
major source of estimation uncertainty, the carrying amounts of these assets in the financial statements
are not considered to be materially sensitive to the impact of risks arising from climate change. We have
also considered the impact of climate change targets on the fair value of pension assets, however given
the nature of the assets being primarily bonds and insurance contracts, this has not been considered to
be a key assumption in the valuation. As a result of this, and any other long-term assets which could be
impacted by climate change risks, we determined that climate related risks do not have a significant
impact on our audit and there is no significant impact of these risks on our key audit matters. We have
also considered the costs and consumer preferences impact of climate change as part of our
consideration of the going concern basis of preparation.
We have also read the Group’s disclosures of climate related information in the Strategic Report and
Group’s TCFD Summary on pages 59 to 61 and considered consistency with the financial statements and
our audit knowledge.
3. Going concern, viability and principal risks and uncertainties
The directors have prepared the financial statements on the going concern basis as they do not intend to
liquidate the Group or the Parent Company or to cease their operations, and as they have concluded that
the Group’s and the Parent Company’s financial position means that this is realistic. They have also
concluded that there are no material uncertainties that could have cast significant doubt over their ability
to continue as a going concern for at least a year from the date of approval of the financial statements
(“the going concern period”).
Going concern
We used our knowledge of the Group, its industry, and the general economic environment to identify the
inherent risks to its business model and analysed how those risks might affect the Group’s and Parent
Company’s financial resources or ability to continue operations over the going concern period. The risks
that we considered most likely to adversely affect the Group’s and Parent Company’s available financial
resources and metrics relevant to debt covenants over this period were:
We considered whether these risks could plausibly affect the liquidity or covenant compliance in the
going concern period by comparing severe, but plausible downside scenarios that could arise from these
risks individually and collectively against the level of available financial resources and covenants
indicated by the Group’s financial forecasts.
Our procedures also included an assessment of whether the going concern disclosure in note 1 to the
Financial Statements gives a complete and accurate description of the Directors’ assessment of going
concern.
Accordingly, based on those procedures, we found the directors’ use of the going concern basis of
preparation without any material uncertainty for the Group and Parent Company to be acceptable.
However, as we cannot predict all future events or conditions and as subsequent events may result in
outcomes that are inconsistent with judgements that were reasonable at the time they were made, the
above conclusions are not a guarantee that the Group or the Parent Company will continue in operation.
Our conclusions:
– We consider that the Directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate;
– We have not identified, and concur with the Directors’ assessment that there is not, a material
uncertainty related to events or conditions that, individually or collectively, may cast significant doubt
on the Group’s or Parent Company’s ability to continue as a going concern for the going concern
period;
– We have nothing material to add or draw attention to in relation to the Directors’ statement in note 1 to
the financial statements on the use of the going concern basis of accounting with no material
uncertainties that may cast significant doubt over the Group and Parent Company’s use of that basis
for the going concern period, and we found the going concern disclosure in note 1 to be acceptable;
and
– The related statement under the Listing Rules set out on page 160 is materially consistent with the
financial statements and our audit knowledge.
– The current inflationary environment, and the economic uncertainty it is causing, disruption at a
number of the Group’s key production facilities, the viability of key suppliers and customers, and the
impact on consumer demand for the Group’s brands;
– A significant product safety issue leading to reputational damage with customers, consumer or
Disclosures of emerging and principal risks and longer-term viability
Our responsibility
We are required to perform procedures to identify whether there is a material inconsistency between
the directors’ disclosures in respect of emerging and principal risks and the viability statement, and the
financial statements and our audit knowledge.
regulators; and
– The impact of a significant business continuity issue, outside of those risks presented by the
inflationary environment, affecting the Group’s manufacturing facilities or those of its suppliers.
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3. Going concern, viability and principal risks and uncertainties continued
Based on those procedures, we have nothing material to add or draw attention to in relation to:
4.1 Revenue recognition in relation to trade spend arrangements and associated accruals
Financial Statement Elements
– the directors’ confirmation within the Viability Statement (page 87) that they have carried out a robust
assessment of the emerging and principal risks facing the Group, including those that would threaten
its business model, future performance, solvency and liquidity;
Trade spend accruals
Our assessment of risk vs FY21
FY22
FY21
£1,137m
£1,137 m
Vs FY21
– the Principal and Emerging Risks disclosures describing these risks and how emerging risks are
identified and explaining how they are being managed and mitigated; and
– the directors’ explanation in the Viability Statement of how they have assessed the prospects of the
Group, over what period they have done so and why they considered that period to be appropriate,
and their statement as to whether they have a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due over the period of their assessment,
including any related disclosures drawing attention to any necessary qualifications or assumptions.
We are also required to review the Viability Statement set out on page 87 under the Listing Rules.
Our work is limited to assessing these matters in the context of only the knowledge acquired during our
financial statements audit. As we cannot predict all future events or conditions and as subsequent
events may result in outcomes that are inconsistent with judgements that were reasonable at the time
they were made, the absence of anything to report on these statements is not a guarantee as to the
Group’s and Parent Company’s longer-term viability.
Our reporting
We have nothing material to add or draw attention to in relation to these disclosures.
We have concluded that these disclosures are materially consistent with the financial statements and our
audit knowledge.
4. Key audit matters
What we mean
Key audit matters are those matters that, in our professional judgement, were of most significance in the
audit of the financial statements and include the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by us, including those which had the greatest effect on:
– the overall audit strategy;
– the allocation of resources in the audit; and
– directing the efforts of the engagement team.
We include below the Key Audit Matters in decreasing order of audit significance together with our key
audit procedures to address those matters and our results from those procedures. These matters were
addressed, and our results are based on procedures undertaken, for the purpose of our audit of the
financial statements as a whole. We do not provide a separate opinion on these matters.
We have not identified any significant changes to our assessment of the level of risk
relating to trade spend arrangements and associated accruals compared to FY21
Our results
FY22: Acceptable
FY21: Acceptable
Description of the Key Audit Matter
The risk: subjective estimate
The Group regularly enters into complex arrangements providing pricing, placement and other
promotional rebates and allowances to its customers. These trade spend arrangements can vary in
complexity by market, product category and customer.
Revenue is measured net of outflows arising from such arrangements which, for agreements or practices
spanning a period end, requires an estimate of the extent and value of future activity. These estimates
can be subjective and require the use of assumptions that are susceptible to management bias and
fraud.
The Group operates a variable compensation scheme with outturns directly linked to financial
performance against targets. Strong financial performance could create an incentive to defer revenues
into the next financial year by overstating trade spend accruals. Weaker financial performance may also
create a bias to misstate trade spend accruals. Whilst the risk of a material misstatement in an individual
market is remote, there is a risk that unacceptable judgements in multiple markets may, in aggregate,
materially misstate the Group Financial Statements.
The effect of these matters is that, as part of our risk assessment, we determined that trade spend
accruals carry a high degree of estimation uncertainty, with a potential range of reasonable outcomes
greater than our materiality for the Group Financial Statements as a whole.
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4. Key audit matters continued
Our response to the risk
Our procedures included:
Accounting policies: We critically assessed the appropriateness of the Group’s accounting policies
relating to trade spend.
Communications with the Reckitt Benckiser Group plc’s Audit Committee
Our discussions with and reporting to the Audit Committee included:
– Our approach to the audit of the trade spend accruals including details of our planned substantive
procedures and the extent of our control reliance
Historical comparisons: We, through instruction of our component teams, assessed the accuracy of the
Group’s accruals by comparing, for a selection of the more judgemental accruals, those recognised in the
prior year to the actual trade spend incurred. Where we identified significant differences between the
expected and final quantum of outflow, we considered whether such differences were as a result of
a change in estimate or error in order to respond to the fraud risk. We performed an assessment of
whether an overstatement of accruals identified through these procedures was material.
– Our assessment of findings from our component team’s retrospective reviews of FY21 accruals,
including our consideration of whether any release of accruals in relation to trade spend
was material
– Our assessment of findings from our component team’s audits, including our consideration of
whether the FY22 accruals in relation to trade spend were acceptable
Tests of detail: We focused our testing on those trade spend accruals we considered to be more
judgemental or potentially subject to management bias or fraud and performed procedures to a
precision level sufficient to address the risk of fraud. For a sample of these trade spend accruals,
our component teams:
– reperformed the calculation to assess whether it was mathematically accurate;
– identified the key assumptions in the calculation of each accrual selected, such as forecast sales
volumes, rebate structure and settlement mechanism;
– agreed those key assumptions to relevant documentation, such as invoices received after the balance
sheet date, customer agreements or third-party consumption data; and
– assessed whether the key assumptions were consistent with external data points and the Group’s
historic experience of comparable trade spend arrangements.
Assessing transparency: We assessed the adequacy of the Group’s disclosures in relation to the degree
of estimation involved in arriving at the trade spend accruals and the resulting amount of trade spend
deducted in determining Net Revenue.
We performed the detailed tests above rather than seeking to rely on any of the group’s controls
because our knowledge of the design of these controls and related IT controls indicated that we would
not be able to obtain the required evidence to support reliance on controls.
Areas of particular auditor judgement
We performed an assessment of whether the Groups’ overall estimate, considering the Group’s
accounting policies, and the complex nature of the agreements entered into, is acceptable. We also
considered whether an unadjusted misstatement identified through our procedures directly related
to the key audit matter was material.
Our results
We found the trade spend accruals recognised to be acceptable (FY21 result: acceptable)
Further information in the Annual Report and Accounts: See the Audit Committee Report on page 113
for details on how the Audit Committee considered revenue recognition in relation to trade spend
arrangements and associated accruals as an area of significant attention, page 183 for the accounting
policy on revenue recognition in relation to trade spend arrangements and associated accruals,
and page 209/note 21 for the financial disclosures.
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4. Key audit matters continued
4.2 Recoverability of goodwill and indefinite life intangible assets (Biofreeze and IFCN)
Financial Statement Elements
Key assumptions in the models include the discount rate, forecast financial performance, in particular net
revenue and margin growth; as well as external factors such as forecast growth of the relevant
categories and terminal growth rates.
Goodwill and indefinite life intangible assets (Biofreeze and IFCN)
£7,038m
£6,521m
Impairment charge (Biofreeze)
£152m
£nil
FY22
FY21
Our assessment of risk vs FY21
We have assessed the recoverability of the “Biofreeze CGU” to be part of the key audit
matter in the period in light of ongoing geopolitical and economic events.
“IFCN CGU” – The risk in relation to this key audit matter has decreased in the year due to
the business performance of the CGU.
Vs FY21
New
Our results
FY22: Acceptable
FY21: Acceptable
Description of the Key Audit Matter
The risk: the forecast-based valuation
The recoverability of goodwill and indefinite life intangible assets is assessed using forecast financial
information within a discounted cash flow model (“the model”).
Our risk is focussed on two cash generating units (CGUs); Biofreeze and IFCN. This is due to the level of
headroom and sensitivity of key assumptions within these CGUs, particularly in light of current levels of
uncertainty in relation to geopolitical and economic events. We also identified a fraud risk related to
recoverability of goodwill and intangible assets in response to possible pressures to realise value from
significant acquisitions.
In the current year the Group recognised an impairment charge to Biofreeze goodwill of £152m (FY21:nil),
reflecting the current macroeconomic environment, which has introduced uncertainty into the Biofreeze
cashflows resulting in an increase to the pre-tax discount rate. The IFCN CGU is sensitive to reasonable
changes in key assumptions albeit business performance alongside temporary competitor supply
shortages in the US has reduced the risk over this CGU from prior year.
The recoverable amount of the two CGUs, and consequently the impairment charge, is therefore subject
to a high degree of estimation uncertainty with a range of possible outcomes in excess of materiality and
as such, we consider there to be a significant risk over the valuation of goodwill and indefinite life
intangible assets.
Our response to the risk
Our procedures included:
Sensitivity analysis: We considered the sensitivity of the goodwill and intangible asset valuation to
reasonably possible changes in assumptions and focused our attention to those assumptions which we
considered the most critical to the valuation.
Benchmarking assumptions: In response to the risk of fraud, we evaluated the Net Revenue growth
assumptions in the model with reference to historic performance and external market data relating to
projected growth for the relevant categories. For Biofreeze, we critically challenged the Group on its
assumptions relating to price and volume growth through comparison to external market data sources.
For IFCN, we challenged the Group’s assumptions relating to the market share assumptions considering
competitor supply issues, and inflationary effects including through comparison to external market data
sources.
We benchmarked margin assumptions against actual margin achievement, external market volume and
cost inflation growth forecasts, our assessment of the Group’s ability to achieve productivity savings and
the Group’s historic ability to pass on cost inflation through price rises. We also benchmarked the
long-term growth rate assumptions against market forecasts.
Personnel interviews: We compared judgements made centrally to direct discussions with the relevant
members of global business units and country management. We considered and challenged the group’s
assumptions and corroborated these views with the groups’ in-market teams.
Valuation expertise: We engaged internal valuation specialists to challenge the appropriateness of the
key assumptions underlying the CGU valuations, principally the discount rates and long-term growth rates
used. We also benchmarked the recoverable amount of the CGUs using implied earnings multiples to
comparative companies and the historic transactions within the industry, and for Biofreeze to acquisition
multiples, as well as considering latest market conditions.
Assessing transparency: We assessed whether the Group’s disclosures about the sensitivity of the
outcome of the impairment assessment to changes in key assumptions reflected the risks inherent in the
recoverable amount of goodwill and indefinite life intangible assets.
We performed the tests above rather than seeking to rely on any of the Group’s controls because the
nature of the balance is such that we would expect to obtain audit evidence primarily through the
detailed procedures described.
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4. Key audit matters continued
Communications with the Reckitt Benckiser Group plc’s Audit Committee
Our discussions with and reporting to the Audit Committee included:
Our results
FY22: Acceptable
FY21: Acceptable
– Our approach to the audit of the valuation of the CGUs including details of our planned substantive
procedures and the extent of our control reliance
– For the recoverable amounts, an indication of whether and where the Group’s estimate lay within
our reasonable range
– The adequacy of the disclosures, particularly as they relate to the sensitivity of the recoverable
amount to key assumptions e.g. revenue growth, margin growth and discount rate
Areas of particular auditor judgement
We identified an area of particular auditor judgment to be the assessment of whether the Directors’
overall estimate for Biofreeze, considering key assumptions including net revenue, gross margin,
discount rate and long-term growth rate, fell within an acceptable range.
Our results
We found the Group’s conclusion that there is no impairment of goodwill and indefinite life intangible
assets relating to the IFCN CGU to be acceptable (FY21 result: acceptable); and for the Biofreeze CGU
we found the goodwill and indefinite life intangible assets balance, and the related impairment
charge, to be acceptable (FY21 result: not applicable, as this was not a key audit matter).
Further information in the Annual Report and Accounts: See the Audit Committee Report on page 113 for
details on how the Audit Committee considered recoverability of goodwill and indefinite life intangible
assets relating to the Biofreeze and IFCN CGUs as an area of significant attention, page 183 for the
accounting policy on recoverability of goodwill and indefinite life intangible assets and page 194/note 9
for the financial disclosures.
4.3 Provisions for uncertain tax positions
Financial Statement Elements
Uncertain tax positions
Our assessment of risk vs FY21
FY22
FY21
£722m
£770m
Vs FY21
We have not identified any significant changes to our assessment of the level of risk
relating to provisions for uncertain tax positions compared to FY21.
Description of the Key Audit Matter
The risk: subjective estimate
Due to the Group operating across a number of different tax jurisdictions, and the complexities of
transfer pricing and other international tax legislation, it is subject to periodic challenge by local tax
authorities on a range of tax matters arising in the normal course of business.
These challenges by the local tax authorities include but are not limited to:
– transfer pricing arrangements relating to the Group’s operating model;
– transfer pricing arrangements relating to the ownership of intellectual property rights that are used
across the Group;
– deductibility of interest on intra-Group borrowings;
– the European Commission’s ongoing State Aid investigations into transfer pricing ruling practices of
certain member states.
Provision for uncertain tax positions requires the Directors to make judgements and estimates in relation to
tax issues and exposures where the Group may be challenged by local tax authorities on its interpretation
of tax legislation. Auditor judgement is required to assess whether the Directors’ overall estimate falls
within an acceptable range. This takes into account the method and assumptions underpinning exposures
calculated such as: the clarity of relevant legislation and related guidance; advice from in-house specialists;
opinions of professional firms; past experience; and precedents set by a particular tax authority.
The effect of these matters is that, as part of our risk assessment, we determined that the estimates of
uncertain tax positions has a high degree of estimation uncertainty, with a potential range of reasonable
outcomes greater than our materiality for the Group Financial Statements as a whole and possibly many
time that amount.
Our response to the risk
Our procedures included:
Our tax expertise: We used our own international and local tax specialists to assist us to:
– Inspect and assess the Group’s centrally prepared transfer pricing policies to determine whether they
reflect the risks, activities and substance of each of the entities within the supply chain; and
– Assess the Group’s tax positions, its correspondence with the relevant tax authorities, and to analyse
and challenge the assumptions used to determine provisions for tax uncertainties based on our
knowledge and experiences of the application of tax legislation
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4. Key audit matters continued
Historical comparisons: We assessed the historical accuracy of the provision level following any recent
tax authority audits and results of those, considered the impact on the remaining provision.
Our results
FY22: Acceptable
FY21: Acceptable
Assessing transparency: We assessed the adequacy of the Group’s disclosures in respect of uncertain
tax positions.
We performed the tests above rather than seeking to rely on any of the Group’s controls because the
nature of the balance is such that we would expect to obtain audit evidence primarily through the
detailed procedures described.
Communications with the Reckitt Benckiser Group plc’s Audit Committee
Our discussions with and reporting to the Audit Committee included:
– Our approach to the audit of the uncertain tax positions including details of our planned
substantive procedures and the extent of our control reliance
– For the uncertain tax positions, an indication of whether and where the Group’s estimate lay within
our reasonable range
– The adequacy of the disclosures, particularly as it relates to the sensitivity of the uncertain tax
position to possible changes in key assumptions
Areas of particular auditor judgement
We identified an area of particular auditor judgment to be the clarity of the associated disclosure in
relation to the estimation uncertainty associated with uncertain tax positions.
Our results
We found the level of uncertain tax provisioning to be acceptable (FY21 result: acceptable).
Further information in the Annual Report and Accounts: See the Audit Committee Report on page 113 for
details on how the Audit Committee considered provisions for uncertain tax positions as an area of
significant attention, page 188 for the accounting policy on provisions for uncertain tax positions, and
page 210/note 22 for the financial disclosures.
4.4 Contingent liabilities arising from the amendment to the South Korean Humidifier Sanitiser (HS) law
Our assessment of risk vs FY21
Vs FY21
We have not identified any significant changes to our assessment of the level of risk
relating to contingent liabilities arising from the amendment to the South Korean
Humidifier Sanitiser (HS) Law compared to FY21.
Description of the Key Audit Matter
The risk: dispute outcome
The Group is involved in an ongoing litigation relating to the HS issue in South Korea. The HS law
amendment enacted on 25 September 2020 significantly altered the legal framework under which HS
claims were previously made and settled. As a result, judgement is needed to assess whether the
recognition criteria for a provision have been met for additional litigation under the HS law amendment.
The Group must assess the likelihood and extent of any future economic outflow arising from the HS law
amendment. The amounts involved are potentially significant, and the application of accounting
standards to determine the amount, if any, to be provided for, is inherently subjective. Given the
uncertainty relating to the amount and timing of any possible outflow, there is a risk over the
presentation of any contingent liability and the transparency of disclosures therein.
Our response to the risk
Our procedures included:
Enquiry of lawyers: We enquired of the Group’s internal and external counsel to obtain an understanding
of developments, in particular the progress of litigations and the establishment of a mediation panel
between HS companies and claimant groups.
We made inquiries of the Group’s external legal counsel to understand developments in the matter. We
requested and received formal correspondence directly from the Group’s external counsel that
evaluated the current status of legal proceedings, the probability of economic outflow in relation to the
2020 law amendment, and the ability to reliably estimate any economic outflow.
We corroborated the consistency of the judgement made by the Directors to enquiries with both internal
and external legal counsel.
Assessing transparency: We assessed the adequacy of the Group’s disclosures of contingent liabilities
related to the HS law amendment in Note 20 of the Group Financial Statements, particularly the
uncertainties relating to the amount and probability of outflow.
We performed the tests above rather than seeking to rely on any of the Group’s controls because the
nature of the balance is such that we would expect to obtain audit evidence primarily through the
detailed procedures described.
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Reckitt Annual Report and Accounts 2022
4. Key audit matters continued
Communications with the Reckitt Benckiser Group plc’s Audit Committee
Our discussions with and reporting to the Audit Committee included:
– Our approach to the assessment over the ongoing litigations relating to the HS issue in South Korea
– Our conclusions on the appropriateness of the Group’s methodology and accounting policies
– The adequacy of the disclosures, particularly as it relates to the uncertainties in relation to the
amount and probability of outflow
Areas of particular auditor judgement
We identified an area of particular auditor judgement to be consideration of whether the contingent
liability disclosure is sufficiently transparent in respect of the uncertainties that exist in relation to the
amount and timing of any resulting outflow.
Our results
We found the Group’s treatment of the impact of the HS law amendment as contingent liabilities and
transparency of disclosure to be acceptable.
Further information in the Annual Report and Accounts: See the Audit Committee Report on page 113 for
details on how the Audit Committee considered contingent liabilities arising from the amendment to the
South Korean Humidifier Sanitiser (HS) law as an area of significant attention, page 188 for the accounting
policy on contingent liabilities arising from the amendment to the South Korean Humidifier Sanitiser (HS)
law, and page 208/note 20 for the financial disclosures.
4.5 Recoverability of the Parent Company’s investment in the subsidiary, Reckitt Benckiser Limited
(Parent Company)
Financial Statement Elements
Parent Company Investment
Our assessment of risk vs FY21
FY22
FY21
£15,078m £15,001m
Vs FY21
We have not identified any significant changes to our assessment of the level of risk
relating to the recoverability of the Parent Company’s investment in the subsidiary,
Reckitt Benckiser Limited, compared to FY21.
Description of the Key Audit Matter
The risk: low risk, high value
The carrying amount of the Parent Company’s investment in its subsidiary, Reckitt Benckiser Limited,
represents 99.6% (FY21: 99.5%) of the Parent Company’s total assets. Its recoverability is not at a high risk
of significant misstatement or subject to significant judgement. However, due to its materiality in the
context of the Parent Company Financial Statements, this is considered to be the area that had the
greatest effect on our overall Parent Company audit.
Our response to the risk
Our procedures included:
Comparing valuations: We compared the carrying amount of the investment to the market capitalisation
of the Group as Reckitt Benckiser Limited, either directly or indirectly, owns all other subsidiaries of the
Group.
We performed the test above rather than seeking to rely on any of the group’s controls because the
nature of the balance is such that we would expect to obtain audit evidence primarily through the
detailed procedures described.
Communications with the Reckitt Benckiser Group plc’s Audit Committee
Our discussions with and reporting to the Audit Committee included:
– Our approach to the assessment of the carrying amount of the parent company’s investment in
the subsidiary
– For the carrying amount, our conclusion on the valuation being acceptable
Our results
We found the Company’s conclusion that there is no impairment of its investment in the subsidiary to
be acceptable (FY21 result: acceptable).
Further information in the Annual Report and Accounts: See the Audit Committee Report on page 113 for
details on how the Audit Committee considered recoverability of the Parent Company’s investment in
the subsidiary, Reckitt Benckiser Limited as an area of significant attention, page 225 for the accounting
policy on recoverability of the Parent Company’s investment in the subsidiary, Reckitt Benckiser Limited,
and page 226/note 2 of Parent Company accounts for the financial disclosures.
Our results
FY22: Acceptable
FY21: Acceptable
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Reckitt Annual Report and Accounts 2022
5. Our ability to detect irregularities, and our response
Fraud – Identifying and responding to risks of material misstatement due to fraud
Fraud risk assessment
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions
that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud.
Our risk assessment procedures included:
– Consultation with our own forensic specialists to assist us in identifying fraud risks based on their
experience of comparable businesses, similar sector, as well as of the geographies in which the Group
operates. The forensic specialists participated in the initial fraud risk assessment discussions and were
consulted throughout the audit when further guidance was deemed necessary;
– Enquiry of directors, operational managers, the General Counsel, the Chief Ethics and Compliance
Officer and members of the internal audit function as well as inspection of minutes of meetings of the
Board, Audit Committee, Executive Committee and Corporate Responsibility, Sustainability, Ethics and
Compliance (CRSEC) Committee;
– Inspection of the Group’s policies and procedures to prevent, detect and respond to the risks of fraud,
internal audit reports issued during the year and reports to the Group’s whistleblowing hotline and the
responses to those reports, including those concerning investigations;
– Consideration of the Group’s results against performance targets and the Group’s remuneration policies.
Risk communications
We communicated identified fraud risks throughout the audit team and remained alert to any indications
of fraud throughout the audit. This included communication from the Group to component audit teams of
relevant fraud risks identified at the Group level and request to all component audit teams to report to
the Group audit team any instances of fraud that could give rise to a material misstatement at Group.
Fraud risks
As required by auditing standards, and after considering the impact of the Group’s results against
performance targets, we perform procedures to address the risk of management override of controls
and the risk of fraudulent revenue recognition. We assessed that there is an inherent risk that Group and
component management may be in a position to make inappropriate accounting entries, and risk of bias
in accounting estimates and judgements. We determined that these risks would most likely manifest
themselves in two key areas being:
– Trade spend and other accruals may be manipulated to alter the timing of recognition of revenue and
profit; and
– Management bias in the recoverability of goodwill and indefinite life intangible assets arising from
possible external pressure to realise value in relation to IFCN and the recent acquisition of Biofreeze.
Link to Key Audit Matters
Further detail in respect of the fraud risks is set out in the key audit matter disclosures in section 4 of this
report.
Procedures to address fraud risks
We performed procedures including:
– For all components within scope, identifying journal entries to test based on risk criteria and comparing
the identified entries to supporting documentation. These included unusual journal entries associated
with trade spend and other operational expenditure accruals
– Increase in the number of in-scope components from 48 to 54, as well as six unannounced
components where out of scope component teams performed interim analytics, trade spend and
other operational expenditure accruals procedures, and journal entry testing
– Reduction in performance materiality from 75% to 65% for the Group and component audits.
We discussed with the Audit Committee matters related to actual or suspected fraud and considered
any implications for our audit. See Key Audit Matters section for procedures performed in response to
the fraud risks which are related to the key audit matters.
Actual or suspected fraud discussed with Audit Committee
In the prior year, we discussed with the Audit Committee matters related to actual or suspected fraud,
which included the results of an investigation commissioned by the Directors to assess evidence
supporting the creation, utilisation and release of certain operational expenditure and trade investment
accruals within the Hygiene GBU (page 137), and considered any implications for our audit. As part of
FY22 audit procedures, we have continued to discuss this risk with the Audit Committee and the
directors and our response to it.
Laws and regulations – Identifying and responding to risks of material misstatement relating to
compliance with laws and regulations
Laws and regulations risk assessment
We identified areas of laws and regulations that could reasonably be expected to have a material effect
on the Financial Statements from our general commercial and sector experience. We held enquiries with
the Directors and other management (as required by auditing standards), and inspected regulatory and
legal correspondence received by the Group. We held enquiries with the Group’s external legal counsel
where considered necessary, and we also inspected the policies and procedures regarding compliance
with laws and regulations.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTINDEPENDENT AUDITOR’S REPORT CONTINUED 172
Reckitt Annual Report and Accounts 2022
5. Our ability to detect irregularities, and our response continued
Risk communications
We communicated identified laws and regulations throughout our team and remained alert to any
indications of non-compliance throughout the audit. This included communication from the Group to all
component audit teams of relevant laws and regulations identified at the Group level, and a request for
component auditors to report to the Group audit team any instances of non-compliance with laws and
regulations that could give rise to a material misstatement at the Group level.
Direct laws context and link to audit
The potential effect of these laws and regulations on the Financial Statements varies considerably.
The Group is subject to laws and regulations that directly impact the Financial Statements including
financial reporting legislation (including related companies’ legislation), distributable profits legislation,
and taxation legislation (direct and indirect). We assessed the extent of compliance with these laws and
regulations as part of our procedures on the related Financial Statement items.
Most significant indirect law/ regulation areas
We identified the following areas as those most likely to have such an effect:
– Employee health and safety, reflecting the nature of the Group’s production and distribution process;
– Anti-bribery and corruption, reflecting that the Group operates in a number of countries where there is
an opportunity to engage in bribery given more limited regulation;
– Interaction with healthcare professionals, reflecting the nature of the Group’s products in the Health
and Nutrition Global Business Units;
– Global competition laws, reflecting the nature of the Group’s business and certain market share positions;
– Consumer product law such as product safety, quality standards and product claims, reflecting the
nature of the Group’s diverse product base;
– Data privacy laws, reflecting the Group’s growing amounts of personal data held; and
– Intellectual property legislation, reflection the potential of the Group to infringe trademarks, copyright
and patents.
Auditing standards limit the required audit procedures to identify non-compliance with these laws and
regulations to enquiry of the directors and other management and inspection of regulatory and legal
correspondence, if any. Therefore, if a breach of operational regulations is not disclosed to us or evident
from relevant correspondence, an audit will not detect that breach.
The Group is subject to many other laws and regulations where the consequences of non-compliance
could have a material effect on amounts or disclosures in the Financial Statements, for instance through
the imposition of fines or litigation or the loss of the Group’s permission to operate in countries where
the non-adherence to laws could prevent trading in such countries.
Link to Key Audit Matters
Further detail in respect of the effect of ongoing litigation relating to the HS Law Amendment in South
Korea is set out in the key audit matter disclosures in section 4 of this report.
Context
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected
some material misstatements in the financial statements, even though we have properly planned and
performed our audit in accordance with auditing standards. For example, the further removed non-
compliance with laws and regulations is from the events and transactions reflected in the financial
statements, the less likely the inherently limited procedures required by auditing standards would
identify it. In addition, as with any audit, there remained a higher risk of non-detection of fraud, as these
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
controls. Our audit procedures are designed to detect material misstatement. We are not responsible for
preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws
and regulations.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTINDEPENDENT AUDITOR’S REPORT CONTINUED 173
Reckitt Annual Report and Accounts 2022
6. Our determination of materiality
The scope of our audit was influenced by our application of materiality. We set quantitative thresholds
and overlay qualitative considerations to help us determine the scope of our audit and the nature, timing
and extent of our procedures, and in evaluating the effect of misstatements, both individually and in the
aggregate, on the financial statements as a whole.
Materiality for the group financial statements as a whole
£130m
(FY21: £135m)
What we mean
A quantitative reference for the purpose of planning and performing our audit.
Basis for determining materiality and judgements applied:
Our Group materiality of £130m (FY21: £135m) was determined by applying a percentage to the
normalised profit before tax from continuing operations (PBTCO). When using a benchmark of
normalised profit before tax to determine overall materiality, KPMG’s approach for listed entities
considers a guideline range of 3% – 5% of the measure. In setting overall Group materiality, we applied
a percentage of 4% (FY21: 5%) to the benchmark.
Consistent with FY21, we determined that normalised profit before tax from continuing operations
(PBTCO) remains the benchmark for the Group. Reckitt Benckiser Group plc is well established and
operates in a stable environment across multiple geographies. Therefore, users of the financial
statements will be primarily interested in the profitability of the Group and its ability to generate
a return for shareholders, of which the most relevant benchmark is normalised PBTCO.
We normalised PBTCO (FY21: normalised PBTCO) by adding back adjustments that do not represent the
normal, continuing operations of the Group. The items we adjusted for the impairment of goodwill, and other
adjusting items as disclosed on pages 78 to 79 in the table reconciling the Group’s IFRS measures to its
adjusted measures for the year ended 31 December 2022, totalling £90 million net (FY21: £2,854 million,
adjustments related to loss on disposal of brands, disposal of IFCN China, reclassified foreign exchange
translation on liquidation of subsidiaries and other adjusting items as defined on pages 78 and 79).
Materiality for the Parent Company financial statements was determined with reference to a benchmark of
Parent Company total assets of which it represents 0.45% (FY21: 0.59%). The Parent Company’s principal
activity is holding the investment in Reckitt Benckiser Limited, and therefore the total assets are the most
relevant benchmark to the users of the financial statements, as this reflects the value of the investment.
Performance materiality
£85m
(FY21: £100m)
What we mean:
Our procedures on individual account balances and disclosures were performed to a lower threshold,
performance materiality, so as to reduce to an acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a material amount across the financial
statements as a whole.
Basis for determining performance materiality and judgements applied:
We have considered performance materiality at a level of 65% (FY21: 75%) of materiality for Reckitt
Benckiser Group plc financial statements as a whole to be appropriate. This therefore has been set at
£85m (FY21: £100m). We applied this percentage in our determination of performance materiality based
on the level of identified misstatements and control deficiencies during the prior period.
The Parent Company performance materiality was set at £49m (FY21: £49m) which equates to 75%
(FY21: 75%) of materiality for the Parent Company financial statements as a whole. We applied this
percentage in our determination of performance materiality to remain consistent with the Group.
Audit misstatement posting threshold
£5m
(FY21: £6m)
What we mean:
This is the amount below which identified misstatements are considered to be clearly trivial from a
quantitative point of view. We may become aware of misstatements below this threshold which could
alter the nature, timing and scope of our audit procedures, for example if we identify smaller
misstatements which are indicators of fraud.
This is also the amount above which all misstatements identified are communicated to Reckitt Benckiser
Group plc’s Audit Committee.
Basis for determining the audit misstatement posting threshold and judgements applied:
We set our audit misstatement posting threshold at 3.9% (FY21: 4.4%) of our materiality for the Group
financial statements. We also report to the Audit Committee any other identified misstatements that
warrant reporting on qualitative grounds.
The overall materiality for the Group financial statements of £130m (FY21: £135m) compares as follows to
the main financial statement caption amounts:
Total Group Net Revenue
Group profit before tax
Total Group Assets
FY22
FY21
FY22
FY21
FY22
FY21
Financial statement
Caption
Group Materiality
as a percentage
of caption
£14,453m
£13,234m
£3,067m
£(260)m £28,742m
£26,946m
0.9%
1.0%
4.2%
51.9%
0.5%
0.5%
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTINDEPENDENT AUDITOR’S REPORT CONTINUED 174
Reckitt Annual Report and Accounts 2022
7. The scope of our audit
Group scope
What we mean
How the Group audit team determined the procedures to be performed across the Group.
We have performed risk assessment and planning procedures to determine which of the Group’s
components are likely to include risks of material misstatement to the Group financial statements, the
type of procedures to be performed at these components and the extent of involvement required from
our component auditors around the world.
The Group operates in more than 60 countries across six continents with the largest market being the
United States of America. The Group is organised into three Global Business Units being Hygiene, Health
and Nutrition.
We scoped the audit by obtaining an understanding of the Group and its environment and assessing the
risk of material misstatement at the Group and component level.
We have considered components on the basis of their contribution to Group Net Revenue, total profits
and losses that made up Group profit before tax and Group total assets.
Of the Group’s 406 (FY21: 422) reporting components, we instructed 53 components (FY21: 47) across 23
overseas countries (FY21: 20 countries) to perform full scope audits for Group purposes, one component
(FY21: none) to performed specified audit procedures and there were no components subject to audit of
account balances (FY21: 1). Please see table below for a summary.
Scope
Number of components
Range of materiality applied
Full scope audit
Specified audit procedures
53
1
£8m – £75m
£64m
The Group audit team has performed audit procedures on the testing of General IT Controls on behalf of
the components. These items were audited by the Group team because these they are managed
centrally. The Group team communicated the results of these procedures to the component teams.
In addition, we have performed Group level analysis on the remaining components to determine whether
further risks of material misstatement exist in those components.
The scope of the audit work performed was fully substantive as we did not rely upon the Group’s internal
control over financial reporting.
The work on 51 of the 54 components (FY21: 46 of the 48 components) was performed by component
auditors and the rest, including the audit of the parent company, was performed by the Group team.
Group audit team oversight
What we mean
The extent of the Group audit team’s involvement in component audits.
The Group audit team is required to instruct the component teams about their responsibilities in relation
to the consolidated Group audit and to understand the approach taken by component auditors to meet
these responsibilities. The Group audit team is also required to understand the conclusions reached by
component auditors and to review and challenge the work they have performed to reach these
conclusions.
Unlike in previous years the Group audit team were able to physically visit 19 countries in November and
December FY22 to attend management balance sheet reviews ahead of the year end (FY21: 0, as a result
of COVID-19 travel restrictions). The Group audit team were therefore able to have face to face
communications with both our KPMG component teams and local Reckitt management.
As well as physical visits, we had regular contact with our component auditors throughout the year,
including:
– Issuing instructions to component auditors on the scope of their work including specifying minimum
procedures to perform in their audit of trade spend and other operational accruals;
– Approval by the Group audit team of the component materiality for all components, which ranged
from £8 million to £75 million (FY21: £8 million to £100 million), having regard to the mix of size and risk
profile of the Group across the components, including considering the benchmark for each
component;
– Attendance by senior members of the Group audit team and relevant component auditors at
management’s balance sheet reviews for all in-scope component locations;
– Risk assessment and challenge sessions with each component audit team in the planning and final
phases of the audit led by a senior member of the Group audit team;
– Attendance by members of the Group audit team and relevant component auditors at year end
clearance meetings where the findings reported to the Group audit team were discussed in more
detail and any further work required by the Group audit team was then performed by the component
auditors; and
– Inspection of component audit teams’ key working papers within component audit files (using remote
technology capabilities) to evaluate the quality of execution of the audits of the components, with a
particular focus on the minimum procedures instructed in relation to our key audit matter, trade spend
arrangements and other operational accruals.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTINDEPENDENT AUDITOR’S REPORT CONTINUED 175
Reckitt Annual Report and Accounts 2022
8. Other information in the annual report
The directors are responsible for the other information presented in the Annual Report together with the
financial statements. Our opinion on the financial statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of
assurance conclusion thereon.
All other information
Our responsibility
Our responsibility is to read the other information and, in doing so, consider whether, based on our
financial statements audit work, the information therein is materially misstated or inconsistent with the
financial statements or our audit knowledge.
Our reporting
Based solely on that work we have not identified material misstatements or inconsistencies in the other
information.
Strategic report and directors’ report
Our responsibility and reporting
Based solely on our work on the other information described above we report to you as follows:
– we have not identified material misstatements in the strategic report and the directors’ report;
– in our opinion the information given in those reports for the financial year is consistent with the
financial statements; and
– in our opinion those reports have been prepared in accordance with the Companies Act 2006.
Directors’ remuneration report
Our responsibility
We are required to form an opinion as to whether the part of the Directors’ Remuneration Report to be
audited has been properly prepared in accordance with the Companies Act 2006.
Our reporting
In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared
in accordance with the Companies Act 2006.
Corporate governance disclosures
Our responsibility
We are required to perform procedures to identify whether there is a material inconsistency between
the financial statements and our audit knowledge, and:
– the directors’ statement that they consider that the annual report and financial statements taken as a
whole is fair, balanced and understandable, and provides the information necessary for shareholders
to assess the Group’s position and performance, business model and strategy;
– the section of the annual report describing the work of the Audit Committee, including the significant
issues that the Audit Committee considered in relation to the financial statements, and how these
issues were addressed; and
– the section of the annual report that describes the review of the effectiveness of the Group’s risk
management and internal control systems.
Our reporting
Based on those procedures, we have concluded that each of these disclosures is materially consistent
with the financial statements and our audit knowledge.
Our responsibility
We are also required to review the part of the Corporate Governance Statement relating to the Group’s
compliance with the provisions of the UK Corporate Governance Code specified by the Listing Rules for
our review.
Our reporting
We have nothing to report in this respect.
Other matters on which we are required to report by exception
Our responsibility
Under the Companies Act 2006, we are required to report to you if, in our opinion:
– adequate accounting records have not been kept by the Parent Company, or returns adequate for our
audit have not been received from branches not visited by us; or
– the Parent Company financial statements and the part of the Directors’ Remuneration Report to be
audited are not in agreement with the accounting records and returns; or
– certain disclosures of directors’ remuneration specified by law are not made; or
– we have not received all the information and explanations we require for our audit.
Our reporting
We have nothing to report in these respects.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTINDEPENDENT AUDITOR’S REPORT CONTINUED 176
Reckitt Annual Report and Accounts 2022
9. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 160, the directors are responsible for: the
preparation of the financial statements including being satisfied that they give a true and fair view;
such internal control as they determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error; assessing the Group and Parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern; and using the going concern basis of accounting unless they either intend to liquidate the Group
or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s
report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of
the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at
www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these financial statements in an annual financial report prepared
using the single electronic reporting format specified in the TD ESEF Regulation. This auditor’s report
provides no assurance over whether the annual financial report has been prepared in accordance with
that format.
10. The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members, as a body, for our audit work, for this
report, or for the opinions we have formed.
A N D R E W B R A DS H AW (S E N I O R S TAT U TO RY AU D I TO R)
F O R A N D O N B E H A L F O F K PM G L L P, S TAT U TO RY AU D I TO R
Chartered Accountants
15 Canada Square
London
28 February 2023
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTINDEPENDENT AUDITOR’S REPORT CONTINUED 177
Reckitt Annual Report and Accounts 2022
G RO U P I N CO M E STATE M E NT A N D STATE M E NT O F CO M PR E H E NS IV E I N CO M E
Note
2022
£m
2021
£m
For the year ended 31 December
Note
2022
£m
G R O U P S TAT E M E N T O F CO M P R E H E N S I V E I N CO M E
Net income/(loss)
Other comprehensive income/(expense)
Items that have or may be reclassified to the Income Statement in subsequent years
Net exchange gain/(loss) on foreign currency translation, net of tax
Reclassification of foreign currency translation reserves on
disposal or liquidation of foreign operations, net of tax
(Losses)/gains on net investment hedges, net of tax
Gains on cash flow hedges, net of tax
7, 26
7, 26
7, 26
7, 26
2,349
1,065
Items that will not be reclassified to the Income Statement in subsequent years
Remeasurements of defined benefit pension plans, net of tax
Revaluation of equity instruments, net of tax
7
7
(56)
(115)
2
896
24
(87)
(63)
Other comprehensive income/(expense), net of tax
Total comprehensive income/(expense)
Attributable to non-controlling interests
Attributable to owners of the parent company
Total comprehensive income/(expense)
833
3,182
20
3,162
3,182
Total comprehensive income/(expense) attributable to owners of the parent company arising from:
Continuing operations
Discontinued operations
3,169
(7)
(741)
31
3,162
(710)
2021
£m
(21)
(374)
(550)
84
30
(810)
133
(1)
132
(678)
(699)
11
(710)
(699)
G R O U P I N CO M E S TAT E M E N T
For the year ended 31 December
CONTINUING OPERATIONS
Net Revenue
Cost of sales
Gross profit
Gain/(loss) on disposal of intangible assets and related businesses
Other net operating expenses
Total net operating expenses
Operating profit/(loss)
Foreign exchange net gain on liquidation of subsidiaries
Other net finance expense
Net finance (expense)/income
Impairment of equity-accounted investments
Share of loss of equity-accounted investments, net of tax
Profit/(loss) before income tax
Income tax (charge)/credit
Net income/(loss) from continuing operations
Net (loss)/income from discontinued operations
Net income/(loss)
Attributable to non-controlling interests
Attributable to owners of the parent company
Net income/(loss)
Basic earnings/(loss) per ordinary share
From continuing operations (pence)
From discontinued operations (pence)
From total operations (pence)
Diluted earnings/(loss) per ordinary share
From continuing operations (pence)
From discontinued operations (pence)
From total operations (pence)
2
29
3
2
6
6
6
11
11
7
30
8
8
8
8
8
8
14,453
(6,092)
8,361
14
(5,126)
13,234
(5,558)
7,676
(3,518)
(4,962)
(5,112)
(8,480)
3,249
69
(230)
(161)
(19)
(2)
3,067
(711)
2,356
(7)
2,349
19
2,330
2,349
326.7
(1.0)
325.7
325.7
(1.0)
324.7
(804)
766
(219)
547
–
(3)
(260)
208
(52)
31
(21)
11
(32)
(21)
(8.8)
4.3
(4.5)
(8.8)
4.3
(4.5)
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 178
Reckitt Annual Report and Accounts 2022
G RO U P BA L A N CE S H E ET
As at 31 December
ASSETS
Non-current assets
Goodwill and other intangible assets
Property, plant and equipment
Equity instruments
Deferred tax assets
Retirement benefit surplus
Other non-current receivables
Total non-current assets
Current assets
Inventories
Trade and other receivables
Derivative financial instruments
Current tax recoverable
Cash and cash equivalents
Total current assets
Assets held for sale
Total assets
LIABILITIES
Current liabilities
Short-term borrowings
Provisions for liabilities and charges
Trade and other payables
Derivative financial instruments
Current tax liabilities
Total current liabilities
Non-current liabilities
Long-term borrowings
Deferred tax liabilities
Retirement benefit obligations
Provisions for liabilities and charges
Derivative financial instruments
Non-current tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Note
2022
£m
2021
£m
As at 31 December
Note
2022
£m
2021
£m
EQUITY
Capital and reserves
Share capital
Share premium
Merger reserve
Other reserves
Retained earnings
Attributable to owners of the parent company
Attributable to non-controlling interests
Total equity
24
26
74
254
(14,229)
(294)
23,638
9,443
40
9,483
74
253
(14,229)
(1,189)
22,490
7,399
54
7,453
The accompanying notes form part of these Financial Statements. The Financial Statements on pages 177
to 221 were approved by the Board of Directors and signed on its behalf on 28 February 2023 by:
C H R I S TO P H E R S I N C L A I R
D I R E C TO R
Reckitt Benckiser Group plc
N I C A N D R O D U R A N T E
D I R E C TO R
Reckitt Benckiser Group plc
9
10
11
12
23
14
13
14
15, 17
16
29
17
18
21
15, 17
22
17
12
23
18
15, 17
22
21
20,203
2,473
86
244
294
157
23,457
1,825
2,082
59
155
1,157
5,278
7
18,868
2,178
194
197
355
149
21,941
1,459
1,926
61
155
1,261
4,862
143
28,742
26,946
(1,721)
(227)
(5,547)
(55)
(791)
(2,485)
(191)
(5,267)
(52)
(93)
(8,341)
(8,088)
(7,163)
(3,037)
(240)
(59)
(249)
(54)
(116)
(7,078)
(2,806)
(318)
(44)
(71)
(826)
(262)
(10,918)
(11,405)
(19,259)
(19,493)
9,483
7,453
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 179
Reckitt Annual Report and Accounts 2022
G RO U P STATE M E NT O F CHA N G ES I N EQ U IT Y
Balance at 1 January 2021
Comprehensive income
Net (loss)/income
Other comprehensive (expense)/income
Total comprehensive (expense)/income
Transactions with owners
Treasury shares reissued
Purchase of ordinary shares by employee share ownership trust
Issuance of shares to non-controlling interest
Share-based payments
Cash dividends
Transactions with non-controlling interests
Disposal of non-controlling interest in IFCN China
Total transactions with owners
Balance at 31 December 2021
Comprehensive income
Net income
Other comprehensive income/(expense)
Total comprehensive income
Transactions with owners
Treasury shares reissued
Issuance of shares to non-controlling interest
Share-based payments
Tax on share awards
Cash dividends
Total transactions with owners
Balance at 31 December 2022
Notes
Share capital
£m
Share
premium
£m
Merger
reserves1
£m
Other
reserves2
£m
Retained
earnings
£m
Total
attributable
to owners of
the parent
company
£m
Non-
controlling
interests
£m
Total equity
£m
74
252
(14,229)
(379)
23,397
9,115
44
9,159
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
–
–
–
–
–
–
1
–
–
–
–
–
–
–
–
–
–
–
–
(810)
(810)
–
–
–
–
–
–
–
–
(32)
132
100
79
(5)
–
30
(1,246)
135
–
(32)
(678)
(710)
80
(5)
–
30
(1,246)
135
–
(1,007)
(1,006)
74
253
(14,229)
(1,189)
22,490
7,399
–
–
–
–
–
–
–
–
–
–
–
–
1
–
–
–
–
1
–
–
–
–
–
–
–
–
–
–
895
895
–
–
–
–
–
–
2,330
(63)
2,267
53
–
78
(1)
(1,249)
2,330
832
3,162
54
–
78
(1)
(1,249)
(1,119)
(1,118)
74
254
(14,229)
(294)
23,638
9,443
11
–
11
–
–
7
–
(17)
–
9
(1)
54
19
1
20
–
1
–
–
(35)
(34)
40
(21)
(678)
(699)
80
(5)
7
30
(1,263)
135
9
(1,007)
7,453
2,349
833
3,182
54
1
78
(1)
(1,284)
(1,152)
9,483
24
25
28
24
25
7
28
1. The merger reserve relates to the 1999 combination of Reckitt & Colman plc and Benckiser N.V. and a Group reconstruction in 2007 treated as a merger under Part 27 of the Companies Act 2006
2. Refer to Note 26 for an explanation of other reserves
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 180
Reckitt Annual Report and Accounts 2022
G RO U P CAS H FLOW STATE M E NT
For the year ended 31 December
Note
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(loss) before tax
Net finance expense/(income)
Share of loss and impairment of equity-accounted investments
Operating profit/(loss) from continuing operations
(Profit)/loss on sale of property, plant and equipment and
intangible assets
Depreciation, amortisation and impairment
Share-based payments
Increase in inventories
Increase in trade and other receivables
Decrease in payables and provisions
Cash generated from continuing operations
Interest paid
Interest received
Tax paid
Net cash flows attributable to discontinued operations
Net cash generated from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from the sale of property, plant and equipment
Proceeds from sale of intangible assets and related businesses,
net of cash disposed
Acquisition of businesses
Other investing activities
Net cash (used in)/generated from investing activities
30
2022
£m
3,067
161
21
3,249
(82)
607
78
(254)
(23)
(145)
3,430
(243)
34
(831)
7
2,397
(362)
(81)
84
247
(12)
(15)
(139)
2021
£m
(260)
(547)
3
(804)
3,442
481
30
(57)
(130)
(126)
2,836
(251)
29
(915)
(2)
1,697
(373)
(77)
9
1,622
(915)
(27)
239
For the year ended 31 December
CASH FLOWS FROM FINANCING ACTIVITIES
Treasury shares reissued
Purchase of ordinary shares by employee share ownership trust
Proceeds from borrowings
Repayment of borrowings
Dividends paid to owners of the parent company
Dividends paid to non-controlling interests
Other financing activities1
Note
24
17
17
28
2022
£m
2021
£m
54
–
2,274
(3,807)
(1,249)
(35)
383
80
(5)
38
(1,044)
(1,246)
(17)
(92)
Net cash used in financing activities
(2,380)
(2,286)
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Exchange gains/(losses)
Cash and cash equivalents at end of the year
Cash and cash equivalents comprise:
Cash and cash equivalents2
Overdrafts
(122)
1,259
19
1,156
1,157
(1)
1,156
(350)
1,644
(35)
1,259
1,261
(2)
1,259
16
17
1. Cash flows from other financing activities are principally composed of cash receipts and payments on derivative contracts
used to hedge foreign exchange gains or losses on non-Sterling financing assets and financing liabilities between the Group’s
treasury company and fellow Group subsidiaries
2. Included within cash and cash equivalents is £276 million of cash (2021: £66 million) which is restricted for use by the Group but
is available on demand and freely available for use within the relevant subsidiary (see Note 16)
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 181
Reckitt Annual Report and Accounts 2022
N OTES TO TH E FI NA N CIA L STATE M E NTS
1 Accounting Policies
The principal accounting policies adopted in the preparation of these Financial Statements are set out
below. Unless otherwise stated, these policies have been consistently applied to all the years presented.
Basis of preparation
These Financial Statements have been prepared in accordance with the recognition, measurement and
presentation requirements of UK-adopted International Accounting Standards and in accordance with
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB).
These Financial Statements have been prepared under the historical cost convention, as modified by the
revaluation of certain financial assets and liabilities (including derivative instruments) at fair value through
profit or loss or other comprehensive income. A summary of the Group’s accounting policies is set out
below. Historical cost is generally based on the fair value of the consideration given in exchange for
goods and services.
The preparation of Financial Statements that conform to IFRS requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at the Balance Sheet date
and revenue and expenses during the reporting period. Although these estimates are based on
management’s best knowledge at the time, actual amounts may ultimately differ from those estimates.
New standards, amendments and interpretations
The following amended standards and interpretations were adopted by the Group during the year
ending 31 December 2022. These amended standards and interpretations have not had a significant
impact on the consolidated Financial Statements.
– Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
– Reference to the Conceptual Framework (Amendments to IFRS 3)
– Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37)
– Annual Improvements to IFRS Standards 2018–2020
The following new and amended standards are effective for annual periods beginning on or after
1 January 2023. The Group has not early adopted the new or amended standards, where applicable, in
preparing these consolidated Financial Statements. These standards, amendments or interpretations are
not expected to have a material impact on the Group in the current or future reporting periods:
– Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
– Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
– Definition of Accounting Estimates (Amendments to IAS 8)
– Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
– IFRS 17 Insurance Contracts
– Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
– COVID-19 Related Rent Concessions beyond 30 June 2021: Amendment to IFRS 16 Leases
Going concern
Having assessed the principal risks and other matters discussed in connection with the Viability
Statement, the Directors considered it appropriate to adopt the going concern basis of accounting in
preparing the consolidated Financial Statements. When reaching this conclusion, the Directors took into
account the Group’s overall financial position, exposure to principal risks and future business forecasts.
At 31 December 2022, the Group had cash and cash equivalents of £1.2 billion. The Group also had access
to committed borrowing facilities of £4.5 billion, which were undrawn at year end and of which £4.45
billion are not subject to renewal until 2025 onwards. Further detail is contained within the Viability
Statement on page 87.
Basis of consolidation
The consolidated Financial Statements include the results of Reckitt Benckiser Group plc, a company
registered in the UK, and all its subsidiary undertakings made up to the same accounting date. Subsidiary
undertakings are those entities controlled by Reckitt Benckiser Group plc. Control exists where the
Group is exposed to, or has the rights to variable returns from its involvement with, the investee and has
the ability to use its power over the investee to affect its returns.
Intercompany transactions, balances and unrealised gains on transactions between Group companies
have been eliminated on consolidation. Unrealised losses have also been eliminated to the extent that
they do not represent an impairment of a transferred asset. The accounting policies of subsidiaries have
been changed where necessary to ensure consistency with accounting policies adopted by the Group.
Climate change
In preparing the Financial Statements, management have considered the impact of climate change,
specifically with reference to the disclosures included in the Strategic Report and the Group’s 2030
Sustainability Ambitions. These factors have not had a significant effect on the Group’s critical
accounting estimates and judgments made with respect to the current year.
Foreign currency translation
Items included in the Financial Statements of each of the Group’s entities are measured using the currency of
the primary economic environment in which the entity operates (the functional currency). The consolidated
Financial Statements are presented in Sterling, which is the Group’s presentational currency.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 182
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
1 Accounting Policies continued
Foreign currency transactions are translated into the functional currency using exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of
foreign currency transactions and from the translation of foreign currency denominated monetary assets
and liabilities are recognised in the Income Statement, except where hedge accounting is applied.
Immediately before the initial classification of the assets and disposal groups as held for sale, the
carrying amounts of the assets (or all the assets and liabilities in the disposal groups) are measured
in accordance with the applicable accounting standards. Goodwill (including cost and accumulated
impairment) is allocated to the disposal group using a relative value approach, unless a different method
better reflects goodwill associated with the disposal.
The Financial Statements of subsidiary undertakings with a non-Sterling functional currency are
translated into Sterling on the following basis:
– Assets and liabilities: at the rate of exchange ruling at the year end date
– Income Statement items: at the average rate of exchange for the year
Exchange differences arising from the translation of the net investment in subsidiary undertakings
with a non-Sterling functional currency, and of borrowings and other currency instruments designated
as hedges of such investments, are recorded in equity on consolidation.
Business combinations
The acquisition method is used to account for the acquisition of subsidiaries and businesses. Identifiable
net assets acquired (including intangible assets) in a business combination are measured initially at their
fair values at the acquisition date.
Where the measurement of the fair value of identifiable net assets acquired is incomplete at the end
of the reporting period in which the combination occurs, the Group will report provisional fair values.
Final fair values are determined within a year of the acquisition date and retrospectively applied.
The excess of the consideration transferred and the amount of any non-controlling interest over the fair
value of the identifiable assets (including intangibles), liabilities and contingent liabilities acquired is
recorded as goodwill.
The consideration transferred is measured at the fair value of the assets given, equity instruments issued
(if any), and liabilities assumed or incurred at the date of acquisition.
Acquisition-related costs are expensed as incurred.
The results of the subsidiaries and businesses acquired are included in the consolidated Financial
Statements from the acquisition date.
Assets held for sale and disposal groups
Non-current assets, or disposal groups comprising assets and liabilities, are classified as held for sale and
presented separately in the Balance Sheet when the following criteria are met: the Group is committed
to selling the asset or disposal group; it is available for immediate sale in its current condition; an active
plan of sale has commenced and been approved in line with Group policy; and in the judgement of Group
management it is highly probable that the sale will be completed within 12 months.
Assets held for sale and disposal groups are subsequently measured at the lower of their carrying
amount and fair value less costs of disposal. Impairment losses on initial classification as held for sale, and
subsequent gains and losses on remeasurement to fair value less costs of disposal, are recognised in the
Income Statement. Once classified as held for sale, intangible assets and property, plant and equipment
are no longer amortised or depreciated.
Disposals of intangible assets and subsidiaries
The financial performance of subsidiaries and businesses are included in the consolidated Financial
Statements up to the point at which the Group ceases to have control over that subsidiary. Intangible
assets not disposed of through the sale of shares in subsidiaries are treated as disposed at the point that
the Group ceases to control the asset.
The difference between the fair value of the consideration (net of costs) and the carrying value of the
assets and liabilities disposed is recognised as a gain or loss in the Income Statement. Any amounts
previously recognised in other comprehensive income in respect of that subsidiary or asset, including
exchange gains or losses on foreign currency translation, are accounted for as if the Group had directly
disposed of related assets and liabilities. This results in a reclassification of amounts previously
recognised in other comprehensive income to the Income Statement and included within the loss on
disposal of intangible assets and related businesses.
Where the assets and liabilities disposed represent a partial disposal of a cash generating unit to which
goodwill has been allocated, goodwill is allocated using a relative value approach to the disposal group,
unless a different method better reflects goodwill associated with the disposal.
Where the tax base will not be transferred with the disposed assets, the deferred tax balances relating
to the intangible assets are not considered part of the assets disposed and are instead credited or
charged to the Income Statement within income tax expense.
Liquidation of subsidiaries
The Group liquidates subsidiaries that are no longer required in order to simplify the Group structure.
As part of this process, the Group ensures any outstanding matters relating to the subsidiary are resolved
before liquidation. Any amounts previously recognised in other comprehensive income in respect of
that subsidiary, including exchange gains and losses on foreign currency translation, are reclassified to
the Income Statement on disposal which is typically on entering liquidation. The amounts previously
recognised in other comprehensive income are included within net finance (expense)/income in the
Income Statement.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 183
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
1 Accounting Policies continued
Non-controlling interests
On an acquisition-by-acquisition basis, the non-controlling interest is measured at either fair value or
a proportionate share of the acquiree’s net assets.
Research and development
Research expenditure is expensed in the year in which it is incurred.
Development expenditure is expensed in the year in which it is incurred, unless it meets the requirements
of IAS 38 to be capitalised and then amortised over the useful life of the developed product.
Purchases of non-controlling interests are accounted for as transactions with the owners and therefore
no goodwill is recognised as a result of such transactions.
Revenue
Revenue from the sale of products is recognised in the Group Income Statement as and when
performance obligations are satisfied by transferring control of the product or service to the customer.
Income tax
Income tax on the income/(loss) for the year comprises current and deferred tax. Income tax is
recognised in the Income Statement except to the extent that it relates to items recognised in other
comprehensive income or directly in equity, in which case the tax is also recognised in other
comprehensive income or directly in equity, respectively.
Net Revenue is defined as the amount invoiced to external customers during the year and comprises, as
required by IFRS 15, gross sales net of trade spend, customer allowances for credit notes, returns and
consumer coupons. The methodology and assumptions used to estimate credit notes, returns and
consumer coupons are monitored and adjusted regularly in the light of contractual and legal obligations,
historical trends, past experience and projected market conditions.
Trade spend, which consists primarily of customer pricing allowances, placement/listing fees and
promotional allowances, is governed by sales agreements with the Group’s trade customers (retailers
and distributors). Trade spend also includes reimbursement arrangements under the Special
Supplemental Nutrition Program for Women, Infants and Children (WIC), payable to the respective US
state WIC agencies.
Accruals are recognised under the terms of these agreements to reflect the expected activity level and
the Group’s historical experience. These accruals are reported within trade and other payables.
Value-added tax and other sales taxes are excluded from Net Revenue.
Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief
Operating Decision Maker (CODM). The CODM, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Group Executive Committee.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted in each jurisdiction at the Balance Sheet date, and any adjustment to tax payable
in respect of previous years.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the consolidated Financial Statements.
Deferred tax is not accounted for if it arises from the initial recognition of an asset or liability in a
transaction (other than a business combination) that affects neither accounting nor taxable profit
or loss at that time. Deferred tax is determined using tax rates (and laws) that have been enacted or
substantively enacted at the Balance Sheet date and are expected to apply when the deferred tax asset
or liability is settled. Deferred tax assets are recognised to the extent that it is probable that future
taxable profit will be available against which the temporary differences can be utilised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries except where
the investor is able to control the timing of the reversal of the temporary differences and it is probable
that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets and liabilities within the same tax jurisdiction are offset where there is a legally
enforceable right to offset current tax assets against current tax liabilities and where there is an intention
to settle these balances on a net basis.
Goodwill and other intangible assets
(i) Goodwill
Goodwill is allocated to the cash generating unit (CGU), or group of CGUs (GCGU), to which it relates and
is tested annually for impairment. Goodwill is carried at cost less accumulated impairment losses.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 184
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
1 Accounting Policies continued
(ii) Brands
Separately acquired brands are shown at cost less accumulated amortisation and impairment. Brands
acquired as part of a business combination, and that are separately identifiable, are recognised at fair
value and amortised over their useful economic life as determined at the acquisition date (up to 20
years), except when their life is determined as being indefinite.
(vii) Acquired intellectual property
Intellectual property rights acquired as part of the business and that are separately identifiable are
recognised at fair value and amortised over their useful economic life as determined at the acquisition
date (up to 20 years).
Amortisation of intangible assets in (ii) to (vii) is charged to cost of goods sold or net operating expenses
depending on the use of the asset.
Applying indefinite lives to certain acquired brands is appropriate due to the stable long-term nature of
the business and the enduring nature of the brands. A core element of the Group’s strategy is to invest
in building its brands through an ongoing programme of product innovation and continuing marketing
investment. Within the Group, a brand typically comprises an assortment of base products and more
innovative products. Both contribute to the enduring nature of the brand. The base products establish
the long-term positioning of the brand while a succession of innovations attracts ongoing consumer
interest and attention. Indefinite life brands are allocated to the CGUs or GCGUs to which they relate
and are tested annually for impairment.
The Directors also review the useful economic life of brands annually, to ensure that these lives are still
appropriate. If a brand is considered to have a finite life, its carrying value is amortised over its remaining
estimated useful economic life.
(iii) Software
Expenditure relating to the acquisition of computer software licences and systems are capitalised at
cost. The assets are amortised on a straight-line basis over a period of seven years for systems and five
years or less for all other software licences.
(iv) Distribution rights
Payments made in respect of product registration, acquired and reacquired distribution rights are
capitalised where the rights comply with the above requirements for recognition of acquired brands.
If the registration or distribution rights are for a defined time period, the intangible asset is amortised
over that period. If no time period is defined, the intangible asset is treated in the same way as
acquired brands.
(v) Customer contracts
Acquired customer contracts are capitalised at cost. These costs are amortised on a straight-line basis
over the period of the contract.
(vi) Customer relationships
Customer relationships are shown at cost less accumulated amortisation and impairment. Customer
relationships acquired as part of a business combination, and that are separately identifiable, are
recognised at fair value and amortised over their useful economic life as determined at the acquisition
date (up to 10 years).
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and impairment,
with the exception of freehold land, which is shown at cost less impairment. Cost includes expenditure
that is directly attributable to the acquisition of the asset. Except for freehold land and assets under
construction, the cost of property, plant and equipment is depreciated on a straight-line basis over the
period of the expected useful life of the asset. For this purpose, expected lives are determined within
the following limits:
– freehold buildings: not more than 50 years;
– leasehold land and buildings: the lesser of 50 years or the life of the lease; and
– owned plant and equipment: not more than 15 years (except for environmental assets and spray dryers
which are not more than 30 years).
In general, production plant and equipment and office equipment are depreciated over 10 years or less
and motor vehicles and computer equipment over 5 years or less.
Assets’ residual values and useful lives are reviewed, and adjusted if necessary, at each Balance Sheet
date. Property, plant and equipment is reviewed for impairment if events or changes in circumstances
indicate that the carrying amount may not be appropriate. Freehold land is reviewed for impairment on
an annual basis.
Gains and losses on the disposal of property, plant and equipment are determined by comparing the
asset’s carrying value with any sale proceeds and are included in the Income Statement.
Leases
The Group has various lease arrangements for buildings (such as offices and warehouses), cars, and IT and
other equipment. Lease terms are negotiated on an individual basis locally and subject to domestic rules
and regulations. At the inception of a lease contract, the Group assesses whether the contract conveys
the right to control the use of an identified asset for a certain period in exchange for consideration, in
which case it is identified as a lease. The Group recognises a right of use asset and a corresponding lease
liability with respect to all lease arrangements in which it is the lessee, except for short-term leases
(defined as leases with a lease term of 12 months or less) and leases of low value assets. Low value leases
are those with an underlying asset value of USD 5,000 or less. For these leases, the Group recognises the
lease payments as an operating expense on a straight-line basis over the term of the lease.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 185
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
1 Accounting Policies continued
Right of use assets
At commencement date, right of use assets are measured at cost, which comprises the following:
Fair value less costs of disposal is calculated using a discounted cash flow approach prepared on a
market participant basis, with a post-tax discount rate applied to projected risk-adjusted post-tax cash
flows and terminal value.
– the initial measurement of the lease liability;
– prepayments before commencement date of the lease;
– initial direct costs; and
– costs to restore.
Subsequent to initial recognition right of use assets are depreciated on a straight-line basis over the
duration of the contract. Right of use assets are assessed for impairment where indicators of impairment
are present.
Lease liabilities
At commencement date, lease liabilities are measured at the present value of lease payments not yet
paid including:
– fixed payments excluding lease incentive receivables;
– future contractually agreed fixed increases; and
– payments related to renewals or early termination, when options to renew or for early termination are
reasonably certain to be exercised.
Subsequent to initial recognition lease liabilities are increased by the interest costs on the lease liabilities
and decreased by lease payments made. Lease liabilities held are remeasured to account for revised
future payments.
Impairment of assets
Assets that have indefinite lives, including goodwill and brands, are tested annually for impairment at the
level where cash flows are considered to be largely independent. This testing is performed at either the
CGU or GCGU level. All CGUs and GCGUs are tested for impairment if there is an event or circumstance
that indicates that their carrying value may not be recoverable. If the carrying value exceeds its
recoverable amount an impairment loss is recognised in the Income Statement. The recoverable amount
is the higher of the CGU’s or GCGU’s value-in-use and its fair value less costs of disposal.
Value-in-use is calculated with reference to the future and terminal cash flows expected to be
generated by each CGU or GCGU (or group of assets where cash flows are not identifiable to specific
assets). The discount rates used in the impairment reviews are based on weighted average cost of
capital (WACC) specific to each CGU and GCGU, with the WACC converted to the implied pre-tax rates.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises materials, direct labour
and an appropriate portion of overhead expenses (based on normal operating capacity) required to get
the inventory to its present location and condition. Inventory valuation is determined on a first in, first out
(FIFO) basis. Net realisable value represents the estimated selling price less applicable selling expenses.
Trade and other receivables
Trade and other receivables are initially recognised at the fair value of consideration less transaction
costs and subsequently held at amortised cost, less provision for discounts and doubtful debts.
Allowance losses are calculated by reviewing lifetime expected credit losses using historic and forward-
looking data on credit risk.
Trade and other payables
Trade and other payables are initially recognised at fair value including transaction costs and
subsequently carried at amortised cost.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and other deposits with a maturity of less than three
months when deposited.
For the purpose of the Cash Flow Statement, bank overdrafts that form an integral part of the Group’s
cash management, and are repayable on demand, are included as a component of cash and cash
equivalents. Bank overdrafts are included within short-term borrowings in the Balance Sheet.
Borrowings
Interest-bearing borrowings are recognised initially at fair value less, where permitted by IFRS 9, any
directly attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are
stated at amortised cost with any difference between cost and redemption value being recognised in
the Income Statement over the period of the borrowings on an effective interest basis.
Cash flows relating to interest are presented within operating cash flows. Proceeds and repayment of
principal amounts are presented as financing cash flows and are presented gross, except for borrowings
with maturities of less than three months (including commercial paper), which are presented net.
Derivative financial instruments and hedging activity
The Group may use derivatives to manage its exposures to fluctuating interest and foreign exchange
rates. These instruments are initially recognised at fair value on the date the contract is entered into
and are subsequently remeasured at their fair value. The method of recognising the resulting gain or loss
depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the
item being hedged.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 186
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
1 Accounting Policies continued
At the inception of designated hedge relationships, the Group documents its risk management
objectives and strategy for undertaking various hedging transactions. The Group also documents its
assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used
in hedging transactions are highly effective in offsetting changes in cash flows or fair values of hedged
items.
The Group designates certain derivatives as either:
– hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast
transaction (cash flow hedges); or
– hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges).
Derivatives designated as cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash
flow hedges is recognised in other comprehensive income and accumulated in the hedging reserve.
Any gain or loss relating to the ineffective portion is recognised immediately in the Income Statement.
When the hedged forecast transaction subsequently results in the recognition of a non-financial item
such as inventory, the amount accumulated in the hedging reserve and the cost of hedging reserve
is included directly in the initial cost of the non-financial item when it is recognised. For all other
transactions, the amounts accumulated in the hedging reserve are recycled to the Income Statement
in the period (or periods) when the hedged item affects the Income Statement.
If the hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires,
is terminated, or is exercised, then hedge accounting is discontinued prospectively. The amount that
has been accumulated in the hedging reserve remains in equity until it is either included in the cost
of a non-financial item or recycled to the Income Statement.
Derivatives designated as fair value hedges
Fair value hedges are used to manage the currency and/or interest rate risks to which the fair value
of certain assets and liabilities are exposed. Changes in the fair value are recognised in the Income
Statement, together with any changes in the fair value of the hedged asset or liability that are
attributable to the hedged risk. If such a hedge relationship no longer meets hedge accounting criteria,
fair value movements on the derivative continue to be taken to the Income Statement while any fair
value adjustments made to the underlying hedged item to that date are amortised through the Income
Statement over its remaining life using the effective interest rate method.
Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are
recognised immediately in the Income Statement.
Net investment hedges
Gains and losses on those hedging instruments designated as hedges of the net investments in foreign
operations are recognised in other comprehensive income to the extent that the hedging relationship is
effective. Gains and losses accumulated in the foreign currency translation reserve are recycled to the
Income Statement when the foreign operation is disposed of.
Equity investments
Equity investments are investments that are neither held for trading nor classified as investments in
subsidiaries, associates or joint arrangements. Subsequent to their initial recognition, equity investments
are stated at their fair value. Gains and losses arising from subsequent changes in the fair value are
recognised in the Income Statement or in other comprehensive income on a case-by-case basis.
Accumulated gains and losses included in other comprehensive income are not recycled to the Income
Statement. Dividends from other investments are recognised in the Income Statement.
Investment in associates
Investments in associates are accounted for using the equity method. An associate is an entity over
which the Group has significant influence, being the power to participate in the investee’s financial and
operating policy decisions without control or joint control.
Interests in associates are stated in the consolidated Balance Sheet at cost, adjusted for the movement
in the Group’s share of their net assets and liabilities. The Group’s share of the profit or loss after tax
of associates is included in the Group’s consolidated profit before taxation. Unrealised intragroup profits
or losses from transactions are offset against the carrying amount of the investment on a pro-rata basis
during consolidation, if material.
When the Group’s share of losses exceeds its interest in an associate, the Group does not recognise
further losses, unless it has incurred obligations or made payments on behalf of the associate.
The Financial Statements of the companies accounted for using the equity method are prepared
in accordance with uniform accounting and measurement methods throughout the Group.
Employee share schemes
Incentives in the form of shares are provided to employees under share option and conditional award
schemes vested in accordance with non-market conditions.
The fair value determined at the grant date of the equity-settled share-based payments is expensed
on a straight-line basis over the vesting period, based on the Group’s estimate of equity instruments
that will eventually vest. At each Balance Sheet date, the Group revises its estimate of the number
of equity instruments expected to vest. The impact of the revision of the original estimates, if any,
is recognised in the Income Statement such that the cumulative expense reflects the revised estimate,
with a corresponding adjustment to equity reserves.
Additional employer costs, including social security taxes, in respect of options and awards are charged
to the Income Statement over the same period with a corresponding liability recognised.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 187
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
1 Accounting Policies continued
Repurchase and reissuance of ordinary shares
When shares recognised as equity are repurchased, the amount of the consideration paid, including
directly attributable costs, is recognised as a charge to equity. Repurchased shares are classified as
Treasury shares and are presented in retained earnings. When Treasury shares are sold or reissued
subsequently, the amount received is recognised as an increase in equity and any resulting surplus
is presented within share premium or deficit presented within retained earnings.
Pension commitments
Group companies operate defined contribution and (funded and unfunded) defined benefit pension plans.
The cost of providing pensions to employees who are members of defined contribution plans is charged
to the Income Statement as contributions are made. The Group has no further payment obligations once
the contributions have been paid.
The deficit or surplus recognised in the Balance Sheet in respect of defined benefit pension plans is
the present value of the defined benefit obligation at the Balance Sheet date, less the fair value of the
plan assets. The defined benefit obligation is calculated annually by independent actuaries using the
projected unit credit method. The present value of the defined benefit obligation is determined by
discounting the estimated future cash flows by the yield on high-quality corporate bonds denominated
in the currency in which the benefits will be paid, and that have a maturity approximating to the terms of
the pension obligations. The costs of providing these defined benefit plans are accrued over the period
of employment. Actuarial gains and losses are recognised immediately in other comprehensive income.
Past service costs are recognised immediately in the Income Statement.
The net interest amount is calculated by applying the discounted rate used to measure the defined
benefit obligation at the beginning of the period to the net defined benefit liability/asset.
The net pension plan interest is presented as other finance income/other finance expense.
Post-retirement benefits other than pensions
Some Group companies provide post-retirement medical care to their retirees. The costs of providing
these benefits are accrued over the period of employment and the liability recognised in the Balance
Sheet is calculated using the projected unit credit method and is discounted to its present value and
the fair value of any related asset is deducted.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past
events; it is more likely than not that there will be an outflow of resources to settle that obligation; and the
amount can be reliably estimated. Provisions are valued at the present value of the Directors’ best estimate
of the expenditure required to settle the obligation at the Balance Sheet date. Where it is possible that
an outflow of resources may be required to settle the obligation or it is not possible to make a reliable
estimate of the estimated financial impact, appropriate disclosure is made but no provision recognised.
Share capital transactions
When the Group purchases equity share capital, the amount of the consideration paid, including directly
attributable costs, is recognised as a change in equity. Purchased shares are either held in Treasury,
in order to satisfy employee options, or cancelled and, in order to maintain capital, an equivalent amount
to the nominal value of the shares cancelled would be transferred from retained earnings.
Dividend distribution
Dividends to owners of the parent company are recognised as a liability in the period in which the
dividends are approved by the company’s shareholders. Interim dividends are recorded in the period
in which they are approved and paid.
Dividend payments are recorded at fair value. Where non-cash dividend payments are made, gains arising
as a result of fair value remeasurements are recognised in the Income Statement in the same period.
Accounting estimates and judgements
In preparing these consolidated Financial Statements, management has made judgements and estimates
that affect the application of the Group’s accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual amounts and results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only
that period, or in the period of the revision and future periods if the revision affects both current
and future periods.
Critical judgements in applying the Group’s accounting policies
Over the course of the year, management has made a number of critical judgements in the application
of the Group’s accounting policies. These include the following:
– Management has identified matters (including the Korea Humidifier Sanitiser and Necrotizing
Enterocolitis issues) that may incur liabilities in the future but does not recognise these liabilities
when it is too early to determine the likely outcome or make a reliable estimate (Note 18, Note 20).
– The continuing enduring nature of the Group’s brands supports the indefinite life assumption for
certain of these assets (Note 9).
– Assumptions are made as to the recoverability of tax assets especially as to whether there will be
sufficient future taxable profits in the same jurisdictions to fully utilise losses in future years (Note 12).
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 188
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
1 Accounting Policies continued
Key sources of estimation uncertainty
Each year, management is required to make a number of assumptions regarding the future. The related
year end accounting estimates will, by definition, seldom equal the final actual results. The estimates
and assumptions that have a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are addressed below.
Goodwill and indefinite life intangible assets:
Under IFRS, goodwill and other indefinite life intangible assets must be tested for impairment on at least
an annual basis. As disclosed further in Note 9, this testing generally requires management to make
multiple estimates, for example around individual market pressures and forces, future price and volume
growth, future margins, terminal growth rates and discount rates.
In 2022, the Group recognised impairment losses of £167 million (2021: £nil), of which £152 million related
to the Biofreeze CGU. The recoverability of the Group’s goodwill and indefinite-lived intangible assets in
relation to Biofreeze is sensitive to reasonably possible changes in key assumptions. Further information
on key estimates and assumptions, including details on the sensitivities of the value-in-use estimates to
reasonable changes in key assumptions, is included in Note 9.
Tax:
The actual tax paid on profits is determined based on tax laws and regulations that differ across the
numerous jurisdictions in which the Group operates. Assumptions are made in applying these laws to
the taxable profits in any given period in order to calculate the tax charge for that period. Where the
eventual tax paid or reclaimed is different to the amounts originally estimated, the difference is charged
or credited to the Income Statement in the period in which it is determined (Note 7).
The Group operates in an international tax environment and is subject to tax examinations and
uncertainties in a number of jurisdictions. The issues involved can be complex and disputes may take a
number of years to resolve. Each uncertainty is separately assessed and management applies judgement
in the recognition and measurement of the uncertainty based on the relevant circumstances. The
exposure recognised is calculated based on the expected value method or the most likely outcome
method, depending on whether there are a wide range of possible outcomes or if resolution of the
uncertainty is concentrated on one outcome. In particular, the range of possible outcomes relating to
transfer pricing exposures can be wide and, in these scenarios, the expected value method is employed.
The accounting estimates and judgements considered include:
– status of the unresolved matter;
– clarity of relevant legislation and related guidance;
– pre-clearances issued by taxing authorities;
– advice from in-house specialists and opinions of professional firms;
– resolution process and range of possible outcomes;
– past experience and precedents set by the particular taxing authority;
– decisions and agreements reached in other jurisdictions on comparable issues;
– unutilised tax losses, tax credits and availability of mutual agreement procedures between tax
authorities; and
– statute of limitations.
Management is of the opinion that the carrying values of the uncertain tax positions made in respect of
these matters represent its best estimate once all facts and circumstances have been taken into account.
Nevertheless, the final amounts paid to discharge the liabilities arising (either through negotiated
settlement or litigation) may be different from the position recognised. The net liabilities recognised in
respect of uncertain tax positions as at 31 December 2022 are £722 million (2021: £770 million) (Note 22).
Trade spend:
The Group provides for amounts payable to our trade customers for promotional activity and
government reimbursement arrangements. Where an activity spans the year end, an accrual is reflected
in the consolidated Financial Statements based on our estimation of customer and consumer uptake
during the relevant period and the extent to which temporary funded activity has occurred. As there is a
timing difference between that initial estimation and final settlement of trade spend with our customers,
differences can result on final settlement. As at 31 December 2022, the Group recognised total accruals
of £1,137 million (2021: £1,137 million) in respect of amounts payable to trade customers and government
bodies for trade spend. The Group’s trade spend arrangements vary considerably by market and
category, and the Group’s trade spend accruals are made up of many individually small accruals.
Therefore, an aggregated disclosure of sensitivity analysis on the key inputs to trade spend accrual
estimates would not be practicable nor meaningful. Nevertheless, a 11% (2021: 12%) difference between
those initial estimates and final settlement would cause a material charge or credit to the Income
Statement in the next financial year. During 2022, adjustments to trade spend accruals as at 31 December
2021, due to changes in accounting estimates, were not material.
Legal provisions:
The Group recognises legal provisions when the Group has a present legal or constructive obligation as
a result of past events; it is more likely than not that there will be an outflow of resources to settle that
obligation; and the amount can be reliably estimated. The level of provisioning in relation to civil and/or
criminal investigations is an area where management and legal judgement are important, with individual
provisions being based on best estimates of the possible loss, considering all available information,
external advice and historical experience. As at 31 December 2022, the Group recognised legal
provisions of £221 million (2021: £180 million) in relation to a number of historical regulatory and other
matters in various jurisdictions.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 189
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
2 Operating Segments
The Group’s operating segments comprise the Hygiene, Health and Nutrition business units reflecting the
way in which information is presented to and reviewed by the Group’s Chief Operating Decision Maker
(CODM) for the purposes of making strategic decisions and assessing Group-wide performance.
The CODM is the Group Executive Committee. This Committee is responsible for the implementation of
strategy (approved by the Board), the management of risk (delegated by the Board) and the review of
Group operational performance and ongoing business integration.
The Group Executive Committee assesses the performance of these operating segments based on Net
Revenue from external customers and segment profit being adjusted operating profit. Intercompany
transactions between operating segments are eliminated. Finance income and expense are not
allocated to segments, as each is managed on a centralised basis.
The segment information for the operating segments for the year ended 31 December 2022 and
31 December 2021 is as follows:
Year ended 31 December 2022
Net revenue
Depreciation and amortisation
Operating profit
Net finance expense
Impairment of equity-accounted
investments
Share of loss of equity-accounted
investments, net of tax
Profit before income tax
Income tax charge
Net income from continuing operations
Hygiene
£m
5,960
(135)
1,214
Health
£m
5,992
(177)
1,648
Nutrition
£m
2,501
(90)
577
Adjusting
items
£m
–
(35)
(190)
Total
£m
14,453
(437)
3,249
(161)
(19)
(2)
3,067
(711)
2,356
Year ended 31 December 2021 (restated)1
Net revenue
Depreciation and amortisation
Operating profit/(loss)
Net finance income
Share of loss of equity-accounted
investments, net of tax
Loss before income tax
Income tax credit
Net loss from continuing operations
Hygiene
£m
5,911
(111)
1,401
Health1
£m
5,053
(155)
1,242
Nutrition1,2
£m
2,270
(96)
Adjusting
items
£m
–
(61)
234
(3,681)
Total
£m
13,234
(423)
(804)
547
(3)
(260)
208
(52)
1. Segmental information for the year ended 31 December 2021 has been restated to reflect the Group’s current operating
segments, the composition of which changed with effect from 1 January 2022 when the Vitamins, Minerals and Supplements
(VMS) business was moved from Nutrition to Health
2. Following the start of the strategic review of IFCN China, the CODM also reviewed financial information for net revenue and
adjusted operating profit excluding IFCN China (which was disposed in September 2021, see Note 29). In the year ended
31 December 2021, Nutrition net revenue based on current operating segments and excluding IFCN China was £1,887 million
and Nutrition adjusted operating profit excluding IFCN China was £301 million
Financial information for the Hygiene, Health and Nutrition operating segments is presented on
an adjusted basis which excludes certain cash and non-cash items. These items have a pattern
of recognition that is largely uncorrelated with the trading performance of the business. Financial
information on an adjusted basis is consistent with how management reviews the business for the
purpose of making operating decisions. Further detail on adjusting items is included on pages 75 to 79.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 190
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
2 Operating Segments continued
The company is domiciled in the UK. The split of Net Revenue from external customers and Non-current
assets (other than equity instruments, deferred tax assets and retirement benefit surplus assets)
between the UK, the US (being the biggest country outside the country of domicile) and that from
all other countries is:
Impairment of goodwill principally comprises a charge of £152 million from the impairment of goodwill
related to the acquisition of Biofreeze (see Note 9). Biofreeze is reported in the Health operating segment.
4 Auditor Remuneration
During the year, the Group (including its overseas subsidiaries) obtained the following services from the
company’s Auditor and its associates:
2022
Net Revenue
Goodwill and other intangible assets
Property, plant and equipment
Other non-current receivables
2021
Net Revenue
Goodwill and other intangible assets
Property, plant and equipment
Other non-current receivables
UK
£m
778
1,875
314
22
UK
£m
739
1,843
316
29
US
£m
4,603
10,905
828
54
US
£m
3,873
9,905
669
63
All other
countries
£m
9,072
7,423
1,331
81
All other
countries
£m
8,622
7,120
1,193
57
Total
£m
14,453
20,203
2,473
157
Total
£m
13,234
18,868
2,178
149
Major customers are typically large grocery chains, multiple retailers and e-commerce platforms. The
Group’s customer base is diverse with no individual customer accounting for more than 10% of net
revenue (2021: one customer accounting for £1,337 million of net revenue across all segments).
3 Analysis of Other Net Operating Expenses
Distribution costs
Research and development costs
Other administrative expenses
Impairment of goodwill
Other net operating income
Other net operating expenses
2022
£m
(3,438)
(325)
(1,205)
(167)
9
2021
£m
(3,460)
(313)
(1,190)
–
1
(5,126)
(4,962)
Audit services pursuant to legislation
Audit of the Group’s Annual Report and Financial Statements
Audit of the Financial Statements of the Group’s subsidiaries
Audit-related assurance services
Total audit and audit-related services
Fees payable to the company’s Auditor and its associates for other services
Other assurance services
Total non-audit services
5 Employee Costs
Total employee costs, including those for Directors, were:
Wages and salaries
Social security costs
Other pension costs
Share-based payments
Total staff costs
Note
23
25
2022
£m
8.4
11.1
0.8
20.3
2.7
2.7
23.0
2022
£m
1,988
281
61
78
2,408
2021
£m
6.4
9.5
0.5
16.4
0.1
0.1
16.5
2021
£m
1,935
251
60
30
2,276
Executive and Non-Executive Directors’ aggregate emoluments are disclosed on pages 140 and 152 of
the Directors’ Remuneration Report, respectively. Compensation awarded to key management (defined
as the members of the Group Executive Committee and the Non-Executive Directors) was:
A net foreign exchange loss of £13 million (2021: loss of £2 million) has been recognised through the
Income Statement.
Other administrative expenses include a gain of £59 million (2021: £nil) on sale and leaseback of a factory
site in the Philippines.
Short-term employee benefits
Post-employment and other long-term benefits
Share-based payments
2022
£m
26
–
15
41
2021
£m
25
–
10
35
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 191
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
5 Employee Costs continued
Staff numbers
The monthly average number of people employed by the Group, including Directors, during the year was:
7 Income Tax Expense
North America
Europe/ANZ
Rest of world
6 Net Finance (Expense)/Income
Foreign exchange net gain on liquidation of subsidiaries
Gains on liquidation
Losses on liquidation
Total foreign exchange net gain on liquidation of subsidiaries
Other finance income
Interest income on cash and cash equivalents
Pension net finance income
Movement on put option liability
Finance income on tax balances
Other finance income
Total other finance income
Other finance expense
Interest payable on borrowings
Foreign exchange losses on intercompany financing, net of hedging
Other finance expense
Total other finance expense
Other net finance expense
Net finance (expense)/income
2022
‘000
5.1
14.3
20.6
40.0
2022
£m
69
–
69
29
5
–
26
1
61
(233)
(24)
(34)
(291)
(230)
(161)
2021
‘000
5.0
14.8
22.0
41.8
2021
£m
1,048
(282)
766
29
1
14
1
–
45
(244)
–
(20)
(264)
(219)
547
As a result of the simplification of the Group’s legal entity structure, a number of entities have been
liquidated. Upon liquidation, the cumulative foreign exchange reserves were recycled to the Income
Statement, resulting in a net foreign exchange gain of £69 million (2021: gain of £766 million), principally
from the liquidation of intermediate financing and holding companies.
Current tax
Adjustment in respect of prior periods
Total current tax
Origination and reversal of temporary differences
Impact of changes in tax rates
Total deferred tax
Cumulative foreign exchange on deferred tax balances reclassified to the
Income Statement
Income tax charge/(credit)
2022
£m
766
(23)
743
(20)
(5)
(25)
(7)
711
2021
£m
711
53
764
(1,089)
185
(904)
(68)
(208)
Current tax includes tax incurred by UK entities of £177 million (2021: £133 million). This is comprised
of UK corporation tax of £126 million (2021: £55 million) and overseas tax suffered of £51 million
(2021: £78 million). UK current tax is calculated at 19% (2021: 19%) of the estimated assessable profit
for the year, net of relief for overseas taxes where available. Taxation in other jurisdictions is calculated
at the rates prevailing in the relevant jurisdictions.
Cash tax paid in the year was £831 million (2021: £915 million). The variance from the current year tax
charge of £766 million is attributable to movements on uncertain tax positions (shown in Note 22)
and timing differences arising between the accrual and payment of current income tax liabilities.
Origination and reversal of temporary differences includes adjustments in respect of prior periods
of £19 million benefit (2021: £86 million benefit).
Cumulative foreign exchange on deferred tax balances reclassified to the Income Statement relates
to deferred tax on assets disposed in the year (see Note 29).
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 192
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
7 Income Tax Expense continued
The total tax charge on the Group’s profit/(loss) for the year can be reconciled to the notional tax charge
calculated at the UK tax rate as follows:
The net impact of divestments and assets reclassified to held for sale in 2022 represents the net tax
effect of the sale of Dermicool and E45 (2021: sale of IFCN China, Scholl, EnfaBebé and reclassification
of E45 to held for sale). The bases on which tax charges are calculated differ from the accounting bases.
Continuing operations
Profit/(loss) before income tax
Tax at the notional UK corporation tax rate of 19% (2021: 19%)
Effect of:
Overseas tax rates
Movement in provision related to uncertain tax positions
Net impact of divestments and assets reclassified to held for sale
Unrecognised tax losses, other unrecognised tax assets and deferred tax
liability on unremitted earnings
Cumulative foreign exchange on deferred tax balances reclassified to the
Income Statement
Withholding and local taxes
Reassessment of prior year estimates
Impact of changes in tax rates
Non-taxable foreign exchange gain arising from legal entity simplification (Note 6)
Other permanent differences
Income tax charge/(credit)
2022
£m
3,067
583
114
(58)
(25)
71
(7)
47
(42)
(5)
(13)
46
711
2021
£m
(260)
(49)
112
(43)
(264)
68
(68)
43
(33)
185
(146)
(13)
(208)
Our effective tax rate in any given financial year reflects a variety of factors that may not be present
in succeeding financial years, and may be affected by variations in profit mix and changes in tax laws,
regulations and related interpretations.
In December 2021 the OECD published the Pillar Two GloBE rules, which seek to ensure multinationals pay
a minimum tax of 15% in each jurisdiction. The Group is within the scope of these rules and has operations
in countries where the tax rate is currently below 15%. The impact of Pillar Two, now expected to be
effective from 1 January 2024, is not expected to be material to the Group’s Financial Statements.
OECD member governments are in the process of introducing the Pillar 2 rules; however, the Group does
not consider that this legislation has been substantively enacted by any participating country as at the
end of the reporting period. Accordingly, the tax accounting impact will be considered when the Pillar
Two GloBE rules are translated into domestic legislation, expected during 2023.
The effect of overseas tax rates represents the impact of profits arising outside the UK that are taxed at
different rates to the UK rate.
Withholding and local taxes suffered in the year are adjusted for previously accrued deferred tax
liabilities on unremitted earnings.
The reassessment of prior year estimates includes settlements reached following conclusion of tax
authority review and differences between final tax return submissions and liabilities accrued in these
Financial Statements.
The impact of changes in tax rates in 2021 primarily resulted from the revaluation of deferred tax assets
following substantive enactment of the increase in the UK corporation rate from 19% to 25% (effective
1 April 2023) on 24 May 2021.
UK deferred tax assets and liabilities have been calculated based on the substantively enacted rate of
25% after factoring in the expected timing of reversal of the related temporary differences (2021: 25%).
This tax rate change will increase the company’s future tax charge on profits arising in the UK.
We conduct business operations in a number of countries, and are therefore subject to tax and
intercompany pricing laws in multiple jurisdictions. We have in the past faced, and may in the future face,
audits and challenges brought by tax authorities, and we are involved in ongoing tax investigations in a
number of countries. If material challenges were to be successful, our effective tax rate may increase,
we may be required to modify structures at significant costs to us, we may also be subject to interest
and penalty charges and we may incur costs in defending litigation or reaching a settlement. Any of the
foregoing could materially and adversely affect our business, financial condition and results of
operations.
EC State Aid
With regard to the European Commission’s (EC’s) challenge to certain aspects of the Gibraltar tax system
a judgement was received in April 2022. This judgment was partially favourable to the Group and was not
appealed and the judgment therefore stands. The amounts involved were not material. On 31 October
2022, in a new development, the EU Commission issued a press release announcing its intention to
extend the scope of its ongoing in-depth inquiry into Gibraltar’s corporate tax regime which focuses
on MJN Gibraltar. This matter will remain under review as the investigation progresses.
On 8 June 2022, the General Court delivered its judgment in the state aid case concerning the UK
CFC Group Financing Exemption. This judgement ruled in favour of the EC on all arguments but has
subsequently been appealed. Although not a direct applicant in the case, the Group remains an
interested party. We believe that the matter is finely balanced and have therefore now appropriately
provided for the matter. The amounts are not material to the Group.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 193
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
7 Income Tax Expense continued
The tax credited/(charged) relating to components of other comprehensive income is as follows:
8 Earnings Per Share
2022
Before tax
£m
Tax (charge)/
credit
£m
After tax
£m
Before tax
£m
2021
Tax (charge)/
credit
£m
Basic earnings/(loss) per share
From continuing operations
From discontinued operations
After tax
£m
1,065
–
1,065
(374)
–
(374)
Total basic earnings/(loss) per share
Diluted earnings/(loss) per share
From continuing operations
From discontinued operations
Total diluted earnings/(loss) per share
Net exchange gains/(losses)
on foreign currency
translation
Reclassification of foreign
currency translation
reserves on disposals or
liquidation of foreign
operations
(Losses)/gains on cash flow
and net investment hedges
Remeasurement of defined
benefit pension plans
(Note 23)
Revaluation of equity
instruments – FVOCI
Other comprehensive
income/(expense)
Current tax
Deferred tax (Note 12)
(56)
(112)
29
(109)
817
–
(1)
(5)
22
16
13
3
16
(56)
(550)
(113)
118
–
(4)
(550)
114
24
(87)
179
(1)
(46)
133
–
(1)
833
(628)
(678)
(50)
–
(50)
(50)
Basic
Basic earnings per share is calculated by dividing the net income/(loss) attributable to owners of the
parent company from continuing operations (2022: £2,337 million income, 2021: £63 million loss) and
discontinued operations (2022: £7 million loss; 2021: £31 million income) by the weighted average number
of ordinary shares in issue during the year (2022: 715,284,629; 2021: 713,758,909).
Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding
to assume conversion of all potentially dilutive ordinary shares. The company has the following
categories of potentially dilutive ordinary shares: Executive Share Awards (including Executive Share
Options and Executive Conditional Awards) and Employee Sharesave Scheme Options. The options
only dilute earnings when they result in the issue of shares at a value below the market price of the share
and when all performance criteria (if applicable) have been met. As at 31 December 2022, there were
14,219,133 (2021: 10,683,109) Executive Share Awards excluded from the dilution because the exercise
price for the options was greater than the average share price for the year or the performance criteria
have not been met.
The tax (charged)/credited directly to the Statement of Changes in Equity during the year is as follows:
Current tax
Deferred tax (Note 12)
2022
£m
(1)
–
(1)
2021
£m
4
(4)
–
On a basic basis
Dilution for Executive Share Awards1
Dilution for Employee Sharesave Scheme Options outstanding1
On a diluted basis
1. As there was a loss in 2021, the effect of potentially dilutive shares was anti-dilutive
2022 average
number of shares
2021 average
number of shares
715,284,629
1,858,996
350,982
713,758,909
–
–
717,494,607
713,758,909
2022
pence
2021
pence
326.7
(1.0)
325.7
325.7
(1.0)
324.7
(8.8)
4.3
(4.5)
(8.8)
4.3
(4.5)
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 194
Reckitt Annual Report and Accounts 2022
N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
9 Goodwill and Other Intangible Assets
Brands
£m
Goodwill
£m
Software
£m
Other
£m
Total
£m
The net book values of significant brand intangible assets acquired through business combinations are
as follows:
Acquisition
Mead Johnson Nutrition Company
SSL International
Boots Healthcare International
Adams Respiratory Therapeutics
Schiff Nutrition International
L&F Household
Lanai Holdings
American Home Products Corporation
Bristol-Myers Squibb OTC
K-Y
Acquisition
year
2017
2010
2006
2008
2012
1994
2021
1990
2013
2014
2022
£m
4,740
1,918
1,440
1,275
1,088
877
680
459
338
280
2021
£m
4,352
1,831
1,387
1,138
971
786
609
418
287
280
The majority of brands, all of goodwill and certain other intangible assets are considered to have
indefinite lives (see Note 1) and therefore are subject to an annual impairment review. The MJN global
brand and acquired customer relationships are deemed to have a finite life and are amortised
accordingly. Amortisation is recognised in net operating expenses or cost of goods sold depending
on the use of the asset.
The net book values of indefinite and finite life intangible assets are as follows:
Cost
At 1 January 2021
Additions
Arising on business combinations
Disposals
Reclassifications to held for sale
Exchange adjustments
17,673
5
596
(4,494)
(112)
(220)
11,408
–
370
(1,543)
(28)
5
At 31 December 2021
13,448
10,212
Additions
Arising on business combinations
Disposals
Reclassifications
Exchange adjustments
–
–
(59)
–
1,136
–
(2)
(6)
–
832
490
72
–
(2)
–
(13)
547
77
–
(3)
16
16
185
–
76
–
–
5
29,756
77
1,042
(6,039)
(140)
(223)
266
24,473
4
7
–
(16)
17
81
5
(68)
–
2,001
At 31 December 2022
14,525
11,036
653
278
26,492
Accumulated amortisation and impairment
At 1 January 2021
Amortisation and impairment
Disposals
Exchange adjustments
At 31 December 2021
Amortisation and impairment
Disposals
Reclassifications
Exchange adjustments
At 31 December 2022
Net book value
At 31 December 2021
At 31 December 2022
449
39
(143)
(3)
342
21
–
–
16
6,039
–
(1,176)
21
4,884
167
–
–
376
379
5,427
13,106
14,146
5,328
5,609
190
66
(2)
(2)
252
68
(1)
8
8
335
295
318
99
27
–
1
6,777
132
(1,321)
17
127
5,605
Net book value
19
–
(8)
10
275
(1)
–
410
Indefinite life assets
Brands
Goodwill
Other
148
6,289
Total indefinite life assets
139
130
18,868
20,203
Finite life assets
Brands
Software
Other
Total finite life assets
The amount stated for brands represents the fair value of brands acquired since 1985 at the date of
acquisition. Other includes product registration, distribution rights, capitalised product development
costs and customer contracts.
Software includes intangible assets under construction of £40 million (2021: £28 million).
2022
£m
2021
£m
14,034
5,609
65
19,708
112
318
65
495
12,983
5,328
39
18,350
123
295
100
518
Total net book value of intangible assets
20,203
18,868
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 195
Reckitt Annual Report and Accounts 2022
N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
9 Goodwill and Other Intangible Assets continued
Cash Generating Units
Goodwill and other intangible assets with indefinite lives are allocated to either individual cash
generating units (CGUs), or groups of cash generating units (together GCGUs). The goodwill and
intangible assets with indefinite lives are tested for impairment at the level at which identifiable cash
inflows are largely independent. Generally, this is at a GCGU level, but for certain intangible assets this
is at a CGU level.
After considering all the evidence available, including how brand and production assets generate cash
inflows and how management monitors the business, the Directors have concluded that for the purpose
of impairment testing of goodwill and other intangible assets, the Group’s GCGUs are Health, Hygiene
and IFCN, with the Group’s CGUs being VMS and Biofreeze.
An analysis of the net book value of indefinite life assets and goodwill by GCGU/CGU is shown below:
GCGU/CGU
Health
Hygiene
IFCN
VMS
Biofreeze
Indefinite
life assets
£m
5,779
1,924
4,661
1,089
646
14,099
2022
Goodwill
£m
3,556
45
1,570
277
161
5,609
Indefinite life
assets
£m
Total
£m
9,335
1,969
6,231
1,366
807
5,455
1,760
4,260
971
576
19,708
13,022
2021
Goodwill
£m
3,350
45
1,408
248
277
5,328
Total
£m
8,805
1,805
5,668
1,219
853
18,350
Within the Health GCGU, the cash flows of certain brands are separately identifiable. As a result, the
carrying values of the associated indefinite life assets have been tested for impairment as CGUs. This is in
addition to the impairment testing over the Health GCGU. The CGUs tested separately are shown below.
Indefinite life assets excluding goodwill
Intimate Wellness
Oriental Pharma
2022
£m
2,213
52
2021
£m
2,124
51
Annual Impairment Review
Goodwill and other indefinite life intangible assets must be tested for impairment on at least an annual
basis. An impairment loss is recognised when the recoverable amount of a GCGU or CGU falls materially
below its net book value at the date of testing.
The determination of recoverable amount, being the higher of value-in-use and fair value less costs to
dispose, is inherently judgemental and requires management to make multiple estimates, for example
around individual market pressures and forces, future price and volume growth, future margins, terminal
growth rates and discount rates.
When forecasting the annual cash flows that support the recoverable amount, the Group generally
uses its short-term budgets and medium-term strategic plans, with additional senior management and
Board-level review. Cash flows beyond the five-year period are projected using terminal growth rates.
These rates do not exceed the long-term average growth rate for the products and markets in which
the GCGU or CGU operates.
The cash flows are discounted back to their present value using a pre-tax discount rate considered
appropriate for each GCGU and CGU. These rates have been derived from management’s views on
the relevant weighted average cost of capital, subsequently converted to the pre-tax equivalent
discount rate.
For the Health, Hygiene and IFCN GCGUs, and the Intimate Wellness and VMS CGUs, any reasonably
possible change in the key valuation assumptions would not imply possible impairment. The recoverable
amount for each of these GCGUs and CGUs was determined utilising the value-in-use basis (2021:
value-in-use basis) with key assumptions including a pre-tax discount rate of 9% for Health, Hygiene, IFCN
and Intimate Wellness (2021: 9% for Health, Hygiene and Intimate Wellness, 10% for IFCN) or 10% for VMS
(2021: 10%), and a terminal growth rate of either 2.5% for Health, Intimate Wellness and VMS (2021: 2.5%),
or 2.0% for Hygiene and IFCN (2021: 2%).
Biofreeze
On 12 July 2021, the Group acquired 100% of the equity interests in Lanai Holdings, owner of the Biofreeze
and TheraPearl brands, for cash consideration of $1,060 million (£766 million). Biofreeze is a leader in
over-the-counter topical pain relief, with a strong footprint in the North America retail and clinical
channels and a growing international presence.
2022
During 2022, Biofreeze performed below expectations following a short-term category slowdown, in part
due to the current macroeconomic conditions. The outlook for the category remains positive and the
Group remains confident in the long-term potential for Biofreeze.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 196
Reckitt Annual Report and Accounts 2022
N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
9 Goodwill and Other Intangible Assets continued
This underperformance, together with the current macroeconomic environment, has introduced
additional uncertainty into future Biofreeze cash flows. To reflect this uncertainty, management has
increased the pre-tax discount rate used to determine value-in-use to 12.0%. This resulted in the
book value of the Biofreeze CGU exceeding its recoverable amount at 31 December 2022, therefore
management has recorded a goodwill impairment of £152 million to record Biofreeze at its recoverable
amount of £698 million ($843 million).
The recoverable amount for the Biofreeze CGU at 31 December 2022 has been determined on a value-in-use
basis using a discounted cash flow approach, with future cash flows derived from a detailed five-year plan.
Cash flows beyond the five-year plan have been projected using a terminal growth rate of 2.5%.
Margins
The determination of the recoverable amount for Biofreeze at 31 December 2022 incorporates certain
key assumptions, some of which are subject to considerable uncertainty. These assumptions include
but are not limited to anticipated market share improvement, the commercial success of new
product launches and international market expansion. As no headroom exists between the Biofreeze
recoverable amount and net book value, any changes to these assumptions, or any deterioration in
other macroeconomic or business-level assumptions supporting the Biofreeze recoverable amount
could necessitate the recognition of impairment losses in future periods.
The key assumptions used in the estimation of value-in-use of Biofreeze are outlined below.
Pre-tax discount rate
Terminal growth rate
Net revenue compound annual growth rate (CAGR) for the period 2022-2027
Gross margin CAGR for the period 2022-2027
2022
12.0%
2.5%
11%
14%
The key estimates incorporated within the determination of the Biofreeze recoverable amount are
summarised below:
Key estimates
Commentary
Net Revenue
Discount rate
In the short to medium term, the valuation model assumes a five-year CAGR of
11%, to be delivered through category growth and market share growth driven
by a mix of innovation arising from format expansion of existing products and
international expansion.
In the short to medium term, the valuation model assumes Biofreeze margins
(both gross and operating) to increase from current levels as the temporary
factors which impacted margins in 2022 unwind and Biofreeze benefits from
productivity initiatives on integrating into Reckitt.
Management determined the Biofreeze-specific weighted average cost of
capital (WACC) and the implied pre-tax discount rate with the support of a
third-party expert. For valuation purposes management used the upper end
of the calculated range to reflect uncertainty in certain key assumptions.
Terminal growth rate
Management is satisfied with the reasonableness of the terminal growth
rate when compared against independent market growth projections and
long-term country inflation rates.
The table below shows the sensitivity of the 2022 recoverable amount to reasonably possible changes in
key assumptions. The table assumes no related response by management (for example, to drive further
cost savings) and is hence theoretical in nature.
Expected Net Revenue growth rates (2023 to 2027) adjusted by 100bps
Expected EBIT growth rates (2023 to 2027) adjusted by 100bps
Terminal growth rate (applied from 2028) adjusted by 50bps
Pre-tax discount rate adjusted by 50bps
2022
£m
+40/-35
+25/-25
+25/-25
+40/-35
2021
At 31 December 2021, management determined that the Biofreeze recoverable amount was
consistent with the acquisition price, such that at the end of 2021 there was no headroom between the
recoverable amount and the carrying value of the Biofreeze CGU. Given the proximity to acquisition, the
recoverable amount for Biofreeze was calculated using the income approach on a fair value less costs
of disposal basis utilising a post-tax discount rate of 11% and a 2.5% terminal growth rate. The fair value
measurement of Biofreeze was categorised within level 3 of the fair value hierarchy, based on inputs into
the valuation technique used.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 197
Reckitt Annual Report and Accounts 2022
N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
10 Property, Plant and Equipment
11 Equity Instruments
Land and
buildings
£m
Plant and
equipment
£m
Right of use
assets
£m
Assets under
construction
£m
Cost
At 1 January 2021
Additions
Arising on business combinations
Disposals
Reclassifications (including held for sale)
Exchange adjustments
1,245
20
5
(81)
51
(20)
2,101
61
15
(210)
151
(45)
At 31 December 2021
1,220
2,073
Additions
Disposals
Reclassifications (including held for sale)
Exchange adjustments
26
(19)
91
91
80
(75)
168
122
At 31 December 2022
1,409
2,368
Accumulated depreciation and impairment
At 1 January 2021
Charge for the year
Disposals
Impairment
Reclassifications (including held for sale)
Exchange adjustments
431
58
(33)
38
(2)
(10)
1,301
168
(105)
8
1
(32)
At 31 December 2021
482
1,341
Charge for the year
Disposals
Impairment
Reclassifications (including held for sale)
Exchange adjustments
62
(12)
–
(6)
30
184
(66)
1
(18)
69
At 31 December 2022
556
1,511
Net book value
As at 31 December 2021
As at 31 December 2022
738
853
732
857
409
110
–
(50)
–
(8)
461
137
(58)
(1)
41
580
122
71
(34)
1
(1)
(3)
156
83
(45)
–
(3)
15
206
305
374
332
292
–
(8)
(207)
(1)
408
256
(6)
(293)
29
394
–
–
–
5
–
–
5
–
(4)
2
–
2
5
403
389
Total
£m
4,087
483
20
(349)
(5)
(74)
4,162
499
(158)
(35)
283
4,751
1,854
297
(172)
52
(2)
(45)
1,984
329
(127)
3
(27)
116
2,278
2,178
2,473
At 31 December 2022, the Group’s right of use assets included land and buildings of £350 million (2021: £284
million) and other assets of £24 million (2021: £21 million). The Group recognised depreciation of £70 million
(2021: £58 million) on the land and buildings and depreciation of £13 million (2021: £13 million) on the other assets.
The Group has commitments to purchase property, plant and equipment of £76 million (2021: £80 million).
Equity investments
Investments in associates accounted for using the equity method
Total equity instruments
2022
£m
82
4
86
2021
£m
171
23
194
Equity investments at 31 December 2022 and 2021 is composed of a number of listed and unlisted equity
investments in which the Group has a minority stake. This includes 13% of the outstanding units in
Packable Holdings LLC, which were revalued to £nil during 2022 (31 December 2021: £114 million).
Investments accounted for using the equity method relate predominantly to the Group’s investment
in Your.MD AS (trading as Healthily). The Group’s share of the result of Healthily amounts to a loss of
£2 million (2021: loss of £3 million). The Group has also recognised an impairment charge of £19 million
(2021: £nil) within the Group Income Statement with respect to this investment. There are no gains or
losses recognised within other comprehensive income with respect to this investment.
12 Deferred Tax
Deferred tax
At 1 January 2022
Credited/(charged) to the
Income Statement
Credited/(charged) to
other comprehensive
income
Exchange differences
Accelerated
capital
allowances
£m
Intangible
assets
£m
Short-term
temporary
differences
£m
Retirement
benefit
obligations
£m
Tax losses
£m
Total
£m
(49)
(3,023)
442
2
–
(7)
1
16
–
(252)
8
37
503
27
15
–
4
46
(6)
(2,609)
(9)
25
(5)
6
3
(212)
(14)
(2,793)
At 31 December 2022
(54)
(3,274)
2022
Deferred tax assets
Deferred tax liabilities
Deferred tax
Accelerated
capital
allowances
£m
20
(74)
(54)
Intangible
assets
£m
(36)
(3,238)
(3,274)
Short-term
temporary
differences
£m
Retirement
benefit
obligations
£m
Tax losses
£m
221
282
503
28
18
46
11
(25)
(14)
Total
£m
244
(3,037)
(2,793)
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 198
Reckitt Annual Report and Accounts 2022
N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
12 Deferred Tax continued
Deferred tax
At 1 January 2021
Credited/(charged) to the
Income Statement
(Charged) to other
comprehensive income
(Charged) directly to equity
Arising on business
acquisitions/disposals
Exchange differences
Accelerated
capital
allowances
£m
Intangible
assets
£m
Short-term
temporary
differences
£m
Retirement
benefit
obligations
£m
Tax losses
£m
(55)
(3,766)
427
3
–
–
4
(1)
864
–
–
(151)
30
59
(4)
(4)
(31)
(5)
442
52
(24)
–
–
–
(1)
27
Total
£m
(3,304)
904
(50)
(4)
(178)
23
38
2
(46)
–
–
–
Unrecognised deferred tax assets
Deferred tax assets on certain corporation tax losses and other short-term temporary differences
totalling £3,029 million gross (2021: £2,091 million gross) have not been recognised at 31 December 2022
as the likelihood of future economic benefit is not sufficiently assured. These assets will be recognised
if utilisation of the losses and other temporary differences become probable.
Unrecognised deferred tax liabilities
The aggregate amount of gross temporary differences associated with investments in subsidiaries,
branches and associates and interest in joint ventures, for which deferred tax liabilities have not been
recognised at 31 December 2022 is £7,630 million (2021: £7,900 million).
Deferred tax on short-term temporary differences of £503 million (2021: £442 million) are comprised of
accrued expenses deductible for tax on a cash basis of £418 million (2021: £337 million), other short-term
temporary differences of £143 million (2021: £135 million) and net of deferred tax liabilities on unremitted
earnings of £58 million (2021: £30 million).
At 31 December 2021
(49)
(3,023)
(6)
(2,609)
2021
Deferred tax assets
Deferred tax liabilities
Deferred tax
Accelerated
capital
allowances
£m
(2)
(47)
(49)
Intangible
assets
£m
(37)
(2,986)
(3,023)
Short-term
temporary
differences
£m
Retirement
benefit
obligations
£m
Tax losses
£m
189
253
442
24
3
27
23
(29)
(6)
Total
£m
197
(2,806)
(2,609)
13 Inventories
Raw materials and consumables
Work in progress
Finished goods and goods held for resale
Total inventories
2022
£m
471
88
1,266
1,825
2021
£m
383
70
1,006
1,459
Deferred tax assets and liabilities have been offset where they relate to income taxes levied by the same
taxation authority.
The total cost of inventories recognised as an expense and included in cost of sales amounted to
£5,810 million (2021: £5,292 million). This includes inventory write-offs and losses of £184 million
(2021: £191 million).
The Group inventory provision at 31 December 2022 was £164 million (2021: £151 million).
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 199
Reckitt Annual Report and Accounts 2022
N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
14 Trade and Other Receivables
Amounts falling due within one year
Trade receivables
Less: Provision for impairment of receivables
Trade receivables – net
Other receivables
Prepayments and accrued income
Trade and other receivables
2022
£m
1,766
(42)
1,724
264
94
2,082
2021
£m
1,587
(36)
1,551
291
84
1,926
The carrying amounts of the Group’s trade and other receivables are denominated in the following
currencies:
Currency analysis
US dollar
Euro
Sterling
Brazilian real
Other currencies
2022
£m
678
289
165
132
818
2021
£m
574
302
167
128
755
Trade and other receivables
2,082
1,926
The maximum exposure to credit risk at the year end is the carrying value of each class of receivable
mentioned above.
a. Trade receivables
Trade receivables consist of amounts due from customers. The Group’s customer base is large and diverse
and consequently there is limited concentration of credit risk. Credit risk is assessed at a subsidiary
and Group level and takes into account the financial positions of customers, past experience, future
expectations and other relevant factors. Individual credit limits are established based on those factors.
The following table provides an ageing analysis of trade receivables at year end:
Ageing analysis
Not overdue
Up to 3 months overdue
Over 3 months overdue
Trade receivables
2022
£m
1,543
157
66
1,766
2021
£m
1,318
219
50
1,587
At 31 December 2022, a provision of £42 million (2021: £36 million) was recorded against certain trade
receivables based on a forward-looking assessment of the lifetime expected credit loss as required by
IFRS 9. This assessment considered the ageing profiles of specific trade receivable balances along with
the risk of future customer defaults.
As at 31 December 2022, trade receivables of £181 million (2021: £233 million) were past due but not
impaired. These receivables were not impaired because having considered their nature and historical
collection, recovery of the unprovided amounts is expected in due course.
b. Other receivables
Other receivables includes recoverable indirect tax of £191 million (2021: £212 million). This contains
£1 million (2021: £2 million) of impaired assets all aged over three months from a broad range of countries
within the Group.
c. Other non-current receivables
Other non-current receivables at 31 December 2022 of £157 million (2021: £149 million) includes
non-current recoverable sales tax and long-term prepayments.
d. Financial instruments (Note 15)
At 31 December 2022, £2,071 (2021: £1,926 million) of the current and non-current receivables totalling
£2,239 million (2021: £2,075 million) are financial assets. These mainly related to amounts owed from
customers or government bodies and are typically non-interest bearing. Amounts that are not financial
assets are mostly prepayments and employee benefit assets.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 200
Reckitt Annual Report and Accounts 2022
N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
15 Financial Instruments and Financial Risk Management
Financial instruments by category
Assets as per the Balance Sheet
Current and non-current trade and other receivables
Derivative financial instruments – FX forward exchange contracts
Equity instruments
Cash and cash equivalents
Liabilities as per the Balance Sheet
Borrowings (commercial paper, loans and overdrafts)1
Lease obligations
Bonds
Senior notes
Derivative financial instruments – FX forward exchange contracts
Derivative financial instruments – Interest rate swaps
Derivative financial instruments – Cross currency interest rate swaps
Current and non-current trade and other payables
At 31 December 2022
Amortised
cost
£m
Derivatives
used for
hedging
£m
Fair value
through the
Income
Statement
£m
Equity
instruments
£m
Carrying
value total
£m
Amortised
cost
£m
At 31 December 2021
Derivatives
used for
hedging
£m
Fair value
through the
Income
Statement
£m
Equity
instruments
£m
Carrying
value total
£m
2,071
–
–
1,157
1,252
389
5,874
1,369
–
–
–
5,344
–
34
–
–
–
–
–
–
22
164
84
–
–
25
–
–
–
–
–
–
34
–
–
–
–
–
82
–
–
–
–
–
–
–
–
–
2,071
59
82
1,157
1,252
389
5,874
1,369
56
164
84
5,344
1,926
–
–
1,261
37
328
7,969
1,229
–
–
–
5,193
–
41
–
–
–
–
–
–
16
22
49
–
–
21
–
–
–
–
–
–
36
–
–
–
–
–
171
–
–
–
–
–
–
–
–
–
1,926
62
171
1,261
37
328
7,969
1,229
52
22
49
5,193
Note
14d
17
11
16
17
19
17
17
17
17
17
21
1. The categories in this disclosure are determined by IFRS 9. Lease obligations are outside the scope of IFRS 9, but they remain within the scope of IFRS 7, and therefore have been shown separately. Borrowings largely relate to commercial paper. As at 31 December
2022, the Group had commercial paper in issue amounting to €841 million (nominal value) at rates between 0.92% and 2.74% with maturities ranging from 6 January 2023 to 30 June 2023, and $550 million (nominal value) at rates between 4.55% and 4.95% with
maturities ranging from 3 January 2023 to 23 March 2023
The fair value measurement hierarchy levels have been defined as follows:
– Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
– Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (level 2). If all significant inputs required to fair
value an instrument are observable, the instrument is included in level 2
– Inputs for the asset or liability that are not based on observable market data (i.e. unobservable inputs) (level 3)
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Offsetting financial assets and financial liabilities
The Group enters into derivative transactions under International Swaps and Derivatives Association
(ISDA) master netting agreements. In certain circumstances – for example, when a credit event such
as a default occurs – all outstanding transactions under the agreement are terminated, the termination
value is assessed and only a single net amount is payable in settlement of all transactions.
The ISDA agreements do not meet the criteria for offsetting in the statement of financial position. This is
because the Group does not currently have any legally enforceable right to offset recognised amounts,
because the right to offset is enforceable only on the occurrence of future events such as a default event.
59
–
–
53
59
82
–
14
62
114
–
43
62
171
The following table sets out the carrying amounts of recognised financial instruments that are subject to
the above agreements.
201
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15 Financial Instruments and Financial Risk Management continued
The following table categorises the Group’s financial assets and liabilities held at fair value by the
valuation methodology applied in determining their fair value.
At 31 December 2022
At 31 December 2021
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Assets as per the Balance Sheet
Derivative financial
instruments – FX forward
exchange contracts
Equity instruments
–
29
Liabilities as per the Balance Sheet
Derivative financial
instruments – FX forward
exchange contracts
Derivative financial
instruments – Interest rate
swaps
Derivative financial
instruments – Cross
currency interest rate
swaps
–
–
–
56
164
84
–
–
–
56
164
84
–
–
–
52
22
49
–
–
–
52
22
49
At 31 December 2022
Financial assets
FX forward exchange contracts
Other financial assets
Financial liabilities
FX forward exchange contracts
Other financial liabilities
The fair value of forward foreign exchange contracts was determined using forward exchange rates
derived from market sourced data at the Balance Sheet date, with the resulting value discounted back
to present value (level 2 classification). The fair value of the interest rate swap contracts and the cross
currency interest rate swaps was calculated using discounted future cash flows at floating market rates
(level 2 classification).
The fair value of equity instruments at 31 December 2022 was determined using both quoted share
price information (level 1 classification) and other non-market information (level 3 classification). At
31 December 2021, the fair value of the investment in Packable Holdings LLC (previously Pharmapacks)
was calculated using a publicly available valuation from the latest funding round (level 2 classification).
Except for the bonds and senior notes, the fair values of other financial assets and liabilities at amortised
cost approximate their carrying values. The fair value of the bonds as at 31 December 2022 is a liability
of £5,612 million (2021: £8,238 million) and the fair value of the senior notes as at 31 December 2022 is a
liability of £1,250 million (2021: £1,400 million). The fair value of the bonds and senior notes was derived
using quoted market rates in an active market (level 1 classification).
At 31 December 2021
Financial assets
FX forward exchange contracts
Other financial assets
Financial liabilities
FX forward exchange contracts
Other financial liabilities
Gross amounts
of recognised
financial assets/
liabilities in the
Balance Sheet
£m
Related financial
instruments that
are not offset
£m
Net amount
£m
59
1,157
1,216
(56)
(249)
(305)
(36)
–
(36)
36
–
36
23
1,157
1,180
(20)
(249)
(269)
Gross amounts of
recognised
financial assets/
liabilities in the
Balance Sheet
£m
Related financial
instruments that
are not offset
£m
Net amount
£m
62
1,261
1,323
(52)
(73)
(125)
(32)
–
(32)
32
–
32
30
1,261
1,291
(20)
(73)
(93)
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 202
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15 Financial Instruments and Financial Risk Management continued
Financial risk management
The Group’s multinational operations expose it to a variety of financial risks that include the effects of
changes in foreign currency exchange rates (foreign exchange risk), market prices, interest rates, credit
risks and liquidity. The Group has in place a risk management programme that uses foreign currency
financial instruments, including debt, and other instruments, to limit the impact of these risks on the
financial performance of the Group.
The Group’s financing and financial risk management activities are centralised into Group Treasury (GT)
to achieve benefits of scale and control. GT manages financial exposures of the Group centrally in a
manner consistent with underlying business risks. GT manages only those risks and flows generated
by the underlying commercial operations; speculative transactions are not undertaken.
The Board of Directors reviews and agrees policies, guidelines and authority levels for all areas of
Treasury activity and individually approves significant activities. The GT function is subject to periodic
independent reviews and audits, both internal and external.
1. Market risk
(a) Currency risk
The Group operates internationally and enters into transactions in many currencies and as such is
exposed to foreign exchange risk arising from various currency exposures. Foreign exchange risk
arises from future commercial transactions, recognised assets and liabilities and net investments
in foreign operations.
The Group’s policy is to align interest costs and operating profit of its major currencies in order to provide
some protection against the translation exposure on foreign currency profits after tax. The Group may
undertake borrowings and other hedging methods in the currencies of the countries where most of its
assets are located.
It is the Group’s policy to monitor and, where appropriate, hedge its foreign currency transaction
exposure. These transaction exposures arise mainly from foreign currency receipts and payments for
goods and services and from the remittances of foreign currency dividends and loans. Where the Group
enters into hedges and applies hedge accounting, hedges are documented and tested for effectiveness
on an ongoing basis with any ineffectiveness recorded in the Income Statement.
The local business units enter into forward foreign exchange contracts with GT to manage these
exposures where practical and allowed by local regulations. GT matches the Group exposures, and
hedges the position where possible, using spot and forward foreign currency exchange contracts.
The notional principal amount of the outstanding forward foreign exchange contracts at 31 December
2022 was £5,395 million receivable (2021: £7,036 million) and £5,376 million payable (2021: £7,027 million).
The Group held forward foreign exchange contracts designated as cash flow hedges primarily in Euro,
Sterling, US dollar, Canadian dollar, Australian dollar, Mexican peso and Turkish lira. The notional value of
the payable leg resulting from these financial instruments was as follows:
Cash flow hedge profile
Euro
Sterling
US dollar
Canadian dollar
Australian dollar
Mexican peso
Turkish lira
Other
2022
£m
343
247
218
96
92
74
73
394
2021
£m
327
310
273
113
107
51
42
434
1,537
1,657
These forward foreign exchange contracts are mainly expected to mature over the period January 2023 to
December 2023 (2021: January 2022 to December 2022). Of the total amount, £20 million (2021: £11 million)
is due between January 2024 and January 2026 (2021: January 2023 and January 2024).
Cash flow hedging is applied with the economic relationship and expected effectiveness being assessed
at inception, with any ineffectiveness recognised in the Income Statement. The ineffective portion
recognised in the Income Statement arising from cash flow hedges is immaterial (2021: immaterial).
Gains recognised in other comprehensive income and the hedging reserve on forward exchange
contracts in 2022 of £2 million gain, net of tax (2021: £30 million gain, net of tax) are recognised in the
Income Statement in the periods in which the hedged forecast transaction affects the Income Statement.
At 31 December 2022, the Group had forward contracts used for cash flow hedging with total fair value
of £12 million asset (2021: £15 million asset). These contracts are denominated in a diverse range of
currency pairings, where a fluctuation of 5% in any one of the contract pairings, with all others remaining
constant, would have a maximum effect of £7 million (2021: £6 million) on shareholder equity, until the
point at which the contracts mature and the forecast transaction occurs. The four largest contract
pairings in order of nominal value were Euro/Polish zloty, Euro/Sterling, Euro/Turkish lira and US Dollar/
Mexican peso.
The Group’s strategy is to minimise Income Statement volatility by monitoring foreign currency balances,
external financing, and external hedging arrangements. The Group’s hedging profile is regularly reviewed
to ensure it is appropriate and to mitigate these risks as far as possible.
Where the Group is exposed to currency risk on its borrowings, the Group seeks to minimise the impact
of foreign exchange on the Income Statement through placing debt within a net investment hedge or
using financial instruments.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 203
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15 Financial Instruments and Financial Risk Management continued
As at 31 December 2022, the Group had designated a 2023 US dollar bond totalling $500 million
(2021: $500 million), 2030 Euro bond totalling €850 million (2021: €850 million) and commercial paper
totalling €750 million (2021: €nil) as the hedging instruments in a net investment hedge relationship.
During the year forward currency swap contracts of €750 million (2021: €750 million) were also in a
hedge relationship. As the forward currency swap contracts matured during the year, this relationship
was ended and it was replaced with the commercial paper. Possible sources of ineffectiveness include
any impairments to the Group’s net investments in Euros. The hedges are documented and are assessed
for effectiveness on an ongoing basis.
The net gain or loss under these arrangements is recognised in other comprehensive income. The net
effect on other comprehensive income for the year ended 31 December 2022 was a £115 million loss
(2021: £84 million gain). If Sterling weakens by 5% against the US dollar and Euro, the maximum impact
on shareholders’ equity due to the net investment hedging on US dollar bond and Euro bond/commercial
paper would be £22 million loss and £75 million loss respectively.
In 2020, the Group issued a €850 million bond due in 2026. Concurrent with the issue of the bond, the
Group entered into a €850 million cross currency interest rate swap on similar terms to the 2026 bond
to mitigate foreign exchange currency risk, for which hedge accounting has been applied. Sources of
ineffectiveness on this hedge relationship will come from a difference in credit ratings between the
counterparties and modifications to the terms of either hedged item or instrument. At 31 December 2022
no material ineffectiveness (2021: no material ineffectiveness) has been recognised in the Income
Statement as the effect is not material. The interest rate element of the swap is discussed in interest rate
risk below.
The remaining major monetary financial instruments (liquid assets, receivables, interest and non-interest
bearing liabilities) are directly denominated in the functional currency of the Group or are transferred to
the functional currency of the local entity through the use of derivatives.
The gains and losses from fair value movements on derivatives held at fair value through the Income
Statement, recognised in the Income Statement in 2022, was a £443 million gain (2021: £6 million gain).
These derivatives are used to hedge foreign exchange gains and losses on non-Sterling financing assets
and financing liabilities between the Group’s treasury company and fellow Group subsidiaries.
(b) Cost inflation risk
Due to the nature of its business the Group is exposed to commodity, freight and other inflation risks.
Short-term volatility in pricing of these products is mitigated through medium-term contracts,
inventories of key materials and financial hedging. Over the medium and long term, the Group mitigates
the impact of inflation through: implementing pricing and revenue growth management; identifying
productivity and efficiencies; and improving sales mix.
(c) Interest rate risk
The Group has both interest-bearing and non-interest bearing assets and liabilities. The Group monitors
its interest income and expense rate exposure on a regular basis. The Group sets its desired level of fixed
and floating rate exposure as part of its interest risk management strategy. The mix of fixed and floating
exposure on interest-bearing assets is managed by using a mixture of fixed and floating rate deposits.
The fixed/floating mix on liabilities is managed by using a mixture of fixed and floating rate borrowings as
well as by using derivatives to swap fixed to floating rate.
In 2020 the Group issued two €850 million bonds due in 2026 and 2030. In order to maintain a level of
floating rate debt in line with the Group’s interest management strategy the Group entered into a €850
million cross currency interest rate swap on similar terms to the 2026 bond and an interest rate swap on
the coupon payments due on the 2030 bond. The accounting for the foreign exchange element of the
cross currency swap is described above. The interest rate element swaps the fixed coupon payments
on the bond for floating rate (the cross currency interest rate swap with reference to adjusted reference
rates following GBP LIBOR cessation, and the interest rate swap with reference to EURIBOR). The interest
rate swaps have been placed into a fair value hedge relationship with the related bonds. Sources of
ineffectiveness on this hedge relationship will come from a difference in credit ratings between the
counterparties and modifications to the terms of either the hedged item or the hedging instrument.
At 31 December 2022 no material ineffectiveness (2021: no material ineffectiveness) has been
recognised in the Income Statement.
Various scenarios are simulated taking into consideration refinancing, renewal of existing positions,
alternative financing and hedging. Based on these scenarios, the Group calculates the impact on the
Income Statement of a defined interest rate shift. For each simulation, the same interest rate shift is
used for all currencies, calculated on a full-year and pre-tax basis.
The scenarios are only run for liabilities that represent the major interest-bearing positions. Based on
the simulations performed, the impact on the Income Statement of a 50 basis-point shift in interest
rates would be a maximum increase of £13 million (2021: £10 million) or decrease of £13 million
(2021: £10 million), respectively for the liabilities covered. The simulation is done on a periodic basis
to verify that the maximum loss simulated is within the limit given by management.
(d) Managing interest rate benchmark reform and associated risks
A fundamental reform of major interest rate benchmarks was undertaken globally, including
the replacement of some interbank offered rates (IBORs) with alternative nearly risk-free rates
(referred to as ‘IBOR reform’).
In 2021, the Group amended its financial instruments and credit facilities that referenced impacted IBORs
such that they incorporated new benchmark rates or included clauses that automatically switched
impacted IBORs to the equivalent fall-back rates. No further amendments were required in 2022 to
conform to the new benchmark rates.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 204
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15 Financial Instruments and Financial Risk Management continued
As announced by the Financial Conduct Authority (FCA) in early 2022, the panel bank submissions for US
dollar LIBOR will cease in mid-2023. The alternative reference rate for US dollar LIBOR is the Secured
Overnight Financing Rate (SOFR). At 31 December 2022, the Group has no external US dollar referencing
financial instrument.
At 31 December 2022, the Group had contracts of cross currency interest swap liabilities with a carrying
value of £84 million referenced to the official ISDA fallback rate Secured Overnight Financing Rate (SOFR)
(2021: unreformed contracts of cross currency interest swap liability of £49 million).
The Group’s EURIBOR interest rate swap is unaffected as EURIBOR is not impacted by IBOR reform.
2. Credit risk
The Group has no significant concentrations of credit risk. Credit risk arises from cash and cash
equivalents, derivative financial instruments, deposits with banks and financial institutions, as well as
credit exposures to customers. The assessment of lifetime expected credit losses relating to trade and
other receivables is detailed in Note 14. Financial institution counterparties are subject to approval under
the Group’s counterparty risk policy and such approval is limited to financial institutions with a BBB rating
or above. The Group uses BBB and higher rated counterparties to manage risk and only uses sub-BBB
rated counterparties by exception. The amount of exposure to any individual counterparty is subject to
a limit defined within the counterparty risk policy, which is reassessed annually by the Board of Directors.
Derivative financial instruments are only traded with counterparties approved in accordance with the
approved policy. Derivative risk is measured using a risk weighting method.
The Group has counterparty risk from asset positions held with financial institutions. This is comprised
of short-term investments, cash and cash equivalents and derivatives positions. For risk management
purposes the Group assesses the exposure to major financial institutions by looking at the deposits,
cash and cash equivalents and a percentage of the nominal amount of derivative contracts taking into
account the time to maturity and the nature of the product. The following table summarises the Group’s
assessment of its exposure. The financial institutions listed in the tables are not comparable year on year.
Counterparty
Financial institution A
Financial institution B
Financial institution C
Financial institution D
Financial institution E
Financial institution F
Financial institution G
Financial institution H
Financial institution I
Financial institution J
Counterparty
Financial institution A
Financial institution B
Financial institution C
Financial institution D
Financial institution E
Financial institution F
Financial institution G
Financial institution H
Financial institution I
Financial institution J
2022
Credit rating
Limit
£m
Exposure
£m
A+
A+
A+
A+
A
A
A+
BBB+
AA-
A
250
250
250
250
200
200
250
125
275
200
187
179
162
145
108
100
87
83
63
59
2021
Credit rating
Limit
£m
Exposure
£m
A+
A+
A+
A+
A+
A
A
AAA
A
A+
250
250
250
250
250
200
200
300
200
250
210
160
147
127
115
115
102
83
70
54
3. Liquidity risk
Liquidity risk is the risk that the Group cannot repay financial liabilities as and when they fall due. The
Group’s liquidity risk is concentrated towards bond and senior note principal repayments due between
2023 and 2044.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 205
Reckitt Annual Report and Accounts 2022
N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
15 Financial Instruments and Financial Risk Management continued
At the end of 2022, the Group had long-term debt excluding lease liabilities of £6,852 million
(2021: £6,812 million), of which £5,196 million (2021: £6,445 million) is repayable in more than two years.
In addition, the Group has committed borrowing facilities totalling £4,500 million (2021: £4,500 million),
of which £4,450 million (2021: £4,500 million) expires after more than two years. These facilities are
provided by high-quality international banks, are undrawn at year end and contain a financial covenant
which is not expected to restrict the Group’s future operations. The committed borrowing facilities,
together with central cash and investments, are considered sufficient to meet the Group’s projected
cash requirements.
All borrowing facilities are at floating rates of interest.
The facilities have been arranged to cover general corporate purposes, including support for commercial
paper issuance. All facilities incur commitment fees at market rates.
The Group’s borrowing limit at 31 December 2022 calculated in accordance with the Articles of
Association was £28,329 million (2021: £22,197 million).
The following table analyses the Group’s financial liabilities and derivatives into relevant maturity
groupings based on the remaining period at the Balance Sheet date to the contractual maturity date.
The amounts disclosed in the table are the contractual undiscounted cash flows which have been
calculated using spot rates at the relevant Balance Sheet date, including interest to be paid.
At 31 December 2022
Commercial paper
Bonds
Senior notes
Trade payables
Other payables
At 31 December 2021
Bonds
Senior notes
Trade payables
Other payables
Total
£m
(1,200)
(6,650)
(2,017)
(2,366)
(2,978)
Total
£m
(8,642)
(1,855)
(2,064)
(3,129)
Less than
1 year
£m
Between
1 and 2 years
£m
Between
2 and 5 years
£m
(1,200)
(554)
(59)
(2,366)
(2,904)
–
(1,757)
(59)
–
(74)
–
(3,026)
(747)
–
–
Less than
1 year
£m
Between
1 and 2 years
£m
Between
2 and 5 years
£m
(2,552)
(53)
(2,064)
(3,048)
(496)
(53)
–
(81)
(2,430)
(690)
–
–
Over
5 years
£m
–
(1,313)
(1,152)
–
–
Over
5 years
£m
(3,164)
(1,059)
–
–
The table below analyses the Group’s derivative financial instruments which will be settled on a gross
basis into relevant maturity groupings based on the remaining period between the Balance Sheet date
and the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted
cash flows which have been calculated using spot rates at the relevant Balance Sheet date.
At 31 December 2022
FX forward exchange contracts
Outflow
Inflow
Cross currency interest rate swap
Outflow
Inflow
Interest rate swap
Outflow
Inflow
At 31 December 2021
FX forward exchange contracts
Outflow
Inflow
Cross currency interest rate swap
Outflow
Inflow
Interest rate swap
Outflow
Inflow
Less than
1 year
£m
Between
1 and 2 years
£m
Between
2 and 5 years
£m
Over
5 years
£m
(5,356)
5,376
(25)
3
(21)
6
(7)
7
(25)
3
(21)
6
(13)
12
(785)
758
(63)
17
Less than
1 year
£m
Between
1 and 2 years
£m
Between
2 and 5 years
£m
(7,016)
7,024
(9)
3
(3)
5
(10)
11
(9)
3
(3)
5
(1)
1
(770)
723
(9)
16
–
–
–
–
(53)
17
Over
5 years
£m
–
–
–
–
(10)
21
Cash flow forecasting is performed by the local business units and on an aggregated basis by GT. GT
monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet
operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities.
Funds over and above those required for short-term working capital purposes by the local businesses are
generally remitted to GT. The Group uses the remittances to settle obligations, repay borrowings, or, in
the event of a surplus, invest in short-term instruments issued by institutions with a BBB rating or above.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 206
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
15 Financial Instruments and Financial Risk Management continued
4. Capital management
The Group considers capital to be net debt plus total equity. Net debt is calculated as total financing
liabilities less cash and cash equivalents and short-term deposits. Total equity includes share capital,
reserves and retained earnings as shown in the Group Balance Sheet.
Cash and cash equivalents including overdrafts
Financing liabilities
Net debt
Total equity
Note
17
2022
£m
1,156
(9,140)
7,984
9,483
17,467
2021
£m
1,259
(9,637)
8,378
7,453
15,831
The objectives for managing capital are to safeguard the Group’s ability to continue as a going concern,
in order to provide returns for shareholders and benefits for other stakeholders and to maintain an
efficient capital structure to optimise the cost of capital.
In 2022, the Group provided returns to shareholders in the form of dividends. Refer to Note 28 for
further details.
The Group monitors net debt and at year end the Group had net debt of £7,984 million (2021: £8,378 million).
The Group seeks to pay down net debt using cash generated by the business to maintain an appropriate
level of financial flexibility.
Supply chain finance
The Group participates in a supply chain finance programme (SCF) under which certain suppliers to the
Group are able to access an SCF arrangement that enables them to fund their working capital. The
principal purpose of this programme is to facilitate efficient payment processing and enable the willing
suppliers to sell their receivables due from the Group to a bank before their due date. The Group does
not incur any additional interest towards the bank on the amounts due to the suppliers. As part of this
facility the Group has confirmed to certain financial institutions that it will make payments of £330 million
(2021: £372 million) to these suppliers as they fall due. These amounts are recorded within trade payables
on the Balance Sheet and all cash flows associated with the programme are included within operating
cash flows as they continue to be part of the normal operating cycle of the Group and their principal
nature remains operating, being payments for the purchase of goods and services.
16 Cash and Cash Equivalents
Cash at bank and in hand
Short-term bank deposits
Cash and cash equivalents
2022
£m
662
495
2021
£m
587
674
1,157
1,261
The Group operates in a number of territories where there are either foreign currency exchange
restrictions, or where it is difficult for the Group to extract cash readily and easily in the short-term.
As a result, £276 million (2021: £66 million) of cash included in cash and cash equivalents is restricted
for use by the Group, yet available for use in the relevant subsidiary’s day-to-day operations.
17 Financial Liabilities – Borrowings
Current
Bank loans and overdrafts1
Commercial paper
Bonds
Lease liabilities
Total short-term borrowings
Bonds
Senior notes
Other non-current borrowings
Lease liabilities
Total long-term borrowings
Total borrowings
Derivative financial instruments
Less overdrafts presented in cash and cash equivalents in the
Cash Flow Statement
Note
2022
£m
2021
£m
19
19
40
1,190
413
78
1,721
5,461
1,369
22
311
7,163
8,884
257
(1)
22
–
2,401
62
2,485
5,568
1,229
15
266
7,078
9,563
76
(2)
Total financing liabilities
9,140
9,637
1. Bank loans are denominated in a number of currencies: all are unsecured and bear interest based on market short-term interest rates
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 207
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
17 Financial Liabilities – Borrowings continued
The Group uses derivative financial instruments to hedge certain elements of interest rate and exchange
risk on its financing liabilities. The split between these items and other derivatives on the Balance Sheet
is shown below:
2022 (£m)
Current
Non-current
Current
Non-current
Assets
Liabilities
Derivative financial instruments (financing liabilities)
Derivative financial instruments (non-financing
liabilities)
At 31 December 2022
25
34
59
–
–
–
(34)
(248)
(21)
(55)
(1)
(249)
Assets
Liabilities
2021 (£m)
Current
Non-current1
Current
Non-current
Derivative financial instruments (financing liabilities)
Derivative financial instruments
(non-financing liabilities)
At 31 December 2021
31
30
61
–
1
1
1. Included within Other non-current receivables on the Balance Sheet
Reconciliation of movement in financing liabilities to Cash Flow Statement
At 1 January
Proceeds from borrowings
Repayment of borrowings1
Other financing cash flows
Total financing cash flows
New lease liabilities
Exchange, fair value and other movements
Total non-cash financing items
At 31 December
(36)
(16)
(52)
2022
£m
9,637
2,274
(3,807)
383
(71)
–
(71)
2021
£m
10,598
38
(1,044)
(92)
(1,150)
(1,098)
134
519
653
109
28
137
9,140
9,637
1. In 2021, £1,190 million proceeds from borrowings with maturities greater than three months are presented net within repayment of
borrowings above. In 2022, the equivalent amounts are presented gross between proceeds from and repayment of borrowings
Maturity of borrowings (excluding lease liabilities)
Bank loans and overdrafts repayable:
Within one year or on demand
Other borrowings repayable:
Within one year:
Commercial paper
Bonds
After one year and in less than five years:
Bonds
Senior notes
After five years or longer:
Bonds
Senior notes
Other non-current borrowings
Gross borrowings (unsecured)
18 Provisions for Liabilities and Charges
At 1 January 2021
Charged to the Income Statement
Utilised during the year
Released to the Income Statement
Exchange adjustments
At 31 December 2021
Charged to the Income Statement
Utilised during the year
Released to the Income Statement
Reclassification
Exchange adjustments
At 31 December 2022
2022
£m
2021
£m
40
22
1,190
413
4,381
636
1,080
733
22
8,455
8,495
–
2,401
2,546
572
3,022
657
15
9,213
9,235
Legal
provisions
£m
Other
provisions
£m
Total
provisions
£m
232
39
(69)
(15)
(7)
180
62
(8)
(17)
(3)
7
221
60
10
(4)
(11)
–
55
15
(3)
(12)
5
5
65
292
49
(73)
(26)
(7)
235
77
(11)
(29)
2
12
286
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 208
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18 Provisions for Liabilities and Charges continued
Provisions have been analysed between current and non-current as follows:
Current
Non-current
2022
£m
227
59
286
2021
£m
191
44
235
Provisions are recognised when the Group has a present or constructive obligation as a result of past
events, it is more likely than not that there will be an outflow of resources to settle that obligation, and
the amount can be reliably estimated. As at 31 December 2022, the Group recognised legal provisions of
£221 million (2021: £180 million) in relation to a number of historical regulatory and other matters in various
jurisdictions.
These provisions relate to matters where the Group is currently involved with, or potentially will be
involved in, litigation. The provision represents the Group’s best estimate of the likely settlement. Due
to the uncertain nature of the resolution of the majority of these matters, £184 million (2021: £144 million)
is recorded as a current provision as it is possible the matters could be settled in the next 12 months;
however, it is possible that they may not be. Legal provisions includes £77 million (2021: £75 million)
relating to the Humidifier Sanitiser (HS) issue in Korea (see Note 20).
Other provisions include environmental and other obligations throughout the Group, the majority of
which are expected to be utilised within five years.
19 Lease Liabilities
Maturity analysis – contractual undiscounted cash flows
Within one year
Later than one and less than five years
After five years
Total undiscounted lease liabilities at 31 December
Lease liabilities included in the statement of financial position at 31 December
Current
Non-current
Interest charged on lease liabilities amounted to £16 million (2021: £13 million).
2022
£m
80
253
135
468
389
78
311
2021
£m
64
222
140
426
328
62
266
20 Contingent Liabilities and Assets
Humidifier Sanitiser issue
The Humidifier Sanitiser (HS) issue in South Korea was a tragic event. The Group continues to make both
public and personal apologies to the victims who have suffered lung injury as a result of the Oxy HS
product and the role that the Oxy HS product played in the issue.
As previously reported, over the last several years the South Korean government has designated a
number of diseases as HS injuries, in addition to the HS lung injury for which Reckitt Korea’s compensation
plan was established. These include asthma, toxic hepatitis, child interstitial lung disease (ILD), bronchitis,
upper airway disease, pneumonia, skin disease (accompanied by respiratory injuries) and depression
(accompanied by respiratory injuries). On 29 October 2021, the Ministry of Environment (MOE) published
a report that concluded epidemiological correlation exists between HS use and asthma, ILD and
pneumonia. On 24 October 2022, the MOE published a second edition of the EC report which updated
the epidemiological studies supporting asthma, ILD and pneumonia, while designating two new HS
injuries, bronchiectasis and acute upper respiratory inflammation. Our expert advisors are currently
reviewing the second edition EC report, but their initial assessment remains that it does not clearly
support causation between HS use and the above injuries.
The Korean National Assembly passed a bill on 6 March 2020 to amend the HS law. The amendment
became effective on 25 September 2020. The main changes in the amendment relate to: (i) the
definition of HS injury (removing the requirement for ‘substantial causation’ with HS exposure); (ii) the
legal presumption of causation (shifting the burden of proof for causation to the defendant if the plaintiff
demonstrates ‘epidemiological correlation’ between HS exposure and their injury), and (iii) amendments
to the fund set up by the government and funded by the government and HS companies (the Special
Relief Fund (SRF), now called the Injury Relief Fund (IRF)) to provide expanded support payments to HS
victims (which would cover all elements of court awarded damages except mental distress, aside from
KRW 100 million consolation payments for death cases, and partial lost income). The government can also
impose on HS manufacturers an additional levy for the IRF up to the amount previously collected for the
SRF. In December 2022, the MOE began the process to review the second IRF levy and the levy notice
was issued to Reckitt Korea on 27 February 2023.
The pending civil actions filed by HS claimants against Reckitt Korea has also been impacted by the
amended HS law, for example due to the lowered causation standard of ‘epidemiological correlation’.
Thus, we have seen the number of civil claimants increase, primarily seeking awards for mental distress
and lost income (for portions not already covered by the IRF). Recently, however, the trend has steadily
declined to about two to four new civil actions per month, which we expect to continue.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 209
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20 Contingent Liabilities and Assets continued
The HS mediation committee (HSMC) was established in October 2021 and has been meeting with
claimant groups and HS companies to discuss various issues related to designing a comprehensive
mediation plan to cover all HS victims. In March 2022, the HSMC communicated a mediation proposal to
the HS industry, including Reckitt Korea. Reckitt Korea has rejected the mediation proposal as it did not
provide a comprehensive resolution to the HS issue. In addition, Reckitt Korea could not accept this or
any future mediation proposals from HSMC without financial support from the Group.
The Group currently has a provision of £77 million (2021: £75 million) in relation to the HS issue in South
Korea. In addition, there are further potential costs that are not considered probable and cannot be
reliably estimated at the current time. The impact of the HS law amendments will require further
monitoring and analysis, in particular those which will be subject to court interpretation, such as the new
epidemiological correlation standard, any limitation applied by courts to damage awards, the interest
rate applied by individual courts to damage awards and external factors such as the rate of future IRF
applications/recognitions. Accordingly, it is not possible to make any reliable estimate of liability for
individuals recognised by the government as having HS injuries.
Necrotizing Enterocolitis (NEC)
Product liability actions relating to NEC have been filed against the Group, or against the Group and
Abbott Laboratories, in state and federal courts in the United States. The actions allege injuries relating
to NEC in pre-term infants. Plaintiffs contend that human milk fortifiers (HMF) and preterm formulas
containing bovine-derived ingredients cause NEC, and that preterm infants should receive a diet of
exclusively breast milk. The Company has denied the material allegations of the claims. It contends that
its products provide critical tools to expert neonatologists for the nutritional management of preterm
infants for whom human milk, by itself, is not nutritionally sufficient. The products are used under the
supervision of medical doctors. Any potential costs relating to these actions are not considered probable
and cannot be reliably estimated at the current time.
Other
From time to time, the Group is involved in discussions in relation to ongoing tax matters in a number of
jurisdictions around the world. Where appropriate, the Directors make provisions based on their
assessment of each case (see Note 7).
21 Trade and Other Payables
Trade payables
Other payables
Other tax and social security payable
Interest accrued on tax balances
Accruals
Trade and other payables
2022
£m
2,366
123
172
105
2,781
5,547
2021
£m
2,064
100
155
–
2,948
5,267
Included within accruals is £1,137 million (2021: £1,137 million) in respect of amounts payable to trade
customers and government bodies for trade spend.
Interest accrued on tax balances has been presented as a current liability (2021: non-current) following
the reassessment of uncertain tax positions to reflect that there is not an unconditional right to defer
settlement of these liabilities (see Note 22).
Other non-current liabilities
Interest accrued on tax balances
Indemnity provisions for disposed businesses
US employee-related payables
Other
Other non-current liabilities
2022
£m
–
51
42
23
116
2021
£m
135
45
46
36
262
Financial instruments (Note 15)
At 31 December 2022, £5,344 million (2021: £5,193 million) of the current and non-current payables
totalling £5,663 million (2021: £5,529 million) are financial liabilities. These mainly relate to amounts owed
to suppliers in respect of goods or services and are typically non-interest bearing. Amounts that are not
financial instruments comprise employee-related liabilities, social security liabilities and accrued interest.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 210
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
22 Current and Non-current Tax Assets and Liabilities
Current tax liabilities
Non-current tax liabilities
Total current and non-current tax liabilities
2022
£m
791
54
845
2021
£m
93
826
919
Certain tax positions taken by us are based on industry practice, tax advice and drawing similarities
from our facts and circumstances to those in case law. In particular, international transfer pricing is
an area of taxation that depends heavily on the underlying facts and circumstances and generally
involves a significant degree of judgement. Tax assets and liabilities are offset where there is a legally
enforceable right to do so.
Included within current tax liabilities is an amount of £722 million (2021: £770 million) relating to uncertain
tax positions primarily in respect of transfer pricing. Within this, £194 million (2021: £155 million) relates to
amounts recognised using the most likely outcome method, where the resolution of the uncertainty is
concentrated on one binary outcome. There is no individual tax uncertainty calculated with this method
that is material to the Financial Statements.
Also within uncertain tax positions is an amount of £528 million (2021: £615 million) recognised using the
expected value method. The liabilities calculated using this method are not material in isolation, are
individually assessed and cover multiple jurisdictions and issues. Therefore, it is not meaningful to provide
aggregated sensitivity estimates. The sources of estimation uncertainty underlying this amount are
shown in Note 1.
The recognition of uncertain tax positions is reviewed regularly for changes in circumstances and
estimates are updated as potential resolutions for the tax uncertainties are encountered through specific
audits or wider case law. As a result, given the size, possible range of outcomes and timing of resolution,
there is a significant risk of material adjustment to the aggregate carrying amount of these liabilities
within the next financial year.
The disputes underlying the liability recognised in respect of uncertain tax positions may take several
years to resolve (see Note 1). Notwithstanding this, the presentation of corporation tax liabilities has
been reassessed to reflect that there is not an unconditional right to defer settlement of these liabilities
and the carrying amount of £722 million (2021: £770 million) has been presented as a current liability
(2021: non-current). The associated interest accrued on uncertain tax positions of £105 million (2021: £135
million) has also been presented as a current liability (2021: non-current; see Note 21).
The remaining non-current tax liability in 2022 relates to the US transition tax (introduced as part
of the 2017 Tax Cuts and Jobs Act) on non-US earnings and profits not previously taxed in the US
as of 31 December 2017. The Group has a right to defer this liability until after 31 December 2023.
23 Pension and Post-Retirement Commitments
Plan details
The Group operates a number of defined benefit and defined contribution pension plans around the
world covering many of its employees, which are principally funded. The Group’s most significant pension
plan (UK) is set up under Trust and is a separate entity from the Group. It has two sections, a defined
contribution section which remains open and a defined benefits section, which closed to accrual from
31 December 2017. Members have a normal retirement age of 65. Trustees of the plan are appointed by
the Group, active members and pensioner membership, and are responsible for the governance of the
plan, including paying all administrative costs of the defined benefit section and compliance with
regulations. The defined benefit section of the plan is funded by the payment of contributions as
required, following each Triennial Valuation.
For the principal UK plan, a full independent actuarial valuation is carried out on a triennial basis. The
most recent valuation was carried out as at 5 April 2022 and as the plan was in surplus on its technical
provisions funding basis, no contributions are required to be paid by the Group in 2023 (2022: £nil).
Funding levels are monitored on an annual basis.
The Group continues to monitor the impact of UK High Court rulings clarifying the requirements to
equalise the Guaranteed Minimum Pension element of benefits for men and women within the UK
Pension schemes from Guaranteed Minimum Pension accrued from post 17 May 1990 pensionable service.
Discussions are ongoing with the pension trustees from all defined benefit schemes in the UK, but no
final agreement on the method of calculation has yet been reached.
The Group also operates a number of other post-retirement plans in certain countries. The two major
plans are the US Retiree Health Care Plan and the Mead Johnson & Company, LLC Medical Plan (together,
the US (Medical) plans). In the US Retiree Health Care Plan, salaried participants become eligible for
retiree healthcare benefits after they reach a combined ‘age and years of service rendered’ figure of 70,
although the age must be a minimum of 55. This plan closed to new members in 2009. In the Mead
Johnson & Company, LLC Medical Plan, acquired as part of the acquisition of MJN on 15 June 2017,
participants become eligible for retiree healthcare benefits if they leave employment after the age of 65,
leave after the age of 55 and have completed 10 years of service, or have their employment involuntarily
terminated after the age of 55. A Benefits Committee is appointed by the Group for both of these plans,
responsible for the governance of the US plans, including paying all administrative costs and compliance
with regulations. Both of these plans are unfunded.
For the US (Medical) plans, a full independent actuarial valuation is carried out on an annual basis. The
most recent valuation was carried out on 1 January 2023. For both of these plans, funding levels are
monitored on an annual basis with contributions made equal to the claims made each year. It is expected
that the combined contributions in 2023 will be £7 million (2022: £7 million).
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23 Pension and Post-Retirement Commitments continued
For the purpose of IAS 19, the projected unit valuation method was used for the UK and US plans, as per
the principal UK plan triennial valuation results (at 5 April 2022) and the US (Medical) plan valuations to
31 December 2022. The UK plans have a weighted average duration of the deferred benefit obligation of
13.5 years (2021: 17.0 years). This decrease is predominantly driven by significant rises in bond yields over
the year to 31 December 2022.
Significant actuarial assumptions
The significant actuarial assumptions used in determining the Group’s obligation for the UK and US
(Medical) plans as at 31 December were:
Rate of increase in pensionable salaries
Rate of increase in deferred pensions during
deferment
Rate of increase in pension payments
Discount rate
Inflation assumption – RPI
Annual medical cost inflation
2022
2021
UK %
5.4
3.4
3.25
5.0
3.4
–
US (Medical)
%
–
–
–
5.2
–
5.0-8.0
UK %
5.4
3.4
3.25
1.9
3.4
–
US (Medical)
%
–
–
–
2.7
–
5.0-8.0
Assumptions regarding future mortality experience are set in accordance with published statistics and
experience in each territory. The expected lifetime of a participant aged 60 and the expected lifetime
of a participant who will be aged 60 in 15 years (20 years in the US) are detailed below:
2022
2021
UK years
US years
UK years
US years
While COVID-19 has had an impact on mortality in the year ended 31 December 2022, the long-term
impact on future mortality trends is currently unknown and consequently no adjustment has been made
to mortality assumptions in this regard.
Amounts recognised on the Balance Sheet
The amounts recognised on the Balance Sheet are as follows:
Balance Sheet liability for:
US (Medical)
Other
Liability on Balance Sheet
Balance Sheet assets for:
UK
Other
Asset on Balance Sheet
Net pension asset
2022
£m
(81)
(159)
(240)
241
53
294
54
2021
£m
(107)
(211)
(318)
298
57
355
37
The UK surplus of £241 million (2021: £298 million) relates mainly to the Reckitt Benckiser Pension Fund.
This surplus has been recognised as the Group has concluded it has an unconditional right to a refund of
any surplus once all member benefits have been paid. The Group’s judgement is based on legal advice
that the Trustees would be unable to unconditionally wind up the plan or enhance members’ benefits
without the Group’s consent.
Number of years a current pensioner is expected to live beyond 60:
Male
Female
Number of years a future pensioner is expected to live beyond 60:
Male
Female
27.5
29.0
28.8
30.4
25.2
27.3
26.9
28.9
27.5
28.9
28.7
30.2
25.1
27.2
26.8
28.8
For the principal UK plan, the mortality assumptions were based on the standard SAPS mortality table
3NMA for males (scaled by 98%) and table 3NFA for females (scaled by 117%). Allowance for future
changes is made by adopting the 2021 edition of the CMI series with a long-term improvement trend of
1.5% per annum from 2013 onwards. For the US plan the mortality assumptions were determined using
the Pri-2012 Total Dataset and projected with Mortality Improvement Scale MP-2021.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 212
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
23 Pension and Post-Retirement Commitments continued
The funded and unfunded amounts recognised on the Balance Sheet are determined as follows:
2022
US
(Medical)
£m
UK
£m
Other
£m
Total
£m
2021
US
(Medical)
£m
UK
£m
Other
£m
Total
£m
(941)
1,186
245
–
–
–
(373)
426
(1,314)
1,612
(1,486)
1,788
53
298
302
–
–
–
(481)
496
(1,967)
2,284
15
317
–
(4)
(81)
–
(159)
–
(240)
(4)
–
(4)
(107)
–
(169)
–
(276)
(4)
In 2021 and 2020, the Trustees of three of the UK pension plans entered into annuity buy-in agreements
which cover, in aggregate, £272 million of pension liabilities valued under IAS 19 at 31 December 2022
(£388 million of pension liabilities valued under IAS 19 at 31 December 2021). The agreements involved
the purchase of bulk annuity policies under which the insurer will pay the UK pension funds amounts
equivalent to the benefits payable to members. These purchases were conducted by the trustees to
ensure the pension fund had an asset that would match its obligation to members. The policies are
valued in accordance with IAS 19 by the plans’ actuary such that the fair value on the annuity policies is
deemed to be the present value of the related obligation measured using the assumptions underpinning
the valuation of the defined benefit obligation. The pension liabilities remain with, and the matching
annuity policies are held within, the UK pension funds. As this was an investment decision by the trustees,
the immaterial reduction in the valuation of plan assets (due to the difference between the purchase
price of the annuity policy and the accounting value of the buy-in asset) arising on each buy-in was
recorded within other comprehensive income. The Trustees have not entered any such buy-in
agreements in 2022.
241
(81)
(106)
54
298
(107)
(154)
37
At 31 December 2022 the Group has not committed to any buy-out arrangements in respect of any of the
UK pension schemes.
Present value of funded
obligations
Fair value of plan assets
Surplus/(liability) of funded
plans
Present value of unfunded
obligations
Irrecoverable surplus
Net pension surplus/
(liability)
Group plan assets are comprised as follows:
2022
US
(Medical)
£m
UK
£m
Other
£m
Equities
Government bonds
Corporate bonds
Real estate/property –
unquoted
Insurance contracts
Other assets – unquoted
134
167
265
82
272
266
Fair value of plan assets
1,186
–
–
–
–
–
–
–
2021
US
(Medical)
£m
UK
£m
Total
£m
226
324
400
101
272
289
92
157
135
19
-
23
178
215
356
113
388
538
426
1,612
1,788
–
–
–
–
–
–
–
Other
£m
202
230
25
19
–
20
Total
£m
380
445
381
132
388
558
496
2,284
Included in other assets are £235 million (2021: £466 million) relating to liability driven investment funds.
This is a bespoke pooled investment vehicle with underlying listed bonds, equities and structured notes.
The fair value of the vehicle is provided by the fund manager based on the underlying value of the
securities held within the vehicle. The Trustees purchased these investments in 2021 to lower risk within
the portfolio without reducing potential returns. These investments have a low leverage percentage and
sufficient capital collateral in place. As a result, no collateral calls were made against the investments
during the year to 31 December 2022 despite the significant volatility experienced in gilt markets.
The remaining other assets are cash.
The present value of obligations for the combined UK plans and the US (Medical) plans at last valuation
date is attributable to participants as follows:
Active participants
Participants with deferred benefits
Participants receiving benefits
Present value of obligation
2022
2021
UK
£m
US (Medical)
£m
UK
£m
US (Medical)
£m
(1)
(307)
(633)
(941)
(34)
(1)
(46)
(81)
(1)
(646)
(839)
(45)
(1)
(61)
(1,486)
(107)
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 213
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23 Pension and Post-Retirement Commitments continued
The movement in the Group’s net surplus/(deficit) is as follows:
At 1 January 2021
Current service cost
Administrative costs
Interest expense/(income)
Remeasurements:
Return on plan assets, excluding amounts included in interest income
Losses/(gains) from changes in demographic assumptions
Gains from change in financial assumptions
Experience losses/(gains)
Exchange differences
Contributions – employers
Payments from plans:
Benefit payments
As at 31 December 2021
Current service cost
Administrative costs
Interest expense/(income)
Remeasurements:
Return on plan assets, excluding amounts included in interest income
(Gains) from changes in demographic assumptions
(Gains) from change in financial assumptions
Experience (gains)/losses
Exchange differences
Contributions – employers
Payments from plans:
Benefit payments
As at 31 December 2022
Present value of obligation
Fair value of plan assets
UK
£m
US (Medical)
£m
UK
£m
US (Medical)
£m
Other
£m
1,547
–
2
23
25
–
1
(27)
8
(18)
–
–
(68)
1,486
–
3
27
30
–
(2)
(518)
16
(504)
–
–
(71)
941
125
1
–
3
4
–
(6)
(5)
(3)
(14)
–
–
(8)
107
1
–
4
5
–
(11)
(22)
(3)
(36)
12
–
(7)
81
719
9
–
9
18
–
4
(33)
4
(25)
(5)
–
(57)
650
8
–
12
20
–
–
(151)
3
(148)
54
–
(44)
532
Total
£m
2,391
10
2
35
47
–
(1)
(65)
9
(57)
(5)
–
(133)
(1,754)
–
–
(26)
(26)
(76)
–
–
–
(76)
–
–
68
2,243
(1,788)
9
3
43
55
–
(13)
(691)
16
(688)
66
–
(122)
–
–
(34)
(34)
565
–
–
–
565
–
–
71
1,554
(1,186)
Other
£m
(510)
–
–
(5)
(5)
(30)
–
(1)
–
(31)
4
(11)
57
Total
£m
(2,264)
–
–
(31)
(31)
(106)
–
(1)
–
(107)
4
(19)
133
(496)
(2,284)
–
–
(14)
(14)
96
–
(2)
–
94
(41)
(13)
44
–
–
(48)
(48)
661
–
(2)
–
659
(41)
(20)
122
(426)
(1,612)
–
–
–
–
–
–
–
–
–
–
–
(8)
8
–
–
–
–
–
–
–
–
–
–
–
(7)
7
–
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 214
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
23 Pension and Post-Retirement Commitments continued
Amounts recognised in the Income Statement
The charge for the year ended 31 December is shown below:
Defined contribution plans
Defined benefit plans (net charge excluding interest)
UK
US (Medical)
Other
Total pension costs included in operating profit (Note 5)1
Pension net finance income included in net finance expense (Note 6)
Income Statement charge included in profit before income tax
Remeasurement gains/(losses) for2:
UK
US (Medical)
Other
2022
£m
49
3
1
8
61
(5)
56
(61)
36
54
29
2021
£m
48
2
1
9
60
(1)
59
94
14
56
164
1. The Income Statement charge recognised in operating profit includes current service cost, past service cost and
administrative costs
2. Remeasurement gains excludes £nil (2021: £15 million) recognised in OCI for irrecoverable surplus
Sensitivity of significant actuarial assumptions
The sensitivity of the UK defined benefit obligation to changes in the principal assumptions is shown below:
2022
Discount rate
Discount rate
RPI increase
RPI Increase
Life expectancy
2021
Discount rate
RPI increase
Life expectancy
Change in
assumption
Change in defined
benefit obligation
Increase 0.1%
Increase 1.0%
Increase 0.1%
Increase 1.0%
Members live 1 year longer
Decrease by 1.3%
Decrease by 11.5%
Increase by 0.7%
Increase by 9.2%
Increase by 3.2%
Change in
assumption
Change in defined
benefit obligation
Increase 0.1%
Increase 0.1%
Members live 1 year longer
Decrease by 1.6%
Increase by 0.9%
Increase by 4.0%
The above sensitivity analyses are based on a change in an assumption while holding all other
assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may
be correlated.
Impact of medical cost trend rates
A 1% change in the assumed healthcare cost trend rates would have an immaterial impact on the service
cost, interest cost and post-retirement benefit obligation.
Risk and risk management
Through its defined benefit pension plans and post-employment medical plans, the Group is exposed
to a number of risks, the most significant of which are detailed as follows:
Asset volatility: The plan liabilities are calculated using a discount rate set with reference to corporate
bond yields. If plan assets underperform this yield, this will create a deficit/reduce the surplus. The US
plans hold a significant proportion of equities, which are expected to outperform corporate bonds in the
long term while providing volatility and risk in the short-term. However, the Group believes that due to
the long-term nature of the plan liabilities and the strength of the supporting group, a level of continuing
equity investment is an appropriate element of the Group’s long-term strategy to manage the plans
efficiently.
Changes in bond yields: A increase in government and corporate bond yields will decrease plan
liabilities, although this will be partially offset by an decrease in the value of the plans’ bond holdings.
Following the increase in market bond yields in the year ended 31 December 2022, the UK plans’ liabilities
reduced by £545 million, offset by a reduction in the plans’ bond holdings by £602 million, resulting in a
£57 million net decrease to the plans’ surplus.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 215
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
23 Pension and Post-Retirement Commitments continued
Inflation risk: Some of the Group’s pension obligations are linked to inflation, and higher inflation will lead
to higher liabilities (although, in most cases, caps on the level of inflationary increases are in place to
protect the plan against extreme inflation). In order to manage inflationary risks, the Trustees’ investment
strategy within the UK plan provides a high level of protection against higher expected long-term
inflation through investments in index-linked gilts, liability driven investments and insurance contracts.
In the US plans, the pensions in payment are not linked to inflation, so this is a less material risk.
Allotment of ordinary shares and release of treasury shares
During the year nil ordinary shares (2021: nil ordinary shares) were allotted and 1,351,767 ordinary shares
were released from Treasury (2021: 1,677,112) to satisfy vesting/exercises under the Group’s various share
schemes as follows:
Ordinary shares of 10p
2022
2021
Number of
shares
Consideration
£m
Number of
shares
Consideration
£m
41
–
41
39
80
Life expectancy: The majority of the plans’ obligations are to provide benefits for the life of the member.
Whilst the plans allow for an increase in life expectancy, increases above this assumption will result in an
increase in the plans’ liabilities. This is particularly significant in the UK plan, where inflationary increases
to benefits result in higher sensitivity to improvements in life expectancy. In 2020 the principal UK
scheme reduced its exposure by purchasing an insurance product that will pay the pensions of some
of the plan’s pensioners. In 2021 two other UK pension schemes purchased a similar insurance policy
covering 100% of their members’ benefits.
Executive Share Options – exercises
Conditional Awards – vesting
372,711
313,293
18
–
860,697
164,867
Total under Executive Share Option
and Conditional Award Schemes
Savings-related Share Option Schemes –
exercises
Total
686,004
18
1,025,564
665,763
1,351,767
36
54
651,548
1,677,112
Change in regulations: The Group is aware that future changes to the regulatory framework may impact
the funding basis of the various plans in the future. The Group’s pensions department monitors the
changes in legislation and analyses the risks as and when they occur.
Investments are well diversified, such that the failure of any single investment would not have a material
impact on the overall level of assets. A portion of assets consists of unit linked insurance policies with
underlying investments in quoted equities and quoted bonds, although the Group also invests in property
and cash. The Group believes that quoted equities offer the best returns over the long term with an
acceptable level of risk. The Trustees of all the UK funds have moved the majority of their assets to
low-cost investment funds in consultation with the Group whilst maintaining prudent diversification
and appropriate interest and inflation hedging. The Trustees and the Group are engaged in ongoing
discussions to align their goals in respect of climate risk. At present, the Trustees have noted that the
diversified asset profile of the UK plans should reduce exposure to climate risks.
24 Share Capital
Issued and fully paid
At 31 December 2021
At 31 December 2022
Equity ordinary
shares number
Nominal value
£m
736,535,179
736,535,179
74
74
In 2022, 1,351,767 Treasury shares were released (2021: 1,677,112), leaving a balance held at 31 December
2022 of 20,771,213 (2021: 22,122,980). Proceeds received from the reissuance of Treasury shares to
exercise share options were £54 million (2021: £80 million).
25 Share-based Payments
The Group operates a number of incentive schemes, including a Long-Term Incentive Plan, and various
other share schemes. All schemes are equity-settled. The total charge for share-based payments for the
year was £78 million (2021: £30 million).
Executive share awards
Executive share awards, comprising both Share Options and Conditional Awards, are granted to the
senior management team. Share Options are granted at an exercise price determined on the grant
date and become payable on exercise – following satisfaction of performance criteria. Conditional
Awards entitle the recipient to receive shares at no cost following satisfaction of both the following
performance criteria and continued employment (Performance Shares), or just continued employment
(Time-vested Shares).
For awards granted between December 2017 and May 2019:
The holders of ordinary shares (par value 10 pence) are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at meetings of the parent company.
Adjusted earnings per share growth
over three years (%)
<6%
6%
Between 6% and 10%
≥10%
Proportion of awards vesting (%)
Nil
20%
Straight-line between
20% and 100%
100%
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 216
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
25 Share-based Payments continued
For awards granted in May 2019:
Threshold
Weighting
(20% vesting)
Maximum
(100%
vesting)
Adjusted EPS growth at actual FX rates (three-year CAGR)
Adjusted EPS growth at constant FX rates (three-year CAGR)
Net Revenue growth (three-year CAGR)
Return on Capital Employed (in final year)
For awards granted in May 20201:
25%
25%
25%
25%
4%
4%
2%
9%
9%
6%
Net Revenue growth (three-year CAGR)
Return on Capital Employed (in final year)
Adjusted EPS at actual FX rates (in final year)
Adjusted EPS at constant FX rates (in final year)
Weighting
Threshold
(20% vesting)
50%
25%
12.5%
12.5%
1.9%
13.5%
283p
304p
Maximum
(100%
vesting)
4.9%
14.8%
318p
341p
1. Targets adjusted in 2021 following the disposal of IFCN China, with the objective of ensuring that the new targets are no harder
or easier to achieve than the original targets
For awards granted in May 20211:
Like-for-like Net Revenue growth (three-year CAGR)
Return on Capital Employed (in final year)
Adjusted EPS at actual FX rates (in final year)
Adjusted EPS at constant FX rates (in final year)
Weighting
Threshold
(20% vesting)
50%
25%
12.5%
12.5%
0.9%
13.7%
289p
308p
Maximum
(100%
vesting)
4.9%
15.4%
360p
382p
1. Targets adjusted in 2021 following the disposal of IFCN China, with the objective of ensuring that the new targets are no harder
or easier to achieve than the original targets
For awards granted in May 2022:
Like-for-like Net Revenue growth (three-year CAGR)
Relative Total Shareholder Return
Return on Capital Employed (in final year)
Percentage of net revenue from more sustainable products
Weighting
Threshold
(20% vesting)
Maximum
(100% vesting)
40%
25%
25%
5%
2%
5%
Median
Upper quartile
13.2%
30%
15.2%
33%
10.8%
12.8%
Percentage reduction in Greenhouse Gas (GHG) emissions
in operations
5%
65%
69%
The cost is spread over the three years of the performance period. For the Executive Committee and
members of the Group Leadership Team, vesting conditions must be met over the three-year period
and are not retested.
For the remaining members of the senior management team, for awards granted prior to 2021, the
targets can be retested in years four or five of the scheme. If any target has not been met, any remaining
shares or options which have not vested will lapse. For awards granted in May 2021 and thereafter,
vesting conditions must be met over the three-year period and are not retested.
Other share awards
Other share awards represent SAYE Schemes (offered to all staff within the relevant geographic area)
and a number of Senior Executive Share Ownership Policy Plan (SOPP) awards. Other share awards have
contractual lives of between three and eight years and are generally not subject to any vesting criteria
other than the employee’s continued employment.
Individual tranches of these other share awards are not material for detailed disclosure and therefore
have been aggregated in the tables following.
Summary of shares outstanding
All outstanding Executive and other share awards as at 31 December 2022 and 31 December 2021 are
included in the tables following which analyse the charge for 2022 and 2021. The Group has used the
Black-Scholes model to calculate the fair value of one award on the date of the grant of the award.
Awards that are subject to Total Shareholder Return (TSR) performance conditions, have been valued
by a third-party specialist using the Monte Carlo model.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 217
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
25 Share-based Payments continued
Table 1: Fair value
The most significant awards are share options and conditional awards, details of which have been provided below.
Award
Grant date
Share options
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
3 December 2012
11 December 2013
1 December 2014
2 December 2015
1 December 2016
30 November 2017
10 May 2019
1 May 2020
28 May 2021
20 May 2022
Conditional awards
2018
2019
2020
2021
2022
30 November 2017
10 May 2019
1 May 2020
28 May 2021
20 May 2022
Black-Scholes model assumptions
Exercise price
at grant
£
Modified
exercise price
£
Performance
period
Share price on
grant date
£
39.14
47.83
50.57
63.25
67.68
64.99
60.83
65.20
64.67
63.32
–
–
–
–
–
38.06
46.51
50.57
63.25
67.68
64.99
60.83
65.20
64.67
63.32
–
–
–
–
–
2013–15
2014–16
2015–17
2016–18
2017–19
2018–20
2019–21
2020–22
2021–23
2022-24
2018–20
2019–21
2020–22
2021-23
2022-24
39.66
46.69
52.40
64.15
66.28
64.86
61.45
65.70
63.68
62.42
64.86
61.40
65.70
63.68
62.42
Volatility
%
20
19
17
18
18
18
20
21
22
22
18
19
21
22
22
Dividend yield
%
Life
years
Risk-free
interest rate
%
Fair value of
one award
£
4.3
3.7
4.0
2.9
3.0
3.4
3.7
2.6
2.1
2.2
3.4
3.7
2.6
2.1
2.2
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
0.61
0.76
1.03
1.07
0.46
0.68
0.83
0.55
0.20
1.31
0.68
0.83
0.55
0.20
1.31
3.29
3.85
4.34
6.75
5.54
5.58
5.89
7.96
7.84
7.94
56.71
53.02
59.17
58.65
43.64
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 218
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
25 Share-based Payments continued
Table 2: Share awards movements 2021 and 2022
Award
Share options1
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Performance shares1
2016
2017
2018
2019
2020
2021
2022
Time-vested shares1
2016
2017
2018
2019
2020
2021
2022
Other share awards
UK SAYE
US SAYE
Overseas SAYE
SOPP
Weighted average exercise price (share options)
1. Grant date and exercise price for each of the awards are shown in Table 1
Options
outstanding at
1 January 2021
number
Granted/
adjustments
number
Lapsed
number
Exercised/vested
number
Options
outstanding at
31 December
2021
number
151,411
247,750
457,296
742,966
1,120,802
573,907
1,837,548
2,086,058
2,595,052
–
–
124,863
175
835,823
1,029,136
1,160,465
–
–
–
–
14,036
85,750
243,912
–
–
738,410
672,995
2,302,103
156,000
£60.97
–
–
–
–
–
–
–
–
–
3,075,575
–
–
–
–
–
–
1,348,016
–
–
–
16,997
(13,884)
7,242
390,137
–
383,424
439,679
930,727
92,800
£64.67
(2,057)
–
(13,350)
(15,000)
(383,399)
(82,376)
(839,095)
(261,796)
(378,529)
(205,846)
–
(124,863)
(175)
(389,368)
(175,064)
(180,520)
(97,716)
–
–
–
–
(2,600)
(15,362)
(28,549)
–
(148,654)
(95,794)
(673,300)
(33,403)
(149,354)
(79,343)
(159,136)
(295,000)
(169,850)
(850)
–
–
–
–
–
–
–
–
(26,354)
–
–
–
–
–
(30,033)
(31,383)
(84,995)
(22,836)
–
–
168,407
284,810
432,966
567,553
490,681
998,453
1,824,262
2,216,523
2,869,729
–
–
–
446,455
827,718
979,945
1,250,300
–
–
–
1,000
37,883
150,797
338,752
–
(102,653)
(65,747)
(482,826)
(14,597)
870,527
951,133
2,076,704
200,800
£64.05
£47.80
£62.58
Granted/
adjustments
number
–
–
–
–
–
–
–
8,076
(2,400)
(4,800)
3,104,325
–
–
–
10,708
1,700
(1,200)
1,397,186
–
–
–
–
(3,385)
(180)
384,508
201,068
223,811
368,031
29,600
£63.31
Lapsed
number
Exercised/
vested number
Options
outstanding at
31 December
2022
number
–
–
(1,029)
(2,000)
(76,902)
(96,305)
(86,068)
(733,733)
(349,416)
(441,576)
(248,505)
–
–
(44,129)
(369,341)
(171,370)
(218,689)
(120,539)
–
–
–
(2,330)
(12,036)
(48,080)
(35,511)
–
(166,350)
(56,412)
(70,968)
(59,326)
–
–
(24,542)
–
–
–
–
–
–
(172,917)
–
–
–
–
–
(1,000)
(30,553)
(71,713)
(40,355)
(12,080)
–
2,057
227,369
359,998
431,325
394,376
912,385
1,074,063
1,864,707
2,423,353
2,855,820
–
–
402,326
296,168
810,275
1,030,411
1,276,647
–
–
–
5,000
63,663
250,137
336,917
(127,428)
(130,809)
(260,638)
(30,376)
(102,359)
(243,691)
(313,144)
(22,624)
841,808
800,444
1,870,953
177,400
£63.29
£47.11
£63.21
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 219
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
25 Share-Based Payments continued
For options outstanding at the year end, the weighted average remaining contractual life is 4.56 years
(2021: 4.58 years). Options outstanding at 31 December 2022 that could have been exercised at that
date were 1,631,807 (2021: 1,946,341) with a weighted average exercise price of £57.54 (2021: £57.03).
The assumptions made in determining the share-based payments charge, in respect to the achievement
of performance criteria, are based on the Directors’ expectations in light of the Group’s business model
and relevant published targets.
Under the terms of the schemes, early exercise may only be granted in exceptional circumstances and
therefore the effect of early exercise is not incorporated into the calculation.
No material modifications have occurred requiring revision to the share-based payment charges for the
outstanding awards.
Total
An estimate of future volatility is made with reference to historical volatility over a similar time period to
the performance period or the contractual life as appropriate. Historical volatility is calculated based on
the annualised standard deviation of the Group’s daily share price movement, being an approximation to
the continuously compounded rate of return on the share.
National Insurance contributions are payable in respect of certain share-based payment transactions and
are treated as cash-settled transactions.
The weighted average share price for the year was £61.09 (2021: £61.60).
Savings-related share option schemes
UK Scheme
US Scheme
Overseas Scheme
Total
Options and conditional awards granted during the year
Options and conditional awards granted during the year which may vest or become exercisable at
various dates between 2023 and 2028 are as follows:
Executive share option and conditional award schemes
LTIP – options
LTIP – performance shares
LTIP – time-vested shares
Group Senior Executive Share Ownership Policy Plan
Price to be
paid
£
Number of
shares under
option
63.32
–
–
–
53.01
53.01
53.01
3,104,325
1,397,186
384,508
29,600
4,915,619
201,068
223,811
368,031
792,910
Options and conditional awards outstanding
Options and conditional awards which have vested or may vest at various dates between 2023 and 2029
are as follows:
Executive share option and conditional award schemes
LTIP – options
LTIP – performance shares
LTIP – time-vested shares
Group Senior Executive Share Ownership Policy Plan
Total
Savings-related share option schemes
UK Scheme
US Scheme
Overseas Scheme
Total
Price to be paid £
Number of shares
under option
From
To
2022
2021
38.06
–
–
–
44.56
44.56
44.56
78.00 10,545,453
3,815,827
655,717
177,400
–
–
–
9,853,384
3,504,418
528,432
200,800
15,194,397 14,087,034
62.44
62.44
62.44
841,808
800,444
1,870,953
870,527
951,133
2,076,704
3,513,205
3,898,364
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 220
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
26 Other Reserves
Attributable to owners of the parent
Balance at 1 January 2021
Other comprehensive income/(expense)
Gains on cash flow hedges, net of tax
Net exchange losses on foreign currency translation, net of tax
Gains on net investment hedges, net of tax
Reclassification of foreign currency translation reserves on
disposal or liquidation of foreign operations, net of tax
Total other comprehensive income/(expense) for the year
Balance at 31 December 2021
Other comprehensive income/(expense)
Gains on cash flow hedges, net of tax
Net exchange gains on foreign currency translation, net of tax
Losses on net investment hedges, net of tax
Reclassification of foreign currency translation reserves on
disposal or liquidation of foreign operations net of tax
Total other comprehensive income for the year
Foreign
currency
translation
reserve
£m
Hedging
reserve
£m
Total other
reserves
£m
(19)
(360)
(379)
30
–
–
–
30
11
2
–
–
–
2
–
(374)
84
(550)
(840)
30
(374)
84
(550)
(810)
(1,200)
(1,189)
–
1,064
(115)
(56)
893
2
1,064
(115)
(56)
895
Balance at 31 December 2022
13
(307)
(294)
The hedging reserve comprises the effective portion of the cumulative net change in fair value of cash
flow hedging instruments related to hedge transactions that are extant at year end.
The foreign currency translation reserve contains the accumulated foreign exchange differences from
the translation of the Financial Statements of the Group’s foreign operations arising when the Group’s
entities are consolidated. The reserve also contains the translation of liabilities that hedge the Group’s
net exposure in a foreign currency.
During the year ended 31 December 2022, a net gain of £56 million (2021: £550 million net gain) was
reclassified to the Income Statement from foreign currency reserves following the disposal or liquidation
of foreign operations, of which a net gain of £69 million (2021: £766 million net gain) related to the
liquidation of subsidiaries (see Note 6 for further details) offset by a loss of £13 million (2021: £216 million)
comprised of £20 million (2021: £284 million) arising from the disposal of certain businesses (see Note 29),
less related tax credits of £7 million (2021: £68 million) (see Note 7).
27 Related Party Transactions
The Group has related party relationships with its Directors and key management personnel (Note 5).
28 Dividends
Cash dividends on equity ordinary shares:
2021 Final paid: 101.6p (2020: Final 101.6p) per share
2022 Interim paid: 73p (2021: Interim 73p) per share
Total dividends for the year
2022
£m
726
523
2021
£m
725
521
1,249
1,246
The Directors are proposing a final dividend in respect of the financial year ended 31 December 2022 of
110.3 pence per share which will absorb an estimated £789 million of shareholders’ funds. If approved by
shareholders it will be paid on 24 May 2023 to shareholders who are on the register on 11 April 2023, with
an ex-dividend date of 6 April 2023.
29 Acquisitions and Disposals
During the year ended 31 December 2022, the Group completed several disposals. In each case, 100% of
the businesses were disposed, unless stated otherwise. In the year ended 31 December 2021, the Group
completed several business acquisitions and disposals.
Acquisitions
During 2022, the Group did not complete any acquisitions.
On 12 July 2021, the Group acquired 100% of the equity interests in Lanai Holdings, owner of the Biofreeze
and TheraPearl brands, for cash consideration of $1,060 million (£766 million). Total identifiable net assets
of £495 million and goodwill of £271 million were recognised in 2021.
Disposals
The Group completed the disposals of Dermicool and E45 on 25 March 2022 and 1 April 2022, respectively,
with combined net cash proceeds of £243 million. The net assets disposed primarily comprised goodwill
and other intangible assets at a book value of £204 million. In addition, cumulative foreign exchange
losses of £10 million have been reclassified to the Income Statement.
The Group recognised a net pre-tax gain of £14 million upon disposal of these brands, recorded within
net operating expenses in the Income Statement. Both Dermicool and E45 formed part of the Health
operating segment. At 31 December 2021, £140 million of intangible assets (including £28 million of
goodwill) associated with the sale of E45 were presented within assets held for sale.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 221
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N OT E S TO T H E F I N A N C I A L S TAT E M E N TS CO N T I N U E D
29 Acquisitions and Disposals continued
During 2021, the Group completed three disposals for a total consideration, net of disposal costs, of
£1,704 million, resulting in a total pre-tax loss on disposal of £3,518 million reported within total net
operating expenses:
– On 9 September 2021, the Group completed the sale of IFCN China to Primavera Capital Group for total
consideration, net of disposal costs, of £1,436 million. The consideration was principally represented
by cash of £1,513 million and a 8% shareholding in the purchaser’s acquisition entity. The net assets
disposed primarily comprised goodwill and other intangible assets at a book value of £4,276 million.
On completion of the disposal, the Group recognised a pre-tax loss on disposal of £3,284 million
included within total net operating expenses.
– The Group completed the disposals of the Scholl and EnfaBebé brands on 1 June 2021 and 1 November
2021, respectively, with combined net cash proceeds of £268 million.
Other
On 13 April 2022, the Group announced it had begun a process aimed at transferring ownership of its
Russian business, which may include a transfer to a third party or to local employees. The net assets of
the Russian business at 31 December 2022 were £230 million and on disposal, foreign exchange losses
of £114 million would be recycled to the Income Statement. The Russian business contributed 2% to
the Group’s revenue in 2022 (2021: 2%). At 31 December 2022, the assets and liabilities had not met the
criteria to be reclassified within assets held for sale.
30 Discontinued Operations
The loss from discontinued operations of £7 million (2021: £31 million income) relates to the Group’s
disposal of the RB Pharmaceuticals business (now Indivior plc).
31 Post Balance Sheet Events
There have been no events subsequent to the Balance Sheet date which require disclosure.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 222
Reckitt Annual Report and Accounts 2022
FIV E YE A R S U M M A RY (U NAU D ITE D)
The five-year summary below is presented on an IFRS basis. The years ending 31 December 2018, 31 December 2019, 31 December 2020, 31 December 2021 and 31 December 2022 show the results for
continuing operations.
Income Statement
Net Revenue
Operating profit/(loss)
Net finance (expense)/income
Share of loss and impairment of equity-accounted investees, net of tax
Profit/(loss) before income tax
Income tax (charge)/credit
Attributable to non-controlling interests
Net income/(loss) attributable to owners of the parent company from continuing operations
Balance Sheet
Net assets
Key Statistics – IFRS basis
Operating margin
Diluted earnings per share, continuing
Declared total dividends per ordinary share
1. Restated for the adoption of IFRS 15
2022
£m
14,453
3,249
(161)
(21)
3,067
(711)
(19)
2,337
2021
£m
13,234
(804)
547
(3)
(260)
208
(11)
(63)
2020
£m
13,993
2,160
(286)
(1)
1,873
(720)
(16)
1,137
2019
£m
12,846
(1,954)
(153)
–
(2,107)
(665)
(13)
(2,785)
Restated1
2018
£m
12,597
3,058
(338)
–
2,720
(536)
(20)
2,164
9,483
7,453
9,159
9,407
14,771
22.5%
325.7p
183.3p
(6.1%)
(8.8p)
174.6p
15.4%
159.3p
174.6p
(15.2%)
(393.0p)
174.6p
24.3%
305.2p
170.7p
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 223
Reckitt Annual Report and Accounts 2022
PA R E NT CO M PA N Y BA L A N CE S H E ET A N D STATE M E NT O F CH A N G ES I N EQ U IT Y
PA R E N T CO M PA N Y BA L A N C E S H E E T
As at 31 December
Fixed assets
Investments
Current assets
Debtors due within one year
Debtors due after more than one year
Current liabilities
Creditors due within one year
Net current liabilities
Total assets less current liabilities
Creditors due after more than one year
Provisions for liabilities and charges
Net assets
EQUITY
Share capital
Share premium
Retained earnings
Total equity
Notes
2022
£m
2021
£m
2
15,078
15,001
3,6
4,6
40
21
61
45
25
70
5,6
(7,846)
(10,898)
5
7
8
(7,785)
(10,828)
7,293
4,173
–
(44)
(42)
(41)
7,249
4,090
74
254
6,921
7,249
74
253
3,763
4,090
The Financial Statements on pages 223 to 240 were approved by the Board of Directors and signed on its
behalf on 28 February 2023 by:
C H R I S TO P H E R S I N C L A I R
D I R E C TO R
Reckitt Benckiser Group plc
Company Number: 06270876
N I C A N D R O D U R A N T E
D I R E C TO R
Reckitt Benckiser Group plc
PA R E N T CO M PA N Y S TAT E M E N T O F C H A N G E S I N E Q U I T Y
Balance at 1 January 2021
Comprehensive income
Loss for the financial year
Total comprehensive loss
Transactions with owners
Treasury shares reissued
Share-based payments
Capital contribution in respect of share-based
payments
Purchase of ordinary shares by employee share
ownership trust
Cash dividends
Total transactions with owners
Balance at 31 December 2021
Comprehensive income
Profit for the financial year
Total comprehensive income
Transactions with owners
Treasury shares reissued
Share-based payments
Capital contribution in respect of share-based
payments
Cash dividends
Total transactions with owners
Balance at 31 December 2022
Share
capital
£m
Share
premium
£m
Retained
earnings
£m
Total
equity
£m
74
252
4,983
5,309
–
–
–
–
–
–
–
–
–
–
1
–
–
–
–
1
(78)
(78)
79
4
26
(78)
(78)
80
4
26
(5)
(1,246)
(5)
(1,246)
(1,142)
(1,141)
74
253
3,763
4,090
–
–
–
–
–
–
–
–
1
–
–
1
4,276
4,276
53
1
4,276
4,276
54
1
77
(1,249)
77
(1,249)
(1,118)
(1,117)
74
254
6,921
7,249
Reckitt Benckiser Group plc has £6,182 million (2021: £3,102 million) of its retained earnings available for
distribution. Details of Treasury shares and other equity transactions are included in Note 24 of the Group
Financial Statements.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 224
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N OTES TO TH E PA R E NT CO M PA NY FI NA N CIA L STATE M E NTS
1 Parent Company Accounting Policies
The principal accounting policies are summarised below. They have all been applied consistently
throughout the year and the preceding year.
Financial Reporting Standard 102 – Reduced Disclosure Exemptions
FRS 102 allows a qualifying entity certain disclosure exemptions, subject to certain conditions, which have
been complied with.
General information and basis of accounting
Reckitt Benckiser Group plc is a company incorporated in the United Kingdom, registered in England and
Wales under the Companies Act 2006, and is a public limited company. The address of the registered
office is given on page 243.
The Company is the parent of Reckitt Benckiser Group plc and its principal activity is to act as a holding
company for the Group. The nature of the Group’s operations and its principal activities are set out in the
Strategic Report on pages 2 to 87.
New standards, amendments and interpretations
The following amended standards and interpretations were adopted by the Company during the year
ending 31 December 2022. These amended standards and interpretations have not had a significant
impact on the Company Financial Statements.
– Amendments to FRS 102: Interest rate benchmark reform
Statement of compliance
The Financial Statements have been prepared under the historical cost convention and in compliance
with United Kingdom Accounting Standards, including Financial Reporting Standard 102, The Financial
Reporting Standard applicable in the United Kingdom and the Republic of Ireland (FRS 102) and the
Companies Act 2006.
The functional currency of Reckitt Benckiser Group plc is considered to be Pounds Sterling because that
is the currency of the primary economic environment in which the Company operates.
As permitted by s408 of the Companies Act 2006, a Statement of Comprehensive Income is not
presented for Reckitt Benckiser Group plc.
The Company has taken advantage of the following exemptions:
(i) from preparing a Statement of Cash Flows, on the basis that it is a qualifying entity and the Group
Cash Flow Statement, included in these Financial Statements, includes the Company’s cash flows; and
(ii) from disclosing the Company key management personnel compensation, as required by FRS 102
paragraph 33.7.
The Company’s results are included in the publicly available consolidated Financial Statements of Reckitt
Benckiser Group plc and these Financial Statements may be obtained from 103-105 Bath Road, Slough,
Berkshire SL1 3UH or at www.reckitt.com.
Foreign currency translation
Transactions denominated in foreign currencies are translated using exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign
currency transactions and from the translation at year end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income.
Taxation
The tax charge/credit is based on the result for the year and takes into account taxation deferred due
to timing differences between the treatment of certain items for taxation and accounting purposes.
Deferred tax liabilities are provided for in full and deferred tax assets are recognised to the extent that
they are considered recoverable.
A net deferred tax asset is considered recoverable if it can be regarded as more likely than not that there
will be suitable taxable profits against which to recover carried forward tax losses and from which the
future reversal of underlying timing differences can be deducted.
Going concern
The Directors considered it appropriate to adopt the going concern basis of accounting in preparing the
Company Financial Statements.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at
the Balance Sheet date, where transactions or events that result in an obligation to pay more tax in the
future or a right to pay less tax in the future have occurred at the Balance Sheet date.
Having assessed the principal risks and other matters discussed in connection with the Group’s Viability
Statement as set out on page 87 of the Group Annual Report, the Directors considered it appropriate to
adopt the going concern basis of accounting in preparing the Company Financial Statements. When
reaching this conclusion, the Directors took into account the Company’s overall financial position and
exposure to principal risks.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which
the timing differences are expected to reverse, based on tax rates and laws that have been enacted
or substantively enacted by the Balance Sheet date. Deferred tax is measured on an undiscounted basis.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 225
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N OT E S TO T H E PA R E N T CO M PA N Y F I N A N C I A L S TAT E M E N TS CO N T I N U E D
1 Parent Company Accounting Policies continued
Fixed asset investments
Fixed asset investments are stated at the lower of cost or their recoverable amount, which is determined
as the higher of net realisable value and value-in-use. A review of the potential impairment of an
investment is carried out by the Directors if events or changes in circumstances indicate that the
carrying value of the investment may not be recoverable. Such impairment reviews are performed
in accordance with FRS 102 Section 27 ‘Impairment of assets’.
Employee share schemes
Incentives in the form of shares are provided to employees under share option and conditional award
schemes which vest in accordance with non-market conditions.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on
a straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that
will eventually vest. At each Balance Sheet date, the Group revises its estimate of the number of equity
instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in
comprehensive income or expense such that the cumulative expense reflects the revised estimate, with
a corresponding adjustment to equity reserves.
Additional employer costs in respect of options and awards are charged, including social security taxes,
to the Statement of Comprehensive Income over the same period, with a corresponding liability
recognised.
The grant by the Company of options over its equity instruments to the employees of subsidiary
undertakings in the Group is treated as a capital contribution. The fair value of employee services
received, measured by reference to the grant date fair value, is recognised over the vesting period as an
increase to investment in subsidiary undertakings, with a corresponding credit to equity in the Company
Financial Statements.
Financial instruments
The Company recognises financial instruments when it becomes a party to the contractual obligations
of the instrument.
(i) Financial assets
Basic financial assets are initially recognised at transaction price, unless the arrangement constitutes
a financing transaction, where the transaction is measured at the present value of the future receipts.
Such assets are subsequently carried at amortised cost.
At the end of each reporting period financial assets measured at amortised cost are assessed for
objective evidence of impairment. If an asset is impaired the impairment loss is the difference between
the carrying amount and the present value of the estimated cash flows discounted at the asset’s original
effective interest rate. The impairment loss is recognised in comprehensive income or expense.
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire
or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred
to another party, or (c) control of the asset has been transferred to another party who has the practical
ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.
(ii) Financial liabilities
Basic financial liabilities, including loans from fellow Group companies, are initially recognised at
transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument
is measured at the present value of future payments. Debt instruments are subsequently carried at
amortised cost.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual
obligation is discharged, cancelled or expires.
(iii) Derivative Financial Instruments
Derivatives, including forward foreign exchange contracts, are not basic financial instruments.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and
subsequently re-measured at their fair value.
The Company designates certain derivative financial instruments as fair value hedges against certain
debtors in USD. Gains or losses arising from changes in the foreign exchange retranslation of the hedged
item and instrument are netted in profit or loss in the period in which they arise.
Provisions
Provisions are recognised when the Company has a present legal or constructive obligation as a result of
past events; it is more likely than not that there will be an outflow of resources to settle that obligation;
and the amount can be reliably estimated. Provisions are valued at the present value of the Directors’
best estimate of the expenditure required to settle the obligation at the Balance Sheet date. Where it is
possible that a settlement may be reached or it is not possible to make a reliable estimate of the
estimated financial impact, appropriate disclosure is made but no provision recognised.
Where a company enters into a financial guarantee contract to guarantee the indebtedness of other
companies within its Group, the Company treats the guarantee contract as a contingent liability until
such a time as it becomes probable that the Company will be required to make a payment under
the guarantee.
Share capital transactions
When the Company purchases equity share capital, the amount of the consideration paid, including
directly attributable costs, is recognised as a charge to equity. Purchased shares are either held in
Treasury in order to satisfy employee options, or cancelled and, in order to maintain capital, an equivalent
amount to the nominal value of the shares cancelled is transferred from retained earnings.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 226
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N OT E S TO T H E PA R E N T CO M PA N Y F I N A N C I A L S TAT E M E N TS CO N T I N U E D
1 Parent Company Accounting Policies continued
Repurchase and reissuance of ordinary shares
When shares recognised as equity are repurchased, the amount of the consideration paid, including
directly attributable costs, is recognised as a charge to equity. Repurchased shares are classified as
Treasury shares and are presented in retained earnings. When Treasury shares are sold or reissued
subsequently, the amount received is recognised as an increase in equity and the resulting surplus
is presented within share premium.
Dividends
Dividends payable are recognised when they meet the criteria for a present obligation (i.e. when they
have been approved).
Accounting estimates and judgements
In preparing these Financial Statements, management has made judgements and estimates that affect
the application of the Company’s accounting policies and the reported amounts of assets, liabilities,
income and expenses. Actual amounts and results may differ from these estimates. The estimates
and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in
the period of the revision and future periods if the revision affects both current and future periods.
Key sources of estimation uncertainty
Each year, management is required to make a number of assumptions regarding the future. The related
year end accounting estimates will, by definition, seldom equal the final actual results. The estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are addressed below.
Tax provisions
Current tax liabilities include an amount of £132 million (2021: £38 million, presented in non-current tax
liabilities) relating to uncertain tax positions in respect of tax deductibility of management expenses.
The exposure recognised is calculated based on the expected value method and the most likely amount
method. The accounting estimates and judgements considered include:
– status of the unresolved matter;
– clarity of relevant legislation and related guidance;
– advice from related party specialists and unrelated third parties;
– range of possible outcomes; and
– statute of limitations.
The recognition of uncertain tax positions is reviewed regularly for changes in circumstances and
estimates are updated as potential resolutions for the tax uncertainties are encountered through specific
audits or wider case law. As a result, given the size, possible range of outcomes and timing of resolution,
there is a significant risk of material adjustment to the aggregate carrying amount of these liabilities
within the next financial year.
Legal provisions
The Company recognises legal provisions in line with the Company’s provisions policy. The level of
provisioning in relation to civil and/or criminal investigations is an area where management and legal
judgment is important, with individual provisions being based on best estimates of the probable loss,
considering all available information, external advice and historical experience. As at 31 December 2022,
the Company recognised legal provisions of £44 million (2021: £41 million) in relation to a number of
historical regulatory matters. Refer to Note 7 of the Company Financial Statements for further
information.
The Company’s Directors are of the opinion that there are no other judgements and no further key
sources of estimation uncertainty in applying the Company’s accounting policies.
2 Investments
Cost
At 1 January 2021
Additions during the year
At 31 December 2021
Additions during the year
At 31 December 2022
Provision for impairment
At 1 January 2021
At 31 December 2022
Net book amounts
At 31 December 2021
At 31 December 2022
Shares in
subsidiary
undertakings
£m
14,975
26
15,001
77
15,078
–
–
15,001
15,078
The Directors believe that the carrying value of the investments is supported by their underlying net assets.
The subsidiary undertakings as at 31 December 2022, all of which are included in the Group Financial
Statements, are shown in Note 12 of the Company Financial Statements.
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N OT E S TO T H E PA R E N T CO M PA N Y F I N A N C I A L S TAT E M E N TS CO N T I N U E D
2 Investments continued
With the exception of Reckitt Benckiser Limited, none of the subsidiaries are directly held by Reckitt
Benckiser Group plc. All subsidiaries have a financial year ending 31 December with the exception of:
Reckitt Benckiser (India) Private Limited, Reckitt Benckiser Healthcare India Private Limited, Mead
Johnson Nutrition (India) Private Limited, RB Hygiene Home India Private Limited and Reckitt Piramal
Private Limited which have a year ending 31 March; Reckitt Benckiser Health Kenya Limited which has
a year ending 30 April; Reckitt Benckiser (Czech Republic) spol. s r.o which has a year ending 31 May;
Lloyds Pharmaceuticals which has a year ending 24 August; Reigate Square Holdings Sàrl which has a
year ending 31 August; RBHCR Health Reckitt Costa Rica Sociedad Anónima which has a year ending
30 September; Pt Reckitt Benckiser Indonesia which has a year ending 29 October; and Reckitt Benckiser
Healthcare (Ireland) Limited which has a year ending 30 November.
Additions during the year, and in 2021, relate to the grant by the Company of options over its equity
instruments to the employees of subsidiary undertakings in the Group.
3 Debtors Due Within One Year
Amounts owed by Group undertakings
Other debtors
2022
£m
30
10
40
Amounts owed by Group undertakings are unsecured, interest free and are repayable on demand
(2021: same).
4 Debtors Due After More Than One Year
Deferred tax assets
Other receivables
2022
£m
1
20
21
2021
£m
36
9
45
2021
£m
1
24
25
5 Creditors
Creditors due within one year:
Amounts owed to Group undertakings
Taxation and social security
Derivative liabilities
Other creditors
2022
£m
7,707
133
2
4
7,846
2021
£m
10,896
1
–
1
10,898
Included in the amounts owed to Group undertakings is an amount of £7,609 million (2021: £10,889 million)
which is unsecured, carries interest at the official ISDA fallback rate and is repayable on demand (2021:
carries interest at the 3M LIBOR equivalent fallback rate). All other amounts owed to Group undertakings
are unsecured, non-interest bearing and are repayable on demand (2021: same).
Included within taxation and social security creditors is an amount recognised in respect of uncertain
tax positions, which may take several years to resolve (Note 1). Notwithstanding this, the presentation
of corporation tax liabilities has been assessed to reflect that there is not an unconditional right to defer
settlement of these liabilities and the carrying amount of £132 million (2021: £38 million) has been
presented as a current liability (2021: non-current).
Creditors due after more than one year:
Non-current tax liabilities
Other creditors
6 Financial instruments
2022
£m
–
–
–
2022
£m
2021
£m
38
4
42
2021
£m
60
69
(2)
(7,711)
–
(10,901)
(7,713)
(10,901)
Deferred tax assets consist of short-term timing differences.
Financial assets
Financial assets measured at amortised cost
Financial liabilities
Derivative financial instruments measured at fair value through profit or loss
Financial liabilities measured at amortised cost
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 228
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N OT E S TO T H E PA R E N T CO M PA N Y F I N A N C I A L S TAT E M E N TS CO N T I N U E D
7 Provisions for Liabilities and Charges
At 1 January 2021
Charged to the Statement of Comprehensive Income
Utilised during the year
At 31 December 2021
Charged to the Statement of Comprehensive Income
Utilised during the year
Released to the Statement of Comprehensive Income
At 31 December 2022
Provisions have been analysed between current and non-current as follows:
Current
Non-current
Legal
provisions
£m
Total
provisions
£m
43
6
(8)
41
14
(7)
(4)
44
2022
£m
43
1
44
43
6
(8)
41
14
(7)
(4)
44
2021
£m
39
2
41
Provisions relate to legal provisions in relation to a number of historical matters.
8 Share Capital
Issued and fully paid
At 1 January 2022
At 31 December 2022
Equity
Nominal value
ordinary shares
736,535,179
736,535,179
£m
74
74
The holders of ordinary shares (par value 10 pence) are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at meetings of the Parent Company.
The allotment of ordinary shares and release of Treasury shares are disclosed in Note 24 of the Group
Financial Statements.
9 Related Party Transactions
There were no transactions with related parties other than wholly owned companies within the Group.
10 Contingent Liabilities
The Company has issued a guarantee to the trustees of the Reckitt Benckiser Pension Fund covering the
obligations of certain UK subsidiaries of the Group who are the sponsoring employers of the UK defined
benefit pension fund. The guarantee covers any amounts due to the pension fund from these subsidiaries
if they fail to meet their pension obligations.
The Company issued a guarantee on behalf of Reckitt Benckiser Treasury Services plc in relation to the
issuance of a $5,000 million bond (2021: $8,250 million bond), made up of one tranche of $2,500 million,
one tranche of $2,000 million and one tranche of $500 million (2021: two tranches of $2,500 million, one
tranche of $2,000 million, one tranche of $750 million and one tranche of $500 million). The Company has
issued a further guarantee in relation to the issuance of a £500 million bond (2021: £500 million), as well as
the issuance of €833 million Euro commercial paper (2021: €nil Euro commercial paper) and $546 million
US dollar commercial paper (2021: $nil US dollar commercial paper). Details are included in Note 15 of the
Group Financial Statements.
The Company issued a guarantee on behalf of Reckitt Benckiser Treasury Services plc in relation to
committed borrowing facilities totalling £4,500 million (2021: £4,500 million). Details of the facilities are
included in Note 15 of the Group Financial Statements.
The Company issued a guarantee on behalf of Mead Johnson Nutrition Company in relation to
outstanding senior notes of $1,550 million (2021: $1,550 million) issued by Mead Johnson Nutrition
Company prior to acquisition. The senior notes consist of one tranche of $750 million, one tranche
of $500 million and one tranche of $300 million (2021: same).
The Company has also issued a guarantee on behalf of Reckitt Benckiser Treasury Services (Nederland)
BV in relation to the issuance of two €850 million bonds (2021: two €850 million bonds). Details are
included in Note 15 of the Group Financial Statements.
The Company has provided a guarantee to certain subsidiary undertakings to exempt them from audit
under Section 479a of the Companies Act 2006. The companies to which a guarantee has been issued
for this purpose are highlighted in Note 12.
Other contingent liabilities are disclosed in Note 20 of the Group Financial Statements.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 229
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N OT E S TO T H E PA R E N T CO M PA N Y F I N A N C I A L S TAT E M E N TS CO N T I N U E D
11 Post Balance Sheet Events
There are no events subsequent to the balance sheet date that require disclosure.
12 Subsidiary Undertakings
In accordance with Section 409 of the Companies Act 2006 and Schedule 4 of The Large and
Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, a full list of related
undertakings as at 31 December 2022, including their registered office address, country of incorporation
and the percentage of share ownership, is disclosed below. All undertakings are indirectly owned by
Reckitt Benckiser Group plc, unless otherwise stated.
From time to time, management reviews the Group structure and seeks to remove redundant, dormant
or non-trading entities. During the year ended 31 December 2022, 17 legal entities were dissolved,
liquidated or otherwise disposed of, and one legal entity was placed into liquidation (2021: 14 legal
entities and one partnership). The removal of legal entities ultimately allows management to focus
on the core business, reduces compliance obligations and cost, and improves transparency of the Group
to external parties.
All subsidiary undertakings of Reckitt Benckiser Group plc are included in the consolidated Financial
Statements of the Group. The subsidiary undertakings marked with* are exempt from the Companies
Act 2006 (the ‘Act’) requirements relating to the audit of their individual accounts by virtue of Section
479A of the Act, as Reckitt Benckiser Group plc has guaranteed them under Section 479C of the Act.
Name
103-105 Bath Road Limited
2309 Realty Corporation
Access VC Limited
Airwick Industrie SAS
Anhui Guilong Pharmaceutical Trading Company Limited
Apenas Boa Nutrição Indústria de Alimentos Ltda.
Beleggingsmaatschappij Lemore B.V.
Benckiser
Biofreeze IP Holdings, LLC
Blisa, LLC
Canterbury Square Holdings S.à.r.l
Central Square Holding B.V.
Holding
100%
99.995%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Registered office
and share class
5, 1
18, 2
5, 1
26, 1
72, 5
79, 1
134, 1
34, 1, 6
27, 9
27, 1
2, 2
134, 1
Name
Crookes Healthcare Limited*
Cupal, Limited*
Dakin Brothers Limited*
Dorincourt Holdings (Ireland) Limited
Durex Limited
eRB Trading Limited
Exponential Health LLC
Fenla Indústria, Comércio e Administração Ltda
FF Homecare & Hygiene Limited
Gainbridge Investments (Cyprus) Limited
Glasgow Square Limited*
Green,Young & Company Limited*
Grosvenor Square Holding B.V.
Guilong Health Technology (Anhui) Co., Limited
Guilong Pharmaceutical (Anhui) Company Limited
Guilong Pharmaceutical (Anhui) Co. Ltd – Xiamen branch†
Hamol Limited*
Hamol NL B.V.
Helpcentral Limited*
Howard Lloyd & Company, Limited*
Kukident GmbH
Lanai Holdings 1.5, Inc.
Lanzhou Keshi Xixili Healthcare Technologies Co. Ltd
LI Pensions Trust Limited
Linden Germany A Limited
Linden Germany B Limited
Holding
Registered office
and share class
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
100%
100%
100%
5, 1, 6
5, 1, 6
5, 1, 6
30, 1
5, 1
5, 1
27, 1
124, 1
107, 7
1, 1
5, 1, 6
5, 1, 6
134, 1
72, 5
88, 5
147
5, 1, 6
134, 1
5, 1, 6
5, 1
84, 4
27, 4
91, 1
5, 1
5, 1
5, 1
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 230
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N OT E S TO T H E PA R E N T CO M PA N Y F I N A N C I A L S TAT E M E N TS CO N T I N U E D
12 Subsidiary Undertakings continued
Name
Lloyds Pharmaceuticals*
London International Group Limited*
London International Trading (Asia) Limited
LRC North America Inc.
LRC Products Limited
LRC Secretarial Services Limited*
Maddison Square Holding B.V.
Manufactura MJN, S. de R.L. de C.V.
Mead Johnson & Company LLC
Mead Johnson do Brasil Comércio e Importação de Produtos de Nutrição
Ltda.
Mead Johnson Do Brasil Comércio E Importação De Produtos De Nutrição
Ltda.†
Mead Johnson Nutricionales de México, S. de R.L. de C.V.
Mead Johnson Nutrition (Asia Pacific) Pte. Ltd.
Mead Johnson Nutrition (Australia) Pty Ltd
Mead Johnson Nutrition (Canada) Co.
Mead Johnson Nutrition (Dominicana) S.A.
Mead Johnson Nutrition (Dominicana), S.A.†^
Mead Johnson Nutrition (India) Private Limited
Mead Johnson Nutrition (Malaysia) Sdn Bhd.
Mead Johnson Nutrition (Panama), S. de R.L.
Mead Johnson Nutrition (Philippines), Inc.
Mead Johnson Nutrition (Poland) Sp. z o.o
Mead Johnson Nutrition (Puerto Rico) Inc.
Mead Johnson Nutrition (Puerto Rico) Inc.†^
Holding
Registered office
and share class
Name
Holding
Registered office
and share class
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
99.9%
100%
100%
5, 1, 6
5, 2
130, 1
21, 4, 7
5, 1
5, 1
134, 1
47, 1
19, 1
53, 1
123
48, 1
7, 1
92, 1
139, 4
27, 1
51
152, 1
97, 1
45, 1
18, 1
145, 10
27, 1
98
Mead Johnson Nutrition (Singapore) Pte. Ltd.
Mead Johnson Nutrition (Thailand) Ltd
Mead Johnson Nutrition (Venezuela) LLC
Mead Johnson Nutrition Venezuela SCA†^
Mead Johnson Nutrition (Vietnam) Company Limited
Mead Johnson Nutrition Colombia Ltda
Mead Johnson Nutrition Company
Mead Johnson Nutrition Holdings (Singapore) Pte. Ltd.
Mead Johnson Nutrition Nominees LLC
Mead Johnson Nutrition Trading Poland S.p z.o.o.
Mead Johnson Nutrition Venezuela, S.C.A.
Mead Johnson One C.V.
Mead Johnson Two C.V.
Medcom Marketing and Prodazha Ukraine LLC
MJ UK Holdings Limited
MJ USA Holdings LLC
MJN Asia Pacific Holdings LLC
MJN Global Holdings B.V.
MJN Holdings (Netherlands) B.V.
MJN Innovation Services B.V.
MJN International Holdings (UK), Ltd.*
MJN U.S. Holdings LLC
New Bridge Holdings B.V.
Norwich Square Holdings S.L.U.
Nurofen Limited
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
7, 1
103, 4
27, 1
21
150, 5
64, 1
19, 1
7, 1
27, 9
145, 9
153, 10
17, 9
17, 9
31, 11
5, 1
27, 1
27, 1
134, 1
134, 1
134, 1
5, 1
27, 1
134, 1
67, 1
5, 1
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 231
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N OT E S TO T H E PA R E N T CO M PA N Y F I N A N C I A L S TAT E M E N TS CO N T I N U E D
12 Subsidiary Undertakings continued
Name
Optrex Limited*
Oriental Medicine Company Limited
Oxy Reckitt Benckiser LLC
Pharmalab Limited*
Propack Produkte fur Haushalt und Korperpflege GmbH
PT Mead Johnson Indonesia
PT Reckitt Benckiser Indonesia
PT Reckitt Benckiser Trading Indonesia
Pt. Reckitt Benckiser Hygiene Home Indonesia#
Pt. Reckitt Benckiser Hygiene Home Trading Indonesia#
Qingdao London Durex Co., Limited
100%
100%
100%
100%
100%
90.1%
100%
100%
100%
100%
100%
Qingdao New Bridge Corporate Management Consulting Company Limited
100%
R&C Nominees Limited*
R&C Nominees One Limited
R&C Nominees Two Limited
RB & Manon Business Co. Limited
RB & Manon Business Limited
RB & Manon Hygiene Home (Shanghai) Limited#
RB & Manon Hygiene Home Limited
RB (China Trading) Limited
RB (China) Holding Co. Limited
RB (Health) Colombia S.A.S.
RB (Health) Malaysia Sdn Bhd
RB (Home Hygiene) Poland Sp. z .o.o.
RB (Home Hygiene) Romania S.R.L
100%
100%
100%
75%
75%
100%
80%
100%
100%
100%
100%
100%
100%
Holding
Registered office
and share class
Name
Holding
Registered office
and share class
5, 1
130, 1
20, 5
5, 1, 6
120, 1
143, 1
143, 1
90, 1
142, 1
142, 1
105, 1
105, 1
5, 1
5, 1
5, 1
126, 5
149, 1
11, 1
127, 1
5, 1
129, 5
64, 1
151, 1
108, 1
135, 1
RB (Hygiene Home) Australia Pty Limited
RB (Hygiene Home) Czech Republic, spol. s.r.o.
RB (Hygiene Home) Hungary Kft
RB (Hygiene Home) New Zealand Limited
RB (Hygiene Home) Slovakia spol. s.r.o
RB (Suzhou) Co. Ltd
RB Asia Holding Limited
RB Health (Canada) Inc.
RB Health (US) LLC
RB Health Ecuador Cía. Ltda
RB Health Manufacturing (US) LLC
RB Health México, S.A. de C.V.
RB Health Nordic A/S
RB Health Nordic A/S, filial†^
RB Health Nordic, NUF†^
RB Health Nordic A/S sivuliike Suomessa†^
RB Health Peru S.R.L
RB Health Services, S.A. de C.V.
RB Holding Europe Du Sud SAS
RB Holdings (Luxembourg) S.à.r.l
RB Holdings (Nottingham) Limited*
RB Holdings Luxembourg (2018) S.à.r.l
RB Hygiene Home (Thailand) Limited
RB Hygiene Home Arabia FZE
RB Hygiene Home Austria GmbH
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
99.6%
100%
100%
96, 1
157, 1
56, 1
94, 1
75, 1
104, 5
5, 1
137, 4
71, 1
46, 1
71, 1
48, 2
154, 1
62
85
89
65, 1
48, 1
26, 1
2, 2
5, 1, 6
2, 1
103, 4
95, 1
82, 1
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 232
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12 Subsidiary Undertakings continued
Name
RB Hygiene Home Belgium SA
RB Hygiene Home Deutschland GmbH
RB Hygiene Home France SAS
RB Hygiene Home India Private Limited
RB Hygiene Home Netherlands BV
RB Hygiene Home Nordic A/S
RB Hygiene Home Nordic NUF†^
RB Hygiene Home Nordic A/S, filial†^
RB Hygiene Home Nordic A/S, sivuliike Suomessa†^
RB Hygiene Home Switzerland AG
RB Investment Company Limited
RB Ireland Hygiene Home Commercial Limited
RB LATAM Holding B.V.
RB Luxembourg (2016) Limited*
RB Luxembourg (TFFC) S.à.r.l
RB Luxembourg Holdings (TFFC) Limited
RB Luxembourg Holdings (TFFC) S.à.r.l†^
RB Manufacturing LLC
RB Mexico Investments Limited*
RB NL Brands B.V.
RB Reigate (2019) Ltd.
RB Reigate (UK) Limited
RB Salute Mexico S.A. de C.V.
RB Square Holdings (Spain) S.L.
RB UK Commercial Limited
Holding
Registered office
and share class
Name
Holding
Registered office
and share class
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
15, 1
73, 5
26, 1
74, 1
134, 1
154, 1
85
158
89
119, 1
148, 2
41, 1
134, 1
5, 1
2, 1
5, 1
2
21, 1
5, 1
134, 1
5, 1
5, 1, 6
66, 1
67, 2
5, 1
RB UK Hygiene Home Commercial Limited
RB USA (2019) Ltd.
RB USA Holdings LLC
RB Winchester (Ireland) Unlimited Company#
RBHCR Health Reckitt Costa Rica Sociedad Anónima
Reckitt & Colman (Guangzhou) Limited
Reckitt & Colman (Jersey) Limited*
Reckitt & Colman (Overseas) Health Limited
Reckitt & Colman (Overseas) Hygiene Home Limited
Reckitt & Colman (Overseas) Limited*
Reckitt & Colman (UK) Limited*
Reckitt & Colman Capital Finance Limited*
Reckitt & Colman Holdings Limited*
Reckitt & Colman Pension Trustee Limited
Reckitt & Colman Sagrotan Verwaltungsgesellschaft GmbH
Reckitt & Sons Limited*
Reckitt Benckiser (Australia) Pty Limited
Reckitt Benckiser (Bangladesh) PLC
Reckitt Benckiser (Belgium) SA/NV
Reckitt Benckiser (Brands) Limited
Reckitt Benckiser (Brasil) Comercial de Produtos de Hygiene, Limpeza e
Cosméticos Ltda.
Reckitt Benckiser (Brasil) Comercial de Produtos de Hygiene, Limpeza e
Cosméticos Ltda. – Branch Embu†
Reckitt Benckiser (Brasil) Comercial de Produtos de Hygiene, Limpeza e
Cosméticos Ltda. – Branch Extrema†
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
82.9%
100%
100%
100%
5, 1
5, 1
21, 1
30, 1
132, 4
101, 1
87, 1
5, 1
5, 1
5, 1
5, 1, 13
87, 2
5, 1, 6
5, 1
73, 4
5, 1
96, 1, 7
36, 1
15, 1
5, 1
53, 1
77
78
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 233
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N OT E S TO T H E PA R E N T CO M PA N Y F I N A N C I A L S TAT E M E N TS CO N T I N U E D
12 Subsidiary Undertakings continued
Name
Reckitt Benckiser (Brasil) Comercial de Produtos de Hygiene, Limpeza e
Cosméticos Ltda. – Branch Serra†
Reckitt Benckiser (Brasil) Ltda
Reckitt Benckiser (Brasil) Ltda – Branch Itupeva†
Reckitt Benckiser (Canada) Inc.
Reckitt Benckiser (Cayman Islands) Limited
Reckitt Benckiser (Centroamérica) S.A.
Reckitt Benckiser (Channel Islands) Limited#
Reckitt Benckiser (Czech Republic) spol s.r.o.
Reckitt Benckiser (ENA) B.V.
Reckitt Benckiser (España), S.L.U
Reckitt Benckiser (Granollers) SL
Reckitt Benckiser (Grosvenor) Holdings Limited*
Reckitt Benckiser (Health) Holdings Limited
Reckitt Benckiser (Hygiene Home) Holdings Limited
Reckitt Benckiser (India) Private limited
Reckitt Benckiser (Lanka) Limited
Reckitt Benckiser (Latvia) SIA
Reckitt Benckiser (Latvia) SIA Eesti filiaal†^
Reckitt Benckiser (Latvia) SIA LT filialas†^
Reckitt Benckiser (Malaysia) Sdn Bhd
Reckitt Benckiser (Near East) Limited
Reckitt Benckiser (New Zealand) Limited
Reckitt Benckiser (Poland) S.A.
Reckitt Benckiser (Portugal), S.A.
Holding
Registered office
and share class
Name
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
99.9%
100%
100%
100%
100%
100%
100%
122
124, 1
121
12, 4
117, 1
132, 1
61, 1
157, 10
133, 1
67, 1
67, 1
5, 1, 6
5, 1
5, 1
74, 4
106, 1
136, 1
83
156
97, 1
39, 1
14, 1
144, 1
131, 1
Reckitt Benckiser (Romania) S.R.L
Reckitt Benckiser Romania, representative office†^
Reckitt Benckiser (RUMEA) Limited
Reckitt Benckiser (RUMEA) Limited – Dubai Branch†^
Reckitt Benckiser (Singapore) Pte. Limited
Reckitt Benckiser (Slovak Republic), spol s.r.o.
Reckitt Benckiser (South America) Holding B.V.
Reckitt Benckiser (Spain) B.V.
Reckitt Benckiser (Switzerland) AG
Reckitt Benckiser (Thailand) Limited
The Representative Office of Reckitt Benckiser (Thailand) Ltd
in Ho Chi Minh City†^
Reckitt Benckiser (UK) Limited
Reckitt Benckiser (USA) Limited
Reckitt Benckiser AG
Reckitt Benckiser Arabia FZE
Reckitt Benckiser Arabia†
Reckitt Benckiser Arabia Trading LLC
Reckitt Benckiser Argentina S.A.
Reckitt Benckiser Asia Pacific Limited
Reckitt Benckiser Asia Pacific Limited†^
Reckitt Benckiser Austria GmbH
Reckitt Benckiser Bahrain W.L.L
Reckitt Benckiser Brands Investments B.V.
Reckitt Benckiser BY LLC
Holding
100%
100%
100%
100%
100%
100%
100%
99.9%
100%
100%
100%
100%
48.7%
100%
100%
100%
100%
100%
100%
Registered office
and share class
86, 10
16
5, 1
110
7, 1
75, 10
134, 1
134, 1
119, 1
103, 1
138
5, 1
5, 1
119, 1
95, 1
24
44, 1
58, 1
5, 1
25
82, 1
59, 1
134, 1
109, 11
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 234
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N OT E S TO T H E PA R E N T CO M PA N Y F I N A N C I A L S TAT E M E N TS CO N T I N U E D
12 Subsidiary Undertakings continued
Name
Reckitt Benckiser Calgon BV
Reckitt Benckiser Chartres SAS
Reckitt Benckiser Chile S.A.
Reckitt Benckiser Colombia S.A
Reckitt Benckiser Commercial (Italia) Srl
Reckitt Benckiser Corporate Services Limited
Reckitt Benckiser d.o.o.
Reckitt Benckiser Detergents GmbH
Reckitt Benckiser Deutschland GmbH
Reckitt Benckiser East Africa Limited
Reckitt Benckiser Ecuador S.A.
Reckitt Benckiser Egypt Limited
Reckitt Benckiser Ev ve Hjyen Ürünleri A.Ş.
Reckitt Benckiser Ev ve Hijyen Ürünleri Levent Şubesi†
Reckitt Benckiser Expatriate Services Limited*
Reckitt Benckiser Fabric Treatment B.V.
Reckitt Benckiser Finance (2005) Limited
Reckitt Benckiser Finance (2007)*
Reckitt Benckiser Finance (2010) Limited*
Reckitt Benckiser Finance Company Limited*
Reckitt Benckiser Finish B.V.
Reckitt Benckiser France SAS
Reckitt Benckiser FSIA B.V.
Reckitt Benckiser Global R&D GmbH
Reckitt Benckiser Health Argentina S.A.
Holding
Registered office
and share class
Name
100%
100%
100%
100%
100%
100%
100%
100%
100%
99.9%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
134, 1
4, 1
54, 1
68, 1
155, 12
5, 1
146, 1
73, 1
73, 4
115, 1
113, 1
118, 1
114, 5
76
5, 1
134, 1
5, 1, 6
5, 1
5, 1
5, 1
134, 1
26, 1
134, 1
120, 4
58, 1
Reckitt Benckiser Health Comercial Ltda
Reckitt Benckiser Health Comercial Ltda†
Reckitt Benckiser Health Kazakhstan LLP
Reckitt Benckiser Health Kenya Limited
Reckitt Benckiser Health Limited
Reckitt Benckiser Healthcare (Central & Eastern Europe) Limited*
Reckitt Benckiser Healthcare (CIS) Limited
Reckitt Benckiser Healthcare (Ireland) Limited#
Reckitt Benckiser Healthcare (Italia) SpA
Reckitt Benckiser Healthcare (MEMA) Limited
Reckitt Benckiser Healthcare (Philippines), Inc.
Reckitt Benckiser Healthcare (UK) Limited
Reckitt Benckiser Healthcare Australia Pty Limited
Reckitt Benckiser Healthcare B.V.
Reckitt Benckiser Healthcare France SAS
Reckitt Benckiser Healthcare India Private Limited
Reckitt Benckiser Healthcare International Limited
Reckitt Benckiser Healthcare LLC
Reckitt Benckiser Healthcare Manufacturing (Thailand) Limited
Reckitt Benckiser Healthcare S.A.U.
Reckitt Benckiser Healthcare, Lda
Reckitt Benckiser Hellas Healthcare S.A.
Reckitt Benckiser Hellas Hygiene Home S.A.
Reckitt Benckiser Holding (Thailand) Limited
Reckitt Benckiser Holding GmbH & Co KG
Holding
100%
100%
100%
100%
100%
100%
100%
100%
100%
99.9%
100%
100%
100%
100%
99.9%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Registered office
and share class
53, 1
49
55, 11
9, 1
5, 1
5, 1
5, 1
30, 1
155, 1
5, 1
28, 4, 7
5, 1
96, 1
134, 1
26, 1
74, 1
5, 1
29, 11
38, 1, 7
67, 2
131, 12
42, 1
42, 1
103, 4, 7
73, 5
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 235
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N OT E S TO T H E PA R E N T CO M PA N Y F I N A N C I A L S TAT E M E N TS CO N T I N U E D
12 Subsidiary Undertakings continued
Name
Reckitt Benckiser Holdings (Channel Islands) Limited*
Reckitt Benckiser Holdings (Channel Islands) Limited†^
Reckitt Benckiser Holdings (Italia) Srl
Reckitt Benckiser Holdings (Luxembourg) Limited
Reckitt Benckiser Holdings (Overseas) Limited*
Reckitt Benckiser Holdings (TFFC) Limited*
Reckitt Benckiser Holdings (USA) Limited
Reckitt Benckiser Holdings (USA) Limited†^
Holding
100%
100%
100%
100%
100%
100%
Reckitt Benckiser Home Chemical Products Trading (Shanghai) Co. Limited
100%
Reckitt Benckiser Hong Kong Limited
Reckitt Benckiser HK Limited Taiwan branch†^
Reckitt Benckiser Household and Health Care Ukraine LLC
Reckitt Benckiser Household Products (China) Company Limited
Reckitt Benckiser Hygiene Home Brands B.V.
Reckitt Benckiser Hygiene Home Egypt Limited#
Reckitt Benckiser Hygiene Home Ukraine LLC
Reckitt Benckiser Investments (No. 1) S.à.r.l
Reckitt Benckiser Investments (No. 2) S.à.r.l
Reckitt Benckiser Investments (No. 4) S.à.r.l
Reckitt Benckiser Investments (No. 5) S.à.r.l
Reckitt Benckiser Investments (No. 7) S.à.r.l
Reckitt Benckiser Investments (No. 8) S.à.r.l
Reckitt Benckiser Investments Limited
Reckitt Benckiser IP LLC
Reckitt Benckiser Ireland Limited
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Registered office
and share class
Name
Holding
Registered office
and share class
116, 1, 6
5
155, 12
5, 1
5, 1
5, 1, 6
5, 1
2
63, 1
130, 1
40
23, 11
102, 5
134, 1
60, 1
23, 11
2, 1
2, 1
2, 1
2, 1
2, 1
2, 1
5, 1, 6
29, 11
30, 1
Reckitt Benckiser Italia SpA
Reckitt Benckiser Japan Ltd
Reckitt Benckiser Jersey (No. 3) Limited
Reckitt Benckiser Jersey (No. 3) Limited†^
Reckitt Benckiser Jersey (No. 5) Limited
Reckitt Benckiser Jersey (No. 5) Limited†^
Reckitt Benckiser Jersey (No. 7) Limited
Reckitt Benckiser Kazakhstan LLP
Reckitt Benckiser Kereskedelmi Kft
Reckitt Benckiser Laundry Detergents (No. 1) B.V.
Reckitt Benckiser Laundry Detergents (No. 2) B.V.
Reckitt Benckiser Lime-A-Way B.V.
Reckitt Benckiser Limited˚
Reckitt Benckiser LLC
Reckitt Benckiser LLC
Branche of Reckitt Benckiser LLC in city Klin, Moscow region, Russia†
Reckitt Benckiser Luxembourg (2010) Limited*
Reckitt Benckiser Luxembourg (No. 1) Limited*
Reckitt Benckiser Luxembourg (No. 2) Limited*
Reckitt Benckiser Luxembourg (No. 3) Limited
Reckitt Benckiser Luxembourg (No. 4) Limited
Reckitt Benckiser Management Services Unlimited Company
Reckitt Benckiser Marc B.V.
Reckitt Benckiser Mexico, S.A. de C.V.
Reckitt Benckiser Morocco SARL/AU
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
155, 1
140, 1
87, 1
5
87, 1
5
87, 1, 14
111, 1
6, 10
134, 1
134, 1
134, 1
5, 1
21, 1
35, 11
93
5, 1
5, 1
5, 1
5, 1, 6
5, 1, 6
30, 2
134, 1
48, 3
37, 1
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 236
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N OT E S TO T H E PA R E N T CO M PA N Y F I N A N C I A L S TAT E M E N TS CO N T I N U E D
12 Subsidiary Undertakings continued
Name
Reckitt Benckiser N.V.
Reckitt Benckiser N.V.†^
Reckitt Benckiser Nigeria Limited
Reckitt Benckiser Oven Cleaners BV
Reckitt Benckiser Pakistan Limited
Reckitt Benckiser Pars PJSC
Reckitt Benckiser Peru S.A.
Reckitt Benckiser Pharmaceuticals (Proprietary) Limited
Reckitt Benckiser Porto Alto Lda
Reckitt Benckiser Power Cleaners B.V.
Reckitt Benckiser Production (Poland) SP Z.o.o.
Reckitt Benckiser S.à.r.l.
Reckitt Benckiser Service Bureau Limited*
Reckitt Benckiser Services (Kenya) Limited
Reckitt Benckiser Services S.A. de C.V.
Reckitt Benckiser South Africa Health Holdings (Pty) Limited
Reckitt Benckiser South Africa Proprietary Limited
Reckitt Benckiser Tatabánya Kft
Reckitt Benckiser Temizlik Malzemesi Sanayive Ticaret A.S.
Reckitt Benckiser Tiret B.V.
Reckitt Benckiser Treasury (2007) Limited
Reckitt Benckiser Treasury Services (Nederland) B.V.
Reckitt Benckiser Treasury Services (Nederland) B.V.†^
Reckitt Benckiser Treasury Services plc
Reckitt Benckiser USA (2010) LLC
Holding
100%
100%
100%
98.7%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Registered office
and share class
Name
Holding
Registered office
and share class
134, 1
2
8, 1
134, 1
141, 1
13, 1
50, 1
43, 1
80, 12
134, 1
144, 1
2, 2
5, 1
99, 1
69, 1
43, 1
43, 1
56, 1
76, 5
134, 1
5, 2
133, 1
5
5, 1
21, 1
Reckitt Benckiser USA (2010) LLC†^
Reckitt Benckiser USA (2012) LLC
Reckitt Benckiser USA (2013) LLC
Reckitt Benckiser USA (2013) LLC†^
Reckitt Benckiser USA Finance (No. 1) Limited*
Reckitt Benckiser USA Finance (No. 2) Limited*
Reckitt Benckiser USA Finance (No. 3) Limited*
Reckitt Benckiser Vanish B.V.
Reckitt Benckiser Venezuela S.A.
Reckitt Colman Chiswick (OTC) Limited*
Reckitt Health Pain (US) LLC
Reckitt Piramal Private Limited
Reckitt Sanabil for Trading Co LLC
Reckitt Seton Limited*
Reckitt Sonet (UK) Limited*
Reigate Square Holdings S.à.r.l.
Relcamp Aie#
Scholl Consumer Products Limited
Servicios Nutricionales Mead Johnson S.de R.L. de C.V.
Sonet Investments Limited*
Sonet Overseas Investments Limited
Sonet Prebbles Limited*
Sonet Products Limited
Sonet Seton UK Limited*
Sphinx Holdings Company, Inc.
100%
100%
100%
100%
100%
100%
100%
100%
100%
99.9%
51%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
95.5%
5
21, 9
21, 1
5
5, 1
5, 1
5, 1
134, 1
52, 1
5, 1, 6
27, 1
152, 1
112, 1
5, 1, 15, 16
5, 1
2, 1
81, 1
5, 1
48, 1
5, 1, 6
5, 1, 6
5, 1
5, 1
5, 1
18, 4
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 237
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N OT E S TO T H E PA R E N T CO M PA N Y F I N A N C I A L S TAT E M E N TS CO N T I N U E D
Holding
Registered office
and share class
100%
100%
100%
100%
100%
100%
100%
100%
100%
99.9%
100%
100%
100%
100%
100%
100%
100%
100%
100%
5, 1
5, 1
96, 1
33, 1
125, 1
100, 1
57, 1
21, 1
5, 1
3, 2
14, 5
5, 6
5, 1, 8
70, 4
128, 1
27, 1
5, 1, 6
32, 9
5, 1
12 Subsidiary Undertakings continued
Name
SSL (MG) Polymers Limited*
SSL (RB) Products Limited*
SSL Australia Pty Ltd
SSL Capital Limited
SSL Healthcare (Shanghai) Limited
SSL Healthcare Manufacturing S.A.U#
SSL Healthcare Sverige AB
SSL Holdings (USA) Inc.
SSL International plc
SSL Manufacturing (Thailand) Limited
SSL New Zealand Limited
SSL Products Limited
Suffolk Finance Company Limited*
Suffolk Insurance Limited
Tai He Tai Lai Culture Communication Co Limited
TheraPearl LLC
Tubifoam Limited
UpSpring LLC
W.Woodward, Limited
† Branch
#
In liquidation
˚ Interest held directly by Reckitt Benckiser Group plc
^ Country of incorporation different to registered address
Footnotes for Note 12
Share Class
1
2
Ordinary
Ordinary A/B/C/D/E/F/G/H/I/J/K
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Ordinary – Fixed/Variable
Common/Equity
Capital Contribution
Bonus
Preference/Preferred
Deferred
Membership Interest
General Partner/Partnership Interest
Charter Capital
Quota
Irredeemable Cumulative Preference
Redeemable Preference – Class A/C/D
Cumulative Preference
Convertible
Registered Offices
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
1 Lampousas Street, P.C. 1095, Nicosia, Cyprus
1 rue de la Poudrerie, Leudelange, L-3364, Luxembourg
100 Moo 5, Bangsamak Sub-District, Bangpakong District, Chachoengsao Province 24180, Thailand
102 rue de Sours, 28000, Chartres, France
103-105 Bath Road, Slough, Berkshire SL1 3UH, United Kingdom
1113 Bocskai út 134-146, Budapest, Hungary
12 Marina Boulevard, #19-01 Marina Bay Financial Centre, 018982, Singapore
12, 11th Floor Heritage Place, 21 Lugard Avenue Ikoyi, Ikoyi, Lagos State, Nigeria
14 Riverside Drive, Arlington Building, 3rd Floor, Nairobi, 209/19, Kenya
15a, Office 302, Micro District 1, Koktem, Bostandyk District, Almaty City, Kazakhstan
16/F, Xu Jia Hui International Plaza, No.1033 Zhao Jia Bang Road, Shanghai, China
1680 Tech Avenue, Unit 2, Mississauga ON L4W 5S9, Canada
1st Floor, unit 11, No.88 Baran Building, Sayed Road, Opposite Mellat Park, Vali-e-Asr Avenue, Tehran, Islamic Republic of Iran
2 Fred Thomas Drive, Takapuna, Auckland, 0622, New Zealand
20 Allée de la Recherche, Anderlecht, 1070 Brussels, Belgium
22 Zlaten rog Street, Floor 3, Office 4, District of Lozenets, City of Sofia, Bulgaria
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 225 North Canal Street, Floor 25, Chicago IL 60606, United States
47
Av de las Granjas 972, Col. Santa Barbara, Azcapotzalco, CDMX, 02230, Mexico
2309 Don Chino Roces Avenue Extension, Makati City, PH 1321, Philippines
48
Av. Ejército Nacional No.769, Corporativo Miyana Torre B, Piso 6, Alcaldía Miguel Hidalgo, Colonia Granada, CP 11520, Mexico
238
Reckitt Annual Report and Accounts 2022
N OT E S TO T H E PA R E N T CO M PA N Y F I N A N C I A L S TAT E M E N TS CO N T I N U E D
12 Subsidiary Undertakings continued
17
18
19
2400 W. Lloyd Expressway, Evansville IN 47721, United States
20
24th Floor, Two IFC, 10 Gukjegeumyung-ro, Youngdeungpo-gu, Seoul, 07326, Republic of Korea
21
22
23
24
25
26
27
28
29
30
31
32
33
251 Little Falls Drive, Wilmington DE 19808, United States
2711 Centreville Road, Suite 400, Wilmington DE 19808, United States
28A Stepana Bandery Prospect, Bld.G, Office 80., Kiev, 04073, Ukraine
309, Floor 3, Dubai Science Park Laboratory Complex, Dubai, United Arab Emirates
3-20-14 Higashi Gotanda, Shinagawa-ku, Tokyo, 141-0022, Japan
38 rue Victor Basch, 91300, Massy, France
399 Interpace Parkway, Parsippany, New Jersey, NJ 07054-1115, United States
3rd Floor, Mead Johnson Nutrition Philippines Inc., 2309 Don Chino Roces Extension, Makati City, 1231, Philippines
3rd Floor, 4 Shluzovaya emb., Zamoskvorechye Municipal district, Moscow, 115114, Russia
3rd Floor, Kilmore House, Park Lane, Spencer Dock, Dublin 1, Ireland
40-Richchia Zhovtnia avenue, 120, 1 Block, Kyiv, 03127, Ukraine
4209 S. Industrial Drive, Suite 200, Austin TX 78744, United States
44 Esplanade, St Helier, JE4 9WG, Jersey
34
4th Floor, 115 George Street, Edinburgh, EH52 4JN, Scotland
35
36
37
38
39
40
41
42
43
44
45
52/1, Kosmodamianskaya emb, 115054, Moscow, Russian Federation
58-59 Nasirabad Industrial Area, Chittagong 4209, Bangladesh
59 Boulevard Zerktouni, Residence Les Fleurs 6eme étage, Casablanca, Morocco
65 Moo 12 Lardkrabang-Bangplee Road, Bangpleeyai Sub-district, Bangplee District, Samutprakarn, 10540, Thailand
6A Hangar Street, PO Box 6440, I.Z., Neve Nee’man B, Hod Hasharon, 457703, Israel
6F, No. 136, Sec. 3, Ren-Ai Rd., Da-An Dist., Taipei City 10, 10657, Taiwan
6th Floor, 2 Grand Canal Square, Dublin 2, Ireland
7 Taki Kavalieratou Street, Kifissia, 145 64, Greece
8 Jet Park Road, Gauteng, Elandsfontein, 1406, South Africa
Al Seer Corporate Office, Behind Al Tayer Motors, Sheikh Zayed Road, Al Quoz Industrial Area 3, Dubai, 31587,
United Arab Emirates
Apartment 6G, 6th Floor, Edificio Bladex, Calle Avenida La Rotonda. Business Park, Corregimiento de Juan Diaz,
Urbanización Costa Del Este, Provincia De Panamá, Distrito de Panama, Panama
46
Av Coruña N27-88 y Orellana, Edificio Coruña Plaza 7mo Piso, Quito, 170150, Ecuador
49
50
51
52
53
Av. Portugal, nº 1.100, Setor Rua 6 Parte A12, Bairro Itaqui, Itapevi, São Paulo, 06696-060, Brazil
Av. Republica de Panama # 2577, Urb. Santa Catalina, La Victoria, Lima, Peru
Av. Winston Churchill No. 1099 Torre Acrópolis, Piso 12, Santo Domingo, República Dominicana
Avenida Mara con Calle San José, Centro Comercial Macaracuay Plaza, Nivel C3, Locales 5 y 12. Urb. Colinas de la California,
Caracas, Bolivarian Republic of Venezuela
Avenida Presidente Juscelino Kubitschek, n° 1909, 24° andar, Parte C, Torre Norte, Condomínio São Paulo Corporate Towers,
Vila Nova Conceição, Sao Paulo, CEP 04.543-907, Brazil
54
Avenida Presidente Kennedy Lateral 5454, Oficina 1602, Vitacura, Región Metropolitana, Chile
55
56
57
58
59
60
61
62
63
Bld. 15/A, Koktem-1, Almaty, 050040, Kazakhstan
Bocskai út 134-146, Budapest, H-1113, Hungary
Box 190, 101 23 Stockholm, Sweden
Bucarelli 2608 PB ‘A’, Ciudad Autonoma de Buenos Aires, Argentina
Building 330, Road 1506, Block 115, Bahrain International Investment Park, Hidd. Kingdom of Bahrain, Bahrain
Building A1, Second Floor, Plot #A14b01, Cairo Festival City, First District, Fifth Settlement, New Cairo, Cairo, Egypt
c/o Grant Thornton Limited, St James Place, St James Street, St Peter Port, GY1 2NZ, Guernsey
c/o Reckitt Benckiser Nordic A/S, Danmark Filial, Regeringsqatan 29, 111 53, Stockholm, Sweden
C6-8 Site 6F, No.333 Futexi Road, Waigaoqiao Free Trade Zone, Shanghai City, China
64
Calle 76 No 11-17, Oficina 301, Bogota, CO, Colombia
65
66
67
Calle Dean Valdivia No. 148, Torre 1, Ofic. 501, Urb. Jardín, San Isidro, Lima, Peru
Calzada de Tlalpan No. 2996, Col. Ex Hacienda Coapa, Del. Coyoacán, Cd. de México, C.P. 04980, Mexico
Carrer de Mataró, 28, 08403, Granollers, Barcelona, Spain
68
Carrera 6 #45-105, Cali, Colombia
69
70
71
72
73
74
75
76
Circuito Dr Gustavo Baz, 7, No. 7, Fracc Industrial El Pedregal, Atizapan de Zaragoza, Edomex, Mexico
Clarendon House, Church Street, Hamilton HM11, Bermuda
Corporation Service Company, 251 Little Falls Drive, Wilmington, New Castle DE 19808, United States
Dangtu Economic Development District, Maanshan City, Anhui Province, China
Darwinstrasse 2-4, 69115, Heidelberg, Germany
DLF Cyber Park, 6th & 7th Floor (Tower C), 405 B, Udyog Vihar Phase III, Sector 20, Gurugram, Haryana, 122016, India
Drieňová 3, Bratislava 821 08, Slovakia
Esentepe Mahallesi Büyükdere Caddesi Tekfen, Tower No: 209 A Blok D:2 34394 4., Levent, Şişli, İstanbul, Turkey
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 239
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12 Subsidiary Undertakings continued
77
78
79
Est Dona Maria Jose Ferraz Prado, 1481, Cond Dist. Park Embu, Brazil
107
Northcliffe House, Young Street, London, W8 5EH, United Kingdom
Estm Maria Margarida Pinto Dona Belinha, 742, GalpaO3, Bloco I/A, Brazil
108
Nowy Dwór Mazowiecki, Ul. Okunin 1, 05-100, Poland
Estrada Fukutaro Yida, n. 930, Bairro Cooperativa, Sao Bernardo Do Campo, Sao Paulo, 09852-060, Brazil
109
of. 166, 66, K Liebknekhta st., Minsk, 220036, Belarus
80
Estrada Malhada dos Carrascos, 12, Porto Alto, 2135-061, Samora Correia, Portugal
110
Office 1801, 1803, 1804, Emaar Real Estate Burj Khalifa, Dubai, United Arab Emirates
81
82
83
Fray Carbo, 24, 08400, Granoliers, Spain
Guglgasse 15, 1110, Vienna, Austria
111
Office 302, Building 15a, Koktem-1, Micro District, Almaty City, Kazakhstan
112
Office Number 51, Fifth Floor, Mukmal Plaza Center, Al Hamra District Palestine Street, Jeddah City, Kingdom of Saudi Arabia
Harju maakond, Rae vald, Rae küla, Raeküla tee 5, 75310, Estonia
113
Oficina 4C, Av. 12 de Octubre, #26-48 y Orellana, Edificio Mirage, Piso 4, Quito, 170525, Ecuador
84
Heinestrasse 9, 69469, Weinheim, Germany
114
Orta Mahallesi Demokrasi, Caddesi Benckiser Sitesi No.92, Tuzla, Istanbul, Turkey
85
86
87
Henrik Ibsens gate 60A, 0255 Oslo, Norway
115
Plot 209/2462, Likoni Road, Nairobi, Kenya
Iancu de Hunedoara Boulevard, Nr. 48, 11th Floor, Crystal Tower Building, 1st District, Bucharest, 011745, Romania
116
PO Box 285, 1st and 2nd Floors, Elizabeth House, Les Ruettes Brayes, St Peter Port, GY1 4LX, Guernsey
IFC 5, St. Helier, JE1 1ST, Jersey
117
PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands
88
Intersection of Hongqi Road and Mingzhu Road, Dangtu Economic Development Zone, Maanshan City, Anhui Province, China
118
Polyom Building, 22 Off Road 90, Fifth District, Fifth Settlement, New Cairo, Cairo, Egypt
89
90
91
92
93
94
95
96
97
98
99
Itsehallintokuja 6, 02600 Espoo, Finland
119
Richtistrasse 5, 8304, Wallisellen, Switzerland
Jl. Raya Narogong, Chamber A.I, Kel. Pasirangin, Kec Cileungsi, Kab. Bogor. Provinsi. Jawa Barat, 16820, Indonesia
120
Robert-Koch-Straße 1, 69115, Heidelberg, Germany
Ketian Aquatic Science and Technology Industrial Park, No. 3949 Kunlunshan Avenue, Lanzhou New Area, Lanzhou City,
Gansu Province, China
121
Rod Dom Gabriel Paulino Bueno Couto, 1606, Brazil
122
Rod Governador Mario Cova, 7270, KM 264 Parte RB, Brazil
King & Wood Mallesons, ‘Governor Phillip Tower’ Level 61, 1 Farrer Place, Sydney NSW 2000, Australia
Klin City, Tereshkovoy Street, 1, 14160052/1, Moscow Region, Russian Federation
Level 1, 2 Fred Thomas Drive, Takapuna, Auckland, 0622, New Zealand
Level 27, Tower B, JAFZA One, Jebel Ali Free Zone, Dubai, PO Box 16834, United Arab Emirates
Level 47, 680 George Street, Sydney NSW 2000, Australia
Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights 50490, Wilayah Persekutuan,
Kuala Lumpur, Malaysia
Los Frailes Industrial Park, Ave. Esmeralda, Calle C # 475, Guaynabo, 00969, Puerto Rico
LR.NO.1870/1/569, 2nd Floor, Apollo Centre, Ring Road Westlands, Kenya
100
No. 151, Avda. Can Fatjó, Rubi, Barcelona, Spain
101
No. 3, Canglian 1 Road, ETDZ, Guangzhou, China
102
No. 34 East Beijing Road, Jingzhou, Hubei, 434001, China
103
No. 388, Room No. 1903, Floor 19th Floor, Exchange Tower, Sukhumvit Road, Sub-District Klongtoey, District Klongtoey,
Bangkok, 10110, Thailand
123
Rodovia Antonio Heil, SC 486, km 4, Bairro Itaipava, ‘Armazém 1B’, Itajaí, São Paulo, CEP 88316-003, Brazil
124
Rodovia Raposo Tavares, 8015 km 18, 1º andar, Sala 2, Jardim Arpoador, Sao Paolo, CEP 05577-900, Brazil
125
Room 1605, No.660, Shangcheng Road, Shanghai Pilot Free Trade Zone, China
126
Room 1701, No. 1033, Zhao Jia Bang Road, Xuhui District, Shanghai, China
127
Room 2001, 20/F, Greenfield Tower, Concordia Plaza, No.1 Science Museum Road, Tsim Sha Tsui, Kowloon, Hong Kong
128
Room 2109, Floor 2, No.10 Chaoyangmenwai Street, Chaoyang District, Beijing City, China
129
Room B01, Unit 2, Tower 9, Dongdaqiao Road, Chaoyang District, Beijing, China, China
130
Rooms 2206-11, 22 Floor, Chubb Tower, Windsor House, 311 Gloucester Road, Causeway Bay, Hong Kong
131
Rua D. Cristóvão da Gama, n.º 1, 1º, C/D, 1400-116, Lisboa, Portugal
132
San Jose-Escazu En Escazu Corporate Center, Setimo Piso, Costado Sur De Multiplaza Escazu, Costa Rica
133
Schiphol Boulevard 267, 1118 BH, Schiphol, The Netherlands
134
Siriusdreef 14, 2132 WT, Hoofddorp, The Netherlands
135
Str. Grigore Alexandrescu 89-97, Aripa Vest, Et. 5, Finish room, Sect. 1, Bucuresti, 010624, Romania
104
No. 99, Changjiang Da Road, Fuqiao Town, Taicang City, China
105
No.1-13 Shangma, Aodong Road, High-tech Industrial Development Zone, Qingdao City, Shandong Province, China
136
Strēlnieku iela 1A-2, Rīga, LV-1010, Latvia
137
Suite 2300, 550 Burard Street, Vancouver BC V6C 2B5, Canada
106
No.25, Shrubbery Garden, Colombo-04, Sri Lanka
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 240
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12 Subsidiary Undertakings continued
138
Suite 402, 4th Floor, No. 235 Dong Khoi Street, Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam
139
Suite 600, 1741 Lower Water Street, Halifax NS B3J 0J2, Canada
140
Sumitomo Fudosan Takanawa Park Tower 14F, 3-20-14 Higashi-Gotanda, Shinagawa-ku, Tokyo, 141-0022, Japan
141
Tenancy 04 & 05, 3rd Floor, Corporate Office Block, Dolmen City, HC, Block 4, Scheme 5, Clifton, Karachi, 75600, Pakistan
142
Treasury Tower 59th Floor, District 8, SCBD, Jalan Jendral Sudirman Kav. 52-53, Jakarta, 12190, Indonesia
143
Treasury Tower, District 8, Level 58, SCBD Lot 28, Jalan Jend Sudirman Kav. 52-53, Kel. Senayan, Kec., Kebayoran Baru, Kota,
Adm Jakarta Selatan, Provinsi, DKI Jakarta, 12190, Indonesia
144
Ul. Okunin 1, 05-100, Nowy Dwór, Mazowiecki, Poland
145
Ul. Wołoska 22, 02-675, Warsaw, Poland
146
Ulica Grada Vukovara 269d, 10 000 Zagreb, Hrvatska, Croatia
147
Unit 02, 11/F, Tower A Hedonic Center, 6 Songyue Road, Siming District, Xiamen, China
148
Unit 05, Level 3, Gate Village Building 04, Dubai Investment Financial Centre, PO BOX 677, United Arab Emirates
149
Unit 2001, 20/F, Greenfield Tower Concordia Plaza, No. 1 Science Museum Road, Kowloon, Hong Kong
150
Unit 401, 4th Floor, Metropolitan Building, No. 235 Dong Khoi Street, Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam
151
Unit No. 50-8-1, 8th Floor, Wisma Uoa Damansara, 50 Jalan Dungun, Damansara Heights, 50490 Kuala Lumpur,
Wilayah Persekutuan, Malaysia
152
Unit No. 54, 5th Floor, Kalpataru Square, Andheri-Kurla Road, Andheri (East), Mumbai, Maharashtra, 400059, India
153
Urb. Las Mercedes, Av. Orinoco cruce con Mucuchies Torre Nordic, Piso 1, Oficina 1 y 2, Municipio Baruta Caracas,
Bolivarian Republic of Venezuela
154
Vandtårnsvej 83 A, 2860, Søborg, Denmark
155
Via Spadolini 7, 20141, Milano, Italy
156
Vilniaus m. sav. Vilniaus m. Olimpiečių g. 1A, Lithuania
157
Vinohradská 2828/151, 130 00 Praha 3-Žižkov, Czech Republic
158
Vretenvägen 2, 4th Floor, 171 54 SOLNA, Sweden
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 241
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S H A R E H O LD E R I N FO R M ATI O N
Annual General Meeting
Our Annual General Meeting (AGM) will be held on Wednesday 3 May 2023 at 14:00 at the London
Heathrow Marriott Hotel, Bath Road, Hayes, Middlesex UB3 5AN.
The Notice convening the meeting, together with the business to be considered at the meeting,
is contained in a separate document for shareholders and is available on our website at
www.reckitt.com/investors/annual-general-meetings.
2023 financial calendar and key dates
Announcement of Quarter 1 trading statement
Annual General Meeting
Record date for 2022 final dividend
Payment of 2022 final ordinary dividend
Announcement of 2023 interim results
Record date for 2023 interim dividend
Payment of 2023 interim ordinary dividend
Announcement of Quarter 3 trading statement
26 April 2023
3 May 2023
11 April 2023
24 May 2023
26 July 2023
4 August 2023
15 September 2023
25 October 2023
Dividend
The Directors recommend a final dividend of 110.3 pence per share for the year ended 31 December
2022. Subject to shareholder approval at the 2023 AGM, payment of the final dividend will be made on
24 May 2023 to all shareholders on the register as at 11 April 2023. The latest date for receipt of new
applications to participate in the Dividend Reinvestment Plan (DRIP) in respect of the 2022 final dividend
is 2 May 2023. Details on how to join the DRIP can be found below.
Dividend Reinvestment Plan (DRIP)
Shareholders participating in the DRIP receive additional shares purchased in the market instead of
receiving a cash dividend. You can elect to join the DRIP by registering on the Computershare Investor
Centre at www.investorcentre.co.uk. Alternatively, you can request a DRIP mandate form and terms and
conditions by contacting Computershare on +44 370 703 0118.
Mandatory direct credit
We no longer pay dividends by cheque. Instead, cash dividends are now paid directly to shareholders’
bank accounts. This is known as ‘mandatory direct credit’. Receiving dividends this way means that
shareholders receive dividend funds quicker. It also means the company reduces its environmental
impact, incurs lower administration costs and reduces the risk of cheque fraud.
To have your dividends paid directly into your bank account, please provide your bank details to our Registrar,
Computershare, either by accessing Computershare’s Investor Centre at www.investorcentre.co.uk or by
telephone on +44 370 703 0118. We will hold your dividends for you until you provide valid bank details and
charges may be applied to reissue any outstanding dividend payments.
If you are based overseas, you may choose to have your dividends paid to your account in your local
currency by using Computershare’s Global Payment Service (GPS). To view the terms and register to
the GPS, please join our DRIP. This is also available via Investor Centre.
Share dealing facility
The company’s shares can be traded through most banks, building societies, stockbrokers or ‘share
shops’. In addition, UK-based shareholders can buy or sell the company’s shares using a share dealing
facility made available by Computershare, which includes internet and postal share dealing.
Internet share dealing
Internet share dealing is available to shareholders residing in the UK. This service offers shareholders a
straightforward way to buy or sell the company’s shares on the London Stock Exchange. The commission
is 1.4%, subject to a minimum charge of £40. In addition, stamp duty, currently 0.5%, is payable on
purchases. Real-time dealing is available during UK market hours (08:00 to 16:30). In addition, you can
place a sale instruction outside of market hours.
To access the service, log on to www-uk.computershare.com/Investor/#ShareDealingInfo. Shareholders
must have their Shareholder Reference Number (SRN) available. The SRN appears on share certificates.
Internet share dealing is only available to residents in either the UK, Channel Islands or Isle of Man.
Postal share dealing service
The postal share dealing service offers a way to sell or purchase shares (subject to availability). To use
the service you must be a resident of the UK or one of the permitted jurisdictions. A full list of permitted
jurisdictions can be found at www-uk.computershare.com/Investor/#ShareDealingInfo. If you wish
to use the service, you can download a postal share dealing form and the terms and conditions at
www-uk.computershare.com/Investor/#ShareDealingInfo. The fee for this service is 1.4% of the value
of each sale or purchase and is subject to a minimum charge of £40. Stamp duty of 0.5% may be payable
on purchases.
Detailed terms and conditions for both internet and postal dealing are available upon request by calling
+44 370 702 0000.
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Electronic shareholder communications
We encourage all shareholders to receive an email notification when shareholder documents become
available online, to reduce our impact on the environment. An election to receive electronic shareholder
communications will:
– result in cost savings to the company since less paper documentation will need to be produced
and posted;
– allow for quicker and more effective communications with shareholders; and
– support Reckitt’s corporate responsibility profile.
Shareholders can register for electronic communications by registering at www.investorcentre.co.uk.
For each new shareholder who does so, £1 will be donated to the Woodland Trust. For more information
on the Woodland Trust, please visit its website at www.woodlandtrust.org.uk.
Shareholders who have elected for electronic communications will receive an email whenever
shareholder documents are available on the company’s website. Shareholders who have elected
by deemed consent, in accordance with the Companies Act 2006, will receive a hard copy notice of
availability of a document on the company’s website and are entitled to request a hard copy of any
such document, at any time, free of charge from Computershare. Shareholders can revoke their consent
to receive electronic communications at any time by contacting Computershare.
The company’s 2022 Annual Report and Notice of the 2023 AGM are available to view at
www.reckitt.com. The Investor section of the website also contains up-to-date information for
shareholders to view throughout the year, including:
– detailed share price information;
– financial results;
– regulatory announcements;
– dividend history, payment dates and amounts;
– access to shareholder documents including the Annual Report and Notice of AGM; and
– share capital information.
Analysis of shareholders as at 31 December 2022
Distribution of shares by type of shareholder
No. of holdings
Shares
Nominees and institutional investors
Individuals
Total
Size of shareholding
1–500
501–1,000
1,001–5,000
5,001–10,000
10,001–50,000
50,001–100,000
100,001–1,000,000
1,000,001 and above
Total
3,137
10,450
727,823,859
8,711,320
13,587
736,535,179
No. of holdings
Shares
7,672
2,131
2,150
326
596
214
381
117
1,466,892
1,547,450
4,459,918
2,306,865
14,889,862
14,977,724
119,490,025
577,396,443
13,587
736,535,179
American Depositary Receipts (ADRs)
ADRs are dollar-denominated securities that represent the ownership of ordinary shares in a non-US
company, quoted and traded in US dollars in the US securities market. ADRs facilitate the purchase,
holding and sale of non-US shares by US investors. Dividends are paid to investors in US dollars.
Reckitt Benckiser Group plc ADRs are traded on the over-the-counter (OTC) market under the symbol
RBGLY. Five ADRs represent one ordinary Reckitt share. J.P. Morgan Chase Bank N.A. is the Depositary.
The table below provides details of the identification of Reckitt securities on the US market place and
the London Stock Exchange.
Symbol
RBGLY
RKT.L.
Security
Listing/Trading
CUSIP/ISIN
US security (ADR)
OTC Pink
756255204
Ordinary share
London Stock Exchange GB00B24CGK77
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 243
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ADR Depositary Bank
J.P. Morgan Chase Bank N.A. sponsors and administers the Reckitt ADR facility.
J.P. Morgan ADR shareholder services can be contacted as follows:
J.P. Morgan Chase Bank N.A.
383 Madison Avenue, Floor 11, New York, NY 10179
Telephone number for general queries: +1 800 990 1135
Telephone number from outside the US: +1 651 453 2128
Website: www.shareowneronline.com
Company Secretary
Catheryn O’Rourke
Registered office
103-105 Bath Road, Slough, Berkshire SL1 3UH, United Kingdom
Telephone: +44 1753 217800
Registered in England and Wales, No. 6270876
Company status
Public Limited Company
Auditor
KPMG LLP
Solicitors
Slaughter and May
Registrar
The company’s Registrar, Computershare, is responsible for maintaining and updating the shareholder
register and making dividend payments to shareholders. If you have any queries relating to your
shareholding, please contact Computershare.
Computershare Investor Services PLC
The Pavilions, Bridgwater Road, Bristol BS99 6ZZ
Shareholder helpline
Telephone: +44 370 703 0118
Website: www.computershare.com/uk
Charity donation
ShareGift is a UK registered charity (No.1052686) which specialises in realising the value locked up in small
shareholdings for charitable purposes. The resulting proceeds are donated to a wide range of charities,
reflecting suggestions received from donors. If you have only a small number of Reckitt shares which are
uneconomic to continue holding, you may wish to consider donating them to ShareGift. Please visit
www.sharegift.org/donate-shares or telephone +44 207 930 3737 for more information.
Unsolicited mail
We are legally obliged to make our register of shareholders available to the public, subject to a proper
purpose test. As a result, some shareholders might receive unsolicited mail. Shareholders wishing to limit
the amount of such mail should write to the Mailing Preference Service, MPS FREEPOST 29 LON20771,
London W1E 0ZT or register online at www.mpsonline.org.uk.
Share fraud and ‘boiler room’ scams
Share fraud is a deceptive practice that induces investors to make sales and purchases based on
inaccurate information and in violation of security laws. In boiler room scams, fraudsters will entice
investors into scams through increased persuasion and high-pressure tactics through cold calling or
random contact.
Reckitt is aware of these deceptions and urges shareholders who are offered unsolicited investment
advice, discounted shares, a premium price for shares, or free company or research reports to investigate
thoroughly before making any decision.
If you receive any form of unsolicited investment advice, please take the following steps:
– Confirm the name of the person and/or organisation
– Check the Financial Conduct Authority’s (FCA) Financial Services Register at register.fca.org.uk/
to ensure they are authorised
– Use the details on the Financial Services Register to contact the firm
– Call the FCA Consumer Helpline on +44 800 111 6768 (freephone) or 0300 500 8082 (from the UK),
if there are no contact details on the Register or if they are out of date
– Search the FCA’s list of unauthorised firms and individuals at
www.fca.org.uk/consumers/unauthorised-firms-individuals to avoid doing business with
reported offenders
– If you are approached by fraudsters please contact the FCA using its helpline, or share fraud
reporting form
– Consider getting independent financial advice
Using an unauthorised firm to buy or sell shares or other investments will prohibit access to the
Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) should the
investment be unsuccessful. Remember: if it sounds too good to be true, it probably is. If you
think you have been a victim of these scams, the matter should be reported to the Police
and to Action Fraud. For more information, please visit the Serious Fraud Office website at
www.sfo.gov.uk/contact-us/reporting-serious-fraud-bribery-corruption.
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Cautionary note concerning forward-looking statements
This Annual Report and Financial Statements contains statements with respect to the financial condition,
results of operations and business of Reckitt Benckiser Group plc and the Reckitt group of companies
(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, geopolitical and social conditions in the key markets in which
the Group operates; the Group’s ability to innovate and remain competitive; the Group’s investment
choices in its portfolio management; the ability of the Group to address existing and emerging
environmental and social risks and opportunities; 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 including the risk of cyber-attack; interruptions in the Group’s
supply chain and disruptions to its production facilities; economic volatility including increases in the
cost of labour, raw materials and commodities; the execution of acquisitions, divestitures and business
transformation projects; product safety and quality, and 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 Annual Report and Financial
Statements. Except as required by any applicable law or regulation, Reckitt 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.
Any information contained in the 2022 Annual Report and Financial Statements on the price at which
shares or other securities in Reckitt Benckiser Group plc have been bought or sold in the past, or on the
yield on such shares or other securities, should not be relied upon as a guide to future performance.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 245
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Printed by a carbon neutral company to
the EMAS standard and Environmental
Management System certified to ISO 14001.
This document is printed on paper made of
material from well-managed, FSC®-certified
forests and other controlled sources.
This publication has been manufactured
using 100% offshore wind electricity
sourced from UK wind.
100% of the inks used are vegetable oil based,
95% of press chemicals are recycled for further
use and, on average 99% of any waste associated
with this production will be recycled and the
remaining 1% used to generate energy.
This is a certified climate neutral print product
for which carbon emissions have been calculated
and offset by supporting recognised carbon
offset projects. The carbon offset projects are
audited and certified according to international
standards and demonstrably reduce emissions.
The climate neutral label includes a unique ID
number specific to this product which can be
tracked at www.climatepartner.com, giving
details of the carbon offsetting process including
information on the emissions volume and the
carbon offset project being supported.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Reckitt Benckiser Group
Registered office
103-105 Bath Road
Slough, Berkshire
SL1 3UH, UK
Registered in England and Wales
No 6270876
reckitt.com