Annual Report

and Accounts 2021

OUR PURPOSE

OUR COMPASS

OUR LEADERSHIP BEHAVIOURS

OUR FIGHT

We exist to protect, heal and nurture in the

relentless pursuit of a cleaner and healthier world.

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. Our Compass is fundamental

torejuvenating sustainable growth.

In order to deliver on our ambitions around

Purpose and our business strategy, our culture

enables our people to have the Freedom to

Succeed and operate at their best. Our culture

isembedded in our Leadership Behaviours.

Thesebehaviours set out our expectations for

how every one of us at Reckitt behaves. They

aredeeply embedded inside our company and

are the basis for how we evaluate our leaders

going forward in line with our desired culture.

Reckitt leaders Own, Create, Deliver and Care.

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.

OWN

• Live our Purpose, Fight

and Compass

• Know our business cold

• Make decisions

CREATE

• Spot opportunities

• Innovate, iterate andscale

• Relentlessly build better

CARE

• Actively listen, learn

andinclude

• Speak direct with respect

• Act to unleash potential

DELIVER

• Focus on what matters

• Move boldly and at pace

• Join forces to win bigger

To read more about our business

visit www.reckitt.com

SEEKING NEW

OPPORTUNITIES

Reckitt Annual Report and Accounts 2021

CONTENTS

p.16

SUSTAINABILITY AMBITIONS

For a cleaner, healthier world

FOCUS ON: DIGITAL

Strategic transformation in the

digitalarena

FOCUS ON: SUPPLY CHAIN

Managing global supply chains

p.38

p.42

Strategic Report

02 At a Glance

04 Chair’s Statement

07 Chief Executive Ofﬁcer’s Statement

10 Market Context

14 Our Business Model

16 Sustainability Ambitions

18 Key Performance Indicators

20 Focus on: COP26

22 Our Strategy

24 Progress Against Our Strategy: Hygiene

26 Progress Against Our Strategy: Health

28 Progress Against Our Strategy: Nutrition

30 Progress Against Our Strategy: Strategic Imperatives

34 Focus on: Innovation

38 Focus on: Digital

42 Focus on: Supply Chain

46 Focus on: Culture & Inclusion

50 Stakeholder Engagement

66 TCFD Summary

68 S172 Statement

72 Non-Financial Information Statement

74 Group Financial Review

88 Risk Management

103 Viability Statement

Governance

104 Corporate Governance Report

108 Our Board of Directors

114 Group Executive Committee

128 Nomination Committee Report

133 Audit Committee Report

141 CRSEC Committee Report

148 Directors’ Remuneration Report

188 Report of the Directors

192 Statement of Directors’ Responsibilities

Financial Statements

193 Independent Auditor’s Report

205 Financial Statements

268 Shareholder Information

AT A GLANCE

At a Glance

GLOBAL PORTFOLIO OF LEADING BRANDS, SOLVING FOUR

OF THE WORLD’S LARGEST PROBLEMS

• Large and attractive total addressable market associated

with solving four of the world’s largest problems

• Powerful, purpose-led brands that make a meaningful

difference to consumers’ lives and help drive the

growth of our customers

• Two-thirds of Group net revenue generated from

brands with top three market positions globally

SUPERIOR EARNINGS MODEL WITH CAPITAL DISCIPLINE

• Superior gross margins and productivity, coupled with

strong execution, funding investment in brand equity

and innovation

• Committed to maintaining single-A credit rating, with

strong working capital and cash generation after

reinvestment in the business

• Surplus cash used for M&A or returned to shareholders

EXECUTING AGAINST OUR PLAN TO DRIVE

SUSTAINABLEGROWTH

• Investment across six strategic imperatives

• Targeting sustainable mid-single-digit net revenue

growth and mid-20’s adjusted operating proﬁt margins

EXPERIENCED AND COMMITTED MANAGEMENT TEAM,

DRIVING A CULTURE OF OWNERSHIP

• FMCG

and consumer health experience, coupled with

functional expertise, from within the Group and through

external hires

• Strong culture of ownership: around 50% of employees

are shareholders

• Leadership Behaviours of Own, Deliver, Create and Care

embedded within the organisation

• Proposed management remuneration based upon LFL net

revenue growth, Relative TSR, ROCE and ESG measures

STRONG ENVIRONMENTAL, SOCIAL AND

GOVERNANCECREDENTIALS

• Sustainability embedded within the business;

£1bninvestment over ten years

• Rated ‘AA’ by MSCI and in top 15% in the household

products industry group and DJSI gold status for 2021

GLOBAL BUSINESS UNITS

HYGIENE

Hygiene is the foundation of health and our purpose-led portfolio

works to eliminate dirt, germs, pests and odours with market-

leading products such as Lysol, Finish, Air Wick, Harpic and Mortein.

For further information on our Hygiene business

see page 24

HEALTH

Our Health portfolio brings compelling, innovative solutions that

provide pain relief, protection, hygiene and personal care to

households across the world, through brands like Dettol, Durex,

Gaviscon, Nurofen, Mucinex, Strepsils and Veet.

For further information on our Health business

see page 26

NUTRITION

The Nutrition business includes our leading infant and child

nutrition, our adult nutrition and our range of vitamins, minerals and

supplements (VMS). Brands include Enfa, Nutramigen, Airborne,

Move Free and Neuriva. The strength of this business is its focus

onscience-led innovations which underpin products catering to

consumers from infants through to the elderly. In Q1 2022, VMS

moved into our Health GBU.

For further information on our Nutrition business

see page 28

Through our core business strengths and the

actions we are taking to further drive performance,

we see an attractive investment story.

OUR INVESTMENT STORY

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

1. Adjusted and other non-GAAP measures, deﬁnitions and terms are deﬁned on

page 81

2. Pipeline value represents the increased revenue opportunity in 2022 compared

to 2021

3. Based on Advantage Group 2021 survey of retailers. 20ppts increase in markets

rated top-tier, from 26% in 2020 to 46% in 2021

4. Calculated for 12 months ending 30 September 2021

FINANCIAL HIGHLIGHTS

Strong ﬁnancial performance building on growth from 2020, with 17.4% two-year stacked

like-for-like

(LFL) revenuegrowth.

288.5p

adjusted total EPS

(diluted)

2020: 327.0p

174.6p

full-year dividend

2020: 174.6p

-4.5p

IFRS total EPS

(diluted)

2020: 166.3p

3.5%

LFL net revenue growth

-5.4%

IFRS net revenue growth

2021: £13,234m (2020: £13,993m)

22.9%

adjusted operating margin

excl.IFCN China

2020: 24.5%

-6.1%

IFRS operating margin

2020: 15.4%

STRATEGIC HIGHLIGHTS

Continued strategic progress throughout 2021, with investment in strategic imperatives,

leading to improved performance.

62%

Category Market Units (CMUs)

holding or gaining market share

c.50%

Increase in innovation

pipelinevalue

20ppts

2021 improvement in % of markets where

Reckitt is rated top-tier by retailers

SUSTAINABILITY HIGHLIGHTS

Good progress against our sustainability ambitions, which were launched in March 2021.

29.3%

revenue from more sustainable

products excluding IFCN

1,4

24.9%

revenue from more

sustainableproducts

1,4

66%

absolute reduction in carbon

emissions from operations

since2015

£38.2m

invested in Fight for Access Fund

in2021

Chair’s Statement

Reckitt’s performance during 2021 gives

grounds for conﬁdence about our future

performance. Our business transformation

programme is on track. We are advancing

our strategic priorities and building

asustainable, purpose-led culture. With

the foundations for sustainable growth

now in place, the company stands at an

inﬂection point.

I’m proud of the progress we made during what was a turbulent

year for the global economy. Reckitt’s resilience and ﬂexibility

were much in evidence. We successfully navigated both

challenges and opportunities arising from pandemic-related

disruptions and supply chain bottlenecks. And we not only

delivered globally in broad performance terms but also continued

to build foundations for sustainable growth and future

outperformance.

We’re competing and innovating more effectively. Our category-

led, demand-centric approach is broadening the scope for our

brands. Our Purpose – to protect, heal and nurture in the relentless

pursuit of a cleaner and healthier world – is warmly endorsed by

the workforce.

With the foundations for strategic transformation ﬁrmly in place,

we are well positioned to focus on opportunities for future growth.

Chris Sinclair

Chair

BUILDING

ONFIRM

FOUNDATIONS

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1. Adjusted and other non-GAAP measures, deﬁnitions and terms are deﬁned on

page 81

BUSINESS PERFORMANCE

Full-year net revenue was £13,234 million, with growth of 3.5% on

alike-for-like basis. This was underpinned by strong performance

in Hygiene and a recovery in Health as we exited the year. The

reshaped Nutrition GBU also made good progress, with solid

revenue growth from the ongoing business.

Adjusted operating proﬁt was £2,877 million, at an adjusted

operating margin of 22.9% (excluding IFCN China), down 160bps

on2020. This is in line with our guidance provided at the half-year

results, and reﬂects planned investment across many areas.

Our medium-term ﬁnancial performance has been encouraging,

with 17.4% like-for-like, stacked growth

over the past two years.

And the business has done well to deliver continuing growth in

thissecond year of its strategic transformation against last year’s

pandemic-inﬂuenced revenue ﬁgures.

Sharper execution, expanded capacity, better customer service and

continually improving digital capabilities have all helped to deliver

strong underlying performance across our portfolio of brands.

The business transformation is now well underway. We are realising

signiﬁcant cost savings through increased productivity, with

£1.1billion achieved to date. We have also sharpened the portfolio

with the strategic disposal of Scholl, IFCN China and E45 alongside

the addition of Biofreeze, a leading US pain relief brand, which

presents exciting new growth opportunities for our Health portfolio.

We remain focused on delivering our strategy in each of our three

business units. Our Hygiene and Health brands have continued

todeliver strong penetration-led gains with market share gains

inmany categories. Strong execution and innovation delivered

consistently good growth in our continuing Nutrition business,

mostnotably in our Vitamins, Minerals and Supplements portfolio,

and in the US IFCN business which now accounts for half of the

GBU’s revenue.

Governance and risk management have also been important areas

of focus for the Board over the last few years. We have continued

to broaden and deepen our approach to managing safety and

compliance risk. We’re embedding our sustainability agenda, with

a new strategy and 2030 ambitions launched in March. In line with

this, we are increasing investments and initiatives that enhance the

safety and sustainability of our products, as well as their efﬁcacy.

Consistent with the expectations we set out last year, the

Directors have proposed a ﬁnal dividend of 101.6 pence per share,

which, when added to the interim dividend of 73 pence, gives a

full-year dividend of 174.6 pence per share. Subject to shareholder

approval at the Annual General Meeting (AGM), this will be paid

on9 June 2022 to shareholders who were on the register on

29 April 2022.

3.5%

LFL revenue growth

174.6p

full-year recommended dividend

£1.1bn

productivity savings to date

We are investing signiﬁcant energy and resources in our

sustainability agenda. Sustainability is an integral part of our

long-term growth strategy and intrinsic to our identity as a

responsible business that aims to make a positive difference in

theworld. The focus on sustainability resonates with stakeholders

and is warmly embraced by our workforce.

CHANGES TO THE BOARD

The Group beneﬁts hugely from the talented individuals on its

Board. They are committed to Reckitt and passionate about its

future. During the year we were pleased to welcome Alan Stewart

as a Non-Executive Director. As a former CFO at Tesco, Alan has

awealth of retail and commercial experience. His expert insights

will inform our approach as we continue to strengthen our retail

partnerships. Alan will also chair the Remuneration Committee,

replacing Mary Harris in that role. I’d like to thank Mary for her

sterling efforts over the last few years in guiding our remuneration

policy changes that integrate sustainability objectives into

performance by incorporating environmental, social and

governance (ESG) metrics. Mary remains on the Remuneration

Committee but is now more able to focus on advancing our

cultural agenda in her role as Designated Non-Executive Director

for engagement with the company’s workforce.

Sara Mathew has decided to step down from the Board at this

year’s AGM. Sara’s insights and knowledge greatly enriched the

Board’s deliberations. She leaves with our sincere thanks and very

best wishes.

CONCLUSION

Healthy organisations respond to stress by adapting quickly.

We’velearned a lot in the past year about managing costs and our

supply chain, and, importantly, about how the organisation can stay

nimble and do the right thing. Reckitt proved its mettle in 2021,

demonstrating its capacity to respond ﬂexibly in a fast-changing

competitive landscape. This speaks to a resilient, relevant

organisation that is addressing key global challenges through

thepower of its brands.

We have arrived at an inﬂection point. We are transitioning

outoffoundation building and the focus now is on improving

performance and delivering growth by driving the business into

new areas and adjacencies. We need to build on the progress

we’ve already made in managing the business responsibly and

sustainably, but our strategy sets the right objectives. We aim to

address the needs of all stakeholders and, by doing that, deliver

strong returns for shareholders. Our task now is to ensure we

continue to compete and innovate.

Reckitt today is a dynamic, integrated business with a rich heritage,

big ambitions and a clear sense of direction. We will maintain our

focus on optimising our operations to do the right thing, always,

and put consumers and people ﬁrst. I’m conﬁdent that, by doing

that, we will deliver strong, sustainable performance.

IMPLEMENTING OUR STRATEGY

Despite turbulent markets, we made rapid progress during 2021 in

implementing our strategy. We were able to advance our strategic

priorities and pursue business transformation while still delivering on

performance. The cultural agenda has also been progressing well.

We’ve invested in transformational capabilities and in organising

ourselves to become more focused and, as noted, continued to

expand our investments and capabilities across the whole area

ofgood governance, sustainability and in managing the business

responsibly. Our participation at COP26 as ofﬁcial hygiene partner

underlined our commitment to meaningful action and highlighted

the interconnectivity between hygiene, human health and

planetary health.

Our performance-oriented culture puts purpose at the heart of our

business. Our rebranding as Reckitt in March crystallised that. Our

new corporate identity is helping us explain what we do and why

we do it with more impact and immediacy. It’s been well received,

both externally and within the Group.

On our business agenda, managing the supply chain was a

particular priority. In the middle of a pandemic, with brands that

play a strategic role in combating infection, maintaining adequate

supply was clearly critical. We were able to scale up product

supply dramatically when needed and achieved signiﬁcant

performance improvements with our major customers, getting

them product on time and at the right levels.

We’ve drawn on that experience to further strengthen our global

supply chain to better manage signiﬁcant supply disruptions and

combat cost inﬂation. These efforts have helped to make the

organisation more integrated and resilient. At the same time,

we’remaking sure we’re getting the productivity gains from our

transformation initiatives, which help to support margins as we

deal with cost inﬂation.

We’ve also been improving other capabilities in the organisation

–including digital and e-commerce, marketing and selling

excellence, enhanced customer service management and R&D.

And we’re building stronger customer and partner relationships

founded on our shared interest in delivering high-impact solutions

that meet societal challenges.

Importantly, we’ve also strengthened our brands by aligning them

with our Purpose and by focusing on category-led markets and

sustainable innovation. Through this, we are uncovering new

spaces in which our brands can operate. Our trusted brands

continued to advance strongly in 2021, growing market share

andincreasing penetration.

TALENT AND CULTURE

Laxman’s talented top team has integrated well and is making

rapid inroads towards achieving our strategic objectives.

Further,the leadership team is progressively embedding and

operationalising our cultural agenda across the business and there

is a clear sense of direction and motivation across the company

todeliver on that. Our workforce has shown itself to be adaptable

and highly effective in very taxing conditions. Their resilience and

commitment have brought tangible improvements to execution

across the Group. We are extraordinarily fortunate to have such

acapable and dedicated team of colleagues.

Chair’s Statement (Continued)

Financial StatementsGovernanceStrategic Report

Chief Executive Ofﬁcer’s Statement

Our journey to rejuvenate sustainable

growth is well on track.

OVERVIEW

In February 2020, we set out our strategy for rejuvenating

sustainable growth and outlined our medium-term ﬁnancial

targets. Our objective is to rebuild like-for-like revenue growth

tothe mid-single-digit range, and to deliver adjusted operating

margins in the mid-20s by the mid-2020s.

This strategy recognises that Reckitt plays a signiﬁcant role in

solving four of the word’s largest problems: How can hygiene

bethe foundation for health? How do we enable consumers

toself-care at a time when health systems are under massive

pressure? How do we support intimate wellness and eradicate

themenace of sexually transmitted diseases? How do we

provideenhanced nutrition for infants and for the increasing

number of seniors in society?

And as part of this, we capitalise on two major shifts: digital

andsustainability. Namely, how can digital enable us to win at

atime when technology is transforming consumer behaviour

andbusiness more broadly? And how do we turn sustainability

intoan advantage to realise new opportunities, while making

theworld better?

Guiding us is our Purpose. We exist to protect, heal and nurture

inthe relentless pursuit of a cleaner and healthier world. Our Fight

is to make access to the highest quality hygiene, wellness and

nourishment a right not a privilege. That means the highest quality

products, availability and information that drives behaviour change.

Our Compass guides us to do the right thing: put consumers and

people ﬁrst, seek out new opportunities, strive for excellence

andbuild shared success. Our behaviours shape us and our culture:

weOwn, we Create, we Deliver and we Care.

Laxman Narasimhan

Chief Executive Ofﬁcer

STRONG GROWTH

WITHA STRENGTHENED

PORTFOLIO

STRONG TOP-LINE MOMENTUM THROUGHOUT 2021

Against this backdrop, we are seeking out new opportunities,

leveraging our Purpose, Compass, Fight and Leadership

Behaviours. And in 2021, we made good progress against

ourambitions. Group net revenue of £13.2 billion grew by 3.5% on

aLFL basis in 2021, resulting in a two-year stacked LFL net revenue

growth of 17.4%.

Our in-market competitiveness remains strong. 62% of our core

Category Market Units (CMUs), excluding IFCN China, held or

gainedshare.

During the year, COVID-19 continued to impact net revenue.

Around 70% of our portfolio, representing brands less sensitive

toCOVID-19 dynamics, grew mid-single digits on a LFL basis.

Theremaining 30% of our portfolio, which includes Lysol, Dettol

and our cold and ﬂu brands (Mucinex, Strepsils and Lemsip), was

more volatile, reﬂecting ﬂuctuations in COVID-19-related demand.

E-commerce net revenue

, excluding IFCN China, grew by 17% in

2021 and now accounts for 12% of Group net revenue. The two-year

stacked growth is over 85%.

EXECUTING WITH EXCELLENCE

We are a performance-driven company, and the signiﬁcant step-up

in investment in foundational capabilities over the past two years

has further improved our execution and competitiveness.

In 2021, we were named Walmart’s Supplier of the Year for

consumables, reﬂecting the improvements in sales excellence

capabilities. Based on the independent Advantage Group 2021

survey of retailers, 46% of our markets, weighted by revenue,

arenow considered ‘top-tier’ for customer service – an increase

of20 percentage points compared to 2020.

Our innovation pipeline is stronger, up 50% in 2022 compared to

2021, and it is also more innovative, with patent ﬁlings up 30%.

Atthe same time, and in the face of signiﬁcant input cost

pressures, our supply chain continued to improve, and our

commitment to quality in supply was a contributing factor in

Reckitt’s readmission to the Dow Jones Sustainability Index.

Underpinning the investment associated with these improvements,

our productivity programme continues to deliver, with cumulative

savings since the beginning of 2020 of £1.1 billion.

17.4%

LFL net revenue growth

(two-year stacked)

c.50%

employee share ownership

upgraded MSCI ESG rating

Chief Executive Ofﬁcer’s Statement (Continued)

1. Adjusted and other non-GAAP measures, deﬁnitions and terms are deﬁned

onpage 81

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

Around the event itself, we worked with stakeholders globally,

demonstrating the important connection between climate change

and people’s health, and the way we can help inﬂuence consumers

to adopt behaviours that help tackle climate change. We engaged

with governments around the world: in Milan, we proﬁled our Finish

purpose commitment at a round-table event focusing on scarce

water resources; in the US, we hosted a COP26 round-table with

the Biden administration’s Deputy Special Envoy for Climate; and

inMexico City, the UK Embassy showcased Reckitt as a trusted

partner for health, hygiene and climate ambitions.

CREATING VALUE FOR SHAREHOLDERS

My Group Executive Committee and I are committed to maximising

value for our shareholders. Our interests are fundamentally aligned.

Reckitt has natural advantages, with the strength of our brands,

which play in attractive categories underpinned by favourable

trends. And the improvements we have made to our foundational

capabilities and to our culture, we believe, will see the business

return to sustainable mid-single-digit revenue growth with

mid-20s margins.

In addition, we will continue to be active managers of the portfolio.

During the year, we sold our footcare brand, Scholl, to Yellow Wood

Partners, and sold our IFCN business in China to Primavera Capital

Group. These two transactions have reduced our exposure to

low-growth or declining categories. The sale of IFCN China is

agood example of Reckitt’s well-known agility, as our central

functions of Digital, Finance, R&D, HR, Legal and Supply, came

together, along with our China team, to separate the business

andclose the deal in just 96 days from the announcement of

thetransaction.

We also announced an important strategic move into the world’s

largest pain management market of the US, with the acquisition

ofBiofreeze – a leading and fast-growing analgesic brand. Here,

we see exciting potential for geographic expansion and innovation,

building on the brand’s existing strong track record for growth.

Towards the end of the year, we announced the disposal of E45.

Aswith Scholl, we saw less ﬁt with our broader portfolio and

thedisposal allows us to focus resources elsewhere.

Finally, with signiﬁcant hires into the Executive team over the

pasttwo years, I am delighted with how well the team has

beenfunctioning, particularly given the unusual and challenging

environment. I deeply appreciate the leadership that they have

shown and the positive changes they and their teams have

brought about.

LOOKING FORWARD

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 the

conﬁdence in both our-near term and medium-term prospects.

WE ARE EVOLVING OUR ALREADY STRONG CULTURE

Alongside the investment in these foundational capabilities is

thework to evolve our culture, building on the success of our past.

In particular, setting out the Leadership Behaviours that we each

Reckitt has always had a strong culture. We are a company of

owners; around 50% of employees own shares in the company

andwe see this as a differentiator.

We Create. That’s always been a strength, but we’ve refocused

incertain areas, fuelled by our investments in capabilities. Our

science platforms combined with our push to broaden our thinking

about consumer-demand spaces have resulted in a larger pipeline.

We Deliver in a way only Reckitt can and evidenced by the agility

and the tireless effort made by our teams in the last two years,

during the pandemic.

And in addition to these three behaviours we have added a fourth:

Care. Care for our consumers, customers, communities and the

environment. We will always be a highly commercial, performance-

driven company: it’s in our DNA. But we are striving to do better

than that, broadening the basis on which we are judged.

RELENTLESS PURSUIT FOR A CLEANER, HEALTHIER WORLD

A key part of Care is our care for the environment and

ourcommunities.

In this regard, we continue to make strong progress against our

sustainability targets which were set out in April 2021. Our MSCI

Sustainability score is now AA – having been upgraded from A

inApril – and our Sustainalytics score is 22.9, ranking us in the top

15% amongst our peers. We are committed to operating according

tothe Paris Agreement, and we are therefore pleased that the

modelling by MSCI demonstrates our climate plans translate

intoatemperature increase of 1.38 degrees – better than many

inour industry.

At the same time, we are better connected with our communities

through our Fight for Access Fund, to which we contributed

£38million in 2021.

An example of how we are aligning commercial interests with

doing business in the right way is our work at the COP26 summit

inGlasgow in November 2021 – which was billed as the last best

chance to implement the goals of the Paris Agreement and the

UNFramework Convention on Climate Change.

As the event’s ofﬁcial hygiene partner, and led by our Global

Business Solutions and R&D teams, we saw our Dettol brand

entrusted with keeping more than 30,000 delegates from over 190

countries safe from COVID-19. This was a key opportunity for us to

demonstrate our Purpose in action. We showed how we’re helping

build awareness of the connection between planetary health and

public health, how our brands can encourage pro-environmental

behaviours and how Hull – where Reckitt has its roots – is working

to become the UK’s ﬁrst net-zero city.

Market Context

Sustainability is not only about doing the right

thing, it is increasingly 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 impact its production and usage can have

onthe environment or wider society.

ADDRESSING FOUR OF THE

WORLD’S LARGEST PROBLEMS

HOW CAN HYGIENE BE THE FOUNDATION FOR HEALTH?

Growing consumer awareness of the importance

ofhygiene and its connection to health

The transmission of infection will remain a pressing global concern.

With more crowded cities, greater movement of people and fewer

opportunities for physical separation, good hygiene practice is

increasingly important. In addition, too many people globally lack

clean water and sanitation.

At the same time, rising levels of income globally are allowing

moreand more consumers to use products pre-emptively

tohelpprotect their health and their homes.

HOW DO WE ENABLE CONSUMERS TO SELF-CARE AT A TIME

WHEN HEALTH SYSTEMS ARE UNDER MASSIVE PRESSURE?

Government healthcare cost pressures and

increased autonomy are elevating the importance

ofself-care solutions

Across the world, ageing populations and stretched public

ﬁnances are putting pressure on health systems. Meanwhile,

individuals are becoming better informed and are more actively

involved in looking after themselves. Citizens are also increasingly

conscious that managing their own health also has a social

dimension in the public health arena.

Self-care is putting people at the heart of decision-making

aboutwhat matters most to them: products and solutions.

Self-care solutions are supported by consumer-centred

technology on apps and elsewhere, offering increasingly

sophisticated personalised recommendations.

CAPITALISING ON THE BROAD AND

RISING IMPACT OF DIGITAL AND

SUSTAINABILITY

As we seek solutions to these

problems, we know that

consumer tastes, values

andbehaviour are evolving.

73%

of people want to reduce their impact

on the environment and nature

(Source: Globescan; Healthy &

Sustainable Living, 2021)

Our response: Reckitt’s premium, category-leading products

support hygiene both inside and outside of the home, cleaning

and sanitising and providing a frontline defence against the

spread of transmissible diseases and viruses.

With our disinfectant brands of Lysol and Dettol, we are helping

to break the chain of infection on surfaces of kitchens and

bathrooms, from hands, and other ‘at-risk’ spaces.

Harpic is ensuring the sanitisation of bathrooms, whilst Air Wick

and Finish support overall cleanliness and hygiene within the

home. Through the Reckitt Global Hygiene Institute and our

Fight for Access Fund, we are also contributing to the building

of awareness and scientiﬁc understanding of hygiene issues,

aswell as to the availability of products.

Finally, our Pest brands such as Mortein and SBP are protecting

families and their homes from unwanted pests and insects.

Our response: By saving a trip to the doctor, we are

helpingtoreduce demand on strained public healthcare.

Ourover-the-counter healthcare brands provide people with

the tools they need to treat everyday symptoms themselves,

without recourse to healthcare professionals. We partner with

clinical professionals and share science-backed information

with consumers to prevent and treat infection. Moving from

aproduct to a consumer focus, we are developing science

solutions that address speciﬁc consumer needs and providing

consumer beneﬁts across protect, heal and nurture. Our

science platforms (see page 36) are enabling us to do this,

aswe share insights gleaned from our gastro-intestinal work

onour VMS brand, Digestive Advantage, for example, with

ourheartburn and indigestion relief brand, Gaviscon. These

dynamics, combined with digital trends, continue to provide

opportunities in areas like personalised nutrition, wellness

anddigital health.

35%

30%

25%

20%

15%

10%

COVID-19

pushed

people online

in 2020. 2021

penetration

data proves

they stay online.

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

Reckitt operates in attractive, growing market segments. We ﬁght to address

four of the world’s largest problems. And as we do this, we are capitalising on

the broad and rising impact of digital and sustainability.

Digital is transforming consumer behaviour and

purchasing decisions, affecting what people buy and

how they buy it. This has implications for the way we

develop and market our products, the value we can offer

consumers, and how we manage our supply chain. The

disruption brought about by COVID-19 has accelerated

these trends, with a step-change in virtual appointments,

remote prescriptions and e-commerce transactions.

Online share of retail sales

HOW DO WE SUPPORT INTIMATE WELLNESS

ANDERADICATE THE MENACE OF SEXUALLY

TRANSMITTED DISEASES?

Maintaining sexual health and protecting young people

in a challenging era

In many areas of the world, awareness and understanding of

sexualhealth and wellbeing is poor. The subject is often taboo

andseen as political rather than an essential life-or-death issue.

The exceptional measures governments and health authorities

imposed during the pandemic contributed to a global setback

inreproductive and sexual health rights. Scarce resources were

diverted from sexual health and quarantine measures kept young

people away from formal educational settings.

HOW DO WE PROVIDE ENHANCED NUTRITION FOR

INFANTS AND FOR THE INCREASING NUMBER OF

SENIORSIN SOCIETY?

Growing demand for specialised infant and adult

nutrition products

Infants deserve the best possible start to life, and a key part of that

is the nutrition they receive. This is particularly the case for those

suffering from allergies, or other conditions for which more

specialised nutrition is needed. With birth rates relatively stable,

demand for such products is likely to be the key driver of infant

formula market growth over time.

At the same time, life expectancy has increased rapidly. With

people living longer, there is growing demand for health and

wellbeing products that allow them to live their lives to the full.

Assuch, there is continued growth in demand for high-quality

specialty food supplements, around key need states such as

immunity, digestion, and cognition and mental health.

Our response: 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. We do this through better

understanding differing consumer needs, and continually

improving the performance of our products, for example, through

size and ﬁt, to enhance pleasure and the consumer experience of

intimacy. At the same time, we’re partnering with key inﬂuencers

and celebrities such as Lil Nas X in the US, to generate product

awareness and grow usage of the category. As part of a better

understanding of consumer needs, we are addressing the

growing demands of previously-overlooked parts of the

market.Through Queen V for example, we are recognising the

importance of vaginal health, leveraging our understanding of

themicrobiome to deliver products seeking to combat everyday

problems such as itchiness and dryness. Our educational

initiatives promote responsible attitudes and behaviours

withprogrammes that help young people make informed

andconﬁdent choices, alongside partners such as the National

AIDS Control Organization (India), Solidarite (France), Dance 4Life

(Netherlands), and UNFPA (Mexico).

Our response: Through the strength of our brands, consumer

insight and science understanding, we are well placed to be

awinner in the nutrition market. With our infant brands such as

theEnfa range and Nutramigen, and adult brands such as Provital,

Move Free, Airborne and Neuriva, we seek to address the most

important needs in nutrition. Our product innovation teams

leverage the capabilities within our science platforms of digestive

health and allergy and immunity to deliver natural solutions

thataddress the speciﬁc nutritional needs of these groups,

whether infants or adults. E-commerce is playing an increasingly

important role in how consumers seek out and purchase

nutritional products. This provides an opportunity for us to better

serve them through the lifecycle of their or their baby’s needs,

with our brand communications with an expectant mother often

beginning well before the baby is born, for example.

Market Context (Continued)

OVERVIEW

Reckitt operates in over 60 countries around the world. Reﬂecting

the premium nature of our portfolio, 64% of revenue is currently

derived by developed markets – primarily North America and

Europe. However, continued growth in the middle classes in

manydeveloping markets such as India and China will improve

affordability of premium products, and is likely to support overall

revenue growth over time.

Split of developed and developing

markets

Nutrition

Health

Hygiene

Group

64% 36%

79% 21%

52% 48%

59% 41%

Developed markets Developing markets

CHINA

China represents 5% of the total Group following the disposal of

the IFCN business. Having averaged double-digit growth in recent

years, it is now the Group’s fourth largest country market.

Reckitt has operated in the Chinese market since 1916 with

headquarters in Shanghai. The business operates across three

GBUs, with approximately 3,500 employees and ﬁve manufacturing

facilities. We have recently invested around £90 million in the

Taicang factory to support China Dettol and Durex growth.

E-commerce has been a major contributor to growth in the market,

now representing around two-thirds of the China business

. Its

success has led the way for learnings across the Group more

broadly, in areas such as digital marketing, data and automation,

and venturing.

Reckitt’s largest brands in China are Durex and Dettol which

represent more than 70% of the China business revenue. Other

brands include Finish, Lysol, Harpic and the more recently launched

Neuriva – all of which we expect to show double-digit percentage

annual growth over the coming years.

We are also active in our communities, supporting education on

the importance of hygiene, and we target reaching over 27,000

schools across the country over the next ﬁve years.

The US is Reckitt’s largest geographic market, with revenue in

2021of over £3.8 billion, representing 30% of Group revenue,

excluding IFCN China.

Reckitt is home to some of the best loved, most recognisable

andmost trusted consumer brands in the US, including Airborne,

Air Wick, Enfamil, Finish, KY, Lysol and Mucinex.

Around 5,300 employees work in the US business. We have three

R&D centres of excellence and six manufacturing locations.

US-made brands include multiple category leaders, among them

Lysol, where we lead the US surface protection category. We’re

number two in laundry additives with Finish, number two in the

cough and cold category with Mucinex, and number three in air

care with Air Wick. Our infant follow-on nutrition, Enfamil, is the

number one brand recommended by paediatricians.

Total US revenue has increased by over 20% since 2019. Led by

theincreased demand for Lysol, growth has been driven by

consumer-centric innovation and improved relationships and

execution with our key customers such as Walmart and Dollar General

– both of which gave us a supplier of the year award during 2021.

Across each of our three GBUs, our business took market share in

2021. In Hygiene, through continued outperformance of Lysol and

AirWick; in Health, this was through gains in Mucinex and Durex;

andin Nutrition, through our infant formula brands.

Innovation was a driver of performance in 2021, with recent

launches including Lysol Smart – a sustainability-focused product

– and the Mucinex NightShift and InstaSoothe ranges.

Reckitt also has a history of supporting local communities through

its brands. One example is Lysol’s ‘HERE for Healthy Schools

Initiative’ which provides educational materials for students and

disinfecting supplies for schools, with the mission to curb the

spread of preventable illnesses.

OUR GEOGRAPHICAL

FOOTPRINT

1. Excluding IFCN China

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

INDIA

India is Reckitt’s second largest market, with revenue in 2021 of

over £800 million, around 6% of Group revenue, and we have

ambitions to double this by 2030.

In a ﬁercely competitive space, we’re outperforming our peers.

Our net revenue growth over the past ﬁve years has averaged

8%per annum. With strong heritage in India, having entered the

market with Dettol in 1940, weplay across multiple categories, with

Dettol, Harpic, Vanish andVeet each leaders in their respective

segments. Our brands are highly trusted, with Dettol for example

scoring 28% points

higher than its closest competitor on key

attributes, and with onein twohouseholds

purchasing the brand

in the last year.

The market backdrop is highly favourable. By 2030, India is

expected to be the most populous country in the world, with

1.5billion people, and GDP is forecast to be $6trillion making

ittheworld’s third largest economy

. Today, Indians spend a

relatively low proportion of their income on consumer staples.

With the equivalent spend some 30 times greater in the US,

thereis substantial headroom for growth.

Such is the strength of our brands such as Dettol, Harpic and Durex,

we are uniquely placed to drive purpose-led messages on vital

topics, such as hygiene and sexual health and wellbeing, across

thecountry. Dettol’s high-proﬁle Banega Swasth India campaign

for example has been running since 2014. Now in its eighth season,

through celebrity endorsement and in partnership with the

country’s most respected TV channel, it’s helping millions of

Indians to improve their lives with better hygiene and sanitation.

The Dettol School Curriculum is reaching 20 million primary school

children. Targeted diarrhoea prevention interventions save the lives

of around 100,000 under-5s in Uttar Pradesh.

Such is the strength of Dettol in the country, that it was the

starting place for what became a global phenomenon. The

#handwashchallenge TikTok campaign, which ultimately garnered

125 billion views, was initiated with Bollywood celebrities and

India’s top TikTok inﬂuencers uploading their own dance-based

interpretations of the handwashing rap.

The development of the India operation over the last two years

exempliﬁes the strategic transformation that’s underway across

Reckitt globally. We’re driving core brand performance with

innovation-led market share growth and penetration gains.

We’regrowing e-commerce – up nearly 140% over the last

threeyears – and extending our reach. We’re supplementing our

retailnetwork with expanding direct distribution and enhancing

digital capabilities. We’re strengthening our supply chain and

improving productivity.

Durex: making Invisible visible

Six years ago, there was limited brand awareness of Durex in India.

The brand had a very small share of what was then a low-visibility

market. Sex had long been seen as a ‘man’ thing that wasn’t

discussed in the public sphere. Condoms were mostly supplied

onrequest by chemists and were not on display. Product

understanding was limited and suppliers mainly served basic

needs, which favoured cheaper local brands.

Durex recognised that several category segments were underserved

and launched superior offerings to meet that untapped demand.

ItsMutual Climax condom emphasised performance, while Durex

Invisible, India’s thinnest condom, stressed intimacy.

The brand backed up these innovations with quirky, social-media-

led campaigns that championed great sex and took on centuries-

old taboos. Celebrity endorsements engaged younger audiences.

In a ﬁrst for India, Durex challenged the stigma around female

sexuality and built conversations around sex that included women

and the LGBTQ+ community.

Key to performance for Durex in India, however, has been its

improved distribution. In early 2019, the brand could be found in

around 76,000 distribution points across the country. Today, it is

over 120,000. Combined with improvements in digital, this has seen

Durex gain over 210bps of market share in 2021, leading to the

brand now being the second largest condom name in the country.

Looking forward, we continue to see the Durex opportunity

assigniﬁcant – with growth in the category, as well as further

opportunities for market share gains.

LFL net revenue growth in India

2016 2018 2019

CAGR +8%

2020 20212017

Leading brand positions

#1 #1#1 #1

1. Advantage survey of retailers 2021

2. Source: Nielsen penetration data

3. Source: World Bank

Hygiene Health Nutrition

eRB

Global Business Solutions; Global Expansion Markets;

Greater China

Global functions & capability centres

Our Business Model

We are the company behind some of the

world’s most recognisable and trusted

consumer brands in hygiene, health

andnutrition.

OUR PURPOSE

We exist to protect, heal and nurture in the relentless pursuit

ofacleaner and healthier world.

OUR ASSETS

Our people and culture

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.

Our brands

We have a global portfolio of leading brands, offering attractive

growth prospects and margins, and sustainable competitive

advantages.

Our knowledge and skills

We have deep consumer understanding, proven R&D capabilities

and an agile organisation, which gets the right products into the

hands of consumersquickly.

Our partnerships

We develop strong, trusted relationships with our customers,

consumers, suppliers, communities and other partners to allow

usto extend our impact.

Our infrastructure

Our business is underpinned by strong manufacturing sites,

R&Dlaboratories, centres of excellence and logistics centres

andwell as digital infrastructure.

Our ﬁnancial strength

Shareholders’ equity, debt and retained proﬁt give us the ﬁnancial

resources to implement our strategy.

WHERE WE PLAY

HOW WE

CREATE VALUE

BUSINESS STRUCTURE

Out-execute

Innovation

Highgrossmargin

business

HighBEI

Productivity

Growth

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

HOW WE WIN VALUE WE CREATE

>80

products now labelled as Climate

Pledge Friendly on Amazon

For customers

see page 52

c.50%

of employees are shareholders

For our people

see page 55

>3,000

scientists, engineers, technologists

and experts work at Reckitt

For expert knowledge

see page 58

For collaboration and

partnerships see page 59

2bn

target engagement with 2 billion

people through our programmes,

partnerships and campaigns by 2030

For communities

see page 61

>20m

Reckitt products sold every day

For consumers

see page 54

c.3,200

direct material suppliers

For suppliers

see page 57

>£80m

invested in over 15 startups to date

For innovators

see page 58

288.5p

total adjusted diluted EPS

For our investors

see page 60

29.3%

net revenue from more sustainable

products excluding IFCN

For our environment

see page 63

MID-TERM TARGETS

Rejuvenating Sustainable Growth. We have committed to deliver:

mid-single-digit growth and mid-20s proﬁt margin.

OUR FIGHT

We have a ﬁght on our hands. A ﬁght to make access

to the highest quality hygiene, wellness and nourishment

aright andnota privilege.

EARNINGS MODEL

BEI = Brand Equity Investment

Sustainability Ambitions

FOR A CLEANER, HEALTHIER WORLD

OUR 2030

SUSTAINABILITY

AMBITIONS

Sustainability is central to our Purpose.

Itruns through everything we do.

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 – purpose-led brands, healthier planet and

fairer society – where we can maximise our positive and enduring

impact, within and through our core business. The ambitions are

supported by speciﬁc targets and metrics to drive disciplined

execution across the business. They are backed by over £1 billion

inexisting, planned and projected investment.

We aim to:

• Reach half the world with products that contribute to a cleaner,

healthier world

• Engage two billion people with purpose-led campaigns to

promote awareness for a cleaner, healthier world

• 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

PARTNERSHIPS

We reach out to like-minded partners to drive real, sustainable

change together. Our partnerships with WWF and the Fair Rubber

Association help us create scale and impact in key areas. The

COP26 partnership adds momentum.

By engaging with consumers through partnerships and campaigns

we aim to help to build awareness and drive changes in behaviour

that can have real impact in making a cleaner, healthier world.

PURPOSE-LED BRANDS

We sell around 20 million products every single day. That’s a lot

ofmaterial and we want it to have a positive impact.

To help ensure we don’t just sell products people want to buy

butalso ones that make a positive difference in the world, we’re

investing in sustainability in all our brands. Each brand now has a

purpose that’s aligned with one of the UN Sustainable Development

Goals (SDGs). Every Reckitt brand focuses on progressing SDGs.

We won’t stand still. We want to challenge ourselves to do more

every day to bring about the cleaner, healthier world we all want

tosee.

We’ve set ourselves ambitious sustainability targets to lower our

use of virgin plastic and reduce our carbon, water and chemical

footprints. All our plastic packaging will be recyclable or reusable

by 2025, with at least a quarter coming from recycled materials.

By2030, we plan to have halved our use of virgin plastic for

packaging, reduced our chemical footprint by nearly two-thirds

and cut our carbon footprint in two. We’re targeting a 50%

reduction in our overall water footprint by 2040.

By 2025

• 100% plastic packaging recyclable or reusable

• 25% recycled content in plastic packaging

By 2030

• 50% of net revenue from more sustainable products

• 50% reduction in our carbon footprint

• 65% reduction in our chemical footprint

• 50% reduction of virgin plastic in packaging

By 2040

• 50% reduction in our water footprint

baseline: 2015

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

A HEALTHIER PLANET

A healthier planet and healthier people are inextricably linked.

Oursustainability ambitions include targets that will ensure we play

an active role in helping to combat climate change, addressing

biodiversity and improving planetary health. We are working with

partners to create positive impact in areas that are stressed by

global warming. Our three-year partnership with WWF will protect

freshwater sources, restore wildﬂower habitats and help it inspire

millions of people to act for our planet.

By 2030

• Water-positive in water-stressed sites

• 100% renewable electricity

• 65% reduction in absolute carbon emissions from operations

By 2040

• Net zero across our value chain

A FAIRER SOCIETY

We are ﬁghting for a world where access to the highest quality

hygiene, wellness and nourishment is everyone’s right, and not

aprivilege. As part of that, we stand for a fairer society where

everyone has a stake, and all voices are heard and acknowledged.

The third pillar of our sustainability ambitions addresses this

directly. 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.

We want all our stakeholders to have sustainable livelihoods

andworking conditions. One way we do this for smaller suppliers

is through partnerships with organisations on the ground.

Ourteam-up with the Fair Rubber Association gets a Fair Trade

premium to the farmers who produce natural rubber latex for

ourDurex products.

We’re assessing and improving standards for our larger suppliers

through our strengthened audit programme. We’re establishing

leading human rights programmes and developing action

plansinall our key markets. We’re supporting resilient, local

communities by helping our suppliers measure and reduce

theirenvironmental footprints.

• An inclusive culture, where everybody is treated fairly

and equally

• Our teams represent the diverse places where we work

and the people we serve

• Gender balance at all management levels by 2030

• Equivalent of 1% operating proﬁt to Fight for Access Fund

A winning photo from

our competition in

partnership with

Talenthouse,

capturing moments

where people have

positively impacted

our planet to create

a cleaner,

healthierworld.

Kliford Gonzales –

Philippines

1.8bn

people engaged through

our partnerships, programmes

and campaigns since 2013

49%

gender balance at all

management levels

66%

reduction in absolute carbon emissions

in our operations since 2015

100%

renewable electricity purchased for

our manufacturing operations

2017

2018

3.0%

2019

0.8%

2020

11.8%

2021 3.5%

2017

27.1%

2018

26.7%

2019

26.2 %

2020

23.6%

2021 21.7%

2017 316.9p

2018

339.9p

2019

349.0p

2020

327.0p

2021 288.5p

2020 36%

2021 66%

2015 0%

2020 6%

2021 3%

2017 100%

2018 93%

2019 96%

2020 96%

2021 96%

2017

18.2%

2018

18.5%

2019

24.6%

2020

30.4%

2021 29. 3%

2017 0.6bn

2018 0.8bn

2019 1.0bn

2020 1.4bn

2021 1.8bn

2017 £10.5m

2018 £14.4m

2019 £12.2m

2020 £52.8m

2021 £38.2m

Key Performance Indicators

LFL Net Revenue Growth

Adjusting Operating Proﬁt Margin

Adjusted diluted EPS

GHG emissions in our operations

Product innovation

Water use per unit of production Sending zero waste to landﬁll

Purpose-led brands Social impact investment

KPI: An indicator of strong sales execution,

innovation and customer service.

KPI: An indicator of brand strength, return on

investment in innovation and marketing.

KPI: An overall indicator of success.

KPI: The percentage reduction of our Scope

1 and 2 emissions against our 2015 baseline.

KPI: Total net revenue from more

sustainableproducts.

KPI: The percentage reduction in total water

consumption per unit of production, against

our 2015 baseline.

KPI: The percentage of our factories

achieving zero waste to landﬁll, including

both hazardous and non-hazardous waste.

KPI: Total number of people engaged

through our partnerships, programmes

andcampaigns since 2013.

KPI: Total value of cash contributed, employee

time in working hours and in-kind product

donations valued at cost to the business.

Target: To rebuild consistent mid-single

digit growth in the medium term.

Target: Our plan, outlined in 2020 and

re-conﬁrmed in 2021 for a margin in the

mid-20s 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 2030: 65% reduction against 2015

baseline (393,004tCO

e).

Target to 2030: 50% of net revenue.

Target to 2025: 30% reduction against 2015

baseline (2.7m

per tonne of product).

Target to 2030: 100%.

Target to 2025: one billion people. Target to 2025: £20 million per year.

FINANCIAL

HEALTHIER PLANET

PURPOSE-LED BRANDS

2017 94%

2018 84%

2019 87%

2020 131%

2021 61%

2018 47%

2019 48%

2020 49%

2021 49%

2017 0.12 1

2018 0.084

2019

0.076

2020 0.050

2021 0.046

2015 0%

2020 +22.6%

2021 +22.6%

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

FCF Conversion

1. 2017 and 2018 ﬁgures are original reported

within relevant periods and have not been

adjusted for subsequent updates made to IFRS

2. Including IFCN China (excluding IFCN

China:13.9%)

3. Including IFCN China (excluding IFCN

China:22.9%)

4. Management levels are band D and above

(excluding board employees)

5. The 2021 total net revenue from more

sustainable products including IFCN was 24.9%

6. Excluding energy used indirectly by consumers

at home

Product footprint

Gender diversity Lost Work Day Accident Rate

(LWDAR)

KPI: A strong link to efﬁcient capital

structure and well managed working capital.

KPI: The percentage reduction of our

product carbon footprint against our

2015baseline

KPI: Gender balance at all

managementlevels.

KPI: Number of incidents resulting

in at leastone lost day of work per

100,000 hours worked.

Target: To maintain the delivery of strong

free cash ﬂow conversion over time.

Target to 2030: -50% reduction against 2015

baseline (10.7 million tCO

e).

Target to 2030: Gender balance at all

management levels

2021: 29% female senior managers in our

global workforce.

Target: Continued decrease in LWDAR rate.

FAIR SOCIETY

Focus on: COP26

The COP26 summit in Glasgow was a pivotal moment in our collective ﬁght against

climate change. Reckitt came on board as the event’s ofﬁcial hygiene partner.

TIME TO TURN

WORDS INTO

ACTION

COP26 was billed as the last, best opportunity to implement the

goals of the Paris Agreement and the UN Framework Convention

on ClimateChange. Reckitt was named as hygiene partner.

Through our Dettol brand, we were entrusted with keeping

30,000+ delegates from over 190 countries safe from COVID-19.

This was a chance for us to demonstrate our Purpose in action.

Wehighlighted the link between planetary health and public

health, we discussed how our brands can encourage consumers

todo the right thing and we proﬁled the campaign in Hull – where

Reckitt has its roots – to become the UK’s ﬁrst net-zero city.

SAFE AND SUSTAINABLE

Our hygiene protocols protected delegates and visitors, while

respecting the event’s sustainable objectives. Over 600 Dettol

handwashing stations were placed strategically around the site.

Every delegate got a hygiene kit.

Our approach was validated by the London School of Hygiene

&Tropical Medicine, and the data suggests it succeeded.

Thefrequency of COVID-19 cases at COP26 was 81% lower

thanthe Scottish national average.

ENGAGING WITH STAKEHOLDERS

In the run-up to the summit, we worked with stakeholders globally,

demonstrating the important connection between climate change

and health, and how we can help inﬂuence consumers to help

tackle climate change.

We engaged with governments in 41 global capitals. We hosted

and participated in top-tier and high-proﬁle events. In Milan, we

proﬁled our Finish brand purpose commitment at a round-table

event focusing on scarce water resources. In the US, we hosted

aCOP26 round-table with the Biden administration’s Deputy

Special Envoy for Climate. In Mexico City, the UK Embassy

showcased Reckitt as a trusted partner for health, hygiene

andclimate ambitions. Dettol’s Banega Swasth Initiative ran

‘OnePlanet, One Health, One Future’ as a 12-hour telethon

onIndia’s leading channel, NDTV.

At COP26, we showcased the risk to public health of climate

change, and health strategies that take account of that.

Weconvened leaders from the World Health Organization,

governments, academia and civil society to build action to

protecthealth and combat climate change. Our major customers

have joined in the debate and are helping to develop solutions.

Sustainability leaders from Walmart, Tesco, Walgreens Boots

Alliance and Sainsbury’s all spoke at Reckitt-convened events.

YOUNG PEOPLE’S VOICES

Young people’s passion and powers of persuasion can inspire

realchange, especially on climate. We ran campaigns at COP26

togivethem a voice. We launched Dettol Hygiene Quest, a fun

andinteractive primary school programme that aims to build

lasting hygiene habits among six to nine year-olds. A competition

for seven to 18 year-olds called for images inspiring action on

climate. The best entries won eco-friendly prizes and featured on

our Instagram account.

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26,000

hygiene kits for delegates

81%

lower COVID-19 cases at COP26

vs Scottish national average

600+

handwashing stations

1,300+

sustainable pledges made

at our exhibition stand

8,000

litres of Dettol

MATCHING PERSONAL PLEDGES

Our COP26 exhibition space highlighted ﬁve misconceptions

onhygiene and challenged visitors to do their bit for a more

sustainable world. Every promise made at our exhibition stand

wasmatched by a donation to WWF UK restoring ten square feet

of wildﬂower habitat.

The top pledge was washing hands with cold instead of warm

water. Most people didn’t know that water temperature makes

nodifference to killing germs. It’s a small change with a big

impact. If everyone in the UK did that, the CO

saving would

bethesame as taking 285,000 cars off the road for a year.

THOUGHT LEADERSHIP

We convened and hosted events on a range of climate change-

related topics. ‘Planetary Health and Public Health’ discussed the

adverse public health impacts of climate change, the escalating

risks of inaction and how the private and public sectors can

collaborate to ﬁnd solutions. ‘Inclusion is Key’ looked at how

gender equality improves science and innovation and spurs

climateaction. The ‘Changing Consumer Behaviours’ panel session

discussed the impact on climate of a shift to more sustainable

consumption and how that can be done. ‘Achieving Net Zero:

Critical Role of Cities’ examined how the race to net zero can be

managed in cities through public and private sector collaboration

with reference to Reckitt’s own participation in Hull Living Lab.

A CLEANER, HEALTHIER WORLD

Our white paper ‘The Impact of Climate Change on Health:

Reducing Risks and Increasing Resilience in the Era of COVID-19’,

co-authored with the London School of Hygiene & Tropical

Medicine and EcoHealth Alliance, was published at the summit.

Thisset out the wide-ranging risks to human health of unabated

climate change and presented detailed recommendations to

address these serious and potentially existential threats. The paper

made ten recommendations for public health to build resilience

and protect people from the health impacts of climatechange.

There was progress at COP26. Critically, most governments and

businesses now agree we’re in a race against time to create the

cleaner, healthier world we all want to see.

But the time for talking has passed and we cannot relax. We need

to act decisively – locally and globally – to tackle this challenge.

Everybody has a role. At Reckitt, we’re determined to play our

fullpart.

PRODUCT

PENETRATION

Capturing new

consumers and

households

MARKET SHARE

GAINS

Serving existing

consumers faster,

better, and

moreefﬁciently

EXPANSION INTO

NEW PLACES

Entering new

geographies and

newchannels

EXPANSION INTO

NEW SPACES

Capturing new

market opportunities

INSPIRE TALENT AND EVOLVE CULTURE

GROWTH DRIVERS

STRATEGIC IMPERATIVES

GROW BRANDS AND INNOVATE

DRIVE SUPERIOR EXECUTION

INVEST IN CAPABILITIES

INCREASE PRODUCTIVITY

EMBED SUSTAINABILITY

ACTIVELY MANAGE THE PORTFOLIO

Our Leadership Behaviours

Own | Create | Deliver | Care

Our Compass

For further information

see inside front cover

Our Strategy

OUR GROWTH

STRATEGY

Established in February 2020,

our strategy seeks to

drive a return to sustainable,

mid-single-digit revenue

growth, with adjusted

operating proﬁt margins

in the mid-20s.

Reckitt Annual Report and Accounts 2021

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GROWTH DRIVERS

STRATEGIC IMPERATIVES

Product penetration

Increasing product usage by capturing new consumers

andhouseholds.

Market share gains

Winning by serving existing consumers faster, better, and more

efﬁciently with superior and more relevant products.

Expansion into new places

Taking our brands and products into new geographies and

newchannels.

Expansion into new spaces

Capturing new market opportunities using our brands and

consumer relationships.

INVESTMENTS SUPPORTING SUSTAINABLE GROWTH

Our strategic imperatives are those areas of focus which support

us in returning the business to sustainable growth.

Grow brands and innovate

Investing ﬁrmly behind our brands to drive equity and improve

theproduct offering for consumers.

Drive superior execution

Investing in capability centres for commercial excellence – sales

outperformance, marketing excellence, eRB and medical sales.

Invest in capabilities

Investments in centralised areas such as supply chain, R&D and

digital to strengthen the core of our business, supporting the

threeGBUs.

CONSUMER-LED CATEGORY GROWTH

Reckitt is shifting from an innovation strategy led by brands

toacategory growth strategy anchored in consumer demand.

Thisnew demand-led growth approach uses deep consumer

insights combined with strength in science and technology

toenable category thinking that drives growth.

For progress against our growth drivers by GBU

see pages 24 to 29

Increase productivity

Embedding programmes to enhance effectiveness

andefﬁciencyin the company and to fund investment.

Embed sustainability

Incorporating sustainability throughout our value chain

andacrossour business.

Actively manage the portfolio

Moving the company to higher growth and addressing

structuralchallenges.

For progress against our strategic imperatives

see page 30

INSPIRE TALENT AND EVOLVE CULTURE

Building on our strong ownership culture, adding Care to our Leadership Behaviours. See Focus on: Culture & Inclusion page 46.

Progress Against Our Strategy

OVERVIEW

Hygiene is the foundation of health, and its relevance has never been greater. As such,

theBusiness plays a key role in Reckitt’s overall Purpose, to protect, heal and nurture.

Atthesame time, growing middle-class populations around the world drive affordability of

ourpremium products. The effects of COVID-19 – principally related to consumers spending

more time at home, and greater demand for disinfection – has increased overall demand,

and we expect anumber of these categories to permanently retain much of this uplift.

The Hygiene GBU represents 45% of Group net revenue, with around 80% of the portfolio

from developed markets. Our six core categories account for more than 80% of total net

revenue and our largest three – surface disinfection, auto dishwashing and air care –

eachdeliver consumer sales of over £1 billion.

Our brands are typically leaders in their categories, with each of our largest brands

atop-three player globally. Lysol is the largest disinfectant brand in the world having

addednearly 28 million new households since 2019; Finish, the leading auto dishwashing

(ADW) detergent brand globally, is improving the standard and efﬁciency of dishwashing

and empowering consumers to conserve water; and air care holds number one or two

positions in over 80% of the markets in which we operate.

We have continued to invest across our capabilities throughout 2021. E-commerce and

innovation were particular areas of focus for Hygiene in 2021. In e-commerce, within air care

for example, we have designed more sustainable ecom-ﬁt solutions empowered by our

strengthened digital-ﬁrst demand creation. We are winning in the fast-growing channel

asonline market leader in the US and in third position in US ofﬂine. Across digital, we have

aneRB Capability Centre (see page 38) and trained over 200 staff, resulting in an improved

media return on investment. Innovation has also been an area of progress, beneﬁting from

the step-up in investment in R&D. Our pipeline is more consumer-centric and stronger than

ever; for example, in auto dishwashing, we have developed thermoforming solutions which

deliver signiﬁcantly better results at premium prices versus our previous ‘hard tablet’

generation of products.

Finally, we have been embedding our Leadership Behaviours of Own, Deliver, Create and

Care. Evidence of the Own and Deliver components in our culture is well reﬂected in the

way in which we were recognised with annual awards by Walmart and Dollar General.

Here,our commercial teams were recognised by the retailers for their transparent and

action-oriented communication, and their tenacity and agility to meet customer needs

inchallenging times.

OUR REVENUE GROWTH ALGORITHM

In the medium-term, we expect our revenues to grow by 4% to 5% per annum, balanced

across our portfolio and coming from growth in penetration and market share, and through

entering new places and new spaces. Our aim is to be present in a third of all households

by2030 as we beneﬁt from a rising middle class globally, whilst generating a third of our

business online, and a third of our business from developing markets.

HYGIENE

Volker Kuhn

President Hygiene

Surface

Disinfection

Auto

Dishwashing

Air

Care

Fabric

Care

Lavatory

Care

Pest

Control

Medium-

term net

revenue

growth

c.4-6% c.3-5% c.3-5% c.2-4% c.3-6% c.2-4%

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PENETRATION

FINISH

Finish exists to ease the burden of dishwashing. We bring

consumers the highest standard of dishwashing while

empowering them to conserve water, a very precious

andscarce resource.

In Turkey, Finish is the brand leader, reaching more than half

of the market, 10.7 million households. Its brand penetration

in 2021 at 51.4% was 430bps ahead of 2020. There were

gains across the category, with both detergents and

enhancers doing well. Purpose-led marketing highlighted

water scarcity and outlined the water-saving beneﬁts of

auto-dishwashing. Our #skiptherinse campaign got a lot of

traction and both Finish detergent and its additive products

made strong gains.

In the US, we teamed up with leading dishwashing machine

brands to drive penetration. There is still massive growth

potential even in this seemingly well-established market;

machine penetration currently stands at just 49% of homes.

Globally, dishwashing machine penetration is only 13%; the

typical consumer has disposable income. The rise in the

global middle class is therefore expanding our addressable

market. By 2025, this group is expected to grow by 160 million

households, a signiﬁcant acceleration. And we are the clear

market leader in these high-growth developing markets.

E-commerce and innovation are important drivers of

category growth. More sustainable e-com-ﬁt solutions are

helping us win higher online share, and our thermoformed

solutions have proved popular with consumers – delivering

better results at premium pricing versus our previous

generation of products.

MARKET SHARE GAINS

LYSOL US

Lysol is the largest disinfectant brand in the world. We generate

94% of our sales in markets where we are the leader or number

two. Lysol’s consistent strong performance throughout the

COVID-19 pandemic is built on its trusted brand status.

Lysol has gained more than 700bps of market share in the

USsince 2019, driven primarily by growth in the core business:

wipes and disinfectant spray. Here, we have seen increased

usage amongst the most loyal consumers contributing

morethan half of this growth, with a 500bps increase the

proportion of consumers buying two or more Lysol products.

Our compelling claim, ‘nothing kills more germs on more

surfaces than Lysol’ is at the heart of the brand’s offering,

andour innovation in fragrances and successful pricing

further contributed to these gains.

A particular success in 2021 was the Lysol ‘Back to School’

programme. Here Lysol has been playing a key role in helping

children and their teachers feel safe as they return to physical

lessons. Concerns were particularly elevated around this period

given the rapid spreading of the Delta variant throughout much

of the summer. Through partnerships with organisations such

as the CDC and National Geographic, marketing campaigns

across TV, digital and social, and through strong in-store display

activation, Lysol was able to take signiﬁcant share from its

competition. Share of the surface category grew 630bps whilst

share in disinfectant spray grew 160bps.

In addition to the core business, we have been broadening

the shoulders of the brand. Globally, we have generated over

£250million additional revenue contribution from new spaces

and places since the beginning of 2019, with Laundry sanitiser

alone for example contributing an additional £90 million.

NEW SPACES

AIR WICK BOTANICA AUSTRALIA

Air Wick Australia has been a leading Category Market Unit,

with Botanica driving both growth and distribution ofshare.

The Australian team managed to achieve one of the most

difﬁcult, but also most important, success factors for an

innovation launch by positioning Botanica as incremental

forconsumers rather than as a replacement for the existing

Air Wick core products.

This vindicated the team’s decision to allocate a sizeable

budget to launch the innovation at scale. They were also

able to secure additional distribution for the new range.

Consumers reacted positively to its purpose-led positioning.

This was highlighted by launching it in a joint campaign with

WWF Australia to help save threatened native wildﬂower

species from extinction.

Since the launch, Air Wick Australia as a whole has gained

signiﬁcant share and has also seen a substantial

improvement in equity metrics.

CASE STUDIES

Progress Against Our Strategy (Continued)

OVERVIEW

We created our Health GBU in 2020, with a dedicated leadership team and focused

resources. Since then, we have developed and deployed clear growth strategies for each

ofour brands and categories, grounded in a deeper level of consumer insight. We have

invested signiﬁcantly in our innovation pipeline and in commercial execution.

The Health GBU represents around 35% of total Group net revenue. We are present in over 130

markets across the world with a balance of revenue from developed and developing markets.

Our portfolio is well diversiﬁed across four key categories, all of which have strong

growthprospects based on a clear runway for household penetration and premiumisation.

In aggregate, over-the-counter (OTC) and germ protection account for 70% of Health net

revenue. Next in size is intimate wellness with high growth potential. Personal care is an

important scale-builder in our portfolio in many markets which we grow and invest in

selectively. All four categories have an attractive earnings model, with the highest margins

generated in OTC and Intimate Wellness.

Our Health brands are very strong. All major brands occupy leading positions in the

categories and the markets in which they play and many have strengthened throughout

COVID-19, as consumers chose the most trusted and efﬁcacious solutions.

We have been particularly focused upon innovation and sales excellence. Innovations

include the Mucinex NightShift and the InstaSoothe sore throat ranges. Nurofen’s

breakthrough ibuprofen 12-hour product launched in Australia and a best-in-class ibuprofen

plus paracetamol, a combination launched as Nuromol in Brazil. With signiﬁcant investment

since 2019, our OTC innovation pipeline in 2022 will be double that of 2021.

Another key focus area has been to drive superior customer service. A year ago we set up

our Sales Outperformance Capability Centre which helped us in resetting more strategic

partnerships with our top customers. We have received several recognition awards including

Supplier of the Year in consumables from Walmart in the US and Tesco Covid Hero in the UK.

Alongside this, we have been improving our share of distribution points. The two most

prominent examples here are Dettol’s global distribution recovery to pre-COVID-19 levels,

aswell as Durex becoming the number two condom brand in India, driven by the expansion

of our network of retailers. And in the UK, we are excited to have established aninitiative to

deliver our products supplied to Boots, direct to consumers via a partnership with Deliveroo.

Throughout the challenges of the pandemic, the Health business has stayed true to the

broader Reckitt Compass, and in particular the Leadership Behaviour of Care. This was

exempliﬁed in 2021 by a cross-functional team from Reckitt India who worked to

provide support to employees and local communities affected by COVID-19.

OUR REVENUE GROWTH ALGORITHM

In the medium-term, we expect our revenues to grow by 4% to 6% 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,

with germ protection, with its greater presence in developing markets, and intimate

wellness the fastest growing segments of the portfolio.

Germ

Protection

OTC Intimate

Wellness

Personal

Care

Medium-term net

revenue growth

c.4-6% c.2-4% c.7-9% c.2-3%

HEALTH

Kris Licht

President Health

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MARKET SHARE GAINS

GAVISCON

Gaviscon’s growing revenue in an expanding market

isbuilton consistent consumer-led innovation and

continuedsuccessful marketing and execution and brand

communications. As we have driven demand however,

growth in sales became constrained by our supply capacity,

risking a deterioration in customer service levels and missed

revenue opportunities.

In early 2021, we invested £20 million at our Hull factory in

the UK, adding additional lines and improving capacity by

60%. This has driven improved service levels – up by around

20ppts since 2019 – and market share gains of 60bps in 2021.

This helped accelerate Gaviscon revenue growth from 9% in

2020 to over 20% in2021.

NEW SPACES

QUEEN V

Reckitt’s broader expanse into the intimate wellness space

has paved the way for the introduction of Queen V. Acquired

by Reckitt in 2021 and relaunching broadly in US retail in

Q22022, the brand has curated a loyal following within

thedigital space, and takes a frank, unapologetic approach

to feminine wellness.

The female intimate wellness category presents signiﬁcant

opportunity for growth for Reckitt with an addressable

market of £11 billion. It is also fuelling growth as cultural

conversations surrounding vaginal health are shifting

consumers’ attitudes and behaviours in the category.

Queen V holds a unique space within our Intimate Wellness

portfolio of brands. Created by women, for women, the

brand was founded to break down stigmas surrounding

vaginal health and offer a more effective, less intimidating,

and fully lifestyle-based approach to self-care. In the past

year, we have leveraged our R&D wealth to bring elevated

science to product solutions. All Queen V products are

Micro-v-iome friendly, going beyond pH balance to remove

harsh ingredients and ensure products respect women’s

natural microbiome ecosystem of good and bad bacteria.

This ecosystem is critical to vaginal balance and the reduced

occurrence of vaginal infections. With three product lines

–Maintain, Help, Enjoy – Queen V not only helps her in

moments of need, it equips her with the tools to proactively

maintain vaginal balance and support her moments of

ultimate enjoyment.

NEW PLACES

NUROMOL AND LUFTAFEM BRAZIL

The Brazilian analgesics market is the world’s ﬁfth biggest,

with its OTC market alone worth £1 billion. Yet there has

been no signiﬁcant innovation in this category for over

adecade.

Reckitt Brazil changed all that this year with our latest

analgesic, which combines the advantages of ibuprofen

andparacetamol in a single dose. We’ve launched Nuromol

for general pain relief. We also launched Luftafem, which

leverages Luftal’s reputation for abdominal care. Aimed at

women, this provides strong-acting relief from menstrual

and other pains. Both have built scale rapidly as premium

brands in the Brazilian market.

We are now playing in a very competitive category with

twonew brands, but early indications are promising.

Weanticipate accelerated growth enabled by increased

awareness. We’ve embarked on a bold and extensive

mediastrategy to facilitate that. We’re building up consumer

awareness, engaging with the medical community, and

extending distribution and trade links. We have big ambitions

here. We’re targeting a 10% share of Brazil’s pain market

within ten years, with analgesics our biggest health category.

CASE STUDIES

Progress Against Our Strategy (Continued)

OVERVIEW

Our Nutrition business seeks to protect heal and nurture through providing the highest

quality nutrition to those at all stages of life – from infancy to old age. With products

spanning infant formula, allergy nutrition and vitamins minerals and supplements (VMS),

weseek to build and develop relationships with consumers with personalised solutions

delivered at scale.

The Nutrition GBU represents 20% of Group net revenue, with 60% from developed markets

– primarily North America.

Approximately 81% of revenue is from our IFCN business. The US is our largest market,

generating about half of IFCN revenue. This business has performed consistently well since

being acquired as part of Mead Johnson in 2017. Since 2018, it has averaged nearly 5%

growth as aresult of continued strong execution and innovation. Our focus in IFCN is now

increasingly centred on replicating this performance in ASEAN and Latin America – the other

two major regions within IFCN. Although market structures, and our positioning within them,

are different to the US, we see signiﬁcant opportunity for improved capabilities and

execution to drive performance.

In VMS, our opportunities are underpinned by the combination of our strong brands,

e-commerce and our brand incubation capabilities, coupled with strong scientiﬁc

platformsand our partnerships with customers. In Q1 2022, our VMS business moved

intoour Health GBU.

Aside from the disposal of IFCN China, our particular focus throughout 2021 has been on

strengthening go-to-market execution. We have focused strongly on reﬁning the model

that underpins the Nutrition business. Speciﬁcally, the incremental investment in science,

innovation, expert recommendation and executional excellence, coupled with our

Consumer Acquisition, Retention and Expansion (CARE) CRM model which maximises

consumer lifetime value, provides the basis for a broader Reckitt relationship with the

household, at a time in the life of a consumer when behaviours change most.

Our Leadership Behaviours of Own, Create, Deliver, Care have been further embedded

throughout the year. As an example of this, a Diversity and Inclusion initiative whereby

Nutrition leaders articulate to the business their own commitment to these issues,

withaview to inspiring the organisation to show its support, proved particularly powerful.

OUR REVENUE GROWTH ALGORITHM

In the medium term, we expect our revenues to grow by 3% to 5% per annum,

through growth in penetration and market share, and through entering new places

and new spaces. We expect relatively stable birth rates globally to be offset

bycontinued premiumisation in our infant nutrition business, particularly

asitrelates to demand for specialty products, whilst VMS category growth

andthe introduction of adult nutrition will further contribute positively.

Core Enfa Specialty

Infant

Adult VMS

Medium-term net

revenue growth

c.0-2% c.7-10% +100bps

contribution

c.4-6%

NUTRITION

Pat Sly

President Nutrition

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NEW PLACES

VMS

The majority of VMS revenue has historically been generated

in the US. Increasingly however, we are focused on growing

the business in China, selling via cross-border platforms

such as Tmall and JD, with Move Free the best-selling brand

in the Joint Health segment. This allows us to use products

manufactured in the US, avoiding the need to specially

formulate products. Whilst being efﬁcient ﬁnancially,

withlimited need for physical presence in the country,

ourmarketing of Move Free in particular is supported

byvery strong local communications and activations.

Now representing around a quarter of VMS revenue, China

growth has averaged 60% over the past ﬁve years, and

wecontinue to see signiﬁcant opportunity for penetration

gains, and to develop products tailored to the local market.

PENETRATION

NEURIVA US

Our brain supplement brand, Neuriva, was launched in the

USin early 2019, capitalising on the opportunity presented

bygrowing consumer awareness of the importance of

brainhealth. Neuriva includes two natural and GMO-free

ingredients – Neurofactor and Plant-sourced Sharp

Phosphatidylserine (PS) – that are clinically proven to fuel

ﬁve indicators of brain performance, including accuracy,

concentration, focus, learning and memory.

Its performance since launch has been very strong. The

brand quickly established itself with key customers such as

Walmart, Walgreens, Amazon and Costco, and built a strong

online presence. In 2021 Neuriva launched a major campaign

partnering with a celebrity neuroscientist, helping it become

the leader in the US for household penetration in the nascent

brain supplement category, with 1.3% of households, and

thecategory’s #1 brand on Amazon. Revenue doubled, and

now represents around 20% of our VMS portfolio. With 68%

of sales coming from new users, the brand is supporting

penetration growth in the category.

MARKET SHARE

IFCN US

Since acquisition of the Mead Johnson business in 2017, our

IFCN US business has performed consistently well, averaging

nearly 5% like-for-like revenue growth since 2018. 2021 was

no exception to this strong momentum, with the business

growing mid-single digits, in part driven by share gains.

We have approximately a one-third share of the IFCN

marketin the US, excluding sales related to the WIC

(Women, Infants and Children) rebate programme. Within

this the majority of revenue is derived from the core, Enfa

family of products, and share here grew c.50bps in 2021 as

aresult of strong innovation, with the new Enfamil NeuroPro

launched in June, accompanied by full digital and Healthcare

professional activation.

The remainder of the IFCN business is comprised of our

faster-growing speciality business, primarily Nutramigen,

which caters for infants with food allergies and other

specialist requirements. Here, share grew by nearly 70bps

in2021. This was also driven by strong marketing execution,

positioning the brand amongst healthcare professionals as

the leader in the cow’s milk allergy (CMA) segment, whilst

engaging and educating consumers regarding CMA through

a ‘360-degree’ digital and social media campaign.

CASE STUDIES

Progress Against Our Strategy (Continued)

As a result, our brand equity metrics continue to be strong; Dettol

India, for example, is seeing a 1000bps improvement in its key

brand attribute of ‘is effective at killing germs’, while Nurofen in

theUK, its largest market, saw a 500bps uplift in ‘is a brand I trust’.

Additionally, the ability to leverage the strength of these brands

tobring about behavioural change while driving commercial

performance was again recognised, with Finish, Dettol and Durex

each winning gold ‘Efﬁe’ awards for their campaigns.

STRATEGIC

IMPERATIVES

Throughout 2021, we have

made goodprogress against

our six strategicimperatives:

GROW BRANDS AND INNOVATE

DRIVE SUPERIOR EXECUTION

INVEST IN CAPABILITIES

INCREASE PRODUCTIVITY

EMBED SUSTAINABILITY

ACTIVELY MANAGE THE PORTFOLIO

GROW BRANDS

AND INNOVATE

The ongoing success of our brands is core to our performance.

Here, we continue to invest strongly in demand generation –

through both Brand Equity Investment (BEI) and investment in

oure-commerce capabilities, which are becoming an increasingly

important driver of brand awareness.

We are developing a credible purpose for all our major brands

which is in turn informing each brand’s personality values, its

behaviour and its sustainability strategy. In doing so, and with

ourdeep understanding of consumer demand and our investment

in innovation, we’re driving growth as we grow brand relevance

with consumers and trade customers.

BRAND EQUITY GROWTH

Is effective at killing germs

+1000bps

Is a brand I trust

+500bps

Spontaneous consideration

+1300bps

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At the same time, we’ve increased our product availability through

greater distribution. Durex, for example, is now the number two

condom brand in India following a more than 60% increase in

We have continued to innovate during the year, with a strong

sustainability component. Notable new launches have included:

theLysol Smart reﬁll product, using 75% less plastic; our Mucinex

InstaSoothe sore throat range; Dettol Tru Clean – our ﬁrst

plant-based disinfectant; and Provital, our adult nutrition product.

Ourinnovation is increasingly recognising the growing importance

of the online channel, with Durex and Vanish each launching

letterbox-friendly products.

DRIVE SUPERIOR

EXECUTION

We continue to make good progress in driving better execution.

Ourenhanced focus on our customers – with more top-to-top

meetings, our dedicated Sales Outperformance Capability Centre

and improved product availability – has markedly improved

customer relationships. Based on the most recent Advantage

surveyof retailers, the percentage of our markets rated ‘top tier’

byour customers improved by 20 percentage points, to 46%. The

improvements have also been recognised through accolades from

speciﬁc customers: During 2021 both Walmart and Dollar General in

the US named Reckitt as a supplier of the year. Such improvements,

in turn, allow us to engage more meaningfully with customers to

understand and capture long-term category opportunities.

distribution points, while Dettol – where global distribution points

were adversely impacted by COVID-19 – has now returned to

pre-pandemic levels. Overall, two-thirds of our top Category

Market Units (CMUs) are growing weighted distribution.

Finally, online plays an increasingly important role in selling not only

to our trade customers but, increasingly, direct to consumers with

11 new online stores launched in 2021 helping drive further double

digit growth in this part of our e-commerce business.

This is further detailed on

Focus on: Digital page 38

INVEST IN

CAPABILITIES

We have continued to invest ﬁrmly in key foundational capabilities

to support growth across the business. In R&D, we have invested

an additional £100 million (c.30%) more than in 2019, primarily

funding increased headcount. Our capability centres (sales

outperformance, marketing excellence, eRB, medical sales) are now

fully established and leveraging best practice across the Group.

The payback periods on such investments can vary markedly.

InR&D, we typically expect investment to be returned over a

multi-year period, reﬂecting the time taken for consumer insights

to be turned into product development, and to go through the

necessary approval processes. Investment here has nevertheless

created a 2022 product pipeline approximately 50% bigger than

2021 levels. Our investment in capability centres by contrast is

already delivering tangible returns. We have seen improvements

inour customer service levels and Revenue Growth Management

(RGM) capabilities now rolled out to more than 60% of CMUs. KPIs

for returns on these investments, both quantitative and qualitative,

are tracked carefully.

INVESTING IN KEY CAPABILITIES

INVESTMENT

AREAS

PAYBACK

PERIOD

KPI

TRACKING

R&D

Multi-year • Number of prototypes and IP

indevelopment

• Number of initiatives reaching

production

• Incremental revenue from

NPDpipeline

E-commerce

and Digital

Fast • Online market share

• Volume of trafﬁc and customer

retention

• Investment tracking in new

ventures

• Value optimisation through

in-house platforms

Sales

Outperformance

Capability Centre

Fast • Advantage survey performance

• Customer top-to-top feedback

• Customer service and on-shelf

availability

• Revenue Growth Management

(RGM) productivity achieved

AWARDS FROM CUSTOMERS

Walmart

Supplier of the Year

in consumables 2021

Superdrug

Supplier of the Year 2021

Woolworths

Australia

Everyday Needs Large

Supplier of the Year 2021

Dollar General

Strategic Partner Summit

winner 2021

Progress Against Our Strategy (Continued)

EMBED

SUSTAINABILITY

Our culture is performance-driven, with a strong sense of shared

ownership. And yet, while being shareholder-centred, we are doing

business in the right way. We have set ambitious ESG goals, with

afocus on our purpose-led brands, the planet and a fairer society.

During the year, we renewed these targets, including a 65%

reduction in absolute carbon emissions, and 50% of revenue from

more sustainable products by 2030. We have been making tangible

progress through the year and are pleased that this has been

recognised externally, with our MSCI ESG rating improving to AA,

and our Sustainalytics rating currently at 22.9 (as at January 2022);

we have also been re-entered to the Dow Jones Sustainability

Index for Europe. In addition, modelling conducted by MSCI has

conﬁrmed that the plans we have in place are consistent with

theParis Agreement targets on climate change.

INCREASE

PRODUCTIVITY

Funding our investments, in 2021 we delivered approximately £750

million of savings, representing cumulative, annualised savings since

the beginning of 2020, of over £1.1 billion. Our programme has been

running ahead of initial expectations, with upgraded targets in part

necessitated by the increased input cost pressures faced across the

sector. We are now targeting £2 billion savings by the end of 2023.

Within this, the majority has been delivered within cost of goods

sold, for example, by implementing standard operating practices

across Reckitt manufacturing facilities to drive efﬁciency and

deliver best practice. Our design to value laboratory has now

analysed over1,000 products to create ideas to reduce waste,

improve the environmental footprint and deliver high-quality

products to consumers at a lower cost. Approximately £150 million

has been delivered within our BEI spend as we improve marketing

data analytics, buy media more efﬁciently, and improve the

efﬁciency of our creative efforts, with the balance saved through

organisational simpliﬁcation.

Our productivity capabilities are now ﬁrmly embedded within the

business, and our teams are increasingly approaching productivity

as a business-as-usual activity. Productivity increasingly goes hand

in hand with our efforts in sustainability, with projects such as

reconﬁguring our sourcing of milk powder in the US or reducing

thequantity of latex waste in the production of condoms both

saving costs and reducing our environmental footprint.

PRODUCTIVITY EXAMPLES

1.Sourcing milk powder

We continue to improve our environmental impact as we

conﬁgure our supply chain, for example, with material savings

made in our US IFCN business, resulting in a 70% reduction in

our carbon dioxide emissions.

70%

reduction in carbon dioxide

emissions

65%

reduction in freight costs

Relevant sustainability targets:

• 65% reduction in absolute carbon emissions

• Carbon-neutral across our value chain

• 50% reduction in product carbon footprint

Improving efﬁciency through

reconﬁguration ofnetwork

Michigan Plant

Chihuahua Plant

2. Improving Productivity and eliminating waste

inmanufacturing

We have implemented our Reckitt Production System (R-PS),

which provides a set of continuous improvement standard tools

and routines to enhance manufacturing performance. Our R-PS

system has been deployed across many our Health and

Nutrition factories. In 2022, the deployment efforts will focus on

our Hygiene business unit, whilst further expanding in Health

and Nutrition.

£55m

reduction in conversion costs and

waste reduction in 2021

Relevant sustainability targets:

• 25% waste reduction

ESG rating history

Aug-17 Aug-19 Jul-20Jul-18 Apr-21

CCC

BBB

AAA

A A A A

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1. 2019 to 2021 CAGR. For IFCN China, Scholl and E45 2021 growth is calculated

tothe end of last full month of ownership by Reckitt

2. June 2021 Reckitt all employees survey

INSPIRE TALENT AND EVOLVE CULTURE

Underpinning our strategic imperatives is the progress we are

making to inspire talent and evolve our culture.

Throughout 2021 we have continued to make good progress,

taking the best of what exists, and building for the future.

Our Purpose, Fight and Compass have been clear for some time.

In2021, however, we established our Leadership Behaviours

ofOwn, Create, Deliver and Care. These behaviours are being

reinforced throughout the organisation. Over 600 of Reckitt’s

global and regional leaders have now participated in the

leadership development programme. We continue to develop

initiatives such as our conscious inclusion programme, the Stronger

Together conversation series – our platform for sharing inspiring

and challenging stories from colleagues across the world –

andouremployee resource groups.

Such focus on our culture is crucial to attracting and retaining

talent, and we are therefore pleased with our improved KPIs.

Wehave for example seen a 100bps increase in Net Promoter

Score from the LGBTQ+ community in 2021, and over 75%

ofourpeople feel a positive impact from the Leadership

Behaviours launched in 2021. Being ‘proud to work at Reckitt’

remains at alevelabove external benchmarks

For more detail on the work we are doing

around culture and inclusion, see page 46

ACTIVELY MANAGE

THE PORTFOLIO

We continue to actively manage the portfolio to migrate it towards

higher growth spaces and to drive shareholder returns.

In July, we completed the acquisition of Biofreeze for $1,060million.

The business has already been growing at double-digit rates in

recent years and we see opportunity for further growth through

product innovation and geographic expansion, and through

leveraging the Reckitt sales and marketing platform.

In September, we completed the sale of IFCN China, following a

strategic review announced in February 2021. The sale was made

to Primavera Capital Group for an implied enterprise value of

$2.2billion. The business represented approximately 6% of Group

revenues in 2020, and had, since the beginning of 2020, been

materially dilutive to Group revenue growth and margins, reﬂecting

increasingly difﬁcult market conditions.

In June, we completed the sale of Scholl to Yellow Wood Partners

for an enterprise value of £275million. Like IFCN China, Scholl had

been dilutive to revenue growth and margin, and the ﬁt with other

parts of our portfolio was not strong. The sale therefore brings

greater focus to our personal care portfolio.

Finally, in December we announced an agreement to dispose

ofE45 – our skincare brand – for £200million. This transaction

completed on 1 April 2022.

We see further opportunity to manage the portfolio towards

higher growth over time, although we are conﬁdent in delivering

our medium-term targets with the current portfolio.

DIVESTING

ACQUIRING

Slower growth or

less scalable brands

Higher growth

or strategically

important brands

Important strategic entry

into the world’s largest

analgesics market

IFCN

China

-14%

+10%

3-year CAGR

Focus on: Innovation

INNOVATION IS A

KEYENABLER FOR

SUSTAINABLE

GROWTH

As a business, we work to solve some

ofthe world’s largest problems. Through

research and development, science

andpartnership, we make products that

people have trusted for generations.

Innovation at Reckitt is delivering purpose-driven, sustainable

products that protect, heal and nurture, to make a meaningful

difference to people’s lives. We earn the continuing loyalty and

trust of our consumers with differentiated products that offer

superior solutions to meet their evolving needs. We want to make

a difference to the world through our brands.

But innovation at Reckitt doesn’t begin and end with product

solutions. Innovation is a mindset, it’s rooted in our culture. There’s

a restless energy here; we always want to improve. Sometimes

that drives top-line growth with new products and better

solutions. Sometimes it spurs process improvements that extend

our manufacturing capacity or drive up productivity.

SUPPORTING INNOVATION THROUGH FOCUSED R&D

Our global R&D function has a strong commercial orientation,

prioritising high-return strategic projects. It aims to bring

differentiated products to market that are safe, effective and

compliant and to achieve that at scale and at pace.

An international team of more than 3,000 scientists, engineers,

technologists and experts operates in nine centres of excellence

at 40 regional labs across our markets. Reckitt’s global hubs drive

scale and concentrate our expertise. Our local operations keep us

close to our consumers, customers and markets and allow us

deliver targeted solutions at pace.

Since 2019 we have invested an additional £100million in our R&D

capability. This is already delivering results through the growth we

are seeing in our product pipeline, a 50% increase from 2021 to

2022 with projects fully resourced for execution and continued

momentum through to 2024.

And, we are improving the quality. We are delivering three times

more value in the pipeline from disruptive innovation; that is,

innovations which represent breakthrough solutions to meet

consumers unmet needs. We have increased our patent ﬁlings by

30%, indicative of a more inventive and differentiated pipeline.

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Our R&D function spurs innovation in three speciﬁc ways: We

generate additional revenue streams by creating new products

and strengthening their utility; our process innovations enhance

productivity and add manufacturing capacity; and by ensuring we

deliver safe and effective solutions, R&D helps us manage risk and

protect base performance.

OUR INNOVATION CAPABILITY ENABLERS

Consumer insights

Our entire approach to innovation is founded on combining our rich

human understanding with trusted science to develop solutions

which meet consumer needs. This is not just about identifying

consumer preferences; we drill down to unearth the fundamental

science and behavioural factors driving their preferences and

concerns. Our sensory and consumer science labs use human

insight and behavioural analytics to enrich our understanding of the

problems worth solving and ensure that consumers’ overall

experience is designed into our products. For example, we are

delivering more occasions for intimate wellness by expanding into

new materials like polyurethane condoms that deliver a different

experience of size and ﬁt, creating more choice for consumers.

We also look beyond speciﬁc brands to develop other

opportunities for serving consumer needs within a speciﬁc

category. Our category development teams research underserved

segments within their category to develop our brand offerings into

new spaces. Durex, for example, was traditionally seen as a

condom brand. The brand’s addressable market is considerably

greater when viewed as part of the intimate wellness category.

In Nutrition, we are adding a whole new area of growth, by taking

insights from our IFCN business to disrupt the adult nutrition

category. In Hygiene, we are responding to shifting consumer

expectations, such as on-the-go disinfection and cooler

temperatures in the auto-dish segment. In Health, a deeper

understanding of functional and emotional beneﬁts for consumers

is yielding innovations for delivery systems, and new

pharmaceutical actives. We are also creating more choice and

accessibility for consumers in line with regulatory changes, from

prescription medicines to OTC.

Focus on: Innovation (Continued)

Science and knowledge

Our ability to apply our science and technical knowledge to

consumer needs ensures our innovations are built on ﬁrm

foundations. This is at the heart of how we deliver ownable

product differentiation. Our focus on science and technology

platforms spanning the breadth of our portfolio allows us to unlock

more value across the Group. We concentrate our scientiﬁc

research on nine interconnected, foundational disciplines that span

our categories. These science and technology platforms have

been selected to deepen the scientiﬁc rigour in areas that span

across our categories and brands. A globally coordinated team of

technical experts and scientists drive each platform.

This approach to our science and technology disciplines allows

usto deliver more differentiation and maximises the beneﬁts.

Breakthroughs in polymer science, for instance, can lead to more

sustainable packaging solutions that are widely applicable.

Packaging is often the ﬁrst experience the consumer has. Is it easy

to open? How safe is the product inside? Is it good for the

environment? We are now able to use novel ﬁlm technology to

down gauge and light weight packaging.

We’re also introducing consumer recycled polymers for Finish and

Enfamil brands. The introduction of more sustainable packaging for

Finish is an early real-world example of a polymer-science-led

application. The iconic stand-up pouch for Finish tablets is now

made from 30% recycled (PCR) plastic and we anticipate PCR

being progressively incorporated into other brands in future. This

innovation stems directly from a two-year project in polymer

science investigating the interaction of multiple materials.

For Gaviscon and Harpic we’re using surface modiﬁcation through

coating technologies to improve shelf life. And it’s also about the

product inside, for example, we’re combining smart-release

technology and advanced polymer design to help deliver

extended pain relief with Nurofen 12HR Ibuprofen 300mg modiﬁed

release tablets.

Science and technology platforms:

Nine interconnected, foundational disciplines with wide-ranging

applications and underlying beneﬁt to our overall portfolio:

Polymer science Microbiome Allergy and immunity

Growth and cognition Digestive health Sensory enrichment

Surface chemistry Entomology Smart release

External partnerships

The pace of play in science and technology has never been faster;

and consumers understand the beneﬁt of science more than ever.

We believe there are great new ideas happening in many areas

around the world, impactful innovation concepts can come from

anywhere. Through our external partnering ecosystem we are able

to access leading-edge science and technologies. Digitalisation

and collaborative networks can amplify and magnify them into

MICROBIOME SCIENCE PLATFORM

Microbiome science has exploded over the last few years.

Scientists have effectively discovered an entirely new

organ. Its impact on human health, animal health and the

environment is vast. The microbiome, the microbes that

live in us, on us and around us, is enabling entirely new

growth areas.

Our microbiome science team targets six biome areas:

• Upper respiratory and ear, nose and throat (ENT) biome

• Built environmental biome

• Vaginal biome and reproductive health

• Skin biome

• Gut biome

• Baby biome

What makes the microbiome science platform so

powerful is that the science really cuts across all areas. By

building connections between them, we are creating

better insights and further utility for future innovations.

The foundational research and development we are

generating means we can incorporate this into products

now, while innovating for the future.

Vaginal biome insights have guided our focus on female

intimate wellness. Our Queen V brand helps to restore a

balanced microbiome for women using active ingredients

and delivery systems. With supplements we are helping to

drive the vaginal microﬂora from the inside out.

Research in the baby biome shows that seeding a healthy

infant microbiome in the precious ﬁrst thousand days of

life has lasting health beneﬁts for allergy and immunity.

The built environmental biome studies the microbes that

are around all of us every day. Our research here has

far-reaching implications that underpin the importance of

hygiene as the foundation of health. We are applying

insights about maintaining a healthy balance between

good and bad germs to drive innovations for bio-based

disinfectants, for instance, in the laundry segment with

laundry sanitisers.

CASE STUDY

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successful globally disruptive innovations. We reach out and forge

partnerships with academics, startups, suppliers and many others

to share our strengths and augment our capabilities. We set out to

be a committed commercial partner that co-develops, co-creates,

and ultimately launches new solutions.

Building scale at pace, launching in multiple markets and creating

superior product experiences are key differentiators for Reckitt.

Our ecosystem is diverse. We draw on the latest developments,

scientiﬁc inventions and capabilities. Our strategic supplier

programme gives us access to innovative new ingredients which

can impact how our products are used.

Changing regulatory conditions can inﬂuence our portfolio of

brands. We see regulatory intelligence as a source of competitive

advantage. We are using our regulatory and medical advantage

toopen new markets and create new differentiated claims.

Acrossthe portfolio, we keep abreast of developments by

maintaining close relationships with regulatory, professional

andtrade associations. We work with technology providers

andforge links with key opinion leaders, healthcare professionals

and their networks.

We collaborate with thought leaders to shape and advance

scientiﬁc understanding around consumer needs. At the University

of Naples for example, where one of the top thought leaders on

food and milk allergy is aiding the science of our Nutramigen

products and helping to create new medical insight and evidence.

We are highly focused on enhancing our science and technology

driven innovation by attracting high quality ideas and developing

more partnerships. This will be further cemented with the launch

of our external partnering platform in 2022.

Diverse ecosystem of partnerships

KOLs, HCPs, inﬂuencers

and networks

Startups and accelerators

Technology

providers

Key suppliers

and distributors

Universities

and research

institutes

Regulatory,

professional and

trade organisations

Sustainable innovation

Sustainability is at the heart of our innovation process. We want

every innovation to be more sustainable than its predecessor,

whether it’s a small incremental change or a major new launch,

everything counts.

This isn’t always straightforward. Sustainability impacts are

multi-dimensional and every innovation has trade-offs.

To help us to understand and evaluate these choices, we’ve

developed a purpose-built Sustainable Innovation Calculator (SIC).

The calculator evaluates the sustainability impact of every new

product versus existing products and established benchmarks.

Each potential innovation is rated on things like reformulation,

packaging, ingredient quality, device optimisation and

consumeruse.

There are always beneﬁts and drawbacks to innovations and we

weigh the impact of our decisions carefully. For example, a natural

ingredient may score highly on one aspect of sustainability, but it

could also have a higher water impact than a synthetic ingredient;

or, plastic packaging may actually have a lower carbon footprint

than a composite equivalent. This is what makes the SIC so

powerful – it looks at all of these elements. We then use that

datato inform our overall decisions, fully understanding the

impactofaproduct innovation and its implications for our

sustainability ambitions.

We want consumers to trust our brands and to feel conﬁdent that

our products are safe and cause no harm to the ecosystems or

thepeople that they touched during their lifecycle. By actively

encouraging an innovation culture which embeds sustainability

asa fundamental criterion, ensuring it is always considered and

improvements both big and small are made at every opportunity,

we believe we will be able to deliver against our ambitions.

NUROFEN 12HR

In 2021 we launched Nurofen 12HR in

partnership with an external company using a

modiﬁed release technology fuelled by

patented technologies which enable us to

unlock enhanced consumer beneﬁts in OTC.

Working closely with our external partner, we

were able to create a tablet that provides

both fast and extended pain relief over 12hrs

in one dose. Specially-formulated ibuprofen

is rapidly released through disintegration

from the outer surface of the pill to provide

fast pain relief but also slowly diffuses

through the polymer-based tablet allowing

for elongated dissolution over a 12hr period.

This type of scientiﬁc application

demonstrates how we can translate novel

physical and chemical performance into

consumer beneﬁt and illustrates the power

of our external partnering programme as we

can combine our capabilities with those of

our partners to create new innovations which

directly address the needs of people around

the world. In creating this scientiﬁc

technology, we will be able to scale and

increase the positive impact across our

portfolio of medicines to drive superior and

differentiated innovations in other formats.

CASE STUDY

DIGITAL TRANSFORMATION

There are four components to our Digital transformation opportunity:

DRIVING BEST-IN CLASS

DEMAND GENERATION

EXECUTING WITH

E-COMMERCE

STRENGTHENING

OUR DIGITAL

INFRASTRUCTURE

DIGITAL SKILL-

BUILDING ACROSS

THE ORGANISATION

Focus on: Digital

STRATEGIC

TRANSFORMATION

IN THE DIGITAL

ARENA

The pandemic has driven a step-change in consumer behaviour, altering what people

buyand how they buy it. Our employees’ ways of working are changing, and supply

chainsare less predictable. This, combined with ongoing developments in technology

andmarketing techniques, drives the need for enhanced end-to-end digital capabilities,

and means the digital transformation of Reckitt is one of our most important opportunities.

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OUR DIGITAL BACKBONE

Our digital infrastructure journey continued in 2021 and

ourtransition to the cloud is well advanced. In December,

wedecommissioned the ﬁrst of our three data centres and

theremaining two will follow in 2022.

As we move to a modular, API ﬁrst architecture for our technology

stack, we have invested in a modern integration layer. Its strong

and agile execution capabilities earned us the Best API Strategy

award from our strategic partner, MuleSoft.

We are adopting an automation-ﬁrst culture across all functional

areas, including our shared services transformation. We have

introduced process mining at scale to ﬁnd opportunities for

simpliﬁcation and rationalisation. Automating our own technology

operation has unlocked signiﬁcant savings and improved

userexperience. We were named Best Automation Centre of

Excellence at the UiPath Automation Excellence Awards and best

IT Opportunity-to-Deployment at The Hackett Group Awards.

We are charting a promising journey that will bring our data and

analytics strategy to life, unlock potential and help us outperform

in the marketplace.

In 2021, we built a machine learning model using more than 200

internal and external real-time data signals to predict consumer

demand in the US for our key categories. We’ve used this to

informstrategic, commercial and supply planning. This marks

astep-change in capability. We’re far more able to navigate

volatile demand. We can offer better service to our customers

and, ultimately, our consumers. We’re scaling up this approach

in2022 to all our key brand/market combinations.

AMAZON CENTRE OF GLOBAL EXCELLENCE

Amazon is our largest global e-commerce customer and

now the second biggest customer to Reckitt globally.

Our30 years’ experience with the company has forged

apowerful and highly functioning partnership.

We collaborate in many key areas. We work together

oncustomer experience, channel optimisation, brand

protection, advertising and supply chain issues. We

co-plan growth strategies. And we continue to progress

our Climate Pledge work.

Embedding sustainability

Our sustainability, innovation, brand and packaging

solutions teams all meet regularly with Amazon to discuss

challenges and unlock new market opportunities.

We were an early signatory to Amazon’s Climate Pledge,

the ﬁrst consumer packaged goods company to do so.

We are now engaging on the complexities and nuances

ofimplementing that in our categories. Our expertise,

along with Amazon’s scale and ambition, has a signiﬁcant

multiplier effect.

On the back of these workstreams, Reckitt brand teams

are actively working to create sustainable innovations

thatemphasise re-usability, compaction and reduced

air,water and packaging impacts in line with Amazon’s

Climate Pledge Friendly (CPF) shopping initiative. They

also support Amazon’s proprietary compact by design

programme. So far, 86 Reckitt products are CPF-badged.

Retailer advertising and media

As part of our global relationship, we collaborate with

Amazon advertising to test, identify and scale up best

practices that expand the reach for Reckitt’s brands.

We’re working together in multiple areas, including

collaborative lists; the global roll-out of full-funnel

advertising; bespoke intelligence and dashboard

capabilities; programmatic and demand-side platform

testing; and early-stage Adtech and Martech integrations.

To maximise our consumer reach and minimise lost

opportunities, we have enabled AI-led media buying

formore than 97% of our search spend on Amazon.

New countries and emerging channels

We launched in two new countries, Sweden and Poland,

during 2021. For the third year in succession, we had

complementary 1P (direct) and 3P (marketplace) offerings

in every country. Although relatively small launches, these

are strategically important opportunities.

Amazon Business, or B2B, is seen as a key growth channel

by the company over the next decade. Working with the

B2B teams based in the US, we are increasing our focus

onserving business customers via their integrated

website and testing ways to better connect with them.

We must deliver a seamless consumer experience and

plan to introduce a professional product range to meet

their speciﬁc needs.

Brand protection

Brand protection is critical to every company. Our global

and regional e-commerce legal teams partner with the

Amazon brand protection team to address the thousands

of unauthorised sellers of our products and better protect

our consumers and our brands. We manage these sellers

directly to further strengthen the consumer experience,

and we are employing elements of AI and ML to broaden

our scope.

CASE STUDY

Focus on: Digital (Continued)

1. Adjusted and other non-GAAP measures, deﬁnitions and terms are deﬁned

onpage 81

A DEEP DIVE ON E-COMMERCE

Our global e-commerce strategy today draws heavily on the

lessons we learnt over the past decade in China. As the most

advanced e-commerce market in the world, where online sales

outstripped physical retail in 2021, we believe China offers a

window into the future of global online market. For example, mega

trends such as social commerce, are already over ten times larger in

China than in the US. Taking this view globally, and using China as a

blueprint, has helped us stay agile, while gaining accelerated scale.

Our digital growth

All our territories have experienced strong double-digit growth

ine-commerce over the last 12 months. E-commerce has more

than doubled its contribution to Group net revenue since 2018

achieving c.£2.5 billion in consumer sales in 2021. That equates

to12% of total revenue. Our aim is to generate 25% of company

revenue digitally within ﬁve years through a combination of

organicand inorganic growth.

2018 2019 2020 2021 Five-year

ambition

7%6%

£2.5bn£2.0bn£1.1bn£0.9bn

10%

12%

25%

Total consumer sales (sell-out estimated retail sales value)

E-commerce as a percentage of Group net revenue)

Our focus is on ensuring that we build e-commerce as a global

capability. Even in countries where Reckitt is relatively small,

weare committed to building our e-commerce capability

tostayahead of the curve.

Our strategic approach

Three areas form the core of our e-commerce strategy.

First, availability and preference. E-commerce has hundreds of

channels and platforms, big and small, and we want to maintain

ﬁrst-mover advantage in them all. To do that, our brands need

tobe present everywhere and be the most preferred brand

intheir category.

Second, we are building efﬁciency and focusing operations through

the active use of data and automation. Our online consumer sales

bring in millions of data points every day: We use this to drive

efﬁciency in our advertising spend and reduce our ﬁxed costs.

Our investment strategy is the third component. The focus here is

on capabilities we either cannot or do not want to build ourselves.

Through Access VC, our venturing division and other entities,

weinvest in early-stage startups that either bring new capabilities

to Reckitt or to take usto new spaces and places. So far, we have

deployed over £80million in capital across several startup brands.

Read more inour Access VC case study.

End-to-end digital capabilities

Over the last two years we have created an end-to-end digital

capability that employs marketing data, automation and venturing.

We have made a signiﬁcant investment to fully integrate our CARE

model (Consumer Acquisition, Retention and Expansion model).

We analyse the data to drive six main capabilities:

• Global media buying across our business units

• A global consumer insights hub informing innovation

andadvertising

• Our digital factory applies consumer insights to produce

in-house targeted creative content

• Data-driven marketing focuses on improving efﬁciencies

• First party and second party data acquisition powers our global

data strategy

• Direct to consumer platforms (we have around 40 D2C brand

storefronts globally)

Our global marketing team of some 2,000 brand stewards

in50countries across all three business units supports our

digitalcapabilities, along with our Global Digital and Data Hub

inWarsaw(Poland) where 200 technology and data professionals

are operating and advancing our backbone digital platforms.

Theyare all plugged into Marketing Excellence, our global virtual

community dedicated to sharing expertise across the Group

andgrowing our global marketing capabilities.

Driving best-in-class demand creation

As part of our investment programme over the past

twoyears, and reﬂecting the growing importance of

theonline channel, we have begun to scale across the

business a digital demand creation excellence programme.

This has involved the development of existing core digital

capabilities such as measurement and audience targeting,

and requires cross-functional up-skilling in our marketing,

media and analytics teams.

The programme has so far been rolled out to over

20markets across each GBU, incorporating over

90‘test-and-learn’ campaigns.

Whilst we are still early in this journey, early signs of the

potential for performance uplift are encouraging. These

‘test-and-learn’ campaigns delivered signiﬁcant sales uplifts

compared to pilot tests, and are also allowing us togenerate

wide playbooks, enabling the sharing best practice across

the Group. External benchmarking has also demonstrated

that, where applied, our programme has accelerated our

‘digital maturity’ in this respect ahead ofindustry averages.

The key drivers of growth

E-commerce penetration is growing across consumer-packaged

goods. We anticipate that the market will be two to three times

larger over the next three years and our addressable market is

expected to grow as much as tenfold over the next ﬁve years.

Increasing convenience for consumers and, from that, gaining lifetime

value is a key objective. Daily-use, big-name brands like Dettol and

Finish are ideal for automated purchase. A signiﬁcant number of UK

consumers have signed up to Amazon Subscribe &Save. These kinds

of schemes are helping us transition to more predictable, repeatable

and more easily serviceable revenue streams.

As we build out from a brand-based approach and begin to think

more in terms of categories, new opportunities are emerging.

Theintimate wellness category, of which the Durex brand

formspart, iswell suited to e-commerce. By growing our digital

capabilities inthis category we can build a data powerhouse

forinsight and innovation. Our recent acquisition of Queen V

strengthens our positioning in this category and provides more

brand-building opportunities with digitally native consumers.

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Growing market share through superior execution

Our e-commerce portfolio is highly focused on our top ten brands.

They account for over 80% of total e-commerce growth over the

last year and over 70% of total e -commerce sales.

We have developed a robust ratings and review process and pay

close attention to consumer feedback. Machine learning helps

usidentify adverse events early and respond to consumer issues.

Our online reputation has ﬂourished, with all our core brands

achieving consistently high consumer ratings on multiple

platformsinternationally.

Excellent execution is a top priority for the e-commerce team.

Amazon UK, for instance, tags over 80% of our brands as either

‘Amazon Choice’ or ‘Best Seller’. As such, they recommend our

products via Alexa and their category searches. That drives

additional trafﬁc and strengthens our market positions.

Our unique operating model

Our operating model is based on what we’ve learnt from our

e-commerce activities in China. ‘Be Big, Be Fast, Be Bold and Open’

emphasises the attributes we need to fuel rapid growth and

energise outperformance.

Be Big – Scale provides tremendous advantages in the digital

arena. Three-quarters of our e-commerce teams focus on scaled

operations. They run big brands in big channels and collaborate

with pure players, such as Amazon and Alibaba, to grow them into

proﬁtable end-to-end businesses. The focus here is on sustainable

growth and ensuring we pursue the right earnings model.

Our omnichannel strategy ensures that Reckitt brands are available

wherever the consumer requires them. Over 90% of our brands are

at Amazon Fresh click-and-collect stores. At Boots and Superdrug,

our brands average 80%+ omnichannel satisfaction ratings.

Be Fast – No one can predict the successes of the future so

wemaintain a strong digital presence everywhere to maximise

ﬁrst-mover advantage. When new channels and platforms emerge

we move quickly to extend our presence. This rapid expansion

ishelping us build scale fast through D2C, B2B, live-streaming and

on social commerce.

2011-2013

Channel Launch Year

2013-2015 2015-2017 2017-2019 2019-H1 2021

DTC

Durex.co.uk

Getir

Dija

Zapp

Superdrug

Amazon 1P Tesco.com Boots.com

Amazon 2P Waitrose.com

Chemists

Direct

Deliveroo

Amazon 3P Asda.com Ocado Ebay

Weezy Morrisons

.com

Sainsburys

.com

Uber

Be Bold and Open – Our experimentation engine is the home of

our moon-shot ideas. Here we partner with our colleagues in R&D

and in our GBUs to launch new brands into the Reckitt portfolio.

We also work with external partners and innovators to test

different approaches.

CASE STUDY

ACCESS VC: INVESTING IN PURPOSE-DRIVEN, DIGITALLY-LED BRANDS

Access VC is the purpose-driven

venturearm of Reckitt. Through it, we help

startups and founders from all walks of life

accelerate their growth and make a bigger

impact on the world. We invest in founders

who share our purpose and want to ﬁght for access

tobetter health, hygiene and nutrition.

Access VC is aptly named. It provides much more

thanfunding. Our partners get access to our experts,

capabilities and global network, including research

anddevelopment, consumer insights and ‘go-to-market’.

We offer mentoring and capital resources to help them

reﬁne and scale their business models. Early-stage

startups can also participate in our six-month accelerator

programme, run by Founders Factory, the world’s leading

startup accelerator.

Our trusted, global brands can help our partners unlock

new markets and reach more consumers. This can result

inbrand partnership opportunities, as well as leveraging

our close relationships with some of the biggest retailers

on the planet.

Oxwash: Decarbonising laundry

Oxwash joined our accelerator programme

to scale their revolutionary sustainable

laundry service. Their laundry system

recycles and disinfects water from

previous wash cycles, saving up to 60% of the water

consumed in a typical commercial washing machine.

Fast forward to today, and the team has expanded the

sustainable laundry startup from one hub in Oxford with

two more, in Cambridge and London. They are now

extending their services across the UK.

Kinsa: Making thermometers smart

Kinsa is a leader in smart thermometers

and real-time monitoring of infectious

disease, appearing in Fast Company’s

listing of ‘The 10 most innovative

companies in data science’. Their solution acts as an

early-warning system for preventable illnesses, helping

communities, schools and enterprises to act fast to stop

the spread.

They are partnering with a number of Reckitt’s brands,

including Lysol and Mucinex, to support the growth and

application of their technology at a bigger scale.

Focus on: Supply Chain

MANAGING

GLOBAL SUPPLY

In our highly connected society, change

can be rapid, radical and unpredictable.

The global pandemic exposed the

vulnerability of supply chains built

onjust-in-time, diversiﬁed and

globalisedmodels.

We found out that, not just factories, but entire regions could halt

production at a moment’s notice, with profound consequences

forbusinesses on the other side of the world.

And on the demand side, the bar is being set higher. Today’s

smartphone-equipped, social-media-savvy consumers expect

products to be available when and where they need them.

Andthey want the brands they buy to be sourced responsibly

andsupplied sustainably.

We are meeting these challenges by managing our global supply

on a holistic basis, by acting as one Reckitt and by staying true

toour Purpose.

COMPLEXITY AND SCALE

Reckitt is a global manufacturer. We sell 20 million products daily

inmore than 200 markets. Well over half of our employees, over

20,000 people, are involved in supplying them.

We manage our supply globally in a highly integrated way. Each

ofour business units has adopted a single operating model that

connects every stage of its supply chain with consumer priorities.

These are underpinned by core capabilities which leverage the

strength and scale of our global network.

The volatility created by the global supply chain crisis is best met

by a holistic approach to planning, with visibility across the full

product lifecycle to mitigate risk and maximise opportunities.

Thisapproach is helping us build a resilient, agile and efﬁcient

manufacturing capability.

We maximise transparency with high-quality data and connected

technologies. The supply function engages directly with all parts

ofthe business. That allows us to adapt swiftly to shifting market

dynamics and adjust our productive capacity proactively.

Global supply pursues ﬁve strategic priorities:

We will meet our strategic priorities through ﬁve workstreams that began in 2020 focused on building internal capabilities and driving

excellence. Our world-class productivity programme has provided us with the resources to reinvest into the Business and underpin these

capabilities with new technologies.

By strengthening our operations, improving our ways of working and increasing efﬁciency, we have created a more resilient supply

organisation, creating value for our people, our customers and our consumers.

EMBRACING OUR

PURPOSE, FIGHT

ANDCOMPASS IN

EVERYTHING WE DO

BUILDING A

SUSTAINABLE

ANDRESILIENT

END-TO-END

SUPPLYCHAIN

PROTECTING

OURPEOPLE,

OURCONSUMERS

ANDOURBRANDS

ENABLING THE

ORGANISATION WITH

SPEED AND AGILITY

FUELLING GROWTH

THROUGH

PRODUCTIVITY AND

UNLOCKINGVALUE

1 42

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QUALITY PERFORMANCE

Our continued investment into ensuring we make products people

love has delivered a step-change in our quality performance over

the last two years around three key metrics:

27%

overall improvement in Quality,

as measured by a reduction in deviations

1,2

12%

reduction in Cost of Non-Quality

11%

reduction in Time to Release

We’re getting better products to market faster, and improving

ourefﬁciency.

On World Quality Day, we introduced a new Quality Commitment

to ensure quality supports our strategy to rejuvenate sustainable

growth. The Quality Commitment recognises that we can only

deliver the highest-quality products by embracing our Purpose,

Fight, Compass and Leadership Behaviours in all that we do.

This replaces our more narrowly deﬁned Quality Vision. The Quality

Commitment is about who we are as well as what we do. Everyone

is required to sign up to it because each of us has a personal

responsibility to ensure that every interaction with our brands

isapositive experience.

To help achieve that, we’ve introduced a single Quality Manual

forall our business units and functions. Group-wide adoption

ofthe same set of processes streamlines and connects the

entirebusiness. This is all underpinned by a new digital platform

tosupport our teams in meeting these high standards.

Our commitment to quality was a contributing factor in Reckitt’s

readmission to the Dow Jones Sustainability Index in 2021.

Our pledge to ‘do the right thing, always’ showed its value recently

after a spate of product recalls by the Singaporean government.

Seventeen brands of hand sanitiser had to be removed from sale

after the detection of unacceptably high levels of acetaldehyde

and/or methanol. Thanks to our robust processes, even at a time

whensanitiser was under intense demand and our teams were

working virtually, Reckitt brands were not affected.

BUILDING THE FACTORY OF THE FUTURE

Industry 4.0 offers huge beneﬁts for manufacturing, but

achieving digital transformation depends on seamless

interconnectivity. Like many manufacturers, Reckitt has

progressively automated our processes over the years.

Werely on technologies that are mostly factory-led and

designed to perform speciﬁc tasks. That results in siloed

data, which limits our ability to understand and analyse our

activities in an integrated way.

To quickly overcome these obstacles and move toward

full-scale digitalisation of our factories, we decided to invest

in a factory of the future. This had to do more than provide

proof of concept, we wanted it to add immediate

value,provide incremental beneﬁts over time and be

re-deployable at other locations.

Each of our factories has speciﬁc requirements and differing

technologies, but there is a shared need for connectivity.

We teamed up with IBM to build a scalable cloud foundation

and data backbone for running our Nottingham factory.

We installed IoT sensors that share equipment data.

Operators no longer need to inspect machinery. They are

notiﬁed automatically when maintenance is due. With more

connectivity and improved data visibility right across the

factory, it’s far easier to understand our processes and

analyse how they can be improved. And this is just the

beginning, machine learning and predictive AI algorithms

will boost manufacturing excellence and automate planning.

Nottingham went operational as Reckitt’s ﬁrst factory of

thefuture in May 2021. Within a month, we were projecting

a10% reduction in plant maintenance costs and a 3%

decrease in electric power consumption. The platform-

based approach there uses consistent data and connectivity

protocols, which are easily replicable at other factory sites.

CASE STUDY

Focus on: Supply Chain (Continued)

1. Quality metrics vs 2019

2. Based upon Quality Deviations metric

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WALMART SUPPLIER

OFTHE YEAR

In March 2021, Walmart named Reckitt its

2020 Supplier of the Year for consumables

fora number of reasons. First and foremost,

we had delivered the products Walmart

shoppers most needed in 2020. We’d

invested in improving availability while

providing products to help keep shoppers

safe during the pandemic. Our transparent

communications kept us agile and able to

provide the stores and shoppers with what

they needed when they needed it. We were

quick to adapt our product mix in 2020 to

maximise in-store availability and tested new

replenishment models in several markets to

meet unconstrained demand.

We also worked hard to deliver meaningful

insights on new shopper habits that helped

Walmart plan for new category dynamics

in2021. Taken together, all of these efforts

led to increased penetration for Walmart

inmultiple categories, including surfaces,

immunity, air care, auto dishwashing, carpet

and septic.

CASE STUDY

THE FOURTH INDUSTRIAL REVOLUTION

We are using technology to help fuel growth and unlock additional

value. Better data and connectivity are helping us get more

efﬁcient and productive. Starting with our Nottingham plant, we’ve

created a fully connected environment that automates the capture,

use, analysis and sharing of data across the Group and can be

easily replicated in any factory around the world.

This combines the Internet of Things (IoT), cloud technology,

networking and AI to improve safety, quality, productivity and

efﬁciency in our manufacturing process. Individually, these

technologies are now mature enough for us to connect them

cost-effectively. These richly connected data pools will deepen

our understanding of how our processes interact and how they

can be improved.

CUSTOMER EXCELLENCE

In a time of unprecedented supply chain disruption, collaborating

with customers has been essential to ensure access to our

products. We have reconﬁgured our customer operating model to

improve availability through improved engagement, communication

and strategic supply chain solutions. By working with our customers

across the supply chain, from manufacturing to customer service

tosales, we are building aligned and tangible success measures

formutually beneﬁcial performance and growth, focused on

consumer needs.

This change in our approach has generated tangible

improvements, which have not gone unnoticed by key partners

such as Walmart and Dollar General, and has been reﬂected in

industry benchmarks such as the Advantage Group 2021 survey

ofretailers.

Focus on: Culture & Inclusion

MOVING

FORWARD

Our cultural transformation in support of

Reckitt’s strategic goals is progressing

well. Our focus on and investments in

inclusion, wellbeing and our people are

inspiring and equipping them to ﬁght for

acleaner, healthier world.

EVOLVING OUR CULTURE

In support of our strategy and to reﬂect our stance as a purpose-

driven, consumer-centric business we are evolving our culture.

Atthe same time, we are continually assessing how best to enable

and deliver exceptional business performance, while adapting to

the changing social priorities in a COVID-19-affected environment.

The cultural change underway at Reckitt builds on our best

qualities. We’ve always been known for our dynamic culture,

unitedby a shared sense of ownership and focused on action

andachievement. Reckitt has long been recognised as a place

where people take responsibility for making things happen.

Thatdrive for delivery and innovation is now even more strongly

combined with a sense of purpose. We’re responsible for our

impactin the world and we want to make a real, positive difference.

There’s a groundswell of support for our Purpose, Fight and

Compass. We are more focused than ever on fulﬁlling Reckitt’s

potential. 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. An inclusive,

dynamicand collaborative culture is at the heart of our

strategictransformation.

LEADERSHIP AT RECKITT

We aim, through our cultural transformation, to drive performance

through our Purpose and unleash the true potential of our people.

Leadership is key to realising our cultural ambitions and achieving

sustainable outperformance.

Using our Compass as the starting point, we’ve deﬁned Leadership

Behaviours that capture Reckitt’s uniqueness, capitalise on our

strengths and stretch us where we still need to shift the dial.

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At Reckitt, we Own, Create, Deliver and Care. Our leaders

mustembody these behaviours. We grow leaders who know

theirbusiness and Own their decisions while living our Purpose

and Compass every day. Create reminds us to relentlessly build

better and seek out new opportunities that put people and

consumers ﬁrst.

Deliver encapsulates our commitment to superior execution.

Getting things done and joining forces to win bigger are more

important than personal kudos. We act boldly and at pace,

focusing on what matters to make things happen.

Care is about making sure we have due concern for the people

we work with as well as the world around us. We speak directly

with respect, actively involving, including and listening to other

voices, and are ready to learn from others.

We are systematically reinforcing these behaviours through

ourpeople, policies and practices, including in our leadership

development curriculum, all-employee survey and personal

development tools.

Our leadership development ethos is that leaders grow leaders.

We made sure senior leaders understood and adopted the

DRIVING CONSCIOUS

INCLUSION

In 2021, we initiated an ambitious programme

to promote the beneﬁts of conscious

inclusion. Starting with our senior

management team, this stressed the

importance of leading inclusively and the

signiﬁcant role leaders can and must play in

creating a more inclusive culture. The learning

was practical, conversational and peer-

based, providing tips and tools to ensure our

leaders embody our Leadership Behaviours

inan inclusive way. Almost 90% of our senior

leaders have attended these sessions so far.

We are now extending this programme

across the Group to encourage all our people

to recognise the critical role they too play in

creating an ‘everyone’ culture. The learning

includes e-workouts, market-wide round-

tables and smaller team discussions.

In 2022, we will continue the learning by

embedding this philosophy into our ongoing

leadership curriculum.

CASE STUDY

behaviours ﬁrst so they can act as role models for their peers and

colleagues. By the end of 2021, over 600 of Reckitt’s global and

regional leaders had participated in the programme.

To help Reckitt leaders understand how their leadership measures

up to these expectations, evaluation of their performance against

the behaviours and feedback from their teams is part of their

annual performance reviews.

Focus on: Culture & Inclusion (Continued)

A DIVERSE, INCLUSIVE CULTURE

Our ambitions for a cleaner, healthier world are advanced in a

fairersociety. By embracing our diversity we help build a more

inclusive world.

We are nearly 40,000 people of 120 different nationalities.

Weoperate in 60 countries that span six continents. Inclusion

isfundamental to our success, both internally and externally.

We are actively creating an environment where all colleagues feel

able to participate fully, bring their best self to work, and realise

their potential. And Reckitt is better placed to have a positive

impact in the world when we represent and reﬂect the diversity

ofthe consumers and communities we serve, globally and locally.

Our Global Inclusion Board, chaired by our CEO, is made up of

senior leaders and sponsors of our Employee Resource Groups

(ERGs). Together, they set and drive our inclusion agenda. The

Board is accountable for strategic delivery, governance, monitoring,

reporting and communication.

Our inclusion strategy rests on six pillars. The work we’re doing

onthe leadership, people and policy pillars helps ensure we are

building an inclusive culture internally. Externally, our inclusive

approach to procurement, brands and partnerships aligns what

wedo with who we are.

STRONGER TOGETHER

Since launching with a ﬁve-year commitment in June 2020, our

global Stronger Together conversation series has continued to

create opportunities for sharing inspiring and challenging stories

from our colleagues across the world. Sometimes tough to hear,

these allow us to understand each other better and build shared

awareness to create a more inclusive environment.

We ran seven live global events in 2021, reaching almost 30,000

people, with more watching later on demand. Invited guests and

colleagues shared their experiences. Many colleagues have shared

deeply personal stories in this global setting, with many more

sharing their stories in local Stronger Together conversations.

Theraw vulnerability and courage shown by colleagues in telling

their real stories have prompted increased awareness and

understanding.

These global conversations have been integral to building

anincreased level of trust across all areas of the organisation.

Theyunderpin and are a key part of our strategy to build a more

inclusive culture through the power of storytelling, education

andallyship.

Stronger Together conversations are now held at regular intervals

within markets to deepen the level of understanding, empathy

andtrust amongst colleagues.

In 2021, to complement and build on the Stronger Together

series,we launched leader-led conscious inclusion conversations

within every team across the organisation. These peer-to-peer

discussions encourage individuals to raise awareness of their

ownbehaviours and be consciously inclusive through discussion

ofconcepts such as reducing bias and micromessaging.

EMPLOYEE RESOURCE GROUPS (ERGS)

ERGs are employee networks that aim to raise the proﬁle of

under-represented people. They provide a space for colleagues

toconnect and support each other. They are represented

ontheGlobal Inclusion Board and provide input on consumer

perspectives which inform our innovation process.

ERGs are open to all and welcome anyone who wants to advance

their interests, either as a member of their community or as an

ally.There are currently three global ERGs; they focus on gender

balance, the LGBTQ+ community, and race and ethnicity. We also

have a global disability working group which is moving to a global

ERG in 2022. We anticipate additional global ERGs may be formed

in the future as needed. Colleagues are also encouraged to set

uplocal ERGs to represent the needs of local communities

intheirmarket.

GENDER PAY REPORTING

In the United Kingdom, gender pay reporting

is a legal requirement. This reporting

highlights any difference between the

average hourly wages of the company’s

maleand female employees in the UK.

Wesee this as a welcome move towards

equality and transparency.

In 2020, Reckitt was one of the ﬁrst UK

companies to start reporting on a global

basis. We now share data on our nine largest

markets, covering over 70% of our working

population. For further information see our

2021 Gender Pay Report at www.reckitt.com/

sustainability/fairer-society/gender-pay.

CASE STUDY

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

SUPPORTING AND ENHANCING OUR COLLEAGUES’ WELLBEING

In 2021, we intensiﬁed our focus on colleagues’ personal and

professional wellbeing with two clear aims. Firstly, we want to

equip all employees with the mental and physical resources to

thrive by building awareness and resilience through self-care and

education. We also focused on increasing resilience in our leaders

to help them sustain performance, individually and collectively.

To realise these ambitions, we have teamed up with leading global

performance partners and an organisation that focuses on mental

health. Together, we delivered bespoke wellbeing resources

including 1:1 and group performance coaching, training, social

learning events and access to resources via digital apps. We also

hosted global wellbeing sessions on balance, mental health and

the importance of managing mental energy. Almost 10,000

colleagues attended and the feedback was very positive.

FUTURE OF WORK GUIDANCE

In March 2020, we implemented a rapid switch to remote

working where practical and possible. This abrupt change

enabled many to experience the beneﬁts, and challenges,

of working remotely. We quickly set up the Reckitt Future

of Work programme to explore and ensure we are ready

for how the workplace might evolve.

Our aim is to create a seamless, inclusive workplace

experience that empowers colleagues with choice about

how and where they work. We encourage our people

toconsider how the four Cs of Connect, Create, Coach

and Collaborate shape their working lives at Reckitt.

Weencourage colleagues to ﬁnd a working pattern

thatworks for them and is aligned with their team,

ourbusiness and consumers’ needs.

Our approach is ﬂexible, focusing on what is delivered,

notwhen or where. We ask colleagues to consider,

onacase-by-case basis, which activities and projects

arebetter achieved by being physically present and which

merit screen-based interaction.

In the physical workplace, we’re moving away from

a1-to-1 desk-to-colleague ratio to a contemporary,

open-plan layout with bookable desks in designated

areas. More space is given over to collaboration, enabling

the four Cs to ﬂourish and helping us truly be one Reckitt.

Our working environment needs to reﬂect and embed

ourPurpose, Compass and culture, focusing on wellbeing

and inclusion while also meeting the diverse needs of

colleagues across our many geographical cultures. We’re

building virtual and physical spaces with a diverse set of

tools, both digital and physical, that meet these needs.

CASE STUDY

US achieves top ranking in Corporate Equality Index

At Reckitt, we’ve made it our priority to foster a more diverse,

equitable and inclusive culture that provides every individual

with a genuine sense of belonging. The efforts we’ve made,

particularly in 2021, earned us a score of 95 out of 100 on the

Human Rights Campaign Foundation’s 2022 Corporate Equality

Index (CEI).

An important benchmarking survey and report in the US, the

CEI measures corporate policies and practices related to

LGBTQ+ workplace equality. This marks the third year Reckitt

has participated.

1. Climate change

2. Product quality & safety

3. Packaging & waste

4. Advancing global health & hygiene

5. Ethical business conduct

6. Sustainable product innovation

7. Public health challenges

8. Labour & human rights

9. Supply chain management

10. Employee health, safety & wellbeing

11. Water

12. Diversity, equity & inclusion

13. Responsible governance

14. Ingredients

15. Biodiversity & ecosystems impacts

16. Talent management & employee

development

17. Data privacy & cybersecurity

18. Contributing to local communities

19. Sales & marketing practices

Importance to stakeholders (low



high)

Impact on the business

(low



high)

Reckitt’s impact: Low Medium High

Low

High

Stakeholder Engagement

MAPPING WHAT

MATTERS

RECKITT’S 2021 MATERIALITY MATRIX

Materiality matrix showing the priority of issues in terms of the view of the business and the view of stakeholders:

As a purpose-led business we aim to

maximise returns for all our stakeholders.

That creates impact for the business and

through the business.

We engage with stakeholders across our business to get the

broadest picture of what they want from us and how we can

respond. Stakeholders tell us what matters most to them. Those

insights help us better meet their needs, and improve our approach.

OUR 2021 MATERIALITY ASSESSMENT

In August 2021, we asked Corporate Citizenship to conduct

amateriality assessment to identify, prioritise and contextualise

thekey risks and opportunities for the business and inform

strategic decision-making. The assessment was built on an earlier

assessment conducted by the company on our behalf. We wanted

to quantify the changes and developments in stakeholders’

perceptions of risk and their expectations of Reckitt as

anorganisation.

Corporate Citizenship last conducted an assessment on our behalf

in 2018. Since then, we’ve been on a journey of transformation. Not

only that, the world has changed enormously: the global pandemic,

rapid technological advances and changing social attitudes have

all had a huge impact on global culture in recent years.

We wanted this materiality exercise to include double materiality

analysis, as recommended by the Global Reporting Initiative’s

latestbest practice guidelines. This considers both the impact

ofenvironmental, social and governance (ESG) issues on us

(ourﬁnancial materiality) and our own ability to impact key ESG

issues (our impact materiality). This perspective was built into

eachstage of the materiality process.

Nineteen material ESG topics were prioritised, chosen for their

topicality and relevance. Precise wording was agreed internally.

Interviews and surveys were then conducted on these subjects

with both internal and external stakeholders.

Internally, Corporate Citizenship conducted ten interviews with

Reckitt leaders and did a detailed survey of 76 employees, who

arebroadly representative of the workforce as a whole. Externally,

they consulted with customers, suppliers, investors, peers, opinion

leaders, NGOs and industry associations. There were detailed

interviews with ten external stakeholders; 20 more responded

tosurveys.

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They analysed these responses to rank the key issues of concern

and develop a materiality matrix reﬂecting internal and external

perspectives on sustainability topics and their relative signiﬁcance

to Reckitt and our stakeholders. Points are ranked by colour to

indicate the perceived signiﬁcance of our impact on each issue.

Climate change has become more important and we have been

working with climate risk specialists, Risilience and Cambridge

Centre for Risk Studies (CCRS) within the Judge Business School

atthe University of Cambridge, to assess our climate change risks

and opportunities. For further information please see page 66 and

our Climate Change Insight.

KEY FINDINGS

Reckitt’s most material issues are closely aligned with our 2030

strategy, which suggests that our stakeholders think we are

prioritising the right things. They didn’t see any major gaps in

strategy and recognised that we’ve made signiﬁcant strides over

the past two years.

There was a shift in our most material issues, however with Climate

change overtaking Product quality & safety.

Our stakeholders view action on climate change as a must-have.

Three of the top four issues where we were thought to have the

biggest (positive or negative) impact – Packaging & waste, Climate

change and Sustainable product innovation – were environmental.

We are now closely identiﬁed with our Purpose. Not only was

Advancing global health and hygiene commonly viewed as one

ofour biggest societal impacts, it was also seen as fundamental

tothe successful delivery of our mission, and therefore intrinsically

linked to our ﬁnancial value.

Non-negotiable ESG issues like Product quality & safety and Ethical

business conduct continue to be among our most material issues.

Stakeholders referenced previous product recalls, and the volatile

nature of public perception of consumer goods companies. Some

also believed that our repositioning as a health company means

that we will face more intense scrutiny.

Employee issues are higher up the agenda. Employee health, safety

& wellbeing and Diversity, equity & inclusion were both seen as

more material this year.

Supply chain issues have also become more material to the

business. There was a notable shift of Labour & human rights

andSupply chain management to the right of the matrix.

Biodiversity is not yet perceived as a business priority, but

manyexternal stakeholders did say they see this as the next

bigemerging issue, with increasing public awareness and

nature-based ﬁnancial disclosures anticipated in coming years.

SUSTAINABLE DEVELOPMENT GOALS

In 2015, UN Member States adopted the 17 Sustainable

Development Goals (SDGs) as part of the 2030 Agenda for

Sustainable Development. At Reckitt, we recognise the impact we

can have for society on many of these goals. There are ﬁve SDGs

where our impact can be greatest. These embody the work of our

brands and our business as a whole, through our value chains and

in our partnerships.

We are also progressing the SDGs through our brands. We have

reorientated each of our brands to give it a distinct purpose that is

aligned with an SDG. See page 54 for more on purpose-led brands.

Progress on the ﬁve SDGs where we have greatest impact is

detailed below:

SDG2: Zero hunger

In infant nutrition we focus on the ﬁrst 1,000

days of life. Our products keep mothers healthy

and nourish their babies. In line with World

Health Organization (WHO) guidelines, we

promote exclusive breastfeeding in the ﬁrst

sixmonths. Protecting people against malnutrition and stunting

isakey theme for our social impact investment programme.

SDG3: Good health and well-being

This goal is closely aligned with our Purpose

and, as the Business Avenger for SDG3,

wearechampioning swifter progress in the

private sector. Many of our brands play a role

inpromoting health and wellbeing. They

include Durex, Dettol, Gaviscon and Mucinex, as well as Lysol

andour Mortein insecticide products. The pandemic has ensured

this has been a focus throughout 2021.

SDG5: Gender equality

Promoting gender equality is enshrined in our

employment policies and in our social impact

programmes. Our employment policies

drivegender equality in our teams. We have

mentoring schemes for female employees,

gender-balanced shortlists and proportional targets at senior

management level. We report internationally on gender pay.

Wehave set up social impact projects to encourage girls to stay

inschool in South Africa and equip women in rural communities.

SDG6: Clean water and sanitation

Our Harpic, Dettol and Lysol brands are closely

associated with programmes emphasising the

importance of good sanitation and hygiene. In

partnership with Water.org and WaterAid, our

Mission Paani and Banega Swasth campaigns

improve access to water and sanitation, building community

awareness of health and hygiene. Publicity campaigns emphasise

conserving water and ensuring sustainable sources for future

generations by building water-harvesting systems in villages.

SDG13: Climate action

We are accelerating delivery of our contribution

to the Paris Climate Change Agreement to

keep global warming to below 1.5°C. This is

amajor milestone in our ambition for carbon

neutrality by 2040, a decade ahead of the

world’s goal of 2050. We will reduce carbon emissions from our

sites by 65% and power our operations with 100% renewable

electricity by 2030, while also reducing our products’ footprint.

Stakeholder Engagement (Continued)

BUILDING PARTNERSHIPS

WITH STAKEHOLDERS

Incorporating stakeholder voices into our decision-making improves our ability to develop

as a purpose-led business. We don’t have all the answers – we reach out to stakeholders

to ﬁnd out what they think and to learn from and deliver with them, as well as to

strengthen long-term relationships.

ALIGNING PURPOSE

ANDSTRATEGY WITH

OURCUSTOMERS

HOW WE ENGAGE WITH CUSTOMERS

We aim to build mutually beneﬁcial partnerships with retailers,

founded on common purpose and strong structural relationships.

We coordinate these relationships globally, regionally or nationally,

depending on the customer proﬁle. We hold top-to-top meetings

to articulate shared objectives and deﬁne common purpose.

Wesupport this work with joint workshops to agree strategy

andaction plans.

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.

CUSTOMER PARTNERSHIPS

Globally, our major physical 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. Our brands are on all the

main portals, and we also trade via marketplace platforms, through

physical retailers’ digital channels and via e-pharmacy outlets.

Online presence is increasingly important. Most large retailers have

pivoted towards omnichannel strategies. We are matching this

change with an omnichannel approach to category and customer

engagement and by developing e-commerce-speciﬁc supply chains.

In e-commerce, we have a more reciprocal relationship. Digital

customers promote and sell our brands through online channels.

When we sell more through their channels we often spend more

on media space.

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.

Refreshing our approach to responsible marketing

We feel an imperative to guide our employees, stakeholders

andpartners on responsible marketing. Central to this approach

is our commitment to comply with relevant local, national

orinternational marketing standards, laws and regulations,

including being guided by industry self-regulatory best

practices. When our existing Ethical Marketing Principles

wereinitially created in 2015, we had not yet embedded brand

Purpose and Sustainability into Reckitt, as we have today. Nor

had we fully foreseen the growing importance of Digital, and

itsmultiple channels for marketers to speak with consumers.

Brands now have far greater amounts of consumer Information,

with the responsibility to source and sort this data responsibly

toensure consumer trust. That is why we have recently adopted

a new ‘Responsible Marketing Principles and a ‘Responsible

Marketing Policy’. These apply to all brands, all audiences and

allcommunications or activities irrespective of nature or media

type (such as sponsorships, promotions, packaging, in store,

onor ofﬂine, TV, radio, print, outdoor, cinema, websites, blogs,

inﬂuencer marketing, social media or sponsored content,

AI,connected packaging, banners, educational material).

We are rolling out of the new Principles and Policy to ensure

effective adoption. This is why we’re investing in a robust

training and change management module, so that the

employees impacted by this Policy understand what is required

of them. Completion of the Responsible Marketing training

willbe mandatory to all marketeers and available to all Reckitt

employees. We’ll systematically measure compliance of the

Policy through established key performance indicators. We

continue to process and monitor on an ongoing basis consumer,

customer and employee feedback on our marketing, for

example through our consumer care lines or our Speak Up Line.

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3. Climate action and responsible sourcing.

On climate, Reckitt was an early signatory to Amazon’s Climate

Pledge, committing us to net-zero emissions by 2040. We now

sellover 80 products that are labelled as Climate Pledge Friendly

on Amazon.

Walmart’s Project Gigaton sustainability initiative seeks to reduce

emissions in the global value chain by a billion metric tonnes by

2030. We’ve been designated a Giga-Guru for the work we’ve

done toreduce and report on our greenhouse gas emissions.

With retailers, we are also focusing increasingly on biodiversity,

responsible sourcing across shared supply chains, co-designing

forlower water and/or carbon product footprint, and climate

action. We shared platforms at COP26 with a number of our

retailcustomers to draw attention to climate change and health,

the ways we can inﬂuence behaviour to combat climate change,

and how businesses can support biodiversity.

4. Purpose-led brands

We are partnering with retailers to build shopper awareness and

engagement with sustainability through our purpose-led brands.

We work together to encourage purpose-led behaviour change

and raise the proﬁle of purpose-led products.

With Walmart, for example, we developed omnichannel

promotions to raise consumer awareness of water-reduction

strategies alongside the Finish Skip the Rinse campaign. There

were in-store displays with video walls, we created a ‘.com’ hub

forWalmart and Reckitt trafﬁc, and we complemented this with

push notiﬁcations on mobile phones.

PARTNERING ON SUSTAINABILITY WITH PURPOSE-LED BRANDS

The global sustainability team works closely with global and local

sales teams. We 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 are working with Amazon

to develop compact by design-certiﬁed products with lighter,

more sustainable packaging.

• Airborne has reduced the size of chewable Vitamin C tablets

and removed secondary cardboard packaging, reducing weight

for e-commerce sales. These and other packaging changes

deliver sustainability aims for us and our customers.

• Air Wick has introduced new packaging in the Liquid Electricals

range, saving over 500 tonnes of plastic.

• Durex has redesigned its 100ml Durex Play lube bottles to use

less plastic and replaced non-recyclable pumps with ﬂip caps.

They now use fully recyclable bottles made from 100%

post-consumer recycled (PCR) plastic.

• Harpic Essentials packaging now includes 35% PCR.

We have set up co-branded recycling stations at some retail

stores. In the UK, we’re recycling PVC blisterpacks from

pharmaceutical tablets together with Superdrug.

We are exploring different reﬁll and reuse models. One example

isLoop, TerraCycle’s reuse and reﬁll platform. Reckitt has signed

upto Tesco’s Loop programme. Tesco now sells Finish tablets in

reusable, stainless steel containers. Each container is cleaned and

returned to shelves for re-sale. The system is available in-store in

the UK

Finish has replaced its hard-to-recycle multi-material (PET and PE)

pouches with a fully recyclable pouch. The PE-based design won

aUK packaging award. We have also increased the amount of

recycled plastic (PCR) in our Finish recyclable pouches.

Lysol SMART kits are reducing plastic pollution by delivering

theproduct in a bottle system that works with reﬁll cartridges.

Thebottle is designed to be reused at least 25 times, resulting in

a75% plastic saving compared to standard delivery mechanisms.

2. Better ingredients

Our focus here is on reducing chemical footprints, creating

products with lower quantities of chemical components

andinnovating to introduce safe, effective products using

naturalingredients.

We share Walmart’s commitment to reducing its chemical

footprint. We are collaborating to reduce chemicals of

highconcern.

Where possible, we’re replacing synthetic with natural ingredients.

Botanical Origin’s nature clean formula uses botanically based

active ingredients. Its plastic packaging is fully recyclable

andmade from 50% recycled materials. Finish 0% is free from

preservatives, fragrances and phosphates, and has a much

lowerchemical footprint. Gaviscon’s naturally sourced GaviNatura

heartburn and indigestion relief range is providing natural solutions

to gastric symptoms.

Stakeholder Engagement (Continued)

PUTTING CONSUMERS FIRST

HOW WE ENGAGE WITH CONSUMERS

Today’s consumers want quality and value, but they also want

toknow that the products they buy and the businesses they buy

them from reﬂect their values. Many expect manufacturers to play

a leading role in reducing global warming.

Sustainability is increasingly relevant for shoppers. Many are

actively prioritising it and favouring purposeful brands. Parents

arepassing that message on to the next generation.

86%

of parents care about sustainability

and try to convey this to their children

(Source: Kantar, What does

sustainability mean to parents

asshoppers?, 2020)

As a purpose-led company, we want to make things better.

Weexist to protect, heal and nurture in the relentless pursuit

ofacleaner, healthier world. Weare ﬁghting to make access

tothehighest-quality hygiene, wellness and nourishment a right,

notaprivilege.

Our Compass guides us and the behaviours we adopt.

Puttingconsumers and people ﬁrst is a guiding principle.

We want people everywhere to trust our brands. 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.

That trust is hard-earned and easily lost.

PURPOSE-LED BRANDS

Our purpose-led brands are at the front line of that ﬁght. We sell

20 million products a day worldwide. They are helping us improve

the lives of the people we serve, our consumers, their families and

their communities through better hygiene, health and nutrition.

We work to forge emotional connections with consumers through

brands that reﬂect their values. Rooting our brands in purpose

supports our sustainability ambitions. Even small changes in

consumer behaviour can have a big impact.

Consumers want products that are safe and effective. They also

want to know they’re sustainable and responsibly sourced. 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.

Every brand has a purpose which connects it to a United Nations

Sustainable Development Goal (SDG) where it can have most

impact. The Vanish brand purpose for example, ‘helping clothes

live many lives’, is centred on SDG12, responsible consumption and

production. Lysol’s purpose, ‘keeping your loved ones illness-free’,

progresses SDG3, good health and well-being. For Air Wick,

‘connecting people to nature’ prioritises SDG15, life on land.

A brand’s purpose drives every aspect of its strategy. It informs

personality, values, behaviour, sustainability strategy and diversity

and inclusion commitments. Anchoring strategy in purpose helps

drive innovation, triggering new products, services and business

models. It also makes our brands more relevant for new target

audiences and new partners.

VANISH – HELPING CLOTHES LIVE MANY LIVES

As the British Fashion Council’s Garment Care Partner

Vanish was active in 2021 in helping to promote

sustainable fashion in line with the brand’s purpose

ofhelping clothes live many lives.

More circularity in the fashion industry is urgently needed.

After oil and gas, it’s one of the world’s most polluting

industries. It’s responsible for 4% of all global carbon

emissions. Much of that comes from consumers. We

dispose of clothing far too quickly. Shockingly, a rubbish

truck-sized load gets incinerated or goes to landﬁll every

single second.

Vanish’s three-part documentary co-produced with

theBritish Fashion Council champions the designers,

entrepreneurs and everyday people at the forefront

ofthesustainable fashion revolution.

‘Generation Rewear’ is working to stop fashion waste.

They are buying pre-loved garments, wearing clothes

longer and repurposing the clothes in their wardrobes.

Vanish is also encouraging people to think more

sustainably about how they wash their clothes. Vanish

products provide better performance at low temperatures

than detergents alone. Cold wash cycles can double the

useful life of clothing, avoiding premature garment

disposal while saving money and energy.

Finally, the brand has become the founding partner of the

Circular Fashion Ecosystem (CFE) project with the Institute

of Positive Fashion to share knowledge with our fashion

partners. The CFE aims provide an action-oriented

blueprint for the future of fashion and accelerate

thetransition towards a circular fashion economy.

CASE STUDY

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Initiative-speciﬁc champions and ambassadors provide expert

input and guidance on current issues. We regularly canvas opinion

to take the temperature of the organisation and to bring to the

surface any issues or concerns. Our all-employee online survey

isakey tool for that.

Annual performance appraisals give employees the opportunity

tooffer more detailed feedback on team leaders. Our internal

grievance process and conﬁdential whistle-blower service provide

alternative mechanisms to raise concerns through formal channels.

Senior leaders encourage colleague conversations to communicate

and ensure understanding of our strategy, involve employees

andunderstand their concerns. Our CEO sets the tone. His online

presentation in March to introduce our new brand internally

included a lengthy Q&A live-streamed by over 9,000 employees

and viewed later by many more. He posts regular email updates

and hosts multi-level focus groups, virtual sofa chit-chats and the

Stronger Together conversation series. Members of the group

executive leadership team take the lead on speciﬁc topics and

participate in virtual and on-site townhall meetings with colleagues

across the globe.

Our new brand has been well received internally. It reﬂects our

status as a purpose-led organisation with a long and rich heritage

and is helping us to inspire our people and evolve our culture.

We maintain online connectivity through Rubi, our intranet.

Wealsopublish a fortnightly newsletter internally. We have an

active presence on social media and use those channels to share

INSPIRING TALENT AND

EVOLVING OUR CULTURE

HOW WE ENGAGE WITH OUR PEOPLE

There are nearly 40,000 of us at Reckitt; colleagues of all ages,

backgrounds, identities and beliefs. We come from all over the

world; more than 120 nations are represented. This diversity is a

tremendous source of strength. It enriches our thinking and helps

us connect with our consumers across the globe.

We want to tap into this strength by promoting an inclusive culture

where everyone is heard and every voice matters. For more on this

see Focus on: Culture & Inclusion on pages 46 to 49.

Speaking direct with respect is a cornerstone of our culture here

at Reckitt. Fostering transparent conversations with and among

colleagues is critical. Globally and locally, we use a range of

mechanisms to learn what our colleagues are really thinking, from

in-depth conversations on speciﬁc topics to Group-wide surveys.

Colleagues are encouraged to submit ideas and vote on proposals

through our Freedom to Succeed forum. Their thinking informs

strategy and triggers action. For instance, in June we followed up

the launch of our 2030 sustainability ambitions with a call for ideas.

We received nearly 300 suggestions back, many of them excellent.

These were passed on to relevant teams for assessment and

further action.

Stakeholder Engagement (Continued)

rich content, spark topical discussions and present business

updates. With over 970,000 followers of Reckitt, LinkedIn is a key

platform for sharing news and topics of interest, and an important

recruitment channel. We’re also active on Facebook, where we

have 97,000 followers, and we also have 20,000 on Twitter and

11,500 on Instagram. These numbers continue to grow.

WHAT THEY TELL US

We conducted an all-employee survey in June 2021 using the

LinkedIn survey tool, Glint. Reckitt originally adopted Glint for

employee feedback and insights in 2020. We included all 31

questions asked in 2020 in this year’s survey, so we could do

year-on-year comparisons.

There was an extra question this year on barriers to execution and

17 more questions examining how our leaders are living up to our

desired Leadership Behaviours (see Focus on: Culture & Inclusion

on pages 46 to 49 for more on these). We also requested optional

demographic information in seven key markets to inform our

inclusion strategy.

There was strong engagement in the survey globally. Over 74%

ofour global workforce responded and there were some 25,000

comments. Analysing these highlighted relative strengths and

areas where we can improve.

As inspired by our Purpose, Fight and Compass: 85% of

respondents are personally committed to making access to the

highest-quality hygiene, wellness and nourishment a right, not a

privilege. They are proud to work for the company and identify

strongly with our culture of achievement. There is also strong

appreciation for the company’s investments in wellbeing and

sustainable high performance.

Overall, our leaders are thought to be performing well. Colleagues

scored leadership highly in all categories. The highest leadership

scores registered were for decisiveness, Purpose and speaking

direct with respect.

The survey also highlighted some areas for improvement.

Colleagues are very supportive of the company’s journey to a

moreinclusive culture, but want more equal opportunities for

development and better recognition of their efforts. There is also

aview that barriers to execution are sometimes high; we need

tohave more simpliﬁed processes and automation that will help

amore efﬁcient response.

In my role as the designated NED for employees, I facilitate the Board’s access to employee

views to enrich boardroom discussions by ensuring colleagues’ priorities and concerns are

shared with and understood by the Board.

Direct conversations can help the Board gauge the strength and depth of feeling on a range

of issues. At the same time, we aim not to duplicate the company’s own extensive internal

engagement efforts, which are regularly and openly shared with the Board.

I and the full Board elicit employees’ perspectives through a combination of formal and

informal channels that exist in the Business. For example, the Board reviewed the 2021

all-employee survey, along with other talent and culture metrics.

Additionally, in September the Board conducted formal listening sessions with employees.

Groups of colleagues from a wide range of backgrounds met up, in person and virtually, with

Board members to discuss topics such as inclusion, consumer focus, innovation and R&D,

business transformation and sustainability.

Along with other Board members, I visited the Nottingham, UK factory to gain direct

experience of the manufacturing facility and talk to colleagues on site. In addition,

Iattended the seven Stronger Together conversations held in 2021 to hear ﬁrst-hand

theexperience of Reckitt colleagues across the world. Diversity and inclusion were

increasingly prevalent themes this year and sustainability continues to be seen as both

urgent and important.

The Board factors the effect on employees into our deliberations and decisions. We

regularly consider speciﬁc, employee-related issues, including engagement, turnover and

attrition rates, talent, inclusion, broader reward frameworks and gender pay gap reporting.

The inclusion of environmental, social and governance (ESG) as a reward metric in our

proposed Directors’ Remuneration Policy is in direct response to employee as well as

shareholder feedback. This year, among other issues, we also discussed Reckitt’s role in

ourplanned COP26 partnership, which was extremely important to the business and our

colleagues, and the impact on them of the IFCN China divestment.

Our colleagues are invaluable in helping us identify both current and upcoming issues; not

least because the people that work here are consumers and citizens too. Listening to what

they say and acting on what they tell us is helping Reckitt fulﬁl its Purpose and stay relevant

in a changing world.

“Understanding where

colleagues are coming from

helps us get where we want

to be.”

Mary Harris

Designated Non-Executive Director

for engagement with the

company’s workforce

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We are developing human rights programmes across our value

chain and will have detailed action plans in our ten key markets

by2030. We’re building on our work with the Danish Institute for

Human Rights (DIHR) in Thailand with a comprehensive review of

human rights in markets, prioritised by scale and the level of risk.

At the same time, we are working with supplier collaboration

platform Manufacture 2030 to encourage and support suppliers in

recording and reducing their carbon and water impacts.

BUILDING A RESPONSIBLE AND

RESILIENT SUPPLY CHAIN

HOW WE ENGAGE WITH SUPPLIERS

Maintaining healthy long-term relationships with our suppliers not

only helps us protect business continuity, but also lays important

foundations for achieving our sustainability ambitions.

We are embedding 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 support more sustainable livelihoods and working conditions

for our suppliers. Our new partnership with the Fair Rubber

Association ensures that the farmers who produce natural rubber

latex used for our Durex products receive a Fair Trade premium.

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 stop them. We audit all suppliers. Where

needed, we work with them through our capability building

programme to help improve their processes and raise standards.

We require all our suppliers 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 material responsibly, protect the

environment and reduce environmental impact, use ever safer and

more sustainable ingredients, and conduct business with honesty

and integrity (see ‘Managing global supply’ on page 42).

FAIR RUBBER AND THE

BUSINESS/COMMUNITY

BENEFITS

We continue to deliver on our action plan

inThailand, with initiatives such as our work

to certify rubber farms and plantations

underFair Rubber Association standards.

Itstrengthens their communities and our

supply network.

This approach extends to other key

commodities. Our work with palm oil

suppliers is developing individual roadmaps

to ensure we’re only using certiﬁed

sustainable palm oil for infant formula and

soap within the next two years. Similar

programmes exist with our paper and

boardsuppliers for the origin of timber.

These programmes also connect to our

workon biodiversity with the University of

Oxford’s Nature-Based Insetting team (see

‘Ecosystems, biodiversity and nature-based

solutions’ on page 65).

CASE STUDY

Stakeholder Engagement (Continued)

EXPERT KNOWLEDGE

HOW WE ENGAGE WITH EXPERTS

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.

In 2021, we commissioned an ecosystem impact assessment

fromNature-Based Insetting at the University of Oxford, which

published its initial ﬁndings in November. This looked at the effect

on ecosystems of value chains that source commodities, such as

palm oil, latex and fragrances, in areas of high biodiversity. We are

developing progressive programmes in response to this data to

protect and regenerate these ecosystems by 2030.

We’ve established a strategic partnership with Risilience and

Cambridge Centre for Risk Studies (CCRS), within the Judge

Business School at the University of Cambridge, to support our

ongoing commitment to deliver on the Paris Agreement and

ambition to achieve carbon neutrality by 2040 while delivering

growth and long-term shareholder value. Risilience will supply

analytics to assess climate science impacts and potential ways

ofevolving the business to achieve our sustainability goals.

A co-authored white paper with EcoHealth Alliance and the

London School of Hygiene & Tropical Medicine was published at

COP26. ‘The Impact of Climate Change on Health: Reducing Risks

and Increasing Resilience in the Era of COVID-19’ set out the risks

to human health of unabated climate change and presented

recommendations to address these potentially existential threats.

We sponsored a report by the Economist Intelligence Unit (EIU)

onthe global state of health literacy. ‘Health literacy around the

world: policy approaches to wellbeing through knowledge and

empowerment’ reviewed the state of health literacy in seven

countries, its link with health outcomes and how it could be

boosted in national policy and the education, healthcare and

digitalsectors.

One of the ways we are advancing understanding of the links

between hygiene and health through the Reckitt Global Hygiene

Institute. The institute is a not-for-proﬁt organisation launched

in2020 with funding from Reckitt. It seeks to create a central

repository of hygiene research to ﬁll the gaps in science-based

evidence around hygiene. It commissions speciﬁc, directed

research through grant funding and funds a post-doctoral

fellowship programme in hygiene. Its research efforts are guided

byan internationally renowned, independent expert panel.

We engage with healthcare professionals internationally to

exchange information, share best clinical practice and sponsor

research. We manage numerous educational partnerships,

including with Harvard School of Public Health, the Royal Children’s

Hospital in Melbourne and SickKids in Canada. We also share our

expertise in professional journals and at presentations for

international symposiums and congresses.

PARTNERING WITH

INNOVATORS

COLLABORATIVE PROJECTS AND VENTURES

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.

We collaborate with independent, purpose-driven entrepreneurs

whose objectives chime with our own. That’s why we’ve 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-driven initiatives. Access VC also manages our existing

Reckitt minority stake assets, including the Healthily and 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.

A winning photo from

our competition in

partnership with

Talenthouse,

capturing moments

where people have

positively impacted

our planet to create

a cleaner,

healthierworld.

Marcos Antonio

Esteves – Brazil

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Financial StatementsGovernanceStrategic Report

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. Recent collaborators include little yawn collective, which

champions proven sleep solutions for kids, and Oxwash, which is

making laundry simple and sustainable together with Vanish Zero.

For more on Access VC, see Focus on: Digital on page 38.

We reach out to external partners in numerous ways to promote

innovation, and beneﬁt hugely from the range and diversity of

thepeople and organisations with whom we collaborate. We tap

external knowledge to apply inventions and import capabilities.

Through our strategic supplier programme, we co-develop new

ingredients and processes. For more on external partnerships,

seeFocus on: Innovation on page 34.

COLLABORATION AND

PARTNERSHIPS

WORKING WITH GOVERNMENTS, INDUSTRY PARTNERS AND NGOS

As a partner to governments, we’re encouraging behaviour change

for societal issues. In 2021, as one of 11 principal partners at the UN

Climate Change Conference in Glasgow (COP26) and the ofﬁcial

hygiene partner, we worked to advance action on climate change

and promote awareness of the link between planetary and public

health (see pages 64 and 65).

Where impact at scale through collective action is needed to

make a lasting or transformational difference we’re working with

our peers to introduce new, more sustainable business models.

We’re advancing best practice and encouraging the transition

towards more sustainable activity by leveraging our participation

intrade associations.

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 Action group, Plastic Waste Coalition of Action and its

Human Rights working group.

Through the Global Self-Care Federation, we work with our peers

in the self-care industry to raise international standards and ensure

key policy- 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.

Illicit trade has grown well beyond the capabilities of individual

governments and individual companies. It requires a sustained,

coordinated response. Reckitt joined the Transnational Alliance

toCombat Illicit Trade (TRACIT) in 2020. TRACIT is a private sector

initiative to mitigate the economic and social damages of illicit

trade and counterfeit goods.

We are also members of AISE, Europe’s International Association for

Soaps, Detergents and Maintenance Products, where we actively

support its agenda for sustainable cleaning. These help inform our

own approach on aligning product development with policy and

regulatory development.

In June 2021, we joined the World Business Council for Sustainable

Development (WBCSD). The WBCSD comprises nearly 200

companies who are committed to innovating to make real, tangible

progress to tackle the triple threat of climate change, nature

incrisis and mounting inequalities, for a more sustainable world.

We are speciﬁcally involved in work on protecting and promoting

health, which connected to our activity at COP26.

We work with NGOs and government bodies that coalesce around

areas of common interest. As members of the Ellen MacArthur

Foundation, we’re pursuing joint initiatives to reduce the use of

plastics and developing infrastructure, systems and standards

thatpromote the circular economy.

Since 2020 Reckitt has been committed to the UN Global

Compactcorporate responsibility initiative 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 to advance the broader development goals

of the United Nations, particularly the 17 Sustainable Development

Goals. We have communicated our progress to deliver the

TenPrinciples, details are within our Sustainability policies

andreports at www.reckitt.com.

Voted popular

choice, a photo from

our competition in

partnership with

Talenthouse,

capturing moments

where people have

positively impacted

our planet to create

a cleaner,

healthierworld.

Muhammad Amdad

Hossain –

Bangladesh

Stakeholder Engagement (Continued)

ENGAGING WITH INVESTORS

OUR INVESTMENT COMMUNITY

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, with over

50% of Reckitt employees owning a stake in the company.

Our investors provide the ﬁnancial capital – equity or debt – that

underpins our business and allows us successfully to execute our

strategy. In return, they expect good ﬁnancial returns as dividends,

capital appreciation or interest.

The cost of equity or debt is inﬂuenced by ﬁnancial markets’ risk/

reward perception. Maintaining an open, constructive dialogue

around the opportunities and challenges we face helps investors

make appropriate investment decisions.

All market participants are entitled to equal and timely access to

market-sensitive information. We are committed to keeping all

investors updated, with regular brieﬁngs on our strategic progress

as a purpose-led business focused on sustainable growth. We

ensure retail investors get access to the same information at the

same time as our institutional investors, often through our

corporate website.

COVID-19 restrictions meant the 2021 AGM was held as a closed

meeting. Shareholders were able to submit questions in advance

or during the meeting, allowing the Board to engage and interact

directly with them.

Our proactive investor relations programme this year included

one-to-one meetings with major shareholders, group meetings,

webinars, roadshows, conferences, round tables and ﬁreside chats.

We are now supplementing our regular ﬁnancial reporting with

‘bite-size’ seminars proﬁling different facets of the company to

give further insight into our transformation journey. The ﬁrst of

these was held in September, ‘Delivering sustainable growth’,

included updates on how business units are putting strategy into

practice and in-depth presentations on R&D and e-commerce.

INVESTOR PRIORITIES

In 2021, our investors primarily wanted to discover more about

thecompany’s performance in its transformational journey as

weprogress our strategy of rejuvenating sustainable growth.

Theywere keen to understand where investments have been

made and their associated returns.

In common with many of our peers, cost-inﬂation and its effect

onour margin outlook, was a recurring topic. Investors are also

tracking carefully how COVID-19 is changing consumer behaviour,

particularly now the virus appears to be receding in parts of

theworld.

Portfolio management activities that had a material effect on

company structure, in particular the disposal of IFCN China and

theacquisition of Biofreeze were particular items of interest.

ESG is an increasingly material topic for investors, with ESG ratings

incorporated into investment decision-making. Our ratings are

alsoused as part of a loan facility which was established during

the year.

Investors welcomed Reckitt’s return to the Dow Jones Sustainability

Index (DJSI) in 2021. They wanted to hear how our renewed ESG

targets would be achieved and the effect on performance of

embedding sustainability into our core business model.

Our Sustainalytics ESG score is currently rated as medium risk at

22.9 – slightly higher than previously following the revision of some

of their criteria. Our AA MSCI ESG rating places us as an industry

leader on managing ESG risks.

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INVESTING IN COMMUNITIES

HOW WE ENGAGE WITH COMMUNITIES

As we manage the effects of the COVID-19 pandemic and

buildback towards a sustainable way of living, the right to the

highest-quality hygiene, wellness and nourishment has never

beenmore important.

We ﬁght for that 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.

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.

In 2021, as the world began to look beyond the pandemic,

werenewed our focus on our long-term goals of sustainability

andgrowth, while protecting those communities most at risk.

SEED, SCALE & SUSTAIN

Our ambition is to reach half the world with our purpose-led

products, engage two billion people through our programmes,

partnerships and campaigns, and have a measurable, positive

impact on ten million people by 2030.

Through our brands and social impact programmes, we have

continued to support people and ideas to create systemic change

and contribute to tackling some of the world’s greatest challenges.

Underpinning our approach is our social impact model – Seed,

Scale & Sustain – which offers investment and mentorship, and

convenes global experts to connect social enterprises with the

resources they need to grow and ultimately become independent.

We support individuals, ideas and infrastructure. We provide

funding and advice to develop projects. We connect innovative

businesses and programmes with our global network to help them

to build scale across communities and borders. And we equip

them with the resources and know-how to help their projects

become self-sustaining and deliver lasting social impact.

For the biggest challenges, collaboration is key. We develop strong

partnerships and invest where we can make the most difference.

Examples include working with Water.org to get people clean

water and sanitation services, delivering emergency relief with

theInternational Red Cross, and restoring water and wildﬂower

habitats alongside the WWF.

ACTIVE WHERE WE MAKE THE BIGGEST IMPACT

We aim to progress all the SDGs, but focus more resources where

ourimpact is greatest. We’ve identiﬁed SDG2, SDG3, SDG5, SDG8

andSDG13 as our high-priority goals. (For more on SDGs see page51)

We have long experience building health and hygiene literacy.

Ourpartners help us get these messages across with impact.

Recent examples include our work with Raleigh to teach good

handwashing practices in Tanzania and our work with Project

HOPE to change hygiene behaviours in Pakistan.

We support the poorest communities – where hunger, disease and

poor sanitation are most prevalent, and where the worst effects

ofclimate change are felt ﬁrst. We emphasise women and girls.

Weset a target that a minimum of 50% of our beneﬁciaries are

women and expect to be above this.

Our programmes focus on three main areas: clean water,

hygieneand sanitation; sexual health and rights; and maternal

andchild health.

• Clean water, hygiene and sanitation: we ﬁght for universal

access to clean water and a safe, hygienic environment

• Sexual rights and equality: 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, HYGIENE AND SANITATION

In August 2021, we extended our two-year partnership with

Water.org to continue to strengthen access to safe water

andsanitation.

In 2020, Eko Group H2O+ won the Lead2030 grant under SDG6

atOne Young World. They gained funding and mentoring from

Reckitt. Their winning project uses reused and recycled materials

to harvest and ﬁlter the abundant local rainwater in Colombia.

Reckitt’s mentorship has helped to scale the operation. By the

endof 2021, Eko had tripled sales, installing 65 rainwater harvesting

systems in seven communities. They had also developed a new

handwashing basin product to improve hygiene in schools.

Simultaneously, with Dettol, we are improving hygiene and

wellbeing through the Hygiene Quest. This interactive educational

programme is promoting good hygiene behaviours in schools. Its

comprehensive curriculum uses gamiﬁcation, nudge psychology

and motivational reward systems to support long-lasting

behavioural change. It was piloted in Scotland and Nigeria to

testresponses in different cultural and economic environments.

Teachers reported better handwashing by students and lower

rates of illness and absenteeism. We presented the Scottish results

at COP26 and have scaled the programme up in both countries.

ACCESS TO CLEAN WATER

THROUGH AFFORDABLE

MICROFINANCE

Reckitt and Water.org’s joint microﬁnance

programme has been rolled out in India,

Indonesia and Kenya. We worked together

todevelop an easy-to-use microﬁnance

platform with local banks, offering loans for

domestic hygiene and sanitation services,

such as toilets, sinks, wells and water tanks.

The loans are designed to be affordable to

the poorest communities.

More than £36 million in loans have supported

over 700,000 people in the past two years.

The next step is to scale up the microﬁnance

platform to make it self-sustaining.

CASE STUDY

Stakeholder Engagement (Continued)

SEXUAL RIGHTS AND EQUALITY

In 2020 Reckitt, UNAIDS and Gilead partnered with the Wits

Business School at the University of Witwatersrand to launch a new

programme, ‘Aspire Higher’, which challenged students to pitch

innovative ways of improving the sexual health of African youth.

Four pilot projects gained funding. They’ve been working

throughout 2021 to implement and test their new ideas.

Sometimes, the best opportunities to create positive social impact

are right on our own doorstep. Reckitt sources raw materials for

Durex in Thailand. HIV prevalence there is among the highest in

Asia, with 9% of the region’s total population living with HIV. We

are investing in the health of workers living in rural communities.

The Rurality Thaitex programme is improving access to safe sex

and family planning. Sexual education is delivered at places of

work and workers also have access to sexual health services at

mobile centres and drop-in clinics.

MATERNAL AND CHILD HEALTH

We’ve worked with the US non-proﬁt March of Dimes since

2020toimprove access to antenatal and postpartum care

fortheestimated 7 million women and 500,000 babies born

eachyearinthe US living in so-called ‘maternity deserts’.

We’veinvested in two pilot programmes to test the impact

ofnewapproaches to improving care within maternity deserts

inOhio and Washington, D.C.

Project Oscar began shortly after Reckitt delegates from One

Young World 2017 met disability activist Oscar Anderson. Oscar

lives with cerebral palsy as a complication of untreated neonatal

jaundice (NNJ).

NNJ affects six out of ten newborn globally. It is easily treatable

with the right care. We developed a plan for sustained change

inthe provision of care in Vietnam, where Oscar was born.

Wepartnered with the Ministry of Health to train 261 healthcare

professionals and provide 96 regional hospitals with high

qualityphototherapy units. Since the launch of the programme,

over60,000 newborns have been effectively treated by

trainedhealthcare professionals. A recent assessment of

theprogramme’s impact identiﬁed reductions in fatalities,

disabilityand hospitalisation.

In South Africa, diarrhoea is one of the deadliest diseases for

children under the age of ﬁve. In 2021, we worked with the local

Ministry of Health to encourage the regular handwashing that can

prevent the illness. Dettol New Mums Clinic provided hygiene

products, educational resources and support for healthcare

workers, reaching hundreds of thousands of mothers.

In Bangladesh, maternal mortality is the third most common

causeof death among women aged 15-49, with approximately

7,600 preventable deaths each year. In 2021, the local Dettol

teamsupported BRAC’s (formerly known as the Bangladesh

Rehabilitation Assistance Committee) Health, Nutrition and

Population programme, providing hygiene products and education

to help improve antenatal and postpartum care. Our small

contribution has helped ensure mothers are able to put into

practice the advice given to them by BRAC staff.

EMERGENCY RELIEF

Reckitt provides emergency relief in response to global events

andneed.

In February 2021, we began a new strategic partnership with

theRed Cross to support its campaign to strengthen vulnerable

communities. We joined the charity’s Disaster Relief Alliance with

an initial £250,000 grant and product donations, as well as time

through employee volunteering.

The COVID-19 pandemic has affected communities across the

world, but refugees are particularly at risk. In 2021, we helped fund

the International Rescue Committee (IRC), enabling it to directly

engage 11,206 people, two-thirds of them women. In Syria, hygiene

kits were distributed to vulnerable groups, including the elderly

and people with disabilities or chronic disease.

IMPROVING ACCESS TONUTRITIOUS, AFFORDABLE FOOD

Malnutrition is rife in Africa. In Congo, 22% of the

population, including 3.4 million children, are malnourished.

Tailored Food won the Lead2030 SDG2 grant at One

Young World in 2020 and funding from Reckitt for a

business model that addresses one of the key causes –

the lack of affordable and nutritious food products. It

works with local entrepreneurs, farmers and market

workers to help them to develop their own nutritious food

products, using local produce and processes.

With signiﬁcant growth and impact over the past year,

Tailored Food’s sales of nutritious, tasty, low-cost meals

have more than trebled, from 210,000 to 676,000. An

estimated 33,800 people suffering from malnutrition in

Liberia and Congo have beneﬁted, as too has the local

economy. There are 265 more well-paying jobs for women

in rural communities thanks to sales the business has

generated. It has the backing of the UN World Food

Programme, whose’ commitment to buy 70,000 cassava

and peanut-based snack bars in Congo every month

supports 160 women entrepreneurs in rural communities.

A recent research study into Tailored Food’s business

model by the Bill & Melinda Gates Foundation found that

100% of consumers living in extreme poverty view its

products as both affordable and accessible. Reckitt has

extended its support for Tailored Food into 2022 to help

reach even more local food producers and strengthen

access to quality nutrition.

CASE STUDY

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OUR SHARED PLANET

ENABLING CIRCULARITY

Shifting to a more circular economic system – one built around

reducing, reusing, recycling, renewal and redesign – is a massive

global transformation. Everybody will need to adopt different

waysof doing things. It calls for new and novel infrastructures

anda radical shift in our collective behaviour.

We’re doing what we can do to increase circularity, but this is

acollaborative effort. Multiple actors – our peers, our suppliers,

ourcustomers, consumers, recyclers, re-processors and regulators

– need to coordinate their activities.

Getting there will take progress in three main areas: eliminating

waste and pollution, circulating products and materials, and

regenerating nature. We are addressing all three of these as well

as ﬁnding ways to facilitate more circular systems and processes.

DEVELOPING CIRCULAR ECONOMY MODELS

We have been working with a range of partners to implement

circular infrastructure.

TerraCycle’s closed-loop recycling programme allows UK

consumers to recycle non-recyclable ﬂexible packaging through

public drop-off locations and by initiating home collections. The

Reckitt Recycling Programme is operational in 1,300+ UK locations.

Meanwhile, Finish has partnered with Loop in a new trial with

UKretailer Tesco. The Loop sustainable packaging concept sees

empty packaging collected, cleaned and redistributed. Ten Tesco

stores are selling Finish tabs alongside other Loop brand partners

in stainless-steel jars, with in-store return points for when the

product is ﬁnished.

PLASTICS AND PACKAGING

We are reducing our plastic footprint and are committed to make

all our packaging recyclable by 2025.

We have increased the recyclability of our range, but the

proportion of post-consumer resin (PCR) we include in our

packaging is still far lower than we would like. Disappointingly,

ourPCR percentage only increased marginally from 3% in 2019 to

3.5% in 2020. This is in part because our focus during COVID-19 has

been on selling higher volumes of hygiene products to combat the

pandemic. Although we used 50% more PCR in our packaging, this

was overshadowed by much higher volumes of hygiene products

sold. It’s also the case that some of our regulated products take

longer to change. We’re committed to accelerating this

programme, increasing PCR and using less plastic overall.

We have redesigned the Durex 200ml Play Massage 2in1 bottle to

be fully recyclable. It is now made from 100% PCR. In India, Reckitt

was one of the ﬁrst buyers of Banyan Nation’s ‘better plastic’ PCR

solution. Banyan Nation uses an innovative plastic intelligence

platform to connect to small-scale waste collectors and sorters.

The collected plastic is recycled as PCR in Reckitt packaging.

REDUCING WASTE IN MANUFACTURING

We are identifying cost reductions and efﬁciency improvements

atour manufacturing sites by thinking more sustainably.

The Durex factory in Bangpakong, Thailand was paying over

£60,000 a year to dispose of unused natural rubber latex and

Naked condom waste products. In 2021, however it found a sandal

manufacturer who wanted to use this waste rubber to make

slippers. This not only saved money by reducing waste but also

earned revenue from sales. The initiative improved the factory’s

ﬁnancial position by over £32,000.

The Makati factory in the Philippines teamed up with J&J Farms

toconvert waste milk powder to animal feeds and biogas. J&J’s

biogas facility creates enough methane to run generators which

provide electricity for deep-well pumps, air-conditioned housing

for breeding boars and tunnel-ventilated farrowing houses.

Upto80% of the farm’s electricity comes from its biogas facility.

The increase in biogas production from adding milk powder has

reduced electrical consumption by over 20%.

CHEMICALS AND INGREDIENTS

We are moving towards better chemistry in our products and

lowering our chemical footprint by progressively using more

ingredients from natural origins as part of a more circular model.

VEO’s probiotic surface cleaner uses a 99% biodegradable formula

with active probiotic bacteria – free from chlorine bleach,

formaldehyde, phosphates and disinfectant chemicals. The

biodegradable formula preserves water and enables a longer-

lasting impact with less negative environmental impact than

traditional chemicals.

The Veet Minima hair removal range has low chemical credentials,

including cold wax strips that are hypoallergenic and fragrance –

and dye-free. Hot wax strips are fragrance and dye-free with 100%

natural ingredients, while creams do not use urea.

Lysol’s Simply kills 99.9% of bacteria using a plant-based active

ingredient and is free from bleach, dyes and phosphates. Lysol is

powered with hydrogen peroxide, which kills 99.9% of viruses and

bacteria without the harshness of bleach.

Dettol Tru Clean has plant-based active ingredients. It’s free from

bleach, dye and phosphates and can be produced with far less

water. The product has been launched in China and its wider

roll-out is under consideration.

Consumers are concerned about harsh chemicals and artiﬁcial

fragrances in their homes. Air Wick has been reducing the

chemical footprint in its products and increasing naturally

derivedingredients to over 50%. These changes resulted

inthelaunch of Summer Delights, White Flowers & Melon

withan87.5% reduction in chemical footprint.

Across Reckitt, our brands are developing ‘free from’

rangesremoving ingredients of potential concern

(e.g. dyes, fragrances, preservatives).

PROTECTING PLANETARY

HEALTH

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.

OUR ACTION ON CLIMATE CHANGE

Our ambition is to reach net zero emissions across our value chain

by 2040, a decade earlier than the world’s goal to keep the rise in

temperature to less than 1.5°C globally. We also recognise the

importance of making rapid progress before then. Our science-

based targets for 2030 do just that, with a 65% reduction in Scope

1 and 2 operations emissions and a 50% reduction in Scope 3

product emissions.

Our absolute carbon emissions (Scope 1, 2 and 3) stayed level

with2020 (-0.04%) despite business growth. Against our 2015

baseline however, volumes over the past two years have increased

our overall footprint. This increase is in our scope 3 emissions,

particularly relating to ingredients and packaging. At the same time,

our scope 1,2 emissions have reduced by 66% against the baseline.

To address these scope 3 emissions, we continue to develop more

recyclable packaging and greater use of recycled materials, in line

with our plastics pledge; our work with suppliers to monitor and

reduce their footprint; and our emerging prioritisation of high

carbon ingredients. This is driving activity to reduce emissions from

ingredient manufacture and to consider alternative, lower-carbon

ingredients while maintaining product efﬁcacy, safety and quality.

More detail is in our Climate Change Insight.

We are reducing Scope 1 and 2 emissions by switching to

renewable electricity sources for all our manufacturing sites.

We’vealready achieved 66% carbon reduction in our operations

and will press on from here.

We are also ﬁnding ways to reduce energy usage in manufacturing.

We’re initially targeting high-energy processes such as compressors,

air handling and boilers. Over time, we will progressively replace

equipment with more energy-efﬁcient alternatives.

We will also introduce alternatives to the gas used in combined

heat and power plants and, in time, in spray dryers, where we

usegas for thermal energy. In Evansville (US), we’re already using

landﬁll gas for spray drying. We intend to replicate that approach

where possible at other locations. We are monitoring alternative

fuels such as hydrogen as a longer-term gas replacement.

Scope 3 emission reductions are more difﬁcult to achieve as they

often rely on supplier activity and changes in how people use our

products. Nevertheless, we’re making progress to deliver our 2030

50% goal.

We’re engaging with suppliers with the help of Manufacture 2030

to help them measure and reduce their carbon emissions. We’re

targeting high-energy ingredients to ensure they’re manufactured

using renewable energy. Where this isn’t possible we’ll consider

alternative ingredients.

Internally, we’re using our Sustainable Innovation Calculator (SIC)

todesign lower-carbon ingredients and materials into our

products. The SIC also helps us design products that require less

energy andwater in use, and we’re increasing the use of recycled

and recyclable packaging to reduce the end-of-life carbon

footprint for our products.

We’re also engaging with our consumers to reduce their energy

and water use by, for instance, advocating lowering washing

machine temperatures, skipping the rinse for dishwashing, using

cold water to wash their hands and recycling packaging.

Looking at our logistics network, we’re undertaking a low-carbon

trial in the UK to reduce our carbon footprint. This uses recycled

vegetable oil as fuel. We’ll develop more low-carbon logistics

solutions and scale these globally.

Water stress, a consequence of climate change, is another

focusfor us. With around 19 of our sites in water-stressed areas,

it’simportant we reduce water impact in these communities.

We’ve reduced water use per production unit by 3% since 2015,

and will go further. But we want to go beyond our own factories.

That’s why we work in local communities to safeguard water

suppliers, improve sanitation and enable health literacy.

Stakeholder Engagement (Continued)

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We also aim to up the efﬁciency of our water use, targeting a

further 30% improvement by 2025. By 2040, we aim to halve the

water footprint of our products. We’re designing products to

reduce their water and carbon impact across their whole lifecycle.

This can mean, for example, using less water in manufacturing,

concentrating ingredients so they are lighter to transport, or

formulating them so they can be used in people’s homes with

lesswater.

Our ambition is to become water positive in water-stressed areas

by 2030. We’re developing water catchment area programmes

atkey sites. Our Hosur, India site now has sufﬁcient externally

validated projects to cover half its annual water use and the

remainder will be conﬁrmed in 2022. It has created water

harvesting projects and helped reinstate local water courses. Our

Sitarganj factory in India, one of our bigger water users, is saving

nearly 15,000 tonnes of water annually by reducing wastewater.

It’s important that we work with and learn from others. We’ve

joined the Water Resilience Coalition and its parent organisation,

the CEO Water Mandate. This group of some 200 companies seeks

to address global water challenges through corporate water

stewardship, in partnership with the UN, governments and civil

society organisations.

Finish worked with National Geographic, Love Water UK and US

non-proﬁt The Nature Conservancy to reach more than 350 million

people around the world with the Save Water Clean Clever

campaign. In the US alone, pledges made add up to over seven

million gallons of water saved every year.

A large part of our water footprint arises when people use our

products in their homes. If we can reduce that, we create a big

impact. But tackling that requires subtle changes in how people

use products, for example skipping the rinse when using Finish.

Our brands connect with people every day, and campaigns like this

one help people understand how doing things a little differently

can save water or energy at home. This can save waste, and even

save people money, while our products can still perform just as

well. Similar to carbon, the overall water footprint increased by

14.6% compared to our 2015 baseline, inﬂuenced by high volumes

of disinfectant and hygiene products such as soap over the

pasttwo years. Our SIC targets our water footprint within our

innovation process. It focuses us on using ingredients with a

lowerwater footprint alongside our continuing work to reduce

water when consumers use our products at home. For example,

developing Finish to avoid the need for pre-rinsing. With more than

90% of our total water footprint arising when products are used,

this emphasis is naturally important for water overall.

ECOSYSTEMS, BIODIVERSITY AND NATURE-BASED SOLUTIONS

At Reckitt, we’re committed to protecting and regenerating the

ecosystems we rely on. We know that strong ecosystems will

become increasingly resilient over time and better able to support

natural resources and local people.

It makes sense to build up biodiversity. Translating that principle

into effective action is more challenging, however,and we’re

currently developing our approach. We will need comprehensive,

evidence-based metrics to measure our impacts on nature before

we can take effective action.

In 2021, we linked up with the Nature-Based Insetting team at the

University of Oxford to develop nature-based solutions. Together,

we are developing a roadmap for the protection, restoration and

sustainable management of ecosystems within key supply chains.

WWF PARTNERSHIP

WWF and Reckitt launched a partnership in

March 2021 to tackle causes where we can

make the most impact.

Together, we will help restore and protect

2,100km of freshwater within two of the

world’s most important ecosystems in the

Amazon and the Ganges. The programmes

aim to improve the quality of freshwater

resources to allow people and nature

tothrive.

We’re also inspiring millions to ﬁght for nature

through our brand partnerships with Air Wick

and Finish. Together we will restore over 1.2

billion square feet of wildﬂower habitats

globally and replenish 500 million litres of

freshwater in theUK. Through our partnership

we are alsoraising awareness with people on

thebiodiversity and water crises, and

encouraging proactive actions from all

toeffectively address.

WWF is also supporting Reckitt’s sustainable

business transformation through joint

research and collaboration focusing on water,

climate change and biodiversity.

We’ve started to make great progress:

• WWF is participating in the Indian

government’s ﬁrst national river dolphin

population census to help protect this

iconic endangered species, with 925km

ofthe Ganges already surveyed

• A major study has begun to explore

hydropower alternatives in the Tapajós

basin in Brazil to keep the rivers free

ofdams

• Through the Air Wick partnership; WWF is

already restoring 77 million square feet of

forest and wildﬂower habitats globally

CASE STUDY

This roadmap will help mitigate our ecosystem impacts in a socially

sustainable way, by insetting measurable nature-based solutions

into our global value chains that will help tackle climate change.

We’re focusing ﬁrst on our most vulnerable, signiﬁcant value

chains, beginning with ﬁve commodities: palm oil, latex, and three

fragrance oils used in Reckitt’s Air Wick Botanica range. All

originate in areas of high biodiversity. Our programme evaluates

environmental impacts and subsequently develops measurable

and impactful interventions against evidence-based targets.

Ouraim is to implement these in key value chains by 2030.

TCFD Summary

OUR TCFD

SUMMARY

CLIMATE CHANGE AND OUR BUSINESS

At Reckitt we recognise the importance of climate change in

ourrelentless pursuit of a cleaner and healthier world. From the

perspective of our business and our consumers all over the world,

we also recognise the increasingly clear and adverse impact that

climate change is having and will have on people’s health and

hygiene. Whether through new vectors of disease, increased risk,

poorer hygiene through water stress or increased bacterial loads,

increased ambient temperatures or different acute weather

patterns, to name but a few, these impacts will pose both risks

andopportunities within our value chain.

To that end, in our approach to meet the recommendations of

theTask Force on Climate-related Financial Disclosures (TCFD),

weassess risks and opportunities within our day-to-day

businessoperations, structure and governance activities. Our

comprehensive TCFD disclosure is published in our Climate Change

Insight together with further details of climate change activity and

emissions data to provide a holistic report of activity for all

interested stakeholders.

We are building compliance with TCFD expectations and

recommendations. This embeds our climate change response

within routine business activity, helping to build an effective

response that assesses materiality, mitigates risk and builds

opportunity within our brands and value chain. For example, we

have adopted our Sustainable Innovation Calculator (SIC) for all

new product development, measuring the climate and water

impact of innovations. We also strongly support climate disclosure

and transparency in our annual reporting and associated

sustainability insights.

We have conducted climate-related risk and opportunities

scenario analysis to consider the longer-term impacts of climate

change. With Risilience and Cambridge Centre for Risk Studies

(CCRS) within the Judge Business School at the University of

Cambridge, we developed a digital-twin model of our business.

This builds scenarios for low-carbon transition and physical risks

across our value chain, with a 5 to 20 year horizon and consistent

with the emissions pathways and scenarios speciﬁed by the

Intergovernmental Panel on Climate Change (IPCC).

OUR APPROACH

In 2021, we worked with Risilience to assess our climate change

risks and opportunities. The Risilience platform applies the climate

change research frameworks and approaches pioneered by

Risilience and provides quantitative analytics that inform our risk

management approach, and allows us to prioritise areas for action.

Our programme involves key functional stakeholders throughout

Reckitt including procurement, brands, operations, sustainability

and ﬁnance teams.

We assess risks and opportunities in the short term (up to three

years), medium term (three to six years) and long term (six to 12 years

and beyond). From a range of potential future global climate

pathways, we initially assessed ﬁve different scenarios: a >4°C

(global temperature rise by 2100); a 3°C scenario based on

international policies in 2020-21; a 2.5°C scenario; a Paris-Agreement-

aligned mitigation (2°C) and a 1.5°C mitigation (global net zero by

2050 as referred to by IPCC) scenario. With the help of Risilience,

ournear-to-medium-term analysis included piloting a cumulative

ﬁve-year view which supports our ﬁnancial and operational planning.

Compliance Statement

We are pleased to conﬁrm that we have included

inthisTCFD Statement for Reckitt the material climate-

related ﬁnancial disclosures consistent with the four

recommendations and the eleven recommended disclosures

set. However, as we try and align our approach to the

updated TCFD additional guidance (Implementing the

Recommendations of the Task Force on Climate-related

Financial Disclosures (2021 TCFD Annex) which was released

in October 2021, there are some recommendations in the

2021 TCFD Annex: All Sector Guide that we are continuing to

work on and will require more time for us to fully consider. In

line with the current Listing Rules requirements (as referred

to in Listing Rule 9.8.6R(8)), these areas are detailed below

with reference to the TCFD recommendations:

• Development of more detailed disclosures by geography

or sector, in addition to the current considerations for the

overall business. Our current analysis often considers

speciﬁc geographies for supply chain risks and sectors

for market-level risks and opportunities, and we will

develop these for future reporting (TCFD Strategy (a)).

• Assessment of climate related issues in terms of

acquisitions or divestments, where we are developing

processes to strengthen our existing compliance agenda.

We will report on these in the future (TCFD Strategy (b)).

• Assessment of climate related issues in terms of the

response of consumers, to products in different ways,

both in terms of risk and opportunity, and in different

geographies. We have begun to assess these, considering

both internal and external data and will report more on

these in the next two years. Our sustainable product

innovation programme does, however, already take such

issues into account alongside transitions risks, within our

product innovation activity (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, during 2022, of our internal carbon

pricing approach and modelling which will inform future

programmes (TCFD Strategy (b)).

• With ongoing activity, we continue to build resilience

against the impacts of climate change (TCFD Strategy (c)).

We are working to implement the 2021 TCFD Annex

recommendations in full over the course of 2022 and will

report further on these in our next TCFD report.

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

GOVERNANCE

Our approach to climate change risk is within the governance

framework of our core business. Our Board, supported by the Board’s

Corporate Responsibility, Sustainability, Ethics and Compliance

(CRSEC) Committee and Risk Committee, has responsibility

foroversight of our climate change strategy. The strategy is

delivered through our Executive Committee and management

team.For more details on our Governance Framework and CRSEC

committee, see pages 141 to 147 in our Annual Report and our

Sustainability Governance, Reporting and Assurance Insight.

LEARNINGS TO DATE

Our climate risk analysis, through the digital-twin model, has

provided initial insights that we will reﬁne and develop further

in2022 and beyond. This includes understanding the potential

risksand opportunities to our upstream supply chain and the

supplyof materials. This will build resilience through our suppliers

with theinvolvement of our procurement and sustainability

functions. Asecond area of focus is on risks at our operating sites.

For example, increases in the frequency and severity of extreme

weather events (physical risks) could affect the supply chain. There

may also be an increasing impact of chronic risks such as water

stress. We have already begun to build resilience through business

continuity planning and, in the design and location of new sites, by

taking account of issues including future water stress. We assessed

a range of other risks associated with transition to a low-carbon

economy and policy environment, including potential policy and

regulation, and technology, market, reputation and liability risks. This

leads to a third area of focus: the potential impact of climate change

on the way people select and use our products. With data from

ourown consumer research team alongside external data from

Risilience and others, we will consider potential trends and also how,

using our SIC this inﬂuences the design of new products. This also

creates an opportunity for innovation that meets the emerging

demands of consumers and the impacts of ﬁscal policy and a

changing environment. We will report further on this in the future.

Considering the carbon and water footprints of our products,

thegrowing interest people have in more sustainable products

andhow low-carbon, low-water products may save people energy

and water in use in the future will help our innovation process,

strengthening the resilience and appeal of our brands.

Changes relating to the low-carbon transition, as well as the

associated impacts, vary with the different climate pathways.

Impacts are inﬂuenced by emerging and potential policy

frameworks over the coming years including, for example, the

extent of carbon taxation measures. Should such measures be

applied to all Scope 1, 2 and 3 emissions by 2025, and considering

transition factors beyond policy such as consumer preference

andtechnological change, the impact would 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.

Physical risks are expected to be minor in the short to medium

term. Over the longer term, 20 years or so, physical risk impacts

will become more pronounced, both in terms of more frequent

extreme weather events and chronic impact. Again, our

progressive work on topics such as water catchment area

management, product innovation and supply chain resilience are

intended to mitigate these risks. For further details please see our

Climate Change Insight.

Our analysis will continue in 2022 and beyond, initially assessing key

risks in greater detail. This will include the relative impacts across

key raw materials and, as noted, potential changes in consumer

use. We will also assess the impact of our sustainability and

climatestrategy which will provide insights into the efﬁcacy and

contribution of various climate mitigation initiatives. This helps 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 focus activity through routine

business planning within brands and our supply chain, including

within ﬁnancial planning for those business functions 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 are built into current

ﬁve-year planning and are within existing external disclosures.

Progress is reviewed routinely to enable further assessment of

resource need and allocation.

For our full TCFD statement and our work with Risilience,

emissionsdata, activity to build resilience, see our Climate

ChangeInsight. In line with our commitment to climate

disclosureand transparency, more details of our climate strategy,

governance andrelated risk and opportunity analysis can be

foundinourpublicsubmission to the external benchmark

CarbonDisclosure Project (CDP) investor questionnaire at

www.reckitt.com/sustainability/policies-and-reports.

A winning photo from

our competition in

partnership with

Talenthouse,

capturing moments

where people have

positively impacted

our planet to create

a cleaner,

healthierworld.

Cabure Films – Spain

S172 Statement

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 2021.

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.

Section 172 Overview Relevant disclosures

(a) the likely

consequences

of any decision

in the long-term

The Board always strives to act in the long-term interests of its key stakeholders. Our

Rejuvenating Sustainable Growth strategy is founded on creating long-term shareholder value,

which is achieved by meeting the needs of all stakeholders, through our relentless pursuit of

acleaner and healthier world. When launching our strategy, we set out that we would manage

and strengthen our portfolio, whilst seeking out new opportunities.

In doing so, during the year, the Board approved the sale of the Scholl brand, and our Infant

Formula and Child Nutrition (IFCN) business in China, and the acquisition of the Biofreeze brand.

The Board took into consideration the long-term consequences of these decisions, ongoing

feedback and consultation with investors, and the potential to create stakeholder value. These

decisions represent a major step forward in implementing our strategy and a key milestone in

ourjourney to rejuvenate sustainable growth.

Chief Executive Ofﬁcer’s

Statement page 9

Nutrition pages 28 to 29

Progress against our

strategy page 33

Stakeholder Engagement

page 60

Decision making in

practice and taking

stakeholder views into

account pages 70 to 71

(b) the interests of

our people

Our employees are fundamental to our success as a business. Understanding the interests of our

employees is important for the Board and forms part of our decision-making process. During the

year, the Board has kept up to date with methods of employee engagement, including the results

of all employee surveys on culture, Stronger Together conversations and employee well-being.

Our approach to ways of working in light of COVID-19 and adopting a hybrid working model

takes into consideration direct feedback received from our employees through surveys.

In September, the Board held round-table discussions with employees which focused on

inclusion, consumers, innovation and science, sustainability and business transformation. The

discussions provided employees with the opportunity to engage directly with Board members

and express their views and concerns regarding the organisation, its culture and operations. The

Board reviewed feedback from the round-table discussions at its November meeting, including

actions required to address employee concerns. The Board is committed to continuing to

engage with employees to understand their interests.

Focus on: culture &

inclusion pages 46 to 49

Building Partnerships

with Stakeholders

pages 55 to 56

Chair’s introduction to

governance pages 105

to 106

Corporate Governance

Report pages 121 to 122

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 our partners,

andthe communities and environment we operate in. 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.

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

Section 172 Overview Relevant disclosures

foster business

relationships

with our key

stakeholders

The Board understands the importance of fostering business relationships with key stakeholders.

During the year, the Board took part in listening sessions on the topics of nutrition, ecosystems,

biodiversity and nature-based solutions. At these sessions the Board heard perspectives from

external panellists including investors, suppliers, academics and NGOs. Board members were

invited to ask questions during the session and discuss next steps.

In our efforts to provide access to the highest quality health and hygiene products, we

wereproud to be named a Principal Partner, and the ofﬁcial hygiene partner at COP26. Key

management personnel attended the conference including our CEO, where a broad range of

events were held with government ministers, leading academics and civil society leaders. This

enabled us to better understand the interests and aims of those stakeholders and also develop

our own activities in support whilst also creating opportunities for our business. The signiﬁcant

impact of climate change on health was a key theme of our engagement at COP26, alongside

our ability to connect with customers and consumers to develop joint activities to combat

climate change. As the ofﬁcial hygiene partner for the conference, we demonstrated Reckitt’s

ability to protect the health of tens of thousands of people at such events through effective

hygiene interventions and protective self-care. This supported the organising parties of the

United Nations and the UK Government in running a safe and valuable conference.

Sustainability Ambitions

pages 16 to 17

Focus on: COP26

pages20 to 21

Stakeholder

Engagement pages 52

to 65

CRSEC Committee

Report pages 141 to 147

(d) the impact of

Reckitt’s

operations on

the community

and the

environment

Sustainability is central to our Purpose and runs through everything we do. We understand

asabusiness the effects our operations have on the environment and the need to embed

sustainability to create positive impacts for both communities and the wider society in which

they operate, as well as for our business. During 2021, we built on our commitment to combat

climate change through science-based targets for carbon reduction by 2030 and as a key

milestone, our ambition is to be carbon neutral across our value chain by 2040. In March 2021,

oursustainability ambitions to 2030 were approved by the Board. We are focused 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 to support inclusion,

strengthen human rights and support for sustainable livelihoods. Our goals of reaching half the

world with purpose-led brands to enable more people to lead cleaner, healthier lives, and of

engaging two billion people through our programmes and campaigns, are designed to create

lasting impact in communities and with our stakeholders. They also strengthen impact within

ourbusiness. AtCOP26, we demonstrated how we can engage consumers to help tackle

climatechange, using our innovative products to reduce energy usage in their daily lives and

create impact at scale alongside our own work to do the same in our value chain.

Our Board is responsible for overseeing, considering and reviewing the Group’s environmental,

social and governance (ESG) strategy, as outlined in its Schedule of Matters Reserved for the

Board. 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regularly.

Chief Executive Ofﬁcer’s

Statement page 9

Sustainability Ambitions

pages 16 to 17

Key Performance

Indicators page 18 to 19

Focus on: COP26

pages20 to 21

Stakeholder Engagement

pages 53 and 64

Our TCFD Summary

pages 66 to 67

Decision-making in

practice and taking

shareholder views into

account pages 70 to 71

Non-Financial Information

Statement page 73

CRSEC Committee

Report pages 143 to 144

(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.

Our Freedom to Succeed employee value proposition aims to instil, promote, reinforce, and

reward the positive behaviours and attributes that make that real. Our focus is on maintaining

anopen, positive and inclusive culture by promoting continuing dialogue across Reckitt.

Connections are forged across Reckitt in many ways, including Board site visits, virtual townhalls,

regular CEO emails to employees and all-employee surveys. Our Compass and Leadership

Behaviours monitor a consistent standard of cultural expectations across the Company.

The CRSEC Committee reports to the Board after each of its meetings, providing an update

onReckitt’s ethics and compliance priorities, including the Group’s Speak Up programme.

Focus on: Culture &

Inclusion pages 46 to 49

Chair’s introduction to

governance page 104

Corporate Governance

Report pages 121 to 122

Report of Directors’

page 190

(f) the need to act

fairly as

between

Reckitt’s

shareholders

The 2021 Annual General Meeting (AGM) provided an opportunity for the Board to engage

directly with shareholders. Due to the ongoing COVID-19 pandemic, the AGM was held as a

closed meeting. Despite being unable to meet shareholders in person, we invited shareholders

to submit questions in advance of the meeting or during the meeting in real time.

In addition, during the year, we were pleased to launch our investor seminar series. The series

seeks to provide ‘bite-size’ look-ins on the progress we have made in our transformation to

deliver sustainable growth. The ﬁrst event provided investors with an opportunity to hear from

the broader senior management team, including overviews on the business units and speciﬁc

areas of the business such as R&D and innovation.

Stakeholder Engagement

page 60

Chair’s introduction to

governance page 107

S172 Statement (Continued)

The Board considered management’s proposal to rebrand

asReckitt, to reﬂect the company’s renewed Purpose, Fight,

Compass, and Leadership Behaviours. The Board reviewed the

proposal for the rebranding as Reckitt, considering the beneﬁts

forstakeholders in the long term. Stakeholder perspectives played

a key role in the Board’s decision to approve and subsequently

launch the new Reckitt brand. During the decision-making process,

the Board reﬂected on the 200-year history of the company, the

transformation journey of the business and our current corporate

Purpose. The new Reckitt name draws upon the legacy of the

founders of the business as well as our connection to Hull, UK.

Reckitt reﬂects the existing widespread usage of Reckitt by key

stakeholders and is clearer, simpler and more memorable, whilst

retaining positive associations with the company’s heritage.

The importance of branding formed part of Board discussion,

noting that branding acts as a trust mark for our stakeholders,

most notably employees, customers, and investors – but also

governments, regulators, civil society (NGOs) and increasingly

ourconsumers. The Board acknowledged that global digitisation,

including the internet and social media, has made corporate

brands more visible and increasingly valuable. Creating a consistent

and visible brand online allows our consumers, customers and

partners to get a deeper and clearer view of our behaviour and

performance, inﬂuencing opinions and decision-making about

ourproducts, as well as whether to invest in, partner with, or work

for Reckitt. In addition, the Board considered that stakeholders

expect heightened levels of transparency and that in attracting

talent and potential employees, they look for companies with a

good corporate reputation which are aligned to their values. The

redevelopment of the corporate identity from RB to Reckitt is a

key milestone for the company’s ongoing journey of transformation

towards sustainable growth and reﬂects our renewed Purpose and

strategy. The new brand is built on how stakeholders recognise

the brand; it is more powerful, consistent, and impactful.

RB REBRANDING AS RECKITT

DECISION-MAKING IN PRACTICE AND TAKING

STAKEHOLDER VIEWS INTO ACCOUNT

SALE OF IFCN CHINA

During the year we took decisive action to strengthen our

portfolio, following a strategic review of the IFCN business

inChina. The Board carefully considered the proposal to sell

Reckitt’s IFCN business in China. Board discussions identiﬁed

that trading conditions had been difﬁcult for the IFCN business

in China including, as a result of the ongoing restrictions on

cross-border trade between Hong Kong S.A.R. and mainland

China, the impact of increased local competition, and a

slowing down of birth rates. Additionally, operating margins

had been impacted by product write-offs due to lack of trade

between Hong Kong S.A.R. and mainland China. The COVID-19

pandemic and the resultant recession had further impacted

IFCN performance in China.

As part of the Board’s decision-making, stakeholder views

were considered including feedback from investors and the

need to create long-term value for shareholders. The Board

assessed in detail the strategic options for the IFCN business

in line with the Group strategy, assessing the advantages

and disadvantages for stakeholders of selling the IFCN

business in China. In addition, the Board reviewed how IFCN

China could be separated efﬁciently, including separation of

the corporate structure while also considering the impact

oncorporate functions, including employees. The Board

alsoensured protection for the employees through

provisions in the sale and purchase agreement.

After a thorough review, the Board announced the sale of

IFCN China to investment company, Primavera. The Board

considered the long-term interests of stakeholders and

concluded that the sale of IFCN China would create

stakeholder value and be in the best interests of the

company, aligning to our strategy and growth expectations.

Our Nutrition business is now stronger and more

concentrated in markets such as North America,

LatinAmerica, and ASEAN.

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

The approval of our new sustainability ambitions to 2030 was a key

decision for the Board during the year. The proposed sustainability

ambitions were reviewed by the Board at its February meeting and

our new ambitions for a cleaner, healthier world were launched in

March, backed by an investment of more than £1 billion over the

next ten years to ensure we meet our goals.

By 2030, our bold ambitions are to reach half the world with

products that contribute to a cleaner, healthier world; engage

twobillion people through our programmes, partnerships, and

campaigns; create a lasting impact in communities; and, together

with our partners, contribute to delivering the UN Sustainable

Development Goals (SDGs). Our sustainability ambitions are broken

down into three focus areas, reﬂective of our Purpose, and include:

purpose-led brands; healthier planet; and fairer society, addressing

our commitment to ESG factors. The Board considered the

interests and expectations of our stakeholders in the sustainability

and ESG ﬁelds, including: market and benchmarking assessments

of competitor, customer and consumer positions; consideration of

investor focus and ESG metrics; external stakeholder implications,

In July 2021, it was announced that Reckitt had completed the

acquisition of Biofreeze. The Board considered carefully the

position of the brand in the market, the growth possibilities of

topical analgesics in the US pain market and advantages for our

stakeholders. The Board decided that Biofreeze was a strong

strategic ﬁt with Reckitt’s pain portfolio and represented a

uniqueopportunity for Reckitt in the US pain market. The Board

acknowledged that the acquisition represented a unique and

exciting opportunity to unlock value for Reckitt’s shareholders and

investors through Reckitt’s expertise, global operating footprint,

and infrastructure. Biofreeze is a perfect ﬁt with Reckitt’s Health

platform and deepens Reckitt’s presence within the broader

paincategory.

The Biofreeze brand serves our consumers through tapping into

the growing consumer global trend for wellness and self-care,

andaligns with our strategy to build a US Health footprint in new

spaces and places. The acquisition presents beneﬁts for Reckitt’s

stakeholders, who are highly interested in safe and effective

alternatives, consistent with Biofreeze’s positioning. Biofreeze has

including SDGs; internal evaluation including business strategy

development and leadership perspectives; and input from

investors. The Board discussed the need for clear targets,

outcomes for the business, the importance of measurability to

enable reporting and what it meant to be carbon neutral by 2040.

a history of being used by athletes and professionals, and has a

strong clinical foundation, placing the brand in a trusted position to

serve our consumers. In addition, the Board’s review of Biofreeze

identiﬁed that the brand has strong existing partnerships in place

and a number one position on Amazon. These factors, and the

value the brand will provide for Reckitt’s stakeholders, contributed

to the Board’s decision to approve the acquisition.

NEW SUSTAINABILITY AMBITIONS TO 2030

BIOFREEZE ACQUISITION

Non-Financial Information Statement

The information below is intended to help our stakeholders understand our position on key non-ﬁnancial matters, following the new

non-ﬁnancial reporting requirements contained in sections 414C(7), 414CA and 414CB of the Companies Act 2006.

Reporting

requirements

Policies and standards which

govern our approach Additional information and risk management

Environmental matters • Environmental policy

• Sourcing for sustainable growth

policy

• Plastics Pledge

Group Environmental Management System

Our 2030 Sustainability Ambitions

Our Sustainability Performance

Environment

Task Force on Climate-related Financial Disclosures (TCFD)

Pages 16-17

Pages 18-19

Pages 63-65

Pages 66-67

Employees • Code of Conduct

• Our Values

• Occupational Health & Safety

• Speak Up policy

• Sourcing for sustainable growth

policy

Our 2030 Sustainability Ambitions

Our Sustainability Performance

People

CRSEC Committee Report

Gender Pay Gap Report

Group Occupational Health & Safety Management System

Pages 16-17

Pages 18-19

Pages 46-49

Pages 141-147

Human rights • Policy on Human Rights and

Responsible Business

• Modern Slavery Act Statement

• Commitments to international

standards

Our 2030 Sustainability Ambitions

Our Sustainability Performance

Building partnerships with stakeholders

Environment

Pages 16-17

Pages 18-19

Pages 52-65

Pages 63-65

Social and community

matters

• Breast-Milk Substitute (BMS)

Marketing Policy

• Product Safety Policy

• Responsible Marketing Policy

Our commitment to auditing and transparency on BMS

Our 2030 Sustainability Ambitions

Our Sustainability Performance

Customers

Communities

Social Impact Investment Report

Pages 16-17

Pages 18-19

Pages 52-53

Pages 61-62

Anti-bribery and

anti-corruption

• Code of Conduct

• Speak Up policy

People

CRSEC Committee Report

Pages 46-49

Pages 141-147

Policy embedding, due

diligence and outcomes

Risk Management and Principal Risks

CRSEC Committee Report

Pages 88-103

Pages 141-147

Principal risks and impact

of business activity

Principal Risks Pages 92-100

Description of business

model

Our Business Model Pages 14-15

Non-ﬁnancial key

performance indicators

Pages 18-19

1. Information not in the public domain

2. Detailed TCFD disclosure can be found in our Climate Change Insight

Most of our reporting on these topics and KPIs are contained in our Strategic Report under the sections entitled Our 2030 Sustainability Ambitions, Our Sustainability

Performance and Building partnerships with stakeholders and Risk Management (or are incorporated into the Strategic Report by reference for these purposes from the pages

noted). Reckitt has formulated appropriate policies and due diligence procedures regarding all the non-ﬁnancial information presented in this Annual Report. We make it our

responsibility to follow legislation and policy diligently. Insights into key policies and due diligence procedures, and the basis and methodological principles for the collation of

our key sustainability metrics, can be found online at www.reckitt.com/sustainability/policies-and-reports/.

GENDER DIVERSITY

Deﬁnition: the percentage of women in our global workforce.

Target: expand our focus on diversity and talent by improving the retention rates of women from managers to senior managers. This is in line

with our goal of doubling the number of women in senior management roles from a 2016 baseline.

Board Directors All managers Other employees

7 (2020: 7) male 7,913 (2020: 8,596) male 20,491 (2020: 21,611) male

5 (2020: 5) female 7,715 (2020: 8,286) female 16,172 (2020: 17,300) female

1. Diversity data is taken as of 31 December 2021 for active Reckitt employees (excluding contractors)

2. 31 persons with undisclosed gender

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

GREENHOUSE GAS (GHG) EMISSIONS AND ENERGY CONSUMPTION

Metric Unit

2021 2020

Total Scope 1 GHG emissions tCO

e 120,346 131,496

Total Scope 2 GHG emissions tCO

e 13,289 117,297

Total Scope 1 and Scope 2 GHG emissions tCO

e 133,635 248,793

Emissions intensity

tCO

e per unit of production 0.0390 0.0701

Energy consumption resulting in above GHG emissions kWh 1,287,371,165 1,373,207,532

Proportion of GHG emissions arising from UK operations % 14 10

Proportion of energy consumption arising from UK operations % 11 12

We reported the above emissions on a market-based approach in line with the WRI/WBSCD Greenhouse Gas Protocol, Scope 2 Guidance

andour Reporting Criteria. Following a location-based approach, our Scope 2 emissions for 2021 were 254,801 tonnes of CO

e (2020: 266,072

)

andour total Scope 1 and 2 tonnes of CO

e were 375,147 (2020: 397,568

Our GHG 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.

e, or carbon dioxide equivalent, is the effective amount of CO

generated by all gas emissions

which add to the greenhouse effect and global warming.

1. The scope of our GHG emissions per unit of production KPI is for manufacturing and warehousing. Including R&D and ofﬁces the GHG emissions intensity per unit of

production in 2021 and 2020 would be 0.042 tCO

e and 0.072 tCO

e respectively

2. For further information on the methodologies used to calculate our emissions and energy metrics please see our Reporting Criteria Basis of Preparation

3. 2020 ﬁgures updated due to improved methodology for calculating GHG associated with commercial ofﬁces, plus data reporting system updates

4. Emissions Intensity per unit of production is restated for 2020 to reﬂect the change from KCU (1000 consumer units) to tonnes for unit of production. This changes provides

a more uniﬁed measure across our three business units

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

products of Reckitt. 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

This sets out Reckitt’s approach to responsible marketing. It outlines clear requirements to anyone involved in preparing Reckitt marketing

communications and activities. This applies to everyone at Reckitt, particularly the Marketing function, as well as with external partners.

Toensure adoption, Reckitt is investing a robust training module on the policy, so that everybody understands what is required of them.

Compliance will be systematically measured, and we will monitor ongoing feedback through our consumer care lines or 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 Organisation’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.

Group Financial Review

We delivered another strong performance

in 2021.

Group net revenue of £13,234 million grew by 3.5% on a LFL

basisin2021, reﬂecting volume growth of 0.6% and price/mix

improvements of 2.9%. Performance was driven by strong

growthin Hygiene, particularly in North America. Lysol saw good

growth off the back of an outstanding 2020, as core consumption

remained strong, and we gained further penetration in the laundry

sanitiser segment. Total net revenue at actual exchange rates

wasdown 5.4%, reﬂecting net M&A impact of -3.8% and foreign

exchange headwinds of 5.1%.

The two-year stacked LFL net revenue growth for 2021 vs 2019

(the summation of the year-on-year growth rates for 2021 and

2020) for the group was 17.4%. This was driven by two-year

stacked LFL net revenue growth of 27% in Hygiene, and 12%

and6% in Health and Nutrition, respectively.

Our in-market competitiveness remains strong. 62% of our Core

Category Market Units (CMUs), excluding IFCN China, held or gained

share. In Hygiene it was 57% and in Health and Nutrition it was 61%

and 72%, respectively (weighted by net revenue).

During the year, COVID continued to impact net revenue. Around

70% of our portfolio, representing brands less sensitive to COVID

dynamics, grew mid-single-digits. The remaining 30% of our

portfolio which includes Lysol, Dettol and our cold and ﬂu brands

(Mucinex, Strepsils and Lemsip) have been more volatile reﬂecting

ﬂuctuations in COVID related demand.

E-commerce net revenue, excluding IFCN China, grew by

17%in2021 and now accounts for 12% of group net revenue.

Thetwo-year stacked growth is over 85%.

Jeff Carr

Chief Financial Ofﬁcer

CONTINUED

STRONGFINANCIAL

PERFORMANCE

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

1. Adjusted and other non-GAAP measures, deﬁnitions and terms are deﬁned on

page 81

Our Global Business Solutions (GBS) has further developed its

channel and geographic footprint through partnerships with

operators such as Diversey. We have taken market share within the

sectors in which we participate, although overall performance in

2021 was impacted by a slower return to travel and workplaces

than originally anticipated.

Adjusted gross margin (excluding IFCN China) was 58.5%, (2020:

60.5%) a reduction of 200bps. The reduction in gross margin was

principally driven by c.11% cost inﬂation, partially mitigated by

productivity initiatives (+250bps) and pricing and mix (+80bps).

Adjusted operating proﬁt (excluding IFCN China) was £2,944 million

(2020: £3,216 million) at an adjusted operating margin of 22.9%

(2020: 24.5%) in line with our guidance of 22.7-23.2%. The

reduction of -160bps was principally driven by gross margin

(-200bps) partially offset by productivity efﬁciencies in BEI

spend(60bps).

Adjusted operating margin (including IFCN China) was 21.7%

(2020:23.6%). As previously communicated, IFCN China

experienced challenging trading throughout the nine months

ofownership in 2021, as well as c.£40 million of exit costs incurred

justprior to the transfer of the business which diluted adjusted

operating margin in2021.

The IFRS operating loss was £804 million (2020: £2,160 million

proﬁt). The 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 and pre-tax losses of £234 million from the sale of

Scholl and EnfaBebé brand in Argentina.

Total adjusted diluted EPS was 288.5p in 2021 (IFRS: -4.5p loss per

share), 11.8% lower than 2020 due to the lower adjusted operating

proﬁt and the adverse impact of foreign exchange.

The 2021 proposed dividend of 174.6p remains in line with 2020

consistent with our approach of sustaining 2019 levels to rebuild

dividend cover to two times. Thereafter, we will grow the dividend

progressively in line with adjusted net income.

Free cash ﬂow was £1,258 million in 2021 (2020: £3,052 million).

Asexpected, this was lower than the prior year due to the partial

unwind of signiﬁcant working capital favourability experienced

in2020. Capital investment to support our growth and margin

ambitions was £441 million, 3.3% of Group net revenue.

Net debt ended the year 2.6x adjusted EBITDA (2020: 2.4x

adjustedEBITDA).

3.5%

LFL net revenue growth

22.9%

adjusted operating margin

excl. IFCN China

2020: 24.5%

-5.4%

IFRS net revenue growth

2021: £13,234m (2020: £13,993m)

-6.1%

IFRS operating margin

2020: 15.4%

Group Financial Review (Continued)

HYGIENE

Net Revenue 2021

£m Volume Price/Mix LFL FX GAAP

FY 2021 5,911 5.1% 2.4% 7.5% -5.9% 1.6%

Operating Proﬁt

£m

Constant

FX (CER) GAAP

Adjusted Operating Proﬁt 1,401 -1.3% -6.9%

Adjusted Operating Proﬁt Margin % 23.7% -220bps

2021 PERFORMANCE

Hygiene net revenue grew 7.5% on a LFL basis to £5,911 million for

the full-year. Volume grew by 5.1% and price/mix improved by 2.4%.

Price increases taken in the latter half of 2021 were offset by a

return to more normalised promotion levels, especially in North

America. On a two-year stacked LFL basis, net revenue is up 27%.

Growth was broad-based across our core categories and regions,

with over 57% of Core Hygiene CMUs (weighted by net revenue)

growing or holding share. E-commerce net revenue grew by 28%

and we continue to have better market share positions online,

driven by our improved capabilities in go-to-market and digital

demand creation.

Lysol continued the positive momentum, with net revenues up

high-single-digits on a LFL basis in 2021 following well over 70%

growth in 2020. Growth was driven by increased consumption

dueto the pandemic as well as strong growth in new spaces

(e.g.Laundry Sanitisers) and new places. Lysol has continued

togain market share and signiﬁcantly contributed to category

growth, especially in Laundry Sanitisers, where we see signiﬁcant

further penetration growth potential. Overall, Lysol revenue was

c.90% higher than 2019.

Finish continued its growth momentum with net revenue growing

by mid-single-digits in 2021. Revenue growth was particularly

strong in Europe and Developing Markets driven by our focus on

category building, and penetration growth with superior solutions

in our premium Finish Quantum product. E-commerce signiﬁcantly

contributed to the brand’s success.

Air Wick net revenue grew double-digits. This was led by the

USdriven by strong market growth and market share gains.

AirWick’s scented oils natural range together with the launch

ofpurpose inspired marketing campaigns in partnership with

theWorld Wildlife Fund signiﬁcantly accelerated Air Wick’s

growthmomentum.

Vanish net revenue grew double-digits driven by reduced

conﬁnements of consumers versus the prior year and the success

of our purpose led marketing campaign. Harpic grew mid-single-

digits as a result of continued penetration activities in key markets.

Our Pest business delivered low-single-digits growth.

Adjusted operating proﬁt for Hygiene at £1,401 million was down

1.3% on a constant foreign exchange basis and 6.9% on an actual

basis. Our industry leading adjusted operating margin was 23.7%.

Higherraw material and transportation costs were partially

mitigated by record productivity savings, pricing and volume

leverage leading to a -220bps decline in adjusted operating

marginversus the prior year.

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

HEALTH

Net Revenue 2021

£m Volume Price/Mix LFL Net M&A FX GAAP

FY 2021 4,646 -2.1% 2.0% -0.1% -0.4% -4.5% -5.0%

Operating Proﬁt

£m

Constant

FX (CER) GAAP

Adjusted Operating Proﬁt 1,187 -5.5% -11.0%

Adjusted Operating Proﬁt Margin % 25.5% -180bps

2021 PERFORMANCE

Health net revenue of £4,646 million was broadly ﬂat in 2021 versus

2020on a LFL basis. Volume declined 2.1%, reﬂecting primarily

thereduction in Dettol volumes. Price/mix improved by 2.0%.

On a two-year stacked LFL basis, net revenue is up 12%,

reﬂectingthe higher consumption rates for some of our brands,

the broadening of our brands to new places and spaces, and

theactions we have taken on portfolio management to create

afaster growth business.

The disposal of Scholl and acquisition of Biofreeze, combined,

contributed 40bps decline to reported Health net revenue growth

for the full-year.

In 2021 Health delivered strong market share gains, with 61%

ofCore Health CMUs (weighted by net revenue) growing or

holdingshare.

Dettol net revenue declined low double-digits in the year

following exceptional growth in 2020. The brand has continued

tostabilise with net revenue up over 40% compared to 2019, for

both the year as a whole and in the fourth quarter. We delivered

anumber of successful product launches during the year, including

‘Dettol Tru Clean’ – our ﬁrst plant-based disinfectant, quickly

establishing itself as one of the larger eco brands in the UK.

Wehave a strong pipeline of innovations launching in 2022

andaretargeting Dettol to continue its strong, sustainable

growthtrajectory.

Intimate Wellness delivered strong mid-teens growth in both 2021

and on a two-year stack, led by our ﬂagship brands of Durex and

KY. Growth is underpinned by a renewed focus on execution

fundamentals, innovation, investment behind omnichannel

growthacross e-commerce and new ‘impulse access models’.

Inparticular, we have seen strong growth in China from our recent

and successful polyurethane Durex condom launch. KY has driven

renewed momentum from its digital-ﬁrst, culturally connected

advertising and media strategy, which has sparked new points

oftrial and captured incremental households in the US during the

year. Growth in a number of our developing markets has also been

strong, with increased distribution and improved display execution,

to win in impulse points. As a result, Durex has now become

thenumber 2 condom brand in India. We see signiﬁcant growth

opportunities within our Intimate Wellness business as we pivot

from a brand focus to a category centric portfolio of global

lifestyle brands.

OTC net revenue grew by low-single-digits in 2021 but declined by

low-single-digits on a two-year stack basis, driven predominantly

by very low incidences of cold & ﬂu in 2020 and the spring of

2021.Within OTC our less seasonally impacted brand of Gaviscon

delivered strong growth in both 2020 and 2021 driven by market

share gains, and increased distribution into new places such as

India and parts of Latin America. Our cold and ﬂu relief brands,

including Mucinex, Strepsils and Lemsip, were adversely impacted

by extremely low incidences of cold and ﬂu, and resultant high

levels of retailer stock in the ﬁrst half of the year, offset by strong

start to the season in the second half. Importantly we have made

good progress in our growth drivers during 2021; we entered into

anadjacent category (new space) with the successful launch of

Mucinex InstaSoothe, sore throat relief, in the second half of the

year. We also launched into new places with the rollout of Nuromol

– a unique and exclusive formulation of Ibuprofen and Paracetamol

– into Brazil – a top 5 market globally for analgesics. And we made

a strategically important entry into the world’s large analgesic

market with the acquisition of Biofreeze in the US. Biofreeze a fast

growing, efﬁcacious, topical analgesic brand, will beneﬁt from

Reckitt’s strong distribution platform in the US, and its global

category expertise and innovation capability. Since the acquisition

Biofreeze has delivered double-digit LFL growth.

Our personal care portfolio, following the sale of Scholl in H1 2021,

has grown mid-single-digits led by our Veet brand. Growth was

driven by our focus on new channels with high-single-digit growth

in our e-commerce platforms, the expansion of Veet for Men, and

our entry into new spaces such as Veet Minima/Pure.

Adjusted operating proﬁt for Health at £1,187 million was down

5.5% on a constant foreign exchange basis. Adjusted operating

margin was 25.5%, a reduction of 180bps year-on-year. The decline

is due to the impact of a weak cold and ﬂu season, further

investment behind capabilities and a deteriorating input cost

environment. This was partially mitigated by our productivity

programme and some pricing taken in the second half of 2021.

Group Financial Review (Continued)

NUTRITION

2021 PERFORMANCE

Nutrition net revenue grew by 0.6% on a LFL basis in the full-year at

£2,677 million, and grew 6% on a two-year stack. Within this, our

IFCN business grew consistently over the past two years at

low-single digit growth, with our VMS business delivering very

strong growth in 2020, offset by a weaker 2021 as it lapped the

very strong comparatives. For 2021 volume declined 4.9% and we

delivered price/mix improvements of 5.5% as pricing was taken in

a number of markets. Actual net revenue declined 18.6% primarily

as a result of the performance and disposal of IFCN China which

completed in September.

Market share performance was strong, with 72% of our Core

Nutrition CMUs (weighted by net revenue) holding or gaining

market share for the year, excluding IFCN China.

IFCN net revenue grew 3% on a LFL basis. The US business, which

represents around half of IFCN net revenue, grew mid-single-

digits. Growth in our speciality brands was strong, we gained

sharein the important non-WIC portion of the market, and further

expanded our adult nutrition offering with the launch of Provital

inASEAN and Sustagen in the developing markets. Latin America

grew low single-digits, whilst ASEAN was down slightly, with

better momentum in the second half of the year in part driven

byimprovements in competitiveness in key ASEAN markets.

Net revenue in our Vitamins, Minerals and Supplements business

declined high-single-digits. This was primarily the result of a

reduction in demand for Airborne following exceptional growth

in2020, plus increased competitive challenges. Despite these

challenges, net revenue in 2021 signiﬁcantly exceeded 2019 levels.

Move Free grew strongly in both the US and China, and Neuriva, has

become the leader in the US for household penetration in the brain

category, with net revenue doubling in 2021.

Adjusted operating proﬁt for Nutrition at £289 million was 31.2%

lower ona constant foreign exchange basis and 37.4% lower on an

actual basis. Adjusted operating margin was 10.8%, down 330bps

year-on-year reﬂecting principally the negative leverage related to

the signiﬁcant decline in IFCN China net revenue. Excluding IFCN

China, adjusted operating proﬁt for Nutrition was £356 million

(15.5% margin).

IFCN China

The disposal of IFCN China completed on 9 September 2021.

Thebusiness contributed net revenue of £383 million and an

adjustedoperating loss of £67 million in 2021 to the date of sale,

with achallenging and competitive trading environment

throughout theyear, and c.£40 million of exit costs incurred

immediately prior tothetransfer of the business.

Net Revenue 2021 £m Volume Price/Mix LFL Net M&A FX GAAP

FY 2021 2,677 -4.9% 5.5% 0.6% -14.4% -4.8% -18.6%

FY 2021 (ex IFCN China) 2,294 -4.9% 5.5% 0.6% 0.2% -6.2% -5.4%

Operating Proﬁt

£m

Constant

FX (CER) GAAP

Adjusted Operating Proﬁt 289 -31.2% -37.4%

Adjusted Operating Proﬁt Margin % 10.8% -330bps

Adjusted Operating Proﬁt (ex IFCN China) 356 2.4% -5.6%

Adjusted Operating Proﬁt Margin % (ex IFCN China) 15.5% Unchanged

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

The following section should be read in conjunction with the

FY2021 Review from page 74 and the Adjusted Performance

Measures section from page 81.

GROUP OPERATING PROFIT

Adjusted operating proﬁt was £2,877 million (2020: £3,301 million)

at an adjusted operating margin of 21.7%, 190bps lower than the

prior year (2020: 23.6%). Adjusted operating margin excluding

IFCNChina was 22.9% (2020: 24.5%), 160bps lower than prior year.

Adjusted operating proﬁt in 2021 included the favourable effect of

adjustments to trade spend and operational expenditure accruals,

certain of which were subject to signiﬁcant estimation uncertainty

as a result of the COVID-19 pandemic when originally recorded

in2020.

IFRS operating loss was £804 million (2020: £2,160 million proﬁt)

atan IFRS operating margin of minus 6.1% (2020: 15.4%). The

IFRSoperating loss in 2021 was principally driven by the loss of

£3,353 million in relation to the IFCN China strategic review. The

IFRS operating proﬁt in2020 included impairment charges of

£985million in relation to IFCNgoodwill.

NET FINANCE EXPENSE

Adjusted net ﬁnance expense was £220 million (2020: £260 million).

The decrease in 2021 is due to lower average net debt, a credit on

revaluation of a put option liability and a favourable comparison

with prior year adjusted net ﬁnance expense which included the

interest element of a sales tax provision.

IFRS net ﬁnance income of £547 million (2020: £286 million net

ﬁnance expense) was principally driven by a £766 million net

foreign exchange gain resulting from the liquidation of a number of

subsidiaries to simplify the Group’s legal entity structure.

TAX

The adjusted effective tax rate was 22.0% (2020: 22.7%). The rate

in 2021 beneﬁted from favourable updates to estimates in relation

to certain historical matters.

The IFRS tax rate was -80.0% (2020: 38.4%). The IFRS tax rate

in2021 was impacted by 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

Income from discontinued operations of £31 million (2020: £50

million) relatesto the Group’s RB Pharmaceuticals (now Indivior)

business demerged in 2014. The amount in 2021 principally relates

to incomefrom an agreement with Indivior plc to settle indemnity

claims relating to the Group’s settlement with the DoJ in 2019,

andrelatedmatters.

EARNINGS PER SHARE (EPS)

Total adjusted diluted EPS was 288.5p (2020: 327.0p). The decrease

in 2021 was principally due to lower adjusted operating proﬁt and

the adverse impact of foreign exchange.

IFRS total diluted EPS was a loss per share of 4.5p (2020: earnings

per share of 166.3p), principally due to the net loss in relation to the

strategic review of IFCN China.

BALANCE SHEET

At 31 December 2021, the Group had total equity of £7,453 million

(31 December 2020: £9,159 million).

Current assets of £4,862 million (31 December 2020: £5,314 million)

decreased by £452 million, principally as the result of lower cash

and cash equivalents and lower inventories.

Current liabilities of £8,088 million (31 December 2020: £6,938

million) increased by £1,150 million. The increase is principally due

tothe re-classiﬁcation from non-current to current liabilities of

$3.2billion (£2,401 million) of bonds which mature in June 2022,

offset by lower trade and other payables and the repayment of

commercial paper in 2021.

Non-current assets of £21,941 million (31 December 2020: £25,978

million) are primarily comprised of goodwill and other intangible

assets of £18,868 million (31 December 2020: £22,979 million) and

property, plant and equipment. The decrease of £4,037 million is

predominantly due to the disposal of goodwill and other intangible

assets relating to IFCN China and Scholl, partially offset by the

recognition of goodwill and other intangible assets on the

acquisition of Biofreeze.

Non-current liabilities of £11,405 million (31 December 2020: £15,195

million) decreased by £3,790 million. This decrease is principally

due to the re-classiﬁcation from non-current to current liabilities of

$3.2 billion (£2,401 million) of bonds which mature in June 2022, the

early repayment of term loans and the reduction in deferred tax

liabilities as a result of the disposal of IFCN China.

NET WORKING CAPITAL

Negative net working capital was reduced by £347 million to

negative £1,882 million (2020: negative £2,229 million), or a

reduction of £194 million excluding IFCN China which was disposed

in 2021. Negative NWC as a percentage of net revenue was 14%

(2020: 16%).

The reduction in negative NWC excluding IFCN China was the

result of higher inventory and receivables, and as expected lower

payables following the partial reversal of the favourable impact

onNWC in 2020.

ADDITIONAL FINANCIAL

COMMENTARY

CASH FLOW

Free cash ﬂow

£m

31 Dec

2021

31 Dec

2020

Adjusted Operating Proﬁt 2,877 3,301

Depreciation and share-based payments 401 407

Capital expenditure (441) (476)

Movement in working capital and

provisions (356) 895

Exceptional cash ﬂow (86) (46)

Interest paid (222) (267)

Tax paid (915) (762)

Free cash ﬂow 1,258 3,052

Free cash ﬂow conversion 61% 131%

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 as a percentage of continuing adjusted net income

was 61% (2020: 131%). The lower free cash conversion in 2021

wasexpected, principally resulting from the partial unwind of

signiﬁcant working capital favourability experienced in the prior

year. Free cash ﬂow in 2021 includes £203 million of transaction

costs and cash tax relating to the disposal of IFCN China. Excluding

cash outﬂows relating to the disposal of IFCN China, free cash ﬂow

conversion was 71% in 2021.

Net cash from operating activities was £1,697 million (2020: £3,518

million), down £1,821 million.

Net debt

£m

31 Dec

2021

31 Dec

2020

Opening net debt (8,954) (10,749)

Free cash ﬂow 1,258 3,052

Shares reissued 80 131

Acquisitions, disposals and purchase of

investments 694 (36)

Dividends paid (1,263) (1,257)

New lease liabilities in the year (109) (86)

Exchange and other movements (82) 1

Cash ﬂow attributable to discontinued

operations (2) (10)

Closing net debt (8,378) (8,954)

Net debt at 31 December 2021 was £8,378 million (31 December

2020: £8,954 million), a decrease of £576 million, as free cash ﬂow

and net proceeds from M&A more than offset the dividend

payments in 2021.

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 2020:

£5,500 million), 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 2021 dividend of 101.6

pence (2020: 101.6 pence), consistent with its policy and guidance

from February 2020. The ex-dividend date will be 28 April 2022

andthe dividend will be paid on 9 June 2022 to shareholders on

theregister at the record date of 29 April 2022. The last date for

election for the share alternative to the dividend is 17 May 2022. The

ﬁnal 2021 dividend will be accrued once approved by shareholders.

RETURN ON CAPITAL EMPLOYED (ROCE)

ROCE in 2021 was 10.1%, in line with the prior year (2020: 10.1%),

aslower adjusted operating proﬁt was offset by lower average

capital employed. The lower capital employed principally resulted

from the disposal of IFCN China, which has been removed from

capital employed from the date of disposal 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. As a result of the investments being

made during 2021, which will beneﬁt long-term sustainable growth,

our pay-out for 2021 is in excess of our policy of paying an ordinary

dividend equivalent to c.50% of total adjusted net income.

As set out in February 2020, we will maintain the dividend pay-out

per share at 2019 levels until we rebuild dividend cover to target

levels, at which time we will be able to resume growth in

dividends in line with the growth in adjusted net income.

We will return surplus cash to shareholders as appropriate.

Group Financial Review (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

The ﬁnancial information included in this preliminary announcement

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, 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 expenses on tax balances

into income tax expense, to align with the Group’s tax

guidance. As a result, these 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.

In the prior year, for presentational purposes adjusting items

weresplit into exceptional items, other adjusting items and the

reclassiﬁcation of ﬁnance expenses on tax balances. The change

to presentation of these items in the current year is to provide a

clearer view of the nature of the Group’s adjusting items. There has

been no change in individual items classiﬁed as adjusting items.

ADJUSTED MEASURES

• Adjusted Operating Proﬁt and Adjusted Operating Proﬁt

margin: Adjusted operating proﬁt reﬂects the IFRS operating

(loss)/proﬁt excluding items in line with the Group’s adjusted

items policy. See page 84 for details on the adjusting items

anda reconciliation between IFRS operating (loss)/proﬁt 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 adjusting

policy. See page 84 for details on the adjusting items and a

reconciliation between IFRS net (loss)/income and adjusted net

income. The weighted average number of shares for the period

is the same for both IFRS EPS and adjusted EPS.

• Adjusted EBITDA (earnings before interest depreciation and

amortisation): Adjusted operating proﬁt less depreciation and

amortisation (excluding adjusting items).

ALTERNATIVE PERFORMANCE

MEASURES

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.

NWCis calculated as a % of last twelve months net revenue

tocompare changes in NWC to the growth of the business.

• 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.

• 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 83. 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

• Stacked Net Revenue Growth: The summation of the

like-for-like net revenue growth for the relevant period in 2021

and 2020 (excluding IFCN China), to provide visibility of growth

versus periods prior to the start of the COVID-19 pandemic.

• 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.70% of

Group net revenue and between c.65% to c.80% of each GBU’s

net revenue. As a measure of competitiveness, management

tracks the percentage of Core CMUs holding or gaining market

share, weighted by net revenue.

• 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 income from discontinued

operations is presented as a single line item in the Group

Income Statement.

• Return on capital employed (ROCE): Is deﬁned as adjusted

operating proﬁt after tax divided by monthly average capital

employed. Capital employed comprises total assets less current

liabilities other than borrowings-related liabilities. Total assets

exclude cash, retirement beneﬁt surplus, current tax and a

technical gross-up to goodwill that arises because of deferred

tax liabilities recorded against identiﬁed assets acquired in

business combinations. 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). This percentage does

not apply to infant formula.

Group Financial Review (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

RECONCILIATION OF IFRS TO LIKE-FOR-LIKE NET REVENUE BY GBU

Net Revenue

31 December 2021

Hygiene

£m

Health

£m

Nutrition

£m

Group

£m

2020 IFRS 5,816 4,890 3,287 13,993

Disposals – (176) (885) (1,061)

2020 Like-for-like 5,816 4,714 2,402 12,932

2021 IFRS 5,911 4,646 2,677 13,234

M&A – (142) (403) (545)

Exchange 340 207 143 690

2021 Like-for-like 6,251 4,711 2,417 13,379

Like-for-like growth 7.5% (0.1)% 0.6% 3.5%

2020 Like-for-like

19.5% 12.1% 0.0% 11.8%

Impact of IFCN China – – 5.4% 2.1%

2020 Like-for-like excl.

IFCN China

19.5% 12.1% 5.4% 13.9%

2021 2 year stack 27.0% 12.0% 6.0% 17.4%

1 See page 87 for reconciliation to IFRS

RECONCILIATION OF ADJUSTED EBITDA TO NET DEBT

Adjusted EBITDA/Net debt

31 Dec

2021

£m

31 Dec

2020

£m

Operating (loss)/proﬁt (804) 2,160

Less: Adjusting items 3,681 1,141

Adjusted Operating Proﬁt 2,877 3,301

Less: Adjusted Depreciation and

Amortisation 362 392

Adjusted EBITDA 3,239 3,693

Net Debt

31 Dec

2021

£m

31 Dec

2020

£m

Cash and cash equivalents including

overdrafts 1,259 1,644

Financing liabilities (9,637) (10,598)

Net Debt (8,378) (8,954)

Adjusted EBITDA/Net Debt 2.6x 2.4x

DIVIDEND COVER

31 Dec

2021

£m

31 Dec

2020

£m

Interim dividend paid in year 521 520

Final dividend proposed 726 725

Total dividends 1,247 1,245

Adjusted Net Income 2,059 2,334

Dividend cover 1.7 1.9

RECONCILIATION OF OPERATING CASH FLOW TO FREE CASH FLOW

31 Dec

2021

£m

31 Dec

2020

£m

Cash generated from continuing

operations 2,836 4,557

Less: net interest paid (222) (267)

Less: tax paid (915) (762)

Less: purchase of property, plant

&equipment (373) (394)

Less: purchase of intangible assets (77) (92)

Plus: proceeds from the sale of property,

plant & equipment 9 10

Free Cash Flow 1,258 3,052

Free Cash Flow Conversion 61% 131%

ROCE CALCULATION

31 Dec

2021

£m

31 Dec

2020

£m

Adjusted Operating Proﬁt 2,877 3,301

Less: Taxation on adjusted operating

proﬁt (633) (750)

Adjusted Net Operating Proﬁt after

Tax 2,244 2,551

IFRS total assets 26,946 31,292

IFRS total current liabilities (8,088) (6,938)

IFRS total assets less current liabilities 18,858 24,354

Less IFRS items not included in capital

employed:

Short-term borrowings 2,485 763

Current tax liabilities 93 72

Legal provisions 86 127

Cash and cash equivalents (1,261) (1,646)

Current tax recoverable (155) (125)

Retirement beneﬁt surplus (355) (226)

IFRS balances included in capital

employed 19,751 23,319

Add impact back unrealised impairments 3,143 5,116

Less Goodwill due to deferred tax on

intangibles (4,133) (5,301)

Impact of average in year vs closing

balance 3,442 2,023

Average capital employed 22,203 25,157

Return on Capital Employed 10.1% 10.1%

The table below reconciles the Group’s reported IFRS measures to its adjusted measures for the year ended 31 December 2021.

Adjusting Items

IFRS

£m

Impact of

business

combinations

£m

Losses on

disposal of

brands

£m

Reclassiﬁed

foreign

exchange

translation on

liquidation of

subsidiaries

£m

Finance

expense

reclass

£m

Other

individually

material

items of

income and

expense

£m

Adjusted

£m

Net Revenue 13,234 – – – – – 13,234

Cost of sales (5,558) 14 – – – – (5,544)

Gross proﬁt 7,676 14 – – – – 7,690

Net operating expenses (8,480) 77 234 – – 3,356 (4,813)

Operating (Loss)/proﬁt (804) 91 234 – – 3,356 2,877

Net ﬁnance income/(expense) 547 – – (766) (1) – (220)

Share of loss of associate (3) – – – – – (3)

(Loss)/proﬁt before income tax (260) 91 234 (766) (1) 3,356 2,654

Income tax credit/(charge) 208 170 (117) – 1 (846) (584)

Net (loss)/income from continuing

operations (52) 261 117 (766) – 2,510 2,070

Less: Attributable to non-controlling interest (11) – – – – – (11)

Net (loss)/income for the year attributable

to owners of the parent (63) 261 117 (766) – 2,510 2,059

Net income from discontinued operations 31 – – – – (31) –

Total net (loss)/income for the year

attributable to owners of the parent (32) 261 117 (766) – 2,479 2,059

Earnings per share (EPS) from continuing

operations

Basic (8.8) 36.6 16.4 (107.3) – 351.6 288.5

Diluted (8.8) 36.6 16.4 (107.3) – 351.6 288.5

Earnings per share (EPS) from

discontinued operations

Basic 4.3 – – – – (4.3) –

Diluted 4.3 – – – – (4.3) –

Earnings per share (EPS) from total

operations

Basic (4.5) 36.6 16.4 (107.3) – 347.3 288.5

Diluted (4.5) 36.6 16.4 (107.3) – 347.3 288.5

Earnings per share (EPS) is calculated using 713.8 million shares (basic) and 713.8 million shares (diluted).

Group Financial Review (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

Impact of business combinations is composed of:

• Amortisation of acquired intangibles of £61 million relates to

theamortisation of certain intangible assets recognised as

aresult of 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 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.

• 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.

• Changes to deferred tax liabilities of £189 million relate

principally to the revaluation of deferred tax liabilities for

acquired intangible assets due 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 expenses of £1 million relates to the

net interest charge 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 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.

The table below reconciles the Group’s reported IFRS measures to its adjusted measures for the year ended 31 December 2020.

Adjusting Items

IFRS

£m

Impact of

business

combinations

£m

Losses on

disposal of

brands

£m

Reclassiﬁed

foreign

exchange

translation on

liquidation of

subsidiaries

£m

Finance

expense

reclass

£m

Other

individually

material

items of

income and

expense

£m

Adjusted

£m

Net Revenue 13,993 – – – – – 13,993

Cost of sales (5,558) – – – – – (5,558)

Gross proﬁt 8,435 – – – – – 8,435

Net operating expenses (6,275) 80 – – – 1,061 (5,134)

Operating proﬁt 2,160 80 – – – 1,061 3,301

Net ﬁnance expense (286) – – – 26 – (260)

Share of loss of associate (1) – – – – – (1)

Proﬁt before income tax 1,873 80 – – 26 1,061 3,040

Income tax expense (720) 59 – – (26) (3) (690)

Net income from continuing operations 1,153 139 – – – 1,058 2,350

Less: Attributable to non-controlling interest (16) – – – – – (16)

Net (loss)/income for the year attributable

to owners of the parent 1,137 139 – – – 1,058 2,334

Net (loss)/income from discontinued

operations 50 – – – – (50) –

Total net income for the year attributable

to owners of the parent 1,187 139 – – – 1,008 2,334

Earnings per share (EPS) from continuing

operations

Basic 160.0 19.6 – – – 148.7 328.3

Diluted 159.3 19.5 – – – 148.2 327.0

Earnings per share (EPS) from

discontinued operations

Basic 7.0 – – – – (7.0) –

Diluted 7.0 – – – – (7.0) –

Earnings per share (EPS) from total

operations

Basic 167.0 19.6 – – – 141.7 328.3

Diluted 166.3 19.5 – – – 141.2 327.0

Earnings per share (EPS) is calculated using 710.9 million shares (basic) and 713.7 million shares (diluted).

Acquisition related items are composed of:

• Amortisation of acquired intangibles of £80 million relates to

the amortisation of certain intangible assets recognised as

aresult of historical business combinations. Included within

income tax expense is a £19 million tax credit in respect of

thisamortisation

• Changes to deferred tax liabilities of £78 million relate to

principally to the change in the UK corporate tax rate which was

substantively enacted during the year (which is netted against

the £19 million tax credit)

Reclassiﬁcation of ﬁnance expenses of £26 million relates to the

net interest charge on tax liabilities that is shown within the

adjusted tax charge.

Other individually material items of income and

expenseinclude:

• £985 million impairment in relation to IFCN goodwill;

• £69 million charge relating to the Korea HS issue; and

• £7 million relating to previously announced restructuring

projects (principally RB 2.0 costs).

Income tax expense is a £3 million tax credit for these items.

Group Financial Review (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

ADJUSTED MEASURES EXCLUDING IFCN CHINA

The table below reconciles the Group’s reported IFRS measures to its adjusted measures excluding IFCN China for the years ended

31 December 2021 and 31 December 2020.

Year ended 31 December 2021

IFRS

£m

Adjusting

Items

£m

Adjusted

£m

IFCN

China

£m

Adjusted

excl. IFCN

China

£m

Net Revenue 13,234 – 13,234 (383) 12,851

Cost of sales (5,558) 14 (5,544) 214 (5,330)

Gross proﬁt 7,676 14 7,690 (169) 7,521

Net operating expenses (8,480) 3,667 (4,813) 236 (4,577)

Operating (loss)/proﬁt (804) 3,681 2,877 67 2,944

Operating margin –6.1% 22.9%

Operating margin vs PY (2,150 bps) (160 bps)

Year ended 31 December 2020

IFRS

£m

Adjusting

Items

£m

Adjusted

£m

IFCN

China

£m

Adjusted

excl. IFCN

China

£m

Net Revenue 13,993 – 13,993 (861) 13,132

Cost of sales (5,558) – (5,558) 375 (5,183)

Gross proﬁt 8,435 – 8,435 (486) 7,949

Net operating expenses (6,275) 1,141 (5,134) 401 (4,733)

Operating proﬁt 2,160 1,141 3,301 (85) 3,216

Operating margin 15.4% 24.5%

RECONCILIATION OF PRIOR YEAR IFRS TO LIKE-FOR-LIKE NET REVENUE

Net Revenue

31 December 2020

Hygiene

£m

Health

£m

Nutrition

£m

Group

£m

2019 IFRS & like-for-like 5,031 4,462 3,353 12,846

IFCN China disposal – – (991) (991)

2019 Like-for-like (excl. IFCN China) 5,031 4,462 2,362 11,855

2020 reported 5,816 4,890 3,287 13,993

Exchange 194 114 65 373

2020 Like-for-like 6,010 5,004 3,352 14,366

2020 IFCN China disposal – – (863) (863)

2020 Like-for-like (excl. IFCN China) 6,010 5,004 2,489 13,503

Like-for-like growth 19.5% 12.1% 0.0% 11.8%

Like-for-like growth (excl. IFCN China) 19.5% 12.1% 5.4% 13.9%

Risk Management

Risk management occurs at different levels in Reckitt, with identiﬁcation and assessment

performed at the functional, Global Business Unit, corporate and Group levels to provide

both a ‘top-down’ and ‘bottom-up’ three-dimensional view of risk. The framework is

implemented as follows:

WHAT

• Identiﬁes and monitors risks

impacting the operation of

each function or functional area

• Controls are mapped to the

three lines of defence

• Detailed management action

plans are developed to address

control gaps

• Identiﬁes and monitors risks

with the potential to impact

each Global Business Unit and

the corporate centre

• High-level control strategies

and action plans are

documented for each risk.

Supporting functional risks

arereferenced

• Identiﬁes the most signiﬁcant

principal and emerging risks

with potential to impact

theGroup

• Principal and emerging risks are

disclosed in the Annual Report

• Oversight across each

principal risk provided

bya nominated

BoardCommittee

WHEN

• Completed bi-annually, with

updates shared at the Global

Business Unit Risk Committees

• Completed annually in advance

of the Global Business Unit

strategic planning process

• Completed bi-annually in

advance of the half-year results

announcement and Group

strategic planning process.

Updates are shared with the

Risk, Sustainability &

Compliance Committee (RSCC)

and Board

• Periodic reporting and

risk deep dives occur

with input from the

riskowner

HOW

• Functional risks are reviewed in

detail annually to identify any

changes to the risk proﬁle,

including new risks and

changes in assessment

• Formal sign-off by functional

heads. Updates on top risks and

associated mitigations are

reported to the RSCC on a

quarterly basis

• Global Business Unit risk

assessments are reviewed and

updated annually through a

series of one-to-one meetings

with Global Business Unit

leadership

• For corporate functions, the

functional risk assessments are

reviewed and challenged

• One-to-one meetings are held

with all Global Executive

Committee (GEC) members,

Group functional and assurance

heads, external advisors and

Non-Executive Directors (NEDs)

• Synthesised output formally

reviewed and signed off by

theGEC and thereafter by

theBoard

WHO

• Risk assessment owned by

functional leadership team

• Functional risk owners assigned

to speciﬁc risks, controls and

action plans

• Led by Global Business Unit/

corporate management teams

• Group Risk Management

• GEC owners are assigned to

each risk, with the principal and

emerging risk set then

circulated to the Board for ﬁnal

review and sign-off

• GEC owner

Functional

riskassessments

Consolidation and critical

challenge by Risk Management

Reviewed by Global Business Unit/

corporate function leadership teams

Principal and emerging risks identiﬁed

through the Group Risk Assessment are

disclosed in Reckitt’s Annual Report and

Accounts

Global Business Unit/

corporate risk assessments

Group principal and

emerging risk assessment

Board

oversight

Annual

Report

OUR APPROACH TO INTEGRATED

RISK MANAGEMENT AT RECKITT

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

Our approach to the principal and emerging risk assessment

The Group principal and emerging risk assessment is an integral part of the integrated risk

management framework above, identifying the principal and emerging risks with the

greatest potential to impact the Group. The assessment is completed annually in advance of

the Global Business Unit and corporate strategic planning process as follows:

• Identiﬁes the most signiﬁcant

principal and emerging risks

with potential to impact

theGroup

• One-to-one meetings are held

with all GEC members, Group

functional and assurance heads,

external advisors and NEDs

• Functional, Global Business Unit

and corporate risk assessments

feed into this process

• Identiﬁes sources of risk, key

drivers and areas of impact

• Completed annually in advance

of the Global Business Unit

strategic planning process

• Control strategy is reviewed to

establish if it is appropriate and

operating as intended

• Where we identify control gaps,

what more do we need to do?

• Considering the controls

wehave in place to manage

eachrisk:

• What is the probability that

the risk will materialise?

• If it did, what would the likely

impact be?

• How comfortable are

wewith how the risk

isbeingmanaged?

• Is the risk within an

acceptable level of appetite?

• Assessment identiﬁes those

risks and controls where

management should focus

itseffort

• The decision to act will be

based on which risks are no

longer acceptable

• Having identiﬁed areas of

highest risk that require

attention, action plans are

developed by management to:

• Address any control

gapsidentiﬁed

• Improve the effectiveness

ofexisting controls, thereby

reducing the probability and

impact to an acceptable level

• GEC owners and their principal

and emerging risks are

circulated to the Board for

ﬁnalreview, sign-off and

ongoing monitoring

• Principal and emerging risks are

disclosed in the Annual Report

Identiﬁcation of risks

What could impact Reckitt

and the achievement of its

objectives?

What are we doing to

manage the risk?

How comfortable are we

with the level of risk?

What more do

we need to do?

Control strategy Assessment of net risk and

prioritisation

Management

action

Risk Management (Continued)

Category ID Risk title Risk statement

Operational

COVID-19

COVID-19 continues to cause disruption in key markets and creates signiﬁcant volatility and uncertainty across

the portfolio, impacting our ability to accurately predict consumer demand, and execute growth plans.

Product Safety Robust process, 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.

Supply

Disruption

Disruption to the continuity of supply as a result of: ongoing disruptions to material supply, freight and labour

availability; ongoing market volatility and unpredictability; remaining capacity gaps; and reliance on single

factories for key products and/or source for key materials without qualiﬁed contingencies in place.

Cyber Security As a complex global organisation, there is a risk that Reckitt falls victim to increasingly sophisticated

cyber-attacks aimed at causing disruption to our information assets by destruction, or by circumventing

conﬁdentiality, integrity or availability controls.

Employee

Health & Safety

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, in case of outsourced operations.

Sustainability

Failure to address existing and emerging environmental and social risks and opportunities (including climate

change), and changing societal expectations of businesses in addressing these, creates underlying risk to

business resilience, growth and share price performance.

Adherence to

Product Quality

Standards

Non-compliance with applicable quality regulations, guidelines and internal/external standards across the

product lifecycle governing how we produce and supply product.

Strategic

Innovation

The current innovation pipeline does not meet the changing needs of our consumers and new go-to-market

channels, or is not sufﬁcient to achieve organic growth ambitions and drive gross margin accretion.

Disruption

Inability to respond to, adapt and evolve both our products and processes to disruptive market forces

including e-commerce, digital, new formats, applying AI and machine learning, and increasing data

challenges, impacting our ability to effectively service our customers and consumers with the

requiredagility.

China

Risk in China of economic uncertainty, changing regulations and changes in current or new partners

impacting growth and business performance.

People

We do not achieve our strategic objectives due to our reduced ability to attract, develop at accelerated

pace and retain talent in a highly competitive market, further enhanced by a changing workplace

environment. We lose momentum to drive the organisation’s transformation if we do not attract and retain a

diverse and capable workforce.

Financial

Tax Disputes Increasing global tax rates, alongside tax authority challenges in key markets, impact our global operating

model and tax footprint.

Compliance

Product

Regulations

Non-compliance with product classiﬁcation regulations, guidelines, internal standards and/or registrations

across the supply chain and throughout the product lifecycle.

Legal &

Compliance

We are not fully compliant with relevant laws and regulations, including anti-corruption laws, data privacy

laws and global competition laws.

South Korea

Humidiﬁer

Sanitiser (HS)

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.

Other

Black Swan

Event

We deﬁne a Black Swan event as an unforeseen reputational incident impacting multiple brands. The Board

considers the possibility of a Black Swan event throughout the course of the year.

1. See Viability Statement on page 103

Key to principal risks

OUR PRINCIPAL & EMERGING RISKS,

AS AT 31 DECEMBER 2021

Probability

Impact

Critical

Highly Likely

Moderate

Possible

Major

Likely

Manageable

Remote

2 4

10 3

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

Principal risks

Mitigation activity

Colour indicates extent of activity outstanding to

mitigate in line with risk appetite.

All signiﬁcant mitigating actions are in place

and operating effectively

Some signiﬁcant actions remain in progress

Signiﬁcant and urgent actions remain

underway

Risk movement

Arrows indicate movement from prior

yearposition.

Direction and distance of movement.

Action planning to mitigate principal risks

iscomplicated by the interconnectivity

betweenthem, requiring robust oversight

byleadership teams to prioritise time and

resources as appropriate.

Operational

Strategic

People

Financial

Compliance

Interconnectivity of risks

Risk Management (Continued)

MAPPING PRINCIPAL & EMERGING

RISKS TO STRATEGIC IMPERATIVES

Consideration of principal and emerging risks, and how we are managing them, is an

important part of building our strategy and demonstrating our longer-term viability. The

chart below shows the linkage between our current principal and emerging risks and our

strategy, speciﬁcally our six strategic imperatives. Further information on each of the

strategic imperatives can be found on page 22.

Risk Grow brands

and innovate

Drive superior

execution

Invest in

capabilities

Increase

productivity

Embed

sustainability

Actively

manage the

portfolio

Principal risks

1. COVID-19

2. Product Safety

3. Supply Disruption

4. Cyber Security

5. Employee Health & Safety

6. Sustainability

7. Adherence to Product

QualityStandards

8. Innovation

9. Disruption

1 0. China

11. People

12. Tax Disputes

13. Product Regulations

14. Legal & Compliance

15. South Korea Humidiﬁer

Sanitiser (HS)

Emerging risks

1. Geopolitical

2. Economic Volatility in

post-COVID World

3. Sector Consolidation

4. Emergence of

Environmental Tax

Instruments

5. Science and Technology

‘Disruptors’

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

1. COVID-19 2. PRODUCT SAFETY

Oversight accountability

Executive ownership resides directly with the

Group Executive Committee, with each Global

Business Unit responsible for its respective

deliverables. Board oversight is provided by

the main Board.

Oversight accountability

Executive ownership resides with the Chief

R&D Ofﬁcer, who drives activity through

eachof the Global Business Unit executive

leadership teams. Board oversight is provided

by the CRSEC Committee.

Risk movement:

No change

Risk movement:

No change

The risk: COVID-19 continues to cause disruption in key markets and

creates signiﬁcant volatility and uncertainty across the portfolio,

impacting our ability to accurately predict consumer demand, and

execute growth plans.

Potential impact

In 2020, the impact of the COVID-19 principal risk was focused on supply

chain disruption and the health and wellbeing of our people. As we

emerge from the pandemic, we are now facing signiﬁcant demand

volatility across the portfolio and higher levels of uncertainty over the

medium- to long-term impact on consumer behaviours. Such volatility

may impact our ability to accurately forecast and affect the planning and

strategic investments required to execute growth plans.

Mitigation progress in 2021

Return-to-work policies, additional site-speciﬁc protocols and safety

measures have now been rolled out across our sites. These protocols

outline the measures we are taking to keep our people safe and are

overseen by the Global Advisory Group, who continue to monitor and

respond to changing work practices.

Across the Supply organisation, additional supply continuity responses

were activated which included engagement of new suppliers for critical

materials, daily reviews of manufacturing capacity across our network of

factories and manufacturing partners, and partnership with logistics

providers and regulatory authorities to ensure we could move products

across closed borders. Across the R&D organisation, additional lab

procedures, including enhanced safety protocols, were also activated to

ensure we could continue to support the safety and efﬁcacy of current

products in market and in the development pipeline.

Current control strategy

Strategic capacity plans for sourcing, manufacturing and logistics are

being reviewed to respond to the COVID-19-related surge in demand for

speciﬁc products. Our sales and operations planning and execution

processes are being strengthened, allowing us to better respond to the

ampliﬁed demand volatility we are seeing.

As the pandemic continues into 2022, return-to-work protocols have

been established to ensure both compliance with local government

requirements and respect for each individual’s personal situation.

Manufacturing and R&D activities are ongoing, and the safety of our

people across our sites remains our ﬁrst priority. Additionally, we continue

to support our people through regular updates and a programme of

global and local wellbeing initiatives.

We have launched our ‘Future of Work’ approach, providing greater

ﬂexibility and creating a seamless, inclusive and consistent experience in a

hybrid world. Our approach is underpinned by the four Cs – Connect,

Create, Coach and Collaborate – which will help to guide choices around

where we work.

Activity impact for 2022

The Group monitors the impact of COVID-19 across all areas, continually

reviewing our guidance to ensure it remains appropriate and reﬂects any

further developments. It is anticipated that while some disruption will

continue into 2022, this will reduce as our ‘Future of Work’ approach

becomes further embedded. Target rating from current Red to Amber by

the end of 2022, provided that there is no escalation in pandemic-related

circumstances and/or geopolitical events.

The risk: Robust process, 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.

Potential impact

Product safety issues lead to reputational damage with consumers,

customers or regulators. Signiﬁcant ﬁnancial losses could arise from

supply disruption, product recalls, delayed launches, penalties and

alossof consumer trust, as well as possible criminal liability for

seniormanagement.

Any gaps in the completion of our safety assessments or a lack

ofanticipation of new safety concerns could exacerbate any

potentialimpact.

Mitigation progress in 2021

Several product-safety-related programmes have been completed or

remain on plan for completion. Our Product Integrity Review (PIR)

programme is now complete and PLM (Product Lifecycle Management)

implementation is ongoing. Continued focus on data governance and

systems is required to modernise data ﬂow and compliance. A strategic

review of our data governance is underway and further learnings made

will be applied to the programme moving forward.

Our Global Safety Assurance (GSA) transformation project, led by our

Chief Safety Ofﬁcer, is underway with forecast completion in Q1 2023.

The programme will elevate Reckitt’s global safety approach into the

leading group of peer organisations and includes safety culture,

processes, systems and data.

Product safety training has been rolled out to all employees, as well as

speciﬁc training for relevant employees to understand their role in

ensuring safety, quality and regulatory compliance for all Reckitt products.

We have made investments in Consumer Relations to improve consumer

data insights and awareness of social media to identify emerging trends,

themes and safety concerns.

Current control strategy

The GSA team operates as part of the Global R&D function, further

embedding product safety into each of the Global Business Units through

proximity to markets whilst providing centralised oversight and assurance

services. GSA is accountable to the Risk, Sustainability & Compliance

Committee (RSCC) and thereafter to the Corporate Responsibility,

Sustainability, Ethics & Compliance (CRSEC) Committee.

A robust quality management system is underpinned by clear policies and

supporting systems, which are subjected to comprehensive and

independent regular audit review. Consumer safety and vigilance teams

within the GSA function conduct pre- and post-market safety reviews

and monitor and report on adverse events.

Activity impact for 2022

2022 will see the continued rollout of key safety programmes including

Product Lifecycle Management (PLM), QualityOne and the Global Safety

Assurance transformation. Innovation and business processes are

continuously adapted to ensure safety diligence requirements are fully

implemented. We will continue to proactively engage with regulators to

ensure we are staying abreast of emerging safety concerns. Target rating

to remain Amber at the end of 2022. This is a multi-year deliverable to

replace current systems.

Grow brands and innovate Drive superior execution

Invest in capabilities

Increase productivity

Embed sustainability

Actively manage the portfolio

3. SUPPLY DISRUPTION 4. CYBER SECURITY

Oversight accountability

Executive ownership resides directly with

theChief Supply Ofﬁcer. Board oversight

isprovided by the main Board.

Oversight accountability

Executive ownership resides directly with the

Chief Information & Digitisation Ofﬁcer. Board

oversight is provided by the main Board.

Risk movement:

Increasing

Risk movement:

Increasing

The risk: Disruption to the continuity of supply as a result of: ongoing

disruptions to material supply, freight and labour availability; ongoing

market volatility and unpredictability; remaining capacity gaps; and

reliance on single factories for key products and/or source for key

materials without qualiﬁed contingencies in place.

Potential impact

Disruption to the continuity of supply may result in supply shortages

andimportation barrier issues, leading to loss of sales and market share.

Increased levels of cost pressure across commodities, freight and labour

may impact our ability to serve customers and erode our cost competitive

advantage. Network and capacity constraints, combined with higher

levels of market volatility, may also impact the availability of product

inmarket.

Mitigation progress in 2021

Progress has been made across a number of areas to address the varying

causes of supply disruption. We continue to de-risk our supply of critical

materials by reducing the total value of monosourced spend across

eachGlobal Business Unit. Strategic capacity plans have been developed

and are being executed for the sourcing of high-risk materials, critical

manufacturing sites and logistics centres.

The Reckitt Production System, developed to drive sustainable

manufacturing performance, is being rolled out across all manufacturing

sites. An equivalent Logistics System is currently in pilot phase.

In 2021 we established a dedicated e-commerce Supply team that will

focus on planning, e-commerce ready packaging and logistics execution.

Current control strategy

Set-up and qualiﬁcation of multiple manufacturing locations for critical

products is ongoing with a target completion date of 2025. Portfolio

harmonisation and increased regionalisation of manufacturing will allow

usto improve our agility, proximity and responsiveness to any unforeseen

disruptions. A reset of our sales and operations planning and execution

processes is underway and will be deployed across the business in 2022.

We are mitigating increasing cost pressures through our Group-wide

productivity programme which includes procurement excellence,

manufacturing and logistics pillars. The development and rollout of our

end-to-end supply digitisation programme will also help increase cost

and operational efﬁciencies across the supply chain.

We continue to improve our level of asset protection, and factories

considered key or strategic have received investment to attain Highly

Protected Risk (HPR) status by our insurers.

A Group-wide business continuity programme is underway to

strengthenbusiness continuity processes across products and sites.

Robust Employee Health & Safety (EH&S), quality, sustainability and human

rights programmes have been developed and are being rolled out across

all of our facilities and suppliers.

Activity impact for 2022

2022 will see the continued rollout of the end-to-end Supply Chain

Planning programme. This will help to strengthen the resilience of

oursupply chain through investments in: upstream supply resilience;

alternative sites of manufacture; adequate manufacturing capacity;

robustproducts; improved manufacturing processes; and holistic

packaging design. Target rating to remain Amber at the end of 2022.

The risk: As a complex global organisation, there is a risk that Reckitt

falls victim to increasingly sophisticated cyber-attacks aimed at

causing disruption to our information assets by destruction, or by

circumventing conﬁdentiality, integrity or availability controls.

Potential impact

Signiﬁcant business disruption, data destruction or theft, regulatory

non-compliance, reputational damage, ﬁnancial loss and constraints

indelivering global business strategy.

This risk is heightened by the increasing volume and types of sensitive

personal data held, a strengthened regulatory environment including

signiﬁcant ﬁnancial penalties for non-compliance, and the growing

number and complexity of connected digital systems. These include

thirdparties, as well as cloud and digital service providers.

Mitigation progress in 2021

Phase 1 of the Cyber Transformation Programme was successfully

completed in early 2020 and included: removal of legacy platforms;

increased IT security team headcount; new cyber response playbooks

and processes; advanced threat protection; and continued improvements

to system recovery speed and capability. It also covered areas such

asimproving baseline identity and access management for some

ﬁnancialsystems as well as multi-factor authentication to protect

Reckittsystem identities.

We have launched the next phase of our multi-year cyber security

strategy which will further reduce cyber risk through investment in our

cyber security baseline, agility and innovation, allowing us to stay as close

as possible to emerging cyber threats.

Current control strategy

Our strategy places 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. We apply industry standards and methodologies to establish the

control framework, including ISO and National Institute of Standards and

Technology (NIST) guidelines.

Through increasing engagement with the business and partners,

advancement of our cyber capabilities and renewed focus on risk

ownership and accountability, the Group Cyber Transformation

Programme will continue to evolve the cyber security strategy and

framework and implement the required controls to mitigate cyber risk.

Activity impact for 2022

Phase 2 of the Cyber Transformation Programme commenced in 2021

andwill continue over the next three to four years, investing in and

embedding cyber security processes across the Group.

These include: enhancements to operational technology in critical

factories; identity and access management for critical business

applications; digital security; building stronger cyber defence detection

and response capabilities to cover our multi-cloud strategy; and uplifting

Reckitt colleague cyber awareness and education. This risk is dynamic

and constantly evolving, and as such target rating to remain Amber at the

end of 2022.

Risk Management (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

Grow brands and innovate Drive superior execution

Invest in capabilities

Increase productivity

Embed sustainability

Actively manage the portfolio

5. EMPLOYEE HEALTH

&SAFETY

6. SUSTAINABILITY

Oversight accountability

Executive ownership resides directly with

theCEO, Global Business Unit Presidents

andChief Supply Ofﬁcer. Board oversight

isprovided by the CRSEC Committee.

Oversight accountability

Executive ownership resides directly with

theCEO and the Head of Corporate Affairs

&Chief Sustainability Ofﬁcer. Each Global

Business Unit is responsible for its respective

deliverables. Board oversight is provided by

the CRSEC Committee.

Risk movement:

No change

Risk movement:

Increasing

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, in case

ofoutsourced operations.

Potential impact

Impacts are wide-ranging and variable in materiality; they may include

loss of life, debilitating injury, ongoing damage to brand/employer

reputation, reduced operational efﬁciency from factory closure or

signiﬁcant supply disruption, impaired ﬁnancial performance from

lostsales, ﬁnes or remediation costs, and possible criminal liability for

senior management.

Mitigation progress in 2021

COVID-19 health and safety policies, standards and return-to-work

protocols have been published and adopted across our sites, with

keymessages cascaded through the Global Business Unit and Supply

leadership teams. Local audits were completed where required by

regulators to comply with COVID-19 regulations.

We have launched an extensive programme to embed a heightened

Employee Health & Safety (EH&S) culture across the enlarged Group

through rigorous auditing, culture days, surveys and training initiatives.

ADriver Safety Standard programme has been deployed. Engineering

standards are in place and a Global Engineering Compliance team for

structural auditing has been established. Group ISO 45001 or OHSAS 18001

certiﬁcation is complete across all Reckitt in-scope sites and our Group

EH&S standards continue to be enhanced to meet scope.

Current control strategy

Policy and enhanced EH&S standards are in place and reinforced through

an audit compliance programme (including self-assessment, site visits,

assurance of improvement actions, KPI tracking and culture surveys) by

asecond line of defence compliance team within Supply; and ongoing

EH&S training is also provided across all sites including commercial ofﬁces.

Key risk indicators are monitored and action taken where measures

areout of tolerance. During COVID-19-related travel restrictions, we

implemented technology-aided inspections and site coaching calls.

Oversight is provided by the Supply leadership team as well as the Group

Risk, Sustainability & Compliance Committee (RSCC).

Activity impact for 2022

We will continue to roll out the programme of culture surveys and safety

days to increase awareness; and continue with the rigour of auditing,

including supporting the business through supply, commercial and R&D

site visits. Target rating to remain Amber at the end of 2022.

The risk: Failure to address existing and emerging environmental

andsocial risks and opportunities (including climate change), and

changing societal expectations of businesses in addressing these,

creates underlying risk to business resilience, growth and share

priceperformance.

Potential impact

Failure to increase the sustainability of our environmental and social

footprint may lead to increased scrutiny from consumers, customers,

NGOsand ESG-focussed investors. The impacts of this are broad in range

and include: reputational damage; adverse public perception; resource

inefﬁciency; loss of market share as consumers shift towards ‘greener’

products; omission from established sustainability indices impacting future

investment; and potential regulatory penalties. Climate change also has the

potential to signiﬁcantly disrupt Reckitt’s operations through an increased

number of extreme weather events, water crises and ecosystem loss.

Mitigation progress in 2021

In 2021 we launched our Sustainability Ambitions, which will be

underpinned with £1 billion investment over the next ten years. We

continue to focus on strengthening our processes, programmes and

controls alongside our external stakeholder relationships, through

partnerships with NGOs, academia, and critical opinion-formers.

We have partnered with Risilience and Cambridge Centre for Risk Studies

(CCRS) within the Judge Business School at the University of Cambridge to

model the impact of climate risk (both physical and transition) on our global

operations, with the output from this analysis supporting our ﬁnancial and

operational planning, and our Task Force on Climate-related Financial

Disclosures (TCFD) reporting. We also launched a partnership with the

Nature-Based Insetting team at the University of Oxford to better

understand the impact of our footprint on biodiversity and support our

contribution to the Task Force on Nature-related Financial Disclosures (TNFD).

More information about these partnerships can be found on page 66.

A holistic packaging strategy is in development, supporting both

e-commerce and traditional retail channels with levels of packaging use.

The expansion of our human rights programme beyond our supply chain,

using the societal impact framework to assess and address human rights

impacts along the full value chain, is on track. Our sustainability and

governance capability has been enhanced through the establishment

ofthe Group Risk, Sustainability & Compliance Committee (RSCC).

Current control strategy

We continue to embed the plans and resources required to deliver an

environmental strategy in the supply chain in support of climate change

and water efﬁciency, with capital expenditure plans, environmental

project identiﬁcation, local and global capabilities, and capacity to

support environmental performance improvement.

At a Global Business Unit and brand level, we are driving sustainability

through customer-facing programmes, and through delivery of more

sustainable ingredients, packaging and sourcing programmes. We continue

to embed sustainability into the product development process by evaluating

all new innovation against a set of sustainability criteria and introducing

sustainability targets into our science-based and technology solutions.

Activity impact for 2022

Internal and external initiatives, along with greater transparency on

non-ﬁnancial sustainability indicators, will help to drive increased

awareness of our sustainability agenda across our global network. Target

rating to remain Amber at the end of 2022. This is a multi-year deliverable

to build and embed the signiﬁcant actions required.

7. ADHERENCE TO PRODUCT

QUALITY STANDARDS

8. INNOVATION

Oversight accountability

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.

Oversight accountability

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.

Risk movement:

No change

Risk movement:

Decreasing

The risk: Non-compliance with applicable quality regulations,

guidelines and internal/external standards across the product

lifecycle governing how we produce and supply product.

Potential impact

Impacts are wide-ranging and may include a consumer safety incident,

regulatory failures, loss of sales (including product recall) and adverse

reputational impact, a supply disruption or factory closure, or potential

civil/criminal actions against individuals. The risk is heightened by

theincreasing scrutiny, complexity, frequency and stringent audit

requirements enforced on our factories by regulators.

Mitigation progress in 2021

As part of the evolution of our product quality processes, the Quality

team has been integrated into the Supply function. This restructure will

help to further embed product quality into each of the Global Business

Units by driving proximity to markets whilst also providing centralised

oversight and assurance services.

We have made signiﬁcant investment in ensuring the highest quality

ofour products and compliance with all applicable regulations and

standards. These measures include assurance programmes covering

predictive quality, culture of quality, technology-enabled fail-safe controls,

quality audit programmes across manufacturing sites and supplier

facilities, and transformation of our Consumer Relations function.

The Product Integrity Review (PIR), an end-to-end quality review of the

product portfolio, is now complete.

Current control strategy

Reckitt’s Quality standards have been deﬁned, communicated and

embedded within our standard operating procedures. A quality audit

programme to assess compliance with Reckitt’s Quality standards across

manufacturing sites has been established and is being delivered against.

Continued investment in key Quality transformation programmes

including QualityOne and LabEx, and implementation of a systematised

product safety and compliance programme through Product Lifecycle

Management (PLM), is providing a live database of product data.

COVID-19 impact assessments have been performed to identify risks

toprogramme delivery and agreed timescales.

Quality KPIs and metrics are presented and discussed at each Global

Business Unit, Risk, Sustainability & Compliance Committee (RSCC) and

Corporate Responsibility, Sustainability, Ethics & Compliance (CRSEC)

Committee meeting.

Activity impact for 2022

We continue to look for opportunities to optimise our quality assurance

processes and the use of Quality data to drive continuous improvement

across the product lifecycle. Target rating to remain Amber at the end

of2022.

The risk: The current innovation pipeline does not meet the changing

needs of our consumers and new go-to-market channels, or is not

sufﬁcient to achieve organic growth ambitions and drive gross

margin accretion.

Potential impact

Failure to understand and effectively respond to changing consumer

wants, needs and behaviours (including in the context of COVID-19)

maylead to loss of market share to small entrepreneurial companies

leveraging new channels and digital media.

Inability to execute innovation may result in failure to achieve the

necessary innovation rate hurdles in terms of growth contribution and

gross margin accretion, impacting organic top-line growth.

Mitigation progress in 2021

In 2021 we implemented enhanced innovation pipeline reporting to

provide greater visibility over our three-year innovation pipeline, and the

resourcing required to achieve our targets.

We launched the Innovation Council to harmonise innovation across each

Global Business Unit, market and function, including Marketing, R&D and

Supply. TheInnovation Council will report to the GEC on a quarterly basis.

The Global R&D function now includes the Regulatory, Global Safety

Assurance (GSA) and Operational Excellence functions, driving greater

partnerships and operational efﬁciencies. Dedicated teams are focused

on delivering innovation for global brands and operational teams are

focused on local brands. Frontline resources have been deployed

in-market to drive proximity to consumers.

Current control strategy

We continue to invest in new tools and resources to enhance our

innovation, brand purpose, packaging and design capability. Dedicated

resourcing has been deployed to deliver on ‘e-commerce ﬁrst’-focused

innovations.

IGNITE, our new external partnering platform to be launched in 2022, will

enhance our partnership capability and drive co-creation of innovation

through greater external orientation and new partnership opportunities

across discovery, development and launch.

Our consumer data and insights capability has been strengthened with a

dedicated team focused on insight generation and idea validation through

new digital tools for faster and more accurate innovation modelling.

Activity impact for 2022

Continued strengthening of our technical capabilities, alongside the

pursuit of new partnerships, improved harmonisation and enhanced

reporting will help to drive improved innovation across the full product

lifecycle, allowing us to better scale, leverage and accelerate our pipeline.

Innovation models will continue to evolve during 2022 and will broaden

asadditional drivers of innovation growth are identiﬁed. Target rating to

remain Amber at the end of 2022. This is a multi-year deliverable to build

and embed the signiﬁcant actions required.

Risk Management (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

Grow brands and innovate Drive superior execution

Invest in capabilities

Increase productivity

Embed sustainability

Actively manage the portfolio

9. DISRUPTION 10. CHINA

Oversight accountability

Executive ownership resides with the Global

Business Unit Presidents and the Chief Human

Resources Ofﬁcer. Board oversight is provided

by the main Board.

Oversight accountability

Executive ownership resides directly with

theCEO and Global Business Unit Presidents.

Board oversight is provided by the main Board.

Risk movement:

No change

Risk movement:

No change

The risk: Inability to respond to, adapt and evolve both our products

and processes to disruptive market forces including e-commerce,

digital, new formats, applying AI and machine learning and increasing

data challenges, impacting our ability to effectively service our

customers and consumers with the required agility.

Potential impact

We continue to see dramatic changes to the ecosystem and competitive

landscape in which we operate, with many of these changes arising from

COVID-19 and its impact around the globe. Some of the changes may

notyet be fully known or understood and may either present signiﬁcant

future opportunity or disrupt our current operating model.

Failure to respond to these disruptions may result in share loss to insurgent

brands that are more consumer-centric, and may reduce our ability to

identify and exploit rapidly growing channels, impacting top-line growth.

Mitigation progress in 2021

Our eRB organisation is now operating to scale bigger, faster, bolder

e-commerce and digital solutions, supporting each Global Business Unit

with digital business development and strengthening capability through

technology and infrastructure.

Our capability centres (Marketing Excellence, Sales Outperformance,

Medical Sales and eRB) are now operating to share excellence, develop

functional capabilities, drive economies of scale and scope, and provide

tools and technology enabling best practice sharing.

Chief Customer and Chief Information & Digitisation Ofﬁcers are now in

role to strengthen customer relationships and drive new business models

for our increasingly digital consumers.

Global Business Solutions launched in 2020 to support businesses with the

expertise, knowledge and products they need to make their workplaces

and outlets hygienically safe for both consumers and employees.

Current control strategy

Continued investment in capability and technology, enabling us to harness

the power of all channels, all platforms, all brands, in all markets. Pursuit of

external partnership opportunities to identify, incubate and launch new

brands and ventures, driving future growth. Entering new growth spaces

will also allow us to reach and acquire more consumers.

Activity impact for 2022

Internal and external initiatives will continue to increase capability and

drive incremental growth across priority channels and segments. This

includes the continued rollout of The Digital Factory, our venture to build

e-commerce expertise across all markets. Target rating to remain Amber

at the end of 2022. This is a multi-year deliverable to build and embed the

signiﬁcant actions required.

The risk: Risk in China of economic uncertainty, changing regulations

and changes in current or new partners impacting growth and

business performance.

Potential impact

China is a critical market increasingly characterised by economic and

regulatory uncertainty. The behaviours of Chinese consumers are also

changing which, alongside other economic factors, has the potential to

impact our operations and performance in this market.

Mitigation progress in 2021

In 2021 we ﬁnalised the sale of our China Infant Formula & Child Nutrition

business to Primavera. Our operations in China are now supported

through our focused China businesses, allowing us to better leverage our

scale across the Greater China area while maintaining agility, boosting

partnerships to support our growth ambitions, and driving China-centric

innovation through bespoke design and innovation hubs.

Current control strategy

Our current China businesses will continue to be managed as

independent units, with shared government affairs and regulatory

capabilities supported by a quarterly governance model.

We maintain a strong network in China to understand both international

and domestic economic developments that may impact our footprint.

This includes active engagement with industry associations and

regulators, external affairs capability and collaborative partnerships

withgovernment agencies.

China-based regulatory intelligence teams provide insight on any changes

in regulation that may impact us, and we partner closely with local

industry to ensure we are working within government-set parameters.

Activity impact for 2022

We will continue to focus on execution of our Greater China operating

model, alongside continued delivery of China-centric innovation,

consumer-centricity and close monitoring of global and regional

economic developments. Target rating from current Red to realistically

reduce to Amber by the end of 2022, though further disruptions can

beanticipated which could extend this level of higher exposure.

11. PEOPLE 12. TAX DISPUTES

Oversight accountability

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 accountability

Executive ownership resides directly with

theChief Financial Ofﬁcer. Board oversight

isprovided by the Audit Committee.

Risk movement:

No change

Risk movement:

Increasing

The risk: We do not achieve our strategic objectives due to our

reduced ability to attract, develop at accelerated pace and retain

talent in a highly competitive market, further enhanced by a

changingworkplace environment. We lose momentum to drive the

organisation transformation if we do not attract and retain a diverse

and capable workforce.

Potential impact

Disruption to business performance attributed to churn across senior

management positions and the risk of fatigue arising from a period of

sustained business change.

Mitigation progress in 2021

Following the launch of the Rejuvenating Sustainable Growth strategy,

anew leadership team is now in place and churn across senior

management has stabilised.

A Senior Vice-President for Talent & Leadership Development is now in

role and we have launched a Leadership Development and Talent Centre

of Excellence to deliver greater value to the business by identifying,

developing and scaling best practice HR processes that directly

contribute to the attraction, retention and development of our people.

Current control strategy

Talent identiﬁcation, mapping and calibration have been undertaken for

critical senior management positions, helping to optimise both talent

management and succession planning processes.

Retention measures and succession plans for key management positions

are in place, and regular retention risk analysis is undertaken, including a

review of turnover rates and active review of workforce planning to meet

strategic objectives. The Group’s total compensation programmes and

employee value proposition (EVP) are also subject to annual review.

A number of initiatives are under way to promote Reckitt as an employer

of choice. These include social impact and diversity and inclusion (D&I)

programmes, and a global wellbeing programme has been launched

focusing on equipping all employees with tools, techniques and strategies

to sustain peak performance. A new Global Head of Wellbeing will lead

this activity.

We offer a suite of tools to help our people get the most out

oftheircareers at Reckitt, from learning and development, the

annualperformance review process and leadership development

programmesthat focus on how managers can inspire, empower

andengage their teams.

Activity impact for 2022

We will continue to focus on unleashing the potential of our people,

performance and Purpose by attracting the best talent, developing

ourpeople and enabling culture change, to shape and drive our future

workplace to deliver sustainable outperformance. Target rating to remain

Amber by the end of 2022.

The risk: Increasing global tax rates, alongside tax authority

challenges in keymarkets, impact our global operating model and

taxfootprint.

Potential impact

Increasing global tax rates may result in an overall increase in our tax

liability. Additionally, 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.

Mitigation progress in 2021

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. Detailed

and thorough advice and technical support from advisors isreceived.

Provisions are made at CHQ for anticipated exposures. The business will

continue to review the provisioning strategy over the next ﬁve years to

take account of any expected changes.

Current control strategy

Ongoing review by the Reckitt Tax function, country Finance Directors

and external advisors with central provisioning for anticipated exposures.

Regular tax reviews are undertaken with each Global Business Unit

alongside continuous monitoring of information on EC State Aid

investigations and possible application to Reckitt. We also monitor the

impact of the Base Erosion andProﬁt Shifting (BEPS) initiative and other

law changes to identify possible adverse impacts and put in place

remedial strategies.

Activity impact for 2022

Timely and robust responses to progress outstanding disputes, continual

monitoring of progression in relation to APAs and subsequent operating

model tax audits, and increased prioritisation of projects and senior

management overview are expected to maintain this risk as Green for

2022. Target rating to remain Green at the end of 2022.

Risk Management (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

Grow brands and innovate Drive superior execution

Invest in capabilities

Increase productivity

Embed sustainability

Actively manage the portfolio

13. PRODUCT REGULATIONS 14. LEGAL & COMPLIANCE

Oversight accountability

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.

Oversight accountability

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 a combination

of the CRSEC andAudit Committees to

ensure full andappropriate coverage of

theCompliance programme.

Risk movement:

No change

Risk movement:

Increasing

The risk: Non-compliance with product classiﬁcation regulations,

guidelines, internal standards and/or registrations across the supply

chain and throughout the product lifecycle.

Potential impact

Non-compliance with a product-related regulation may result in

supplydisruption, increased regulatory scrutiny, ﬁnancial impact

includingproduct recall, damage to company reputation and potential

civil/criminal liability.

Regulations impacting our products across the portfolio are continually

evolving. If we do not anticipate these changes and are not ready to

usethem to drive innovation and competitive advantage, we may see

anincrease in costs and a loss of market share to competitors.

This risk is enhanced by the extensive range of product regulatory

classiﬁcations across the portfolio, emerging regulations in key markets

and fragmented IT systems lacking end-to-end integration.

Mitigation progress in 2021

As part of the evolution of our product safety and regulatory processes,

the Regulatory team has been integrated into the Global R&D function.

This restructure will help to further embed regulatory compliance into

each of the Global Business Units by driving proximity to markets whilst

also providing centralised oversight and assurance services.

We have increased our investment in medical and regulatory processes

toensure our product claims are more data-focused and substantiation

isstronger. Enhanced metric-based reporting now allows us to focus

onin-market issues and identiﬁcation of any process improvements.

Current control strategy

Multiple control programmes are in place to manage regulatory

compliance risks including resiliency mapping, our REACh compliance

programme and updates to our company core datasheets.

Regulatory intelligence processes and systems have been strengthened

and we have evolved how our regulatory KPIs are established, monitored

and reported.

The Risk, Sustainability & Compliance Committee (RSCC) structure

ensures appropriate regulatory KPIs are reported to all levels in the

organisation. There is an appropriately resourced single system for

consumer complaints in place and specialist audit teams providing

independent assurance.

Activity impact for 2022

The Product Lifecycle Management (PLM) programme will systematise

our product safety and compliance processes, aligning with the standards

set within the Product Integrity Review (PIR) and Product Safety

Evaluation Report (PSER) projects. PLM is due for completion in 2022.

Review of the end-to-end artwork and label approval process is ongoing

and continues to be a focus area for the business.

Our Regulatory teams partner with external regulators to credibly engage

in regulation development and to assess the impact and opportunities

offuture regulations to drive readiness, innovation and competitive

advantage. Target rating from current Amber to Green at the end of 2022.

This is a multi-year deliverable to replace current systems.

The risk: We are not fully compliant with relevant laws and

regulations, including anti-corruption laws, data privacy laws and

global competition laws.

Potential impact

Non-compliance with relevant laws and regulations may damage Reckitt’s

reputation, leading to signiﬁcant potential ﬁnes and possible criminal

liability for Reckitt companies and/or senior management.

Stricter data privacy regulations in key markets, together with adoption of

new technology and our growing e-commerce business, have impacted

data handling practices across the Group. The COVID-19 pandemic has

seen an increase in competition law and anti-trust compliance risk as we

respond to a signiﬁcant increase in demand for COVID-19 essential

products.

Mitigation progress in 2021

The global Ethics & Compliance programme has been strengthened

through the implementation of extensive controls across key compliance

risk areas. For data privacy, this includes the establishment of a robust

privacy framework under the oversight of the Group Data Protection

Ofﬁcer, a dedicated e-commerce privacy function, fully dedicated

privacy resources in key countries, completion of Privacy Impact

Assessments and adoption of stringent data protection safeguards across

direct-to-consumer channels.

Competition law risk and control assessments were completed in key

markets, with supporting mitigation plans agreed and implemented. Our

third-party bribery, interaction with HCEs and HCPs, and grants, donations

and charitable contributions processes have evolved through the

introduction of an enhanced operating model supported by more robust

systems and procedures.

Our third-party due diligence programme has been fortiﬁed and aligned

across Global Business Units for consistency.

Our claims substantiation processes have also been strengthened in

response to the settlement of a number of legacy cases.

Current control strategy

A Senior Vice-President Legal was appointed to each Global Business

Unitin 2020, with dedicated ethics and compliance resources working

alongside the Global Business Units to roll out the Compliance programme

across all key markets. The programme of global compliance risk

assessments will continue in 2022, alongside implementation of new

policies and procedures, allowing us to effectively respond to any

changes in the risk proﬁle.

All employees are required to complete online Global compliance training

modules every year. Core modules include Code of Conduct, anti-bribery,

antitrust, data privacy, human rights, and (separately) product safety and

cyber security.

The Group-wide Speak Up hotline is operational, widely communicated

and reinforced through a robust, independent investigation process and

follow-up procedure.

Activity impact for 2022

Continued advancement of the Ethics & Compliance programme through

targeted risk assessments, enhanced analytics and expansion of the

training programme will help to drive greater awareness of relevant laws,

regulations and company policies. Expansion of the third-party risk

management strategy will strengthen supply chain governance. Target

rating to remain Amber at the end of 2022. This is an ongoing and

dynamic programme.

Geopolitical

Emergence of

Environmental Tax

Instruments

Economic

Volatility in

post-COVID World

Science and

Technology

‘Disruptors’

Sector

Consolidation

Speed of impact

Probability

100

15. SOUTH KOREA HUMIDIFIER

SANITISER (HS)

Oversight accountability

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.

Risk movement:

No change

The South Korea Humidiﬁer Sanitiser (HS) issue was a tragic event. The

Group continues to make both public and personal apologies to victims.

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.

Potential impact

While a provision was made in 2016 to cover the initial government

classiﬁcation rounds and certain other costs, the risk of additional

exposure remains. An amendment made to the HS Special Law in 2020

has led to an increased volume of civil claims against Reckitt Benckiser

Korea (RBK). The South Korean Government has now decided to include

asthma, toxic hepatitis and children’s interstitial lung disease as HS injuries

and there is potential further expansion of liability as the new amendment

to the law reduces the burden of proof to establish that injury or illness is

caused by HS exposure. Further, under the law amendment, the Korean

Government can impose additional contributions to the Industry Relief

Fund (IRF) up to the amount of the previously collected for the Special

Relief Fund (SRF).

Mitigation progress in 2021

RBK has continued to work with the Government, victims and other

businesses to progress settlement with existing category 1 and 2

claimants via its Compensation Plan, and address legal claims, as well

asto restore trust among consumers in South Korea. RBK also made

comments on the issues with the HS law amendment during the

legislative process.

Current control strategy

Full public apology formally and repeatedly made by RBK to affected

parties. Regular review meetings continue with the Group, to monitor

issues as they arise. 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. An HS mediation committee has been

established and has been meeting with claimant groups and industry

companies to discuss various issues related to designing a comprehensive

mediation plan to cover all HS victims.

Activity impact for 2022

The Group will continue to encourage RBK to seek a broader resolution

and will continue to evaluate options to do the right thing while limiting

liability to fund compensation payments which are not anchored in proper

standards of legal and scientiﬁc proof. Target rating likely to remain Amber.

Risk Management (Continued)

The implementation of an effective

riskmanagement framework within an

organisation remains a cornerstone of

thecorporate governance expectations

contained within the 2018 revisions to

theUK Corporate Governance Code.

We have deﬁned an emerging risk as an event that has the

potential to signiﬁcantly impact Reckitt’s ﬁnancial position,

competitiveness and reputation, speciﬁcally:

• when the nature and value of the impact is not yet fully known

or understood, giving the emerging nature of the risk; and/or

• with an increasing impact and probability over a longer time

horizon (i.e. ﬁve or more years).

EMERGING RISKS

Low ﬁnancial

impact

Moderate

ﬁnancial impact

Signiﬁcant

ﬁnancial impact

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

101

Grow brands and innovate Drive superior execution

Invest in capabilities

Increase productivity

Embed sustainability

Actively manage the portfolio

Category ID Risk title Risk statement

Strategic

1 Geopolitical Increasing geopolitical volatility with the potential to destabilise key markets and in some cases disrupt

ouroperations. This includes domestic political developments and regional tensions, the longer-term

impact ofBrexit, ﬂuctuations in oil prices, and changes to local regulations impacting imports and exports

e.g. subsidies, duties etc.

2 Economic Volatility in

post-COVID World

Emerging from COVID-19, we are now faced with a highly volatile global economy. Some economies that

have ‘bounced back’ are seeing increasing inﬂationary pressure and uncertainty whether such inﬂation is a

structural or transitory issue, while other countries are moving further into recession. We are also seeing a

surge in barriers to global trade, including COVID-19 restrictions and global freight shortages. This volatility

impacts our commercial strategies, including pricing, and may expose the Group to high levels of instability.

Further, the impact of COVID-19 on consumer behaviours is increasingly uncertain, impacting our ability to

accurately plan and forecast.

3 Sector Consolidation

Across the consumer products sector, we are seeing increasing levels of consolidation combined with the

rise of private equity ﬁrms. Consolidation in the number of players together with higher levels of

competition for potential acquisition targets may impact our ability to drive inorganic growth.

4 Emergence of

Environmental Tax

Instruments

We see a potential increase in the use of taxes or other ﬁscal instruments in areas such as materials

(e.g.plastics), packaging (e.g. single-use or non-recyclable), landﬁll disposal, as well as emerging water or

carbon taxes as governments seek to encourage producer responsibility, promote behaviour change and

fully cost externalities. This is particularly the case as governments seek to redress the ﬁnancial impacts of

COVID-19 and ‘build back better’.

5 Science and Technology

‘Disruptors’

COVID-19 saw the development of the world’s ﬁrst mRNA vaccines, created using new technology that

has signiﬁcant potential to be applied in the ﬁght against other diseases, including seasonal cold and ﬂu.

The use of mRNA technology and other emerging science to create new vaccines or novel therapies to

ﬁght seasonal cold and ﬂu could signiﬁcantly disrupt the traditional cold and ﬂu category in the long term.

1. GEOPOLITICAL

The risk: Increasing geopolitical volatility with the potential

todestabilise key markets and in some cases disrupt our

operations. This includes domestic political developments

andregional tensions, the longer-term impact of Brexit,

ﬂuctuations in oil prices, and changes to local regulations

impacting imports and exports e.g. subsidies, duties etc.

Potential impact

The potential impacts of any geopolitical volatility are wide-

ranging and include decreasing sales and revenue, ﬂuctuations

incorporate ﬁnance and treasury, and fewer opportunities for

strategic growth. As we operate across a large global network,

geopolitical instability can also impact our supply chain operations,

workforce management practices and the safeguarding of our

data and intellectual property.

Mitigation

We closely monitor the global geopolitical climate to ensure we

understand any developments and their potential to impact our

business. Key measures include monitoring and analysis of any

political or regulatory uncertainty through our external affairs

network, engagement of advisors in critical markets and

identiﬁcation of security threats facing the business through

ourCorporate Security programme.

2. ECONOMIC VOLATILITY IN POST-COVID WORLD

The risk: Emerging from COVID-19, we are now faced with a

highly volatile global economy. Some economies that have

‘bounced back’ are seeing increasing inﬂationary pressure and

uncertainty whether such inﬂation is a structural or transitory

issue, while other countries are moving further into recession.

We are also seeing a surge in barriers to global trade, including

COVID-19 restrictions and global freight shortages. This

volatility impacts our commercial strategies, including pricing,

and may expose the Group to high levels of instability. Further,

the impact of COVID-19 on consumer behaviours is increasingly

uncertain, impacting our ability to accurately plan and forecast.

Potential impact

Economic volatility, including high inﬂation, may impact our pricing

and margin strategies. Our commercial teams closely monitor

economic trends, adapting commercial strategies to optimise

ourbusiness appropriately. High levels of demand volatility

mayalso adversely impact the accuracy of our planning and

forecasting activities.

Mitigation

Whilst we cannot fully protect our business from recessionary or

inﬂationary pressures, we take appropriate measures to maximise

and protect it during such periods of volatility. Key actions include:

portfolio rightsizing and review of pricing guidelines; adapting

ourchannel strategy with disruptive value offerings and the

acceleration of the e-commerce portfolio; ensuring we carefully

balance price and volume-led growth through targeted costing

programmes; maintaining prudent ﬁnancial risk management

through clear metrics for large investments; and accurate

forecasting and cash ﬂow management. In addition, a reset of

oursales and operations planning processes is underway, together

with a review of end-to-end planning processes and systems,

toimprove planning and forecasting accuracy.

102

3. SECTOR CONSOLIDATION

The risk: Across the consumer products sector, we are seeing

increasing levels of consolidation combined with the rise

ofprivate equity ﬁrms. Consolidation in the number of

playerstogether with higher levels of competition for

potentialacquisition targets may impact our ability to

driveinorganic growth.

Potential impact

Increasing sector consolidation and the associated increase

incompetition may impact our ability to successfully drive

inorganic growth.

Mitigation

The Corporate Development team is responsible for identifying,

evaluating and executing Reckitt’s global M&A opportunities. This

involves regularly scanning the competitive landscape to identify

potential mergers, acquisitions, divestments, joint ventures or

long-term partnerships. Corporate Development partners closely

with each Global Business Unit and IMEX to help establish clear and

prioritised inorganic business development objectives, so the

business is focused on the right targets that will help create

long-term value.

4. EMERGENCE OF ENVIRONMENTAL TAX INSTRUMENTS

The risk: We see a potential increase in the use of taxes or other

ﬁscal instruments in areas such as materials (e.g. plastics),

packaging (e.g.single-use or non-recyclable), landﬁll disposal,

as well as emerging water or carbon taxes as governments

seek to encourage producer responsibility, promote behaviour

change and fully cost externalities. This is particularly the case

as governments seek to redress the ﬁnancial impacts of

COVID-19 and ‘build back better’.

Potential impact

Introduction of environmental taxes or other related ﬁscal

instruments could impact our commercial strategies by increasing

the overall cost of production. Failure to comply with such

emerging regulations could also result in adverse ﬁnancial

orreputational impact.

Mitigation

Our Sustainability Ambitions have been designed to reduce our

environmental footprint and allow us to respond to the Extended

Producer Responsibility (EPR) and tax regulation we are seeing

emerge across multiple geographies. Our ambitions include

combating climate change by reducing greenhouse gas emissions,

increasing our use of renewable energy sources and reducing

ouroverall carbon footprint. We are increasing water efﬁciency

and aim to be water positive in water-stressed areas through

catchment management; and we have set a target of zero waste

to landﬁll for all of our manufacturing sites. Progress in these areas

is tracked through quarterly reporting.

A number of initiatives are underway to reduce our use of plastics

and other non-recyclable packaging materials, including virgin

plastic, as well as our overall chemical footprint. These projects

have been built into product development pipelines across

eachGlobal Business Unit. A working group has been established

to coordinate our response to emerging EPR and tax regulation

across 45 products. This will include an initial review of the data

required to support reporting and analysis, and subsequent

strategic intervention through innovation to lower the potential

cost burden.

5. SCIENCE AND TECHNOLOGY ‘DISRUPTORS’

The risk: COVID-19 saw the development of the world’s ﬁrst

mRNA vaccines, created using new technology that has

signiﬁcant potential to be applied in the ﬁght against other

diseases, including seasonal cold and ﬂu. The use of mRNA

technology and other emerging science to create new

vaccines or novel therapies to ﬁght seasonal cold and ﬂu

couldsigniﬁcantly disrupt the traditional cold and ﬂu category

in the long term.

Potential impact

Failure to respond to disruptive science and technology may

impact the longer-term demand for our products.

Mitigation

We engage in a number of external partnerships which allow us

toparticipate in leading research around hygiene interventions,

epidemiology, and the development of emerging treatments.

These include our partnership with the Global Hygiene Council and

establishment of the independent Reckitt Global Hygiene Institute.

Our R&D and Science teams actively engage with the scientiﬁc

community through participation in conferences, thought

leadership and research projects. Working with this consortium of

external experts helps us to stay abreast of leading developments

in science and regulatory affairs, and the impact of emerging

technology. Horizon-scanning activities are undertaken internally

across a number of teams, including the Corporate Development

team and individual brand teams, helping to identify threats and

opportunities in each category.

Risk Management (Continued)

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103

Viability Statement

OUR VIABILITY

STATEMENT

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.

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 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.

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 90 to 102, including mitigation

and control strategies). 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 marked ‘1’ on

page 90); and (ii) crystallisation of all principal risks and the impact

of adverse movements in foreign exchange and interest rates. 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.

The Board has further considered the occurrence of a Black Swan

event: an event of greater adversity than those modelled above,

with sufﬁcient potential impact to risk the future of Reckitt as

astrong and independent business operating in its chosen

markets. The occurrence of a major issue could result in signiﬁcant

reputational impact, a substantial share price fall, signiﬁcant loss of

consumer conﬁdence, and the inability to retain and recruit quality

people. Such an event could have an impact on the viability of

thebusiness. On the basis of a comprehensive set of mitigating

controls in place across the business, considering the unknown

nature of a Black Swan event and that its occurrence is considered

highly unlikely, it has not been included in the Viability Review.

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 103, has been

approved by the Board.

On behalf of the Board

Catheryn O’Rourke

Company Secretary

Reckitt Benckiser Group plc

13 April 2022

104

Corporate Governance Report

CHAIR’S

INTRODUCTION

TOGOVERNANCE

Dear Shareholder,

On behalf of the Board, I am pleased to present Reckitt’s Corporate Governance Report

forthe ﬁnancial year ended 31 December 2021. 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,

monitoring culture and ensuring its alignment with the company’s Purpose, strategy and

values, and overseeing its implementation by management. All Directors must act with

integrity, lead by example and promote the company’s culture and values. The Board

ensures there are appropriate processes in place to manage risk, including the company’s

risk appetite, and monitors the company’s ﬁnancial and operational performance against

objectives.

Effective governance during the COVID-19 pandemic

I am pleased to report that the Group’s governance framework operated effectively during

2021 in light of the continuing COVID-19 pandemic. Governance and risk management

havebeen important areas of focus for the Board over the last few years. Through our

Corporate Responsibility, Sustainability, Ethics and Compliance (CRSEC) Committee,

wehavebroadened our approach to managing safety and compliance risk, which is

discussed in more detail on page 144.

In addition, the impact of COVID-19 has reinforced a number of the UK Corporate

Governance Code 2018 (the Code) principles and provisions – the importance of effective

leadership, of the Group having a clear Purpose and strong values, and of these being

cohesive with the Group’s desired culture. Our response and decision-making throughout

the COVID-19 pandemic has paid due consideration to the wellbeing and safety of our

employees and our employees have adapted effectively and efﬁciently to new ways

ofworking. The Board recognises the exceptional way Reckitt continues to rise to

thechallenge and is extremely proud of the enormous dedication and courage of

ouremployees.

Board focus and oversight

In 2020 we launched our Rejuvenating Sustainable Growth strategy, including our new

Purpose, Fight and Compass. Under the new strategy our business was split into three

Global Business Units (GBUs); Hygiene, Health and Nutrition. One year on, Reckitt is emerging

much stronger, as a more resilient and purposeful company. We have made signiﬁcant

progress in building the foundations for rejuvenating sustainable growth. Our key areas of

Board focus during the year included: our response to COVID-19 and ensuring effective

governance and risk processes were in place; developing our strategy and seeking new

opportunities; building our new Reckitt brand, companioning stakeholder engagement and

wellbeing; enhancing our culture through our Purpose, Fight and Compass; and progressing

our diversity and inclusion agenda. Further details can be found on our Board activities

throughout the year on pages 119 and 120.

Our approach to sustainability

During 2021, we launched our sustainability ambitions, for a Cleaner, Healthier World, which

set out new ambitions to 2030, backed by an existing investment of more than £1 billion over

the next ten years to ensure we meet our goals. Our ambitions align with Reckitt’s Purpose

and our strategy for sustainable growth and focus on three areas: Purpose-Led Brands,

“Good governance and a

strong culture and values are

integral to Reckitt’s Purpose.

We act responsibly and strive

to do the right thing always.

Our Board is committed

toupholding the highest

standards of governance

toprotect our shareholders

and stakeholders’ long-term

interests and ensuring

socialand environmental

obligations are fulﬁlled.”

Chris Sinclair

Chair

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

105

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. We were delighted

to be named as the ofﬁcial hygiene partner for the COP26 meeting

in November 2021, enabling a safe event that supports a healthy

future for the planet. Further details on our role and commitment

atCOP26 can be found on pages 20 to 21. In addition, we are

forging new ways of working with like-minded partners to drive

meaningful, sustainable change for example, we have started

building partnerships with WWF and the Fair Rubber Association.

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. During 2020 and 2021, Reckitt has played an

important role in the global ﬁght to stop the spread of COVID-19,

which would have not been possible without the efforts of our

diverse and talented employees across the world. 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, while 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 early 2020 with our renewed Purpose, Fight and

Compass. Our Global Code of Conduct sets out the level of

conduct expected from all Reckitt employees, contractors,

outsourced personnel and joint ventures as well as the Board of

Directors, as accountable, ethical, and compliant owners of our

Hygiene, Health and Nutrition GBUs. Further details on our culture

and values can be found on pages 121 to 122.

Diversity and inclusion

The Board is committed to ensuring that Reckitt employees have

the Freedom to Succeed, which starts with creating an inclusive

environment where everyone feels able to participate and

realisetheir full potential. In 2020, we established our Stronger

Together sessions. During 2021, we continued to hold meaningful

discussions, share inspiring stories, and are now putting what

we’ve learnt into practice, with inclusion ﬁrmly at the heart of

Reckitt. We have made a ﬁve-year commitment to invite Reckitt

employees worldwide to attend Stronger Together conversations.

These conversations provide a regular forum to discuss important

issues relating to diversity and to inclusion. Since 2020, we are

proud to have held ten virtual global Stronger Together events

with over 4,000 attendees joining live each time. From race and

ethnicity, to LGBTQ+ matters, and from driving gender balance,

toconfronting workplace exclusion, as well as recognising the

steps for change, we’re now charting a course for a more inclusive

future at Reckitt.

At the end of 2020, we established our Global Inclusion Board,

which is chaired by our Chief Executive Ofﬁcer (CEO) and made

upof senior leaders and sponsors of our Employee Resource

Groups (ERGs). Together, they set and drive our inclusion agenda.

Our Global Inclusion Board is accountable for strategic delivery,

governance, monitoring, reporting and communication. Our

inclusion strategy rests on six pillars. The work we’re doing on the

leadership, people and policy pillars helps ensure we are building

an inclusive culture internally. Externally, our inclusive approach to

Reckitt, Thane Road, Nottingham, UK

106

Corporate Governance Report (Continued)

Board composition and succession planning

As part of the ongoing refreshment of the Board and following

anextensive search and recruitment process to strengthen the

knowledge and capabilities of the Board, in January 2021, we

appointed Olivier Bohuon as a Non-Executive Director and as a

member of the Remuneration Committee. Olivier has spent many

years as a successful CEO of a large global company. He has deep

experience in healthcare products and markets and his insights

have been valuable to Board discussions during the year. In

addition, we also announced during the year, certain changes

tothe composition of our Board Committees. In October, it was

announced that Laxman Narasimhan, CEO hadstepped down as a

member of the Nomination Committee and that Elane Stock had

stepped down as a member of the Remuneration Committee and

had been appointed as a member of the Audit Committee. In

February 2022, we were delighted toannounce that Alan Stewart

had joined the Board 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.

In December 2021, we announced that Rupert Bondy, General

Counsel & Company Secretary would leave Reckitt at the end of

February 2022. On behalf of the Board, I would like to thank Rupert

for his outstanding contribution to the business over the last 5

years. Rupert has been material in guiding the transition of the

Board, and supporting a number of major acquisitions and

disposals. Wewish him all the best in his future endeavours.

InFebruary 2022, Catheryn (Cathy) O’Rourke joined the company

as General Counsel & Company Secretary and member of Group

Executive Committee (GEC), following Rupert’s resignation. Cathy

joins 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.

procurement, brands and partnerships aligns what we do with

who we are. We also announced our aim of gender balance at all

management levels by 2030. I am pleased to report that we were

also ranked number three in the Consumer category of the FTSE

100 for board diversity, in the UK Consumer Diversity Index 2021.

UK Corporate Governance Code 2018 and section 172 reporting

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 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 107.

Effective engagement with our shareholders, our employees and

wider stakeholders is of utmost importance to Reckitt’s sustainable

success. Under section 172 of the Companies Act 2006 (CA 2006),

Directors must act in good faith and in a way that would be likely

topromote the success of the company for the beneﬁt of its

shareholders. In its decision-making, the Board considers wider

stakeholder interests. Our key stakeholders include our employees,

shareholders, customers, consumers, partners, government, and

industry associations, and the communities in which we operate.

Throughout 2021, we remained committed to listening and

engaging with our stakeholders on key areas of Reckitt’s business.

In May, the Board participated in a listening session held by external

stakeholders involved and knowledgeable in the area of Nutrition,

who provided a wide variety of perspectives on the topic of

nutrition. The session was interactive and Board members were

invited to ask questions to the stakeholders. Additionally, in

October, the Board participated in a listening session held by

external stakeholders on the topic of ecosystems, biodiversity and

nature-based solutions. Details of our stakeholder engagement

activities undertaken during the year can be found from page 50.

Reckitt, Thane Road,

Nottingham, UK

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

107

UK CORPORATE GOVERNANCE CODE

2018 STATEMENT OF COMPLIANCE

For the year ended 31 December 2021, 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.

Further details on the Board and GEC’s succession plans, including

the recruitment process and selection criteria, can be found in the

Nomination Committee Report, commencing on pages 128 to 132.

Biographies of the members of our Board and GEC can be found

on pages 108 to 116.

Board performance review

The Board undertakes an annual review of its own and its

Committees’ performance and effectiveness. Last year,

theBoardperformance review was facilitated by Lintstock Ltd,

who have been engaged to conduct a three-year Board

Development Programme. Following a similar format to 2020,

for2021 we conducted a performance review of the Board and

Committee’s facilitated by Lintstock Ltd. Details of this year’s Board

performance review, our progress against the outcomes from our

2020 Board performance review and action to be taken to address

the 2021 feedback can be found on pages 126 to 127.

Annual General Meeting and shareholder voting

The Board views the Annual General Meeting (AGM) as a valuable

opportunity to meet with its shareholders as well as an opportunity

for shareholders to put questions to the Chair, the Chairs of the

Committees and the Board. The safety of our shareholders,

Directors, employees, and other stakeholders remains of utmost

importance to us. In light of this and the continuing COVID-19

pandemic, in May 2021, our AGM was held as a closed meeting,

with a virtual webcast which shareholders were able to view

online. Shareholders and their proxies were able to vote in advance

of the meeting. Questions were submitted in advance of the AGM

or during the meeting in real time, enabling the Board to engage

and interact directly with shareholders. At last year’s AGM

shareholders voted in favour of allowing us the ﬂexibility to

holdahybrid AGM going forward, if deemed necessary. At the

time of publication, we anticipate this year’s 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.

Chris Sinclair

Chair

Reckitt Benckiser Group plc

13 April 2022

HOW WE COMPLY WITH THE CODE

1. Board leadership and company purpose Page

Our Board of Directors 108-113

Group Executive Committee 114-116

Reckitt’s approach to governance 117-118

Board activities during 2021 119-120

Our Purpose, strategy, values and culture 121-122

2. Division of responsibilities

How we are governed 123-125

3. Composition, succession and evaluation

Board performance review 126-127

Nomination Committee Report 128-132

4. Audit, risk and internal control

Audit Committee Report 133-140

5. Remuneration

Remuneration Committee Report 148-187

108

Board Leadership and Company Purpose

OUR BOARD OF

DIRECTORS

The Board consists of a balance

ofExecutive and Non-Executive

Directors who together have

collective accountability to Reckitt’s

shareholders and stakeholders.

Key

Chair

Remuneration

Nomination

Audit

Corporate Responsibility, Sustainability,

Ethics and Compliance

Appointments after

31 December 2021

Chris Sinclair

Chair of the Board

Nationality American Board tenure 7 years, 2 months

Appointment

Appointed as a Non-Executive Director in February

2015 and as Chair of the Board in May 2018.

Career

Chris is the former Chair and CEO of Mattel, Inc.

Previously, he served as CEO for various private-

equity-backed companies, including Caribiner

International and Quality Food Centers (now part

of the Kroger Co.). Earlier in his career, Chris held a

number of senior positions at PepsiCo, including Chair

and CEO of Pepsi-Cola Co. (worldwide beverages),

and CEO of PepsiCo Foods and Beverages

International. He was also a Director of Foot Locker,

Inc. and Perdue Farms, Inc.

Chris graduated with a degree in Marketing from the

University of Kansas and received an MBA from the

Tuck School of Business at Dartmouth College.

Skills and experience

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.

Current external appointments

None

Laxman Narasimhan

Chief Executive Ofﬁcer

Nationality American Board tenure 2 years, 8 months

Appointment

Appointed as CEO-Designate in July 2019 and as CEO

on 1 September 2019.

Career

Prior to joining Reckitt, Laxman held various senior

roles at PepsiCo from 2012 to 2019, including Global

Chief Commercial Ofﬁcer, Chief Executive Ofﬁcer

ofLatin America, Europe and Sub-Saharan Africa

operations – where he ran PepsiCo’s food and

beverage businesses across the regions – and Chief

Executive Ofﬁcer of Latin America. Prior to PepsiCo,

Laxman served as a Director of McKinsey & Company

and held various roles from 1993 to 2012. He was also

an Advisory Board member of the Jay H. Baker

Retailing Center at The Wharton School of the

University of Pennsylvania.

Laxman holds a degree in Mechanical Engineering

from the College of Engineering, University of Pune,

India. He has a Master’s degree in German and

International Studies from The Lauder Institute at

theUniversity of Pennsylvania and an MBA in Finance

from The Wharton School of the University of

Pennsylvania.

Skills and experience

Laxman is an outstanding leader who brings wide

experience across the consumer goods sector, both

operationally and at scale. Laxman has exceptional

strategic capabilities and consumer insight with a

proven track record of developing purpose-led brands

and driving consumer-centric and digital innovation.

Hehas previously advised global organisations, led

complex operational businesses and inspired teams

across developed and emerging markets to achieve

market-leading performance. This, combined with his

excellent people engagement and leadership skills,

makes him well qualiﬁed for the role.

Current external appointments

Non-Executive Director of Verizon

CommunicationsInc.

Trustee of Brookings Institution

Member of the Council on Foreign Relations

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

109

Jeff Carr

Chief Financial Ofﬁcer

Nationality British Board tenure 2 years

Appointment

Appointed as Chief Financial Ofﬁcer on 9 April 2020.

Career

Prior to joining Reckitt, Jeff was Chief Financial Ofﬁcer

and Management Board member at Ahold Delhaize,

the Dutch retailer operating across Europe and the

USA. Before joining Ahold Delhaize Jeff held the

roleof Chief Financial Ofﬁcer at First Group plc

andeasyJet plc and held senior ﬁnance roles at

Associated British Foods plc and Reckitt. Jeff started

his career as a graduate trainee at Unilever plc.

Jeff holds a degree in Chemical Engineering from

theUniversity of Exeter and is a Chartered

Management Accountant.

Skills and experience

Jeff brings extensive experience across consumer

and retail companies and is also an alumnus of Reckitt.

Jeff has a record of transformational strategic and

operational leadership, consistent performance

delivery, strong capital allocation discipline and

building strong teams; all of which lead to longer-term

shareholder value creation.

Current external appointments

Chair of the Audit Committee and Non-Executive

Director of Kingﬁsher plc

Olivier Bohuon

Non-Executive Director

Nationality French Board tenure 1 year, 3 months

Appointment

Appointed as a Non-Executive Director in

January2021.

Career

Olivier was CEO of FTSE 100 medical devices company

Smith & Nephew plc from 2011 to 2018. Prior to that,

heserved as CEO of healthcare, cosmetology and

pharmaceutical company Laboratoires Pierre Fabre

from 2010 to 2011, and from 2003 to 2010 he worked

atAbbott Laboratories, rising to Corporate Executive

Vice President and President of the pharmaceutical

products division. Earlier in his career, Olivier worked

at GlaxoSmithKline plc in positions of increasing

seniority. He also served on the Board of Smiths Group

plc from July 2018 to November 2020. Olivier became

a Knight of the Legion of Honour in 2007. Olivier has a

doctorate in Pharmacy from the University of Paris-Sud

and an MBA from HEC Business School in Paris.

Skills and experience

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.

Current external appointments

Chair of Majorelle

External Director of Takeda Pharmaceutical

CompanyLimited

External Director of Virbac SA

Co-Founder and Board member of

AlgoTherapeutixSAS

110

Board Leadership and Company Purpose (Continued)

Andrew Bonﬁeld

Non-Executive Director

Nationality British Board tenure 3 years, 8 months

Appointment

Appointed as a Non-Executive Director in July 2018

and as Chair of the Audit Committee in January 2019.

Career

Andrew has been Chief Financial Ofﬁcer of Caterpillar

Inc. since September 2018. He was previously Group

CFO of National Grid plc from 2010 to 2018. Prior to

this, he held the position of Chief Financial Ofﬁcer

atCadbury plc and also served as Executive Vice

President & Chief Financial Ofﬁcer at Bristol Myers

Squibb. Andrew is a Chartered Accountant and holds

a Bachelor of Commerce degree from the University

of KwaZulu-Natal in Durban, South Africa.

Skills and experience

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.

Current external appointments

Chief Financial Ofﬁcer of Caterpillar Inc.

Margherita Della Valle

Non-Executive Director

Nationality Italian/British Board tenure 1 year, 8 months

Appointment

Appointed as a Non-Executive Director in July2020.

Career

Margherita has been Chief Financial Ofﬁcer of

Vodafone Group Plc since July 2018. She also runs

Vodafone Shared Services, which was established

in2011 to optimise quality and efﬁciency across

Vodafone’s customer, technology, ﬁnance and HR

operations. Prior to her current role, Margherita was

Deputy Chief Financial Ofﬁcer of Vodafone, between

2015 and 2018, having held a number of senior

positions in ﬁnance beforehand, including Group

Financial Controller and Chief Financial Ofﬁcer of

Vodafone’s Europe region. Earlier in her career, she

joined Omnitel Pronto Italia, which became Vodafone

Italy in 1994, and held various consumer marketing

positions in data analytics and consumer base

management. From 2004 to 2007, she was Chief

Financial Ofﬁcer of Vodafone Italy.

Margherita holds a Master’s degree in Economics from

Bocconi University in Italy.

Skills and experience

Margherita has extensive experience of ﬁnancial

markets and digital technologies. She is deeply

experienced in business in both developed and

developing markets, bringing great insight to the

Board. These skills, together with her strong

leadership background, are valuable to the Board

andher membership of the Audit Committee.

Current external appointments

Chief Financial Ofﬁcer of Vodafone Group Plc

Nicandro Durante

Senior Independent Director

Nationality Brazilian/Italian Board tenure 8 years, 4 months

Appointment

Appointed as a Non-Executive Director in

December2013 and as Senior Independent Director

inJanuary 2019.

Career

Nicandro started his career working in ﬁnance in Brazil

and joined British American Tobacco plc (BAT) in 1981.

Whilst at BAT, Nicandro worked in the UK, Hong Kong

and Brazil and held a number of senior positions

including Regional Director for Africa and the Middle

East, Chief Operating Ofﬁcer and, from 2011 to 2019,

Chief Executive Ofﬁcer. Nicandro holds a degree in

Business Administration from the Pontiﬁcal Catholic

University of São Paulo, Brazil, and has obtained

postgraduate qualiﬁcations in ﬁnance and economics.

Skills and experience

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 strong international business experience,

bringing a global perspective to his role.

Current external appointments

Chair of TIM Participações S.A. and Chair of the

ESGCommittee

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Pam Kirby

Non-Executive Director

Nationality British Board tenure 7 years, 2 months

Appointment

Appointed as a Non-Executive Director in February 2015

and as Chair of the CRSEC Committee in July 2016.

Career

Pam served as Chair of SCYNEXIS, Inc. until June 2015.

She was formerly CEO of Quintiles Transnational

Corporation and held senior positions in the

international healthcare industry at AstraZeneca plc

and Hoffman-La Roche. Pam holds a ﬁrst-class BSc

honours degree and a PhD in Clinical Pharmacology

from the University of London.

Skills and experience

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.

Current external appointments

Non-Executive Director of DCC plc

Non-Executive Director of Hikma Pharmaceuticals plc

Member of the Supervisory Board of AkzoNobel N.V.

Mehmood Khan

Non-Executive Director

Nationality American/British Board tenure 3 years, 8 months

Appointment

Appointed as a Non-Executive Director in July2018.

Career

Mehmood has been Chief Executive Ofﬁcer of Life

Biosciences Inc. since April 2019. He was previously

ViceChair and Chief Scientiﬁc Ofﬁcer, Global Research

and Development, at PepsiCo Inc. Mehmood previously

held the position of President, Global Research &

Development Centre at Takeda Pharmaceutical

Company Limited. He was a faculty member at the

Mayo Clinic and Mayo Medical School in Rochester,

Minnesota, serving as Consultant Endocrinologist

andDirector of the Diabetes, Endocrine and Nutritional

Trials Unit in the endocrinology division.

Mehmood has a medical degree from the University

ofLiverpool, is a Fellow of the Royal College of

Physicians, London and of the American College

ofEndocrinology, and holds two Honorary PhDs

inHumanities and International Law.

Skills and experience

Mehmood is a highly skilled medical practitioner

andresearcher. He brings to the Board 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 Chair of Life Biosciences Inc.

Mary Harris

Non-Executive Director

Designated Non-Executive Director for engagement

with the company’s workforce

Nationality British/Dutch Board tenure 7 years, 2 months

Appointment

Appointed as a Non-Executive Director in February

2015, as Chair of the Remuneration Committee in

November 2017 and as Designated Non-Executive

Director for engagement with the company’s

workforce in July 2019.

Career

Mary is currently a Non-Executive Director of ITV plc,

where she is also a member of the Audit and Risk

Committee, and the Nominations Committee, and

Chair ofthe Remuneration Committee. She is also a

member of the Remuneration Committee of St. Hilda’s

College, Oxford and a Supervisory Director of HAL

Holding N.V.Mary was previously a Partner at McKinsey

& Company. She also held the position of Member of

the Supervisory Board of TNT NV, Scotch and Soda NV

and TNT Express NV and was Vice-Chair of the

SupervisoryBoard and Chair of the Remuneration

Committee of Unibail-Rodamco-Westﬁeld S.E.

Shewas formerly a Non-Executive Director and

Chair

of the Remuneration Committee of J Sainsbury plc.

Mary graduated from the University of Oxford with a

Master’s degree in Politics, Philosophy and Economics

and completed her MBA at Harvard Business School.

Skills and experience

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 international and consumer focus. Her previous

experience in other Non-Executive Director roles,

andas Chair of other Remuneration Committees,

isinvaluable in allowing her to effectively chair the

Remuneration Committee.

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.

112

Board Leadership and Company Purpose (Continued)

Sara Mathew

Non-Executive Director

Nationality American Board tenure 2 years, 8 months

Appointment

Appointed as a Non-Executive Director in July 2019.

Career

Sara was previously Chair and Chief Executive Ofﬁcer

of Dun & Bradstreet. In this role, she led the

transformation of the company into an innovative

digital enterprise. Prior to her role as Chair and Chief

Executive Ofﬁcer, she also served as President and

Chief Operating Ofﬁcer, and as Chief Financial Ofﬁcer

where she initiated and managed the redesign of the

company’s accounting processes and controls. Prior to

her career at Dun & Bradstreet, Sara spent 18 years at

Procter & Gamble serving as CFO of the Baby Care

and Pamper Products businesses and Vice President

of Finance in Asia. Previously, she served on the

boards of Shire Pharmaceuticals Limited, Campbell

Soup Company and Avon.

Sara received her undergraduate degree from the

University of Madras in Chennai, India and holds an

MBA in Marketing and Finance from Xavier University

inCincinnati, Ohio.

Skills and experience

Sara has extensive Board experience across a number

of industries including healthcare, consumer products

and ﬁnancial services. She has experience with

consumer goods products and digital technologies

and has led strategic and digital transformations.

Shehas a proven track record of adding signiﬁcant

strategic value, brings great insight to the Board

through her previous positions, and demonstrates

valuable leadership qualities.

Current external appointments

Chair of Freddie Mac

Director of Dropbox Inc.

Director of State Street Corporation

Director of XOS Corporation

Elane Stock

Non-Executive Director

Nationality American Board tenure 3 years, 7 months

Appointment

Appointed as a Non-Executive Director in

September2018.

Career

Elane has been Chief Executive Ofﬁcer of

ServiceMaster Brands since October 2020. Elane

waspreviously Group President at Kimberly-Clark

International where she was responsible for business

operations in EMEA, Asia Paciﬁc and Latin America.

Prior to this, Elane was Global President at Kimberly-

Clark Professional with responsibility for the division

selling workplace hygiene and safety products. She

has also held the position of Director at Equifax Inc.

Inher earlier career, Elane was a Partner at McKinsey

&Company in the US and Ireland.

Elane holds a BA in Political Science from the

University of Illinois and an MBA in Finance from The

Wharton School of the University of Pennsylvania.

Skills and experience

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

Chief Executive Ofﬁcer of ServiceMaster Brands

Director of Yum! Brands, Inc.

Alan Stewart

Non-Executive Director

Nationality British Board tenure 2 months

Appointment

Appointed as a Non-Executive Director and member

of the Remuneration Committee in February 2022.

Career

Alan was Chief Financial Ofﬁcer of Tesco PLC from

2014 to 2021 where he played a key role in the

turnaround of Tesco. Prior to his role at Tesco, Alan

was CFO of Marks & Spencer Group plc from 2010 to

2014. He previously served as CFO of AWAS, Group

Finance Director of WH Smith PLC and CEO and

CFOof Thomas Cook Holdings. He also served on

theboard of Games Workshop Group plc as a

non-executive director. Alan is currently a

Non-Executive Director of Diageo plc having been

appointed in September 2014, has been a member

of the Nomination, Remuneration and Audit

Committees of Diageo plc from appointment, and

has been Chair of the Audit Committee since 2017.

Skills and experience

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.

Current external appointments

Non-Executive Director of Diageo plc

Financial

expertise

Healthcare &

Pharmaceuticals

With skill

Without skill

Consumer goods

& retail

Strategy

Leadership

7 5

Male Female

5 3 4

0-3 years 6-9 years3-6 years 9+ years

3 4 1 1 1 1 1

British British/DutchAmerican American/Brit ish

Brazilian/Italian Ita lian/British French

3 9

Ethnic minority group Non-ethnic minority group

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113

Board members skills overview

1. The ﬁgures reﬂect the number of Board

members at the date of publication

DIVERSE LEADERSHIP

The graphs below show the Board’s composition, tenure, nationality, ethnic diversity

andskills. Further details regarding diversity at Group Executive Committee level and

ourapproach to diversity and inclusion can be found on pages 130 to 131.

Directors as at 31 December 2021

Length of tenure as at 31 December 2021

Nationality as at 31 December 2021 Ethnic diversity as at 31 December 2021

114

GROUP EXECUTIVE

COMMITTEE

11 12

Laxman Narasimhan

Chief Executive Ofﬁcer

Kris Licht

President Health &

Chief Customer Ofﬁcer

Pat Sly

President Nutrition

Miguel Veiga-Pestana

Head of Corporate Affairs &

Chief Sustainability Ofﬁcer

Angela Naef

Chief R&D Ofﬁcer

Rupert Bondy

General Counsel &

Company Secretary

Catheryn O’Rourke

General Counsel &

Company Secretary

Jeff Carr

Chief Financial Ofﬁcer

Volker Kuhn

President Hygiene

Ranjay Radhakrishnan

Chief Human Resources Ofﬁcer

Sami Naffakh

Chief Supply Ofﬁcer

Filippo Catalano

Chief Information &

Digitisation Ofﬁcer

Laxman Narasimhan

Chief Executive Ofﬁcer

Nationality American Company tenure 2 years, 8 months

Experience

Laxman joined Reckitt as CEO-Designate in July 2019 and was appointed as

CEO on 1 September 2019. Prior to joining Reckitt, Laxman held various senior

roles at PepsiCo from 2012 to 2019, including, Global Chief Commercial Ofﬁcer,

Chief Executive Ofﬁcer of Latin America, Europe and Sub-Saharan Africa

operations – where he ran the company’s food and beverage businesses

across the regions – and Chief Executive Ofﬁcer of Latin America. Prior to

PepsiCo, Laxman served as a Director of McKinsey & Company and held various

roles from 1993 to 2012. He was also an Advisory Board member of the Jay H.

Baker Retailing Center at The Wharton School of the University of Pennsylvania.

Laxman holds a degree in Mechanical Engineering from the College of

Engineering, University of Pune, India. He has a Master’s degree in German and

International Studies from The Lauder Institute at the University of Pennsylvania

and an MBA in Finance from The Wharton School of the University of

Pennsylvania. Laxman is an outstanding leader who brings wide experience

across the consumer goods sector. He has previously led complex operational

businesses and inspired teams across developed and emerging markets to

achieve market-leading performance. He has exceptional strategic capabilities

and consumer insight with a proven track record of developing purpose-led

brands and driving consumer-centric digital innovation.

Jeff Carr

Chief Financial Ofﬁcer

Nationality British Company tenure 2 years

Experience

Jeff joined Reckitt as Chief Financial Ofﬁcer on 9 April 2020. Prior to joining

Reckitt, Jeff was Chief Financial Ofﬁcer and Management Board member at

Ahold Delhaize, the Dutch retailer operating across Europe and the USA. Before

joining Ahold Delhaize, Jeff held the role of Chief Financial Ofﬁcer at First Group

plc and easyJet plc and held senior ﬁnance roles at Associated British Foods

plc and Reckitt. Jeff started his career as a graduate trainee at Unilever plc.

Jeff is currently Chair of the Audit Committee and Non-Executive Director of

Kingﬁsher plc. Jeff holds a degree in Chemical Engineering from the University

of Exeter and is a Chartered Management Accountant.

Jeff brings extensive experience across consumer and retail companies. Hehas

a strong track record of transformational strategic and operational leadership,

consistent performance delivery, strong capital allocation discipline and

building strong teams.

Kris Licht

President Health & Chief Customer Ofﬁcer

Nationality American Company tenure 2 years, 5 months

Experience

Kris joined Reckitt in November 2019 as Chief Transformation Ofﬁcer. On 1 July

2020, Kris became President Health and Chief Customer Ofﬁcer. Prior to joining

Reckitt, Kris held a number of senior strategic and operational positions at

PepsiCo. Most recently he served as Division President in PepsiCo’s North

American beverage business. Prior to this, Kris was a Partner at McKinsey &

Company working for over 12 years in the ﬁrm’s consumer, health and retail

practices. Kris brings strong operational and strategic experience to

theCommittee.

Board Leadership and Company Purpose (Continued)

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Volker Kuhn

President Hygiene

Nationality German Company tenure 1 year, 8 months

Experience

Volker Kuhn has been President Hygiene since May 2021.

Prior to his current role, Volker was the Chief Transformation Ofﬁcer at Reckitt

where he led the signiﬁcant acceleration of our productivity program,

turbo-charged new growth platforms and led corporate strategy.

Prior to joining Reckitt, Volker spent 26 years with Procter & Gamble (P&G) in

arange of international ﬁnance, marketing, and senior general management

roles. In his last role with P&G, Volker led the fabric care business unit, Europe,

and the global unit-dose detergent platform.

Volker is a passionate brand builder and has a strong track record of leading

successful business turnarounds, growth initiatives and transformations,

including the carve-out and divestiture of Duracell from P&G. He started his

career at Deutsche Bank and subsequently worked for a small consulting ﬁrm

before joining P&G.

Volker currently serves as Chair and a Non-Executive Board member of FRoSTA

AG, a leading European frozen food company. He is based in Amsterdam.

Pat Sly

President Nutrition

Nationality American Company tenure 4 years, 7 months

Experience

Pat joined Reckitt as part of the Mead Johnson Nutrition (MJN) acquisition

in2017. He was appointed as Chief Operating Ofﬁcer, Nutrition in July 2021.

InFebruary 2022, Pat was appointed as President Nutrition.

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. In his role as Chief Operating Ofﬁcer, Nutrition, Pat leads the

global Nutrition business which includes Infant Formula & Child Nutrition (IFCN),

Specialty Nutrition, Maternal Nutrition and Adult Nutrition.

Pat holds a degree in Business from the Kelley School of Business at Indiana

University and an MBA from the Olin Business School at Washington University

in St. Louis.

Ranjay Radhakrishnan

Chief Human Resources Ofﬁcer

Nationality Indian Company tenure 2 years, 1 month

Experience

Ranjay Radhakrishnan joined Reckitt as Chief Human Resources Ofﬁcer on

1 March 2020. Ranjay has 29 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, one

ofthe world’s leading hotel companies. Previously, Ranjay spent over two

decades at Unilever, in a range of senior leadership roles at global, regional and

country levels. His last role at Unilever was Executive Vice President Global HR,

where he led HR for Unilever’s eight regions and four global product categories,

under a uniﬁed global HR leadership role.

Ranjay has experience in a number of specialist areas of HR such as talent,

diversity and inclusion, learning, reward, organisational effectiveness,

complementing large generalist roles in both mature and developing markets.

Ranjay has lived and worked in several countries, including the UK, the

Netherlands, Singapore, the UAE and India. He graduated from Mumbai

University in Commerce and Accounting and has a Master’s degree in Personnel

Management and Industrial Relations from the Tata Institute of Social Sciences

in Mumbai, India.

Miguel Veiga-Pestana

Head of Corporate Affairs & Chief Sustainability Ofﬁcer

Nationality British Company tenure 5 years

Experience

Miguel joined Reckitt as the Head of Corporate Affairs in 2017, responsible for

allaspects of strategic communications, brand and reputation management.

He was subsequently appointed as Chief Sustainability Ofﬁcer in 2018

responsible for overseeing the development and integration of Reckitt’s

sustainability and purpose-led agenda. He became Head of Corporate Affairs

&Chief Sustainability Ofﬁcer and a member of the Group Executive Committee

in April 2020.

Prior to joining Reckitt, Miguel was Chief Communications Ofﬁcer at the Bill &

Melinda Gates Foundation, based in Seattle, US. Previously, Miguel spent over

adecade at Unilever and held several regional and global roles, notably as the

Vice-President for Global Sustainability Strategy and Advocacy. Miguel has

more than 30 years’ external affairs, communications and sustainability

experience, having held positions in the UK, US and Brussels.

Sami Naffakh

Chief Supply Ofﬁcer

Nationality French Company tenure 1 year, 9 months

Experience

Sami joined Reckitt as Chief Supply Ofﬁcer on 1 July 2020 and is responsible for

Reckitt’s global supply chain operations, which includes planning, procurement,

manufacturing and logistics. Since January 2021, he has also been responsible

for Reckitt’s Quality, Environmental Health & Safety (EHS) and Quality

Compliance teams.

Sami brings to Reckitt close to 30 years of broad international leadership

experience in fast-moving consumer goods companies such as Unilever,

Danone and Estée Lauder – as well as Reckitt, where he previously held

severalleadership positions from 2003 to 2009. Most recently, Sami was

Executive Vice President at Arla Foods, the Danish farmer-owned dairy

cooperative, where he headed up supply chain operations globally. Sami is

skilled in leading major transformations of supply chain operations, increasing

competitiveness, agility and sustainability to quickly adapt to evolving

consumer trends and customer requirements.

116

Angela Naef

Chief R&D Ofﬁcer

Nationality American Company tenure 1 year, 6 months

Experience

Angela joined Reckitt as Chief R&D Ofﬁcer in September 2020. Angela is

responsible for elevating Reckitt’s science capability and platforms as well as for

driving external partnerships. She is a passionate problem solver, innovator and

connector. With a strong belief in the power of collaboration, Angela is focused

on enabling the Research & Development organisation to deliver meaningful

solutions addressing both mega trends and sustainability, to deliver growth.

Angela brings to Reckitt over 22 years of diverse senior leadership experience in

product and business development roles. Most recently, Angela spent ten years

at DuPont, in various technical and commercial leadership roles, where she led

the Nutrition & Biosciences Global Technology and Innovation organisation.

Angela has a strong track record of accelerating innovation in the areas of food

and nutrition sciences, materials, health and clinical sciences, regulatory and

biotechnology. She is a passionate advocate for diversity and inclusion and

actively works on STEM education to inspire the next generation of new

scientists, engineers and experts. Angela is a graduate of the University of

California, Davis with a PhD in Physical Chemistry, and is a Six Sigma Black Belt.

Filippo Catalano

Chief Information & Digitisation Ofﬁcer

Nationality Italian Company tenure 1 year

Experience

Filippo joined Reckitt as Chief Information & Digitisation Ofﬁcer on 1 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. In his previous role, Filippo was SVP, Global Chief Information

Ofﬁcer at Nestlé, where he led the transformation of technology platforms,

data, analytics, e-business, processes and tech skills. Prior to Nestlé Filippo

worked at Procter & Gamble (P&G) across geographies, categories and IT

disciplines, leading the digital transformation in key brands and corporate

initiatives. Filippo currently serves as a Non-Executive Director at Farmer

Connect, a leading tech company providing blockchain-based traceability

forfarm-to-fork supply chains.

Board Leadership and Company Purpose (Continued)

Rupert Bondy

General Counsel & Company Secretary

Nationality British Company tenure 5 years, 2 months

(Resigned in February 2022)

Experience

Rupert joined Reckitt as General Counsel & Company Secretary in January 2017

and is responsible for legal matters across the Group. He began his career as

alawyer in private practice. In 1989 he joined US law ﬁrm Morrison & Foerster,

working in San Francisco and London, and from 1994 he worked for Lovells in

London. In 1995 he joined SmithKline Beecham as Senior Counsel for mergers

and acquisitions and other corporate matters. When SmithKline Beecham and

Glaxo Wellcome merged to form GlaxoSmithKline plc, Rupert was appointed

Senior Vice President and General Counsel. In 2008, Rupert became Group

General Counsel of BP plc, holding that position until he joined Reckitt. Rupert

isa seasoned general counsel with extensive experience across a number of

sectors, including consumer healthcare.

Catheryn O’Rourke

General Counsel & Company Secretary

Nationality American Company tenure 2 months

Experience

Cathy joined Reckitt as General Counsel & Company Secretary in

February 2022, and is responsible for legal, company secretarial and

legal compliance matters across Reckitt.

Cathy brings more than 20 years of experience managing global teams

and handling complex legal and compliance matters. Most recently,

Cathy was Chief Legal and Compliance Ofﬁcer at Smith & Nephew plc.

Prior to joining Smith & Nephew plc, Cathy spent 11 years of her career

with Davis Polk.

Cathy is a graduate of Princeton University, Harvard Law School and the

University of New South Wales, Australia.

Other Group Executive Committee members who served in

theyear

Harold van den Broek

President Hygiene, joined Reckitt in 2014 and left in May 2021

Aditya Sehgal

President of Nutrition, e-RB & Greater China, joined Reckitt in 1994 and left in

October 2021

Our Board

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.

Nomination Committee

Chaired by Chris Sinclair

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 individuals with the

necessary skills, knowledge

and experience to effectively

discharge their responsibilities,

whilst keeping in mind the

importance of diversity.

More details are set out in

theNomination Committee

Report on pages 128 to 132

Audit Committee

Chaired by Andrew Bonﬁeld

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.

More details are set out in

theAudit Committee Report

on pages 133 to 140

Remuneration Committee

Chaired by Mary Harris

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

Remuneration Committee

Report on pages 148 to 187

CRSEC Committee

Chaired by Pam Kirby

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.

More details are set out in

theCRSEC Committee

Report on pages 141 to 147

Disclosure Committee

Chaired by Laxman Narasimhan

Responsible for ensuring accuracy and

timeliness of disclosure of ﬁnancial

and other public announcements.

Risk, Sustainability and Compliance

Committee (RSCC)

Chaired by Laxman Narasimhan

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 & ethics, sustainability, external

affairs, employee health and safety, quality,

consumer safety and regulatory related

matters, including compliance strategies,

policies, programmes and key activities.

Group Executive Committee (GEC)

Chaired by Laxman Narasimhan

The GEC is 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.

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117

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 2021, 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 108

to 112. There are also three supporting Management Committees:

the Disclosure Committee; the Group Executive Committee (GEC),

and the Risk, Sustainability and Compliance Committee (RSCC).

RECKITT’S APPROACH

TO GOVERNANCE

118

Board attendance during 2021

In 2021, there were ﬁve scheduled Board meetings, three of which

were held via videoconference as permitted by the company’s

Articles of Association, owing to restrictions imposed by the

COVID-19 pandemic. An additional six Board meetings were held

during the year relating to various matters including; potential

mergers and acquisitions, review of going concern considerations,

approval of the Reckitt 2021 Annual Report and Notice of Meeting,

and conﬁrmation of AGM arrangements. 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, in light of the easing of government restrictions, the

September 2021 strategy sessions were held in person in the UK.

As part of the September Board schedule, members of the Board

participated in a site visit to Reckitt’s Nottingham factory. In

addition, Board members held roundtable sessions with local

employees to listen to their experiences of working for Reckitt.

Following the conclusion of each scheduled Board meeting, the

Chair held a session with the Non-Executive Directors, without the

1. Stepped down from the Nomination Committee on 1 October 2021

2. Stepped down from the Remuneration Committee and joined the AuditCommittee on 25 October 2021

Executive Directors present. There were four scheduled and

twoadditional Audit Committee meetings, ﬁve scheduled

Remuneration Committee meetings, two scheduled and one

additional Nomination Committee meetings, and four scheduled

meetings of the CRSEC Committee.

The table below sets out the attendance by Directors at the

scheduled Board and Committee meetings which 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

Scheduled meetings

Andrew Bonﬁeld 5/5 4/4 2/2

Jeff Carr 5/5

Margherita Della Valle 4

/5 3/4

Nicandro Durante 5/5 5/5 4/4 2/2

Mary Harris 5/5 5/5 2/2

Mehmood Khan 5/5 4/4

Pam Kirby 5/5 3/4 4/4 2/2

Sara Mathew 5/5 4/4

Laxman Narasimhan

5/5 1/1

Chris Sinclair 5/5 5/5 4/4 2/2

Elane Stock

5/5 1/1 4/4

Olivier Bohuon 4/5 4/5

Board Leadership and Company Purpose (Continued)

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How Board meetings are structured

Board meetings are structured 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 General Counsel & 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. Detailed

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 the

Executive Directors and help drive future agenda items. Details

ofeach Director’s attendance at Board meetings can be found

onpage 118.

The Board uses its meetings as a way of discharging its

responsibilities set out in section 172 of the CA 2006 and considers

its various stakeholder groups when making decisions to promote

the success of the company as a whole.

Our activities during the year

Group plans and budgets

• Reviewed forecasts and key performance targets, including

assumptions, scenarios and projections

• In November, reviewed the Group’s ﬁnancial plan for 2022

Strategy

• Board members met in person for a three-day meeting in

September 2021 to discuss strategy and the innovation pipeline

Mergers and acquisitions

• Sold the Scholl brand to Yellow Wood Partners to bring greater

focus and to strengthen our portfolio

• Completed the sale of our Infant Formula and Child Nutrition (IFCN)

business in China to Primavera Capital Group following a

comprehensive review by the Board of the strategic options for

the business, marking another step in our strategy to Rejuvenating

Sustainable Growth and create long-term value by actively, and

decisively, managing our portfolio

• Acquired the Biofreeze brand from Performance Health to

strengthen our Health portfolio and deepen Reckitt’s presence

within the broader pain category in the US

Rebranding as Reckitt

• Reviewed and approved the rebranding of the company as Reckitt,

as part of our transformation towards sustainable growth. The new

brand identity is more recognisable to our stakeholders and is built

on our Purpose: to protect, heal and nurture in the relentless

pursuit of a cleaner, healthier world

Business updates

• Reckitt strategic reviews, including COVID-19 impact at Group and

GBU level, functional reviews of certain business areas and capability

centres and status updates on transformation programmes

Sustainability strategy

• Launched our sustainability ambitions to 2030 to provide a road

map of how we embed sustainability in Reckitt activities, whilst

driving environment and societal impact

Strategy and planning

BOARD ACTIVITIES DURING 2021

Reporting

• Reviewed and approved Reckitt’s Annual Report and Financial

Statements including compliance with reporting requirements

for2021

• Reviewed and approved Reckitt’s half-year results

• Provided results presentations to investors and employees during

the year

Going concern

• Reviewed going concern and liquidity considerations arising from

the COVID-19 pandemic

Financial resources

• Reviewed the company’s ﬁnancial position, Group debt and

funding arrangements, including issuance of bonds

Interim and ﬁnal dividend payments

• Approved the ﬁnal 2020 and interim 2021 dividend payments

Financial oversight

Employees Partners Communities

Government

and industry

associations

Consumers ShareholdersCustomers

Key

120

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 the controls are continually

kept under review to minimise the potential exposure to risk. The

system is designed to assess and manage, rather than eliminate,

risks to Reckitt’s business objectives, and 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 factors are

detailed on pages 88 to 102

• As part of its risk control, Reckitt regularly evaluates its risks to

achieving objectives, and the likelihood of such risks materialising

and determining 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 that can be taken,

controls that can be implemented and processes that can be

followed to reduce the chances 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 pound on pages 137 to 138 of the

Audit Committee Report. 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 88 to 102

• 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 program in

preparation for internal controls changes arising from the BEIS

consultation, together with the investigation referred to in the Audit

Committee Report on page 137, has identiﬁed certain control

improvement opportunities that management is currently undertaking

Viability Statement

• Considered and approved the 2021 Annual Report Viability

Statement upon recommendation of the Audit Committee

COVID-19

• Received updates on the company’s response to and the impact of

COVID-19 on the business, including focus on supply and consumer

demand, the workforce and risk management

Treasury policy

• Reviewed and approved of 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new Task Force on Climate-related Financial Disclosures (TCFD)

climate reporting regulation that impacts the way we report

keymetrics. In addition, the Board identiﬁed and assessed the

principal ESG risks and the potential effects on Reckitt’s short- and

long-term value. More information on sustainability can be found on

pages 16 to 21. Our TCFD summary can be found on pages 66 to 67

• 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 141 to 147

Risk management and internal control

Board Leadership and Company Purpose (Continued)

Board and Committee performance review

• Conducted the annual Board performance review, identiﬁed areas

for improvement and recommended actions

• Considered and proactively addressed actions from our 2020

internal Board performance review

Composition and succession planning

• Alan Stewart was appointed as a Non-Executive Director and

member of the Remuneration Committee in February 2022

• Laxman Narasimhan, CEO stepped down as a member of the

Nomination Committee effective from 1 October 2021

• Elane Stock stepped down as a member of the Remuneration

Committee and was appointed as a member of the Audit

Committee, effective from 25 October 2021

• Management succession planning reviewed in November

Shareholders and stakeholders

• Held the 2021 AGM as a closed meeting. Shareholders had the

opportunity to pre-submit questions or ask them live during

themeeting

• Passed a special resolution to update Reckitt’s Articles of

Association, giving the Board the ﬂexibility to hold a hybrid

AGMgoing forward

• Held a Board listening session on Nutrition in which we heard

fromexternal experts and were invited to ask questions

• Held a Board listening session on the topic of Ecosystems,

Biodiversity and Nature-based solutions

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 2020 Modern Slavery Act Statement,

asrecommended by the CRSEC Committee

Leadership and governance

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Financial StatementsGovernanceStrategic Report

121

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.

Across the globe, we have an interconnected vision that all

ouremployees have the Freedom to Succeed. Our Freedom

toSucceed employee value proposition aims to instil, promote,

reinforce, and reward the positive behaviours and attributes

thatmake that real. Our focus is on maintaining an open, positive,

inclusive culture by promoting continuing dialogue across the

company. The innovative and entrepreneurial spirit of our

employees is at its best when diverse teams unite, share ideas,

andcreate pioneering solutions.

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 46 to 49 and pages 55 to 56.

Global

Headquarters,

Turner House,

Slough, UK

122

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.

How we monitor culture Board interactions and engagement to monitor culture throughout the year

Connecting directly with our employees Board members meet with employees regularly. As part of this year’s September Board meeting

schedule, Board members visited the Nottingham factory and held round table discussions with

employees on the topics of inclusion, consumers, innovation and science, sustainability and

business transformation. The Board reviewed feedback from the round table discussions at its

November meeting. Feedback showed that employees were proud to work for Reckitt, that

signiﬁcant progress had been made in developing a positive company culture, the handling of

COVID-19 working arrangements showed the company putting people ﬁrst and that there was

areal sense of care for employees. In addition, certain areas were highlighted as requiring more

work, such as, complexity in the organisation, improving female representation in senior roles,

and the need for stability during a period of signiﬁcant change within the organisation. Based

onthe feedback received, the Board continues to monitor actions being taken to address

employee concerns.

Monitoring employee perceptions 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. 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.

Creating a forum for employees

tobeheard

Our Stronger Together conversations provide a forum for employees across the world to share

inspiring and challenging stories focused on issues relating to diversity and inclusion. Board

members attended Stronger Together conversations throughout the year and Mary Harris, our

Designated Non-Executive Director for engagement with the company’s workforce, addressed

employees during a session focused on race and ethnicity.

Ensuring employees are informed 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.

Staying informed of legal &

compliancematters

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 Our Ask Laks forum on the employee intranet provides a place where any employee can post

questions to our CEO, which are answered via the intranet, or in an informal discussion video.

Board Leadership and Company Purpose (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

123

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 2021, 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.

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, whilst promoting a culture of openness

and constructive debate

• 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

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

• Being available to shareholders and stakeholders to address

anyconcerns, which they have been unable to resolve through

normal channels

• Leading the search and appointment process for a new Chair,

when necessary

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

• Examining the day-to-day management of the business against the

performance targets and objectives set, ensuring that

management is held to account

• Reviewing ﬁnancial information and ensuring it is complete,

accurate and transparent

• 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

• Development of succession planning and the appointment and

removal of senior management

• Taking into account and responding to shareholders’ views.

Non-Executive

Division of Responsibilities

124

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 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

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.

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 examined the length of service of each

Director and considers that the Chair and each Non-Executive

Designated Non-Executive Director for engagement with the company’s workforce

• Overseeing the Board’s engagement with the company’s

workforce together with management, to understand more about

engagement and the culture of the company

• Developing and implementing employee engagement initiatives

• Providing an employee voice in the boardroom and reporting

oncertain matters relating to company culture, purpose,

andimprovements

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

• 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

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

• 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

• Providing advice and support to the Chair and all Directors

• 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

• Facilitating an induction programme for all Board members

• Ensuring there are policies and processes in place to help the

Board function efﬁciently and effectively

• Keeping abreast of shareholders’ views

Executive

The Company Secretary

Division of Responsibilities (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

125

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. At the 2022 AGM, Sara

Mathew will not be standing for re-election.

The Board and each Director is 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, or become the Chair of, a FTSE 100 company.

Laxman Narasimhan is currently a Non-Executive Director of

Verizon Communications Inc. and Jeff Carr is currently a Non-

Executive Director of Kingﬁsher plc.

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 of the 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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, taxation, internal

audit, 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.

Upon appointment, Olivier Bohuon received a comprehensive

induction tailored to his appointment as a Non-Executive Director

and member of the Remuneration Committee. This included

meeting with members of key management across the business

and external advisors. He attended virtual meetings, where he had

the opportunity to meet with the CEO, CFO and General Counsel &

Company Secretary. He also met with each of the Presidents of the

three GBUs. His induction further included meetings with members

of the GEC, including the Chief Transformation Ofﬁcer, Chief

Supply Ofﬁcer, Chief Human Resources Ofﬁcer, Chief R&D Ofﬁcer

and Head of Corporate Affairs & Chief Sustainability Ofﬁcer. Olivier

is a member of the Remuneration Committee and had discussions

with Mary Harris, Chair of the Remuneration Committee, and the

Group Head of Reward.

Alan Stewart received a tailored induction following his

appointment to the Board as a Non-Executive Director and

member of the Remuneration Committee. This 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 is a member of the Remuneration

Committee and had discussions with Mary Harris, Chair of the

Remuneration Committee, and the Group Head of Reward.

Both Non-Executive Directors inductions covered legal compliance

matters including, a discussion on Directors’ duties and liabilities,

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 Reckitt’s

company policies.

In previous years, ad-hoc site visits for newly appointed Directors

have been arranged to the Group’s operations to gain an insight

into the business, and usually form part of the annual Board

meeting cycle. 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. As previously mentioned,

in 2021, the off-site meetings were held in the UK, where Board

members had the opportunity to meet in person, visit Reckitt’s

Nottingham factory and listen to the views of employees through

roundtable discussions.

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. Throughout the year training materials have been made

available for Board members to view, including materials relating

toDirectors’ duties in accordance with section 172 CA 2006.

126

BOARD PERFORMANCE REVIEW

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. Last year we engaged Lintstock Ltd

(Lintstock) to facilitate a three-year Board Development

Programme. In the second year of the three-year Board

Development Programme with Lintstock a survey-based review

was conducted, consisting of an online questionnaire sent to

allDirectors. The 2021 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 were

Board composition, Board dynamics and support, management

and focus of meetings, strategic oversight and risk management

and internal control. 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 2020 review

are also outlined below.

2020 recommendations Action taken during 2021

Board composition

• Identify skills and experience gaps and focus on succession

planning for key roles

• The Nomination Committee has 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

Stakeholder oversight

• Broaden the Board’s understanding of and involvement with

consumers and customers

• Maintain visibility of the company culture

• Two Board listening sessions took place during the year, where

Board members heard perspectives on relevant topics from key

stakeholders, including customers and NGOs

• The Board reviewed the company’s culture and workforce

engagement methods at its September Board meeting

Board dynamics and support

• Regular Board training and information sessions

• Improve the length and structure of Board packs

• Analyst reports and other information prevalent to the business

have been shared with Board members

• Board packs were more concise with shorter presentations, leaving

more time for Board discussion at meetings

Strategic oversight

• Focus on M&A, in particular IFCN China and understanding

competitor performance

• In line with our strategy signiﬁcant time at Board meetings were

focused on M&A. The level of information on competitor

performance has also increased

Succession planning and HR management

• Increase Board oversight of talent management

• During the year the Board received presentations from HR on

people and succession

• In April 2021, we were pleased to announce that Filippo Catalano

had joined Reckitt as Chief Information & Digitisation Ofﬁcer

Risk management and internal controls

• Boards oversight of risk appetite and mitigation could receive

deeper review

• The Board, supported by the Audit Committee, has reviewed

anumber of risk management processes during the year

Composition, Succession and Evaluation

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

127

2021 recommendations Action to be taken in 2022

Board composition and succession planning

• The Board’s composition was rated highly overall. With regards to

key changes that ought to be made to the Board’s proﬁle over the

next three to ﬁve years to match Reckitt’s strategic goals, the need

for further digital expertise was highlighted, as was the importance

of additional experience in emerging markets and increased UK

representation on the Board

• The GEC had been successfully embedded following the transition

in 2020, and the structure of Reckitt at senior levels was highly rated

• The Board will continue to monitor succession planning, focusing

on skills gaps and ensuring the Board has the right mix of Directors

with varied expertise and experience

Board dynamics and support

• Non-Executive Directors’ engagement with the CEO, CFO and the

wider Executive team was rated highly. The importance of face-to-

face engagement post COVID-19 was noted

• Whilst Board packs were positively rated, the use of summaries

was identiﬁed as an area for improvement

• More face-to-face interactions between the Board and

management are expected, as COVID-19 restrictions ease

• Management will continue to provide timely and well-structured

papers, including succinct executive summaries

Strategic oversight

• Clarity of the current strategy, testing and development of strategy

and how the Board has monitored progress of the transformation

programme scored highly. The Board’s understanding of key

Reckitt markets and the Board’s understanding of the company’s

brands was also rated positively. It was noted that greater

oversight was required on Reckitt’s digital and cyber capabilities

• Filippo Catalano joined Reckitt as Chief Information & Digitisation

Ofﬁcer in April 2021 to bring greater focus on the area of digital

and cybersecurity. Further updates would be provided on Reckitt’s

digital and cyber capabilities through deep dives conducted

in2022

Risk management and internal control

• The Board’s focus on risk was noted as a strength, particularly the

Board’s oversight of risk appetite and mitigation. There was scope

for more in-depth deep dives into speciﬁc areas of risk

• The Board, supported by the Audit Committee, is reviewing risk

management processes and allocating time at Board meetings

toconduct deep dives into speciﬁc areas of risk

Management and focus of meetings

• Management of meetings was rated highly. It was important to

ensure there was a continued focus on people, including talent

management and succession

• Increase understanding, monitoring and time spent on talent and

succession planning, through greater focus at Board meetings

The 2021 review of the Board’s performance and that of its

Committees concluded that the Board, its Committees and

individual Directors were performing effectively. The Board was

observed to have a good mix of skills, sector-relevant experience,

knowledge and diversity and the length of tenure of the Board as

awhole was deemed appropriate. Board members worked well

together to achieve objectives, with a sufﬁcient degree of support

and challenge provided by Directors. The Board had a good

understanding of its stakeholders including its investors, customers,

consumers, partners and suppliers. The way the Board monitors

employee sentiment and culture was also noted as a strength.

All individual Directors were considered to be contributing

effectively. The key priorities for the Board over the coming year

will be people and succession planning, developing relationships

with management and providing effective challenge where

necessary, meeting in person, transformation, managing the

Group’sportfolio, and performance. The Board has reviewed the

recommendations of the performance review and is taking steps

toaddress these. The principal outcomes of the review will

bereviewed and reassessed as part of the Board’s 2022

performance review.

128

NOMINATION

COMMITTEE REPORT

Committee priorities for 2022

• To keep under review the overall skills and experience of the Board, and diversity,

equality and inclusion at Board as well as management level

• Succession planning for Board members, with particular regard that the current Senior

Independent Director was appointed to the Board in 2013

• Review the tenures of Directors holding leadership roles on the Board

Committee membership

The members of the Committee during the year were:

Member from Meetings attended

Chris Sinclair (Chair)

Chair and member of the

Committee for the whole year

2 of 2

Andrew Bonﬁeld Member for the whole year

2 of 2

Nicandro Durante Member for the whole year

2 of 2

Pam Kirby Member for the whole year

2 of 2

Mary Harris Member for the whole year

2 of 2

Laxman Narasimhan Member until 1 October 2021

2 of 2

Members of the Committee are appointed by the Board. Membership is set out in the

Committee’s terms of reference and comprises of the Chair, Senior Independent 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 108 to 113.

Meetings

Meetings of the Committee are held as needed but are required to take place at least once

a year. In 2021, the Committee held two scheduled meetings which took place virtually due

to COVID-19 travel restrictions and held one additional meeting. 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 above and in the Board

attendance schedule on page 118 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 top 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

“We continue to focus on

succession planning for our

Non-Executive Directors,

keeping in mind the

skillsand experience

required toensure our

long-term success.”

Chris Sinclair

Chair of the NominationCommittee

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

129

Reckitt, Thane Road,

Nottingham, UK

STEP 1

The Committee reviews

the composition of

theBoard and its

Committees to

identifywhich skills,

experiences and

expertise are required

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

• 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 2021

New Director appointment process

The process for Board appointments is led by the Nomination

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 a wealth

of experience and 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

STEP 5

Once the Board

hasapproved the

recommendation,

theappointment is

announced in line

withFCA’s Listing Rules

and a formal induction

process commences

STEP 4

Following the conclusion

of interviews,

theCommittee’s

recommendation is

submitted to the Board

for consideration

STEP 3

The Committee

evaluates the potential

candidates and considers

the shortlist for meetings

and interviews

STEP 2

The Committee outlines

a role speciﬁcation

andengages an

externalconsultant to

conduct asearch for

potential candidates

130

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

ﬁnancial expertise, experience in HR and reward, and experience

as UK-based operating leaders within public limited companies.

We instructed Egon Zehnder International Ltd to carry out a search

for new Non-Executive Directors. Upon their 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, this was followed

up by individual meetings 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 consideration of the level of time required for other

appointments, in making recommendations to the Board.

Egon Zehnder International Ltd is an independent executive

searchﬁrm which 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. They do not have any connection to or provide

anyother services to the company or its individual Directors.

We are delighted that Alan Stewart joined the Board as a

Non-Executive Director and member of the Remuneration

Committee in February 2022. Alan will become Chair of the

Remuneration Committee and a member of the Nomination

Committee at the conclusion of the 2022 AGM. 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. The Committee is conﬁdent that with Alan’s

experience, he will be a great contribution to the Board.

Furthermore, Sara Mathew signalled her intention not to stand for

re-election but to resign from the Board and Audit Committee

upon the conclusion of the company’s 2022 AGM. We would like

totake this opportunity to thank Sara for her services since joining

the company. Taking into consideration the composition of the

Audit Committee, in October 2021, Elane Stock stepped down as

amember of the Remuneration Committee and was appointed as

a member of the Audit Committee. In addition to this, in January

2022, we announced that Mary Harris would be stepping down

asChair of the Remuneration Committee and a member of the

Nomination Committee upon the conclusion of the 2022 AGM.

Marywill remain on the Remuneration Committee and as the

Designated Non-Executive Director for engagement with the

company’s workforce.

Going forward, the main priority for the Committee in 2022

willbeto continue to keep under review succession planning

ofalllong-standing Board members and key Board roles. The

Committee recognises that in sourcing new Non-Executive

Directors it should consider the skills and expertise that the

Boardrequires as highlighted in the Board performance review.

More information about the Committee performance review can

be found on page 132. The Board performance review can be

found on pages 126 to 127.

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.

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.

While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. With the establishment

of Global Business Solutions and our Global Business Units (GBUs),

the Committee focused on identifying and sourcing talent for the

GEC both internally and externally.

Building and maintaining a competitive, leading edge, IT and

Digitalcapabilities are key for Reckitt to be successful and agile.

Tolead us into this digital era, we appointed Filippo Catalano as

the Chief Information & Digitisation Ofﬁcer in April 2021. Filippo

hasextensive leadership experience in deﬁning and shaping the IT,

Digital Portfolios and Technology enabled new business models

across leading consumer goods organisations. Filippo’s experience

will contribute towards developing our digital backbone and

create innovative technological platforms that will support our

business growth.

In March 2021, we announced that Harold van den Broek would

beleaving Reckitt at the end of May 2021. We would like to thank

Harold for his outstanding contribution to the business over the

course of the last 7 years, most notably for his leadership in driving

the transformation of the Hygiene GBU during the most

challenging of times. We wish him well in his future endeavours.

Atthe same time, we announced that Volker Kuhn, Chief

Transformation Ofﬁcer, would assume the role of President

Hygiene in May 2021, following a smooth transition of

responsibilities from Harold. Volker has made a signiﬁcant impact

since joining Reckitt in August 2020, delivering major productivity

savings, establishing our new Global Business Solutions unit and

identifying further growth opportunities. Volkerhas a wealth of

experience across the fast-moving consumer goods industry

which makes him ideally suited for thisleadership role.

Nomination Committee Report (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

131

In June 2021, we announced that Aditya Sehgal, President of

Nutrition, eRB & Greater China would be leaving Reckitt at the

endof October 2021. We would like to thank Aditya for his many

contributions to the business and our people over the past

decades and wish him well for the future. Aditya had an extensive

27-year career at Reckitt and positively impacted its people and

the business across Hygiene, Health and Nutrition. Following his

resignation, his portfolio of responsibilities was re-organised within

senior management and the CEO assumed a more direct oversight

of the Nutrition, e-commerce, and Greater China teams.

To support the changes within the Nutrition business, Pat Sly,

whojoined Reckitt as part of the Mead Johnson Nutrition

acquisition in 2017, was appointed as Chief Operating Ofﬁcer,

Nutrition and member of the GEC in July 2021. 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. In his role as Chief Operating

Ofﬁcer, Nutrition, Pat leads the global Nutrition business which

includes Infant & Child Nutrition (IFCN), Specialty Nutrition, Maternal

Nutrition and Adult Nutrition. In February 2022, Pat was appointed

as President Nutrition.

Further changes to the GEC took place during the year. In

December 2021, we announced that Rupert Bondy, General

Counsel & Company Secretary would be leaving Reckitt at the

endof February 2022. We would like to thank Rupert for his

outstanding contribution to the business over the last 5 years.

Rupert has had been material in guiding the transition of the Board

Directors and helped the company navigate a number of business

critical legal and reputational issues. He has overseen the legal and

contractual aspects of major acquisitions and disposals such as

sale of IFCN in China. In February 2022, Catheryn (Cathy) O’Rourke

joined the company and the GEC as the General Counsel &

Company Secretary following Rupert’s resignation. 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.

More information about our current GEC membership can be found

on pages 114 to 116.

Review of Committee terms of reference

The terms of reference for the Committee are reviewed on an

annual basis. During the November Committee meetings, we

reviewed our terms of reference in line with best market practice

guidance, the Code and the model terms of reference for

Nomination Committees issued by the Chartered Governance

Institute. 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, the 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 of 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.

In October 2021, Laxman Narasimhan stepped down as member of

the Nomination Committee given that he is an Executive Director,

however he continues to attend Committee meetings to provide

input as appropriate.

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’ and to our employee value

proposition of Freedom to Succeed – there is no freedom without

inclusion and no success without diversity. We recognise that it

iscritical for us to have a diverse employee population and also

aBoard and senior management team that is reﬂective of the

markets we operate in and the consumers we serve.

132

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 of six nationalities, and ﬁve women,

two of whom are Committee Chairs. This includes Mary Harris,

whois Chair of the Remuneration Committee and the Designated

Non-Executive Director for engagement with the company’s

workforce, and Pam Kirby who is Chair of the CRSEC Committee.

Iam pleased to report that as at 31 December 2021, 41% 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 three members from ethnic minorities, which

exceeds the Parker Review recommendation, Beyond One by ’21,

which is to have at least one person from an ethnic minority on

theBoard.

Reckitt

41%

Davies Review Target

33%

HamptonAlexander Review Target

25%

Percentage of women Board members

Our GEC, comprising of the most senior management level in the

business, represents 7 different nationalities from across the globe,

embodying our corporate inclusion and diversity policy. Our GEC

also consists of three members from ethnic minority backgrounds.

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 2021, female

representation within the GEC (and their direct reports) was 26%.

Whilst progress has been made, we are cognisant of the gap in

performance towards the 33% for female leadership within the

GEC and their direct reports as detailed in the Hampton-Alexander

Review (and in provision 23 of the Code) and we are working to

improve gender balance at all management levels. We recognise

that female representation at our most senior levels needs

improvement and the Committee continues to make a

commitment to increase female representation at this level. We

were delighted that in February 2022, Cathy O’Rourke joined the

company and the GEC as General Counsel & Company Secretary.

As at 31 December 2021, female employees accounted for 44%

ofour global workforce.

Our Group diversity policy can be found at www.reckitt.com/

sustainability/policies-and-reports. 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 inclusion and diversity at the core of everything

we do. Further details can be found in our stakeholder

engagement section from page 50.

Performance review

Committee performance review

This year, the Committee participated in the main Board

performance review conducted by Lintstock Ltd, appointed

tofacilitate a three-year Board Development Programme.

Respondents in the Committee questionnaire scored the

Committee highly in key areas, speciﬁcally noting the composition

of the Board was effective, balanced and diverse. The main area

offocus relevant to the Committee, identiﬁed as a result of the

performance review, is to continue to identify additional skills

required for the Board in areas that may be lacking such as digital

expertise and experience in emerging markets. Another area of

focus is to ensure succession planning remains a high priority for

key Board roles over a longer-term horizon and improving the

Board’s oversight of the company’s processes for managing and

developing talent. The Board performance review is discussed in

further detail on pages 126 to 127. Lintstock is independent of and

has no other links with the company or its Directors in connection

with the performance review.

Nomination Committee Report (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

133

AUDIT COMMITTEE

REPORT

On behalf of the Board, I am pleased to present the

AuditCommittee Report for the ﬁnancial year ended

31 December 2021.

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 2022

• Maintaining oversight and providing reassurance 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, tax, and legal and compliance

• Sustaining a strong culture of risk management across the Group

• Taking a proactive approach in preparing for legislative and regulatory changes which

may be required to internal controls and reporting, arising from the Department for

Business, Energy & Industrial Strategy (BEIS) consultation

• Continuing to holistically monitor legislative and regulatory changes which may affect

the work of the Committee

“The Committee plays a

keyrole in the governance

of the Group’s ﬁnancial

reporting, risk management,

internal controls, and the

external audit. Maintaining

robust internal controls

remained a key focus for

theCommittee, particularly

in light of the impact

ofCOVID-19.”

Andrew Bonﬁeld

Chair of the Audit Committee

134

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 large 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 auditing 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 above.

Committee appointments are generally made for a three-year

period. Members of the Committee are appointed by the Board on

the recommendation 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 Group Secretariat acted as Secretary

to the Committee.

Meetings

During 2021, the Committee held six meetings at times aligned to

the company’s reporting cycle. Of the six meetings held during the

year, ﬁve were held via videoconference, as permitted by the

company’s Articles of Association and the Committee’s terms of

reference, owing to COVID-19-related restrictions. Committee

meetings usually take place ahead of Board meetings and the

Committee membership

Composition Member from Meetings attended

Recent and relevant ﬁnancial

experience

Sectoral experience relevant

to Reckitt’s operations

Andrew Bonﬁeld (Chair)

July 2018 5 of 6 • 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

• Consumer goods

• Pharmaceuticals/healthcare

Pam Kirby

March 2016 5 of 6 • Sits on another FTSE 100

company’s Audit Committee

• Pharmaceuticals/healthcare

• Technology

Sara Mathew July 2019

6 of 6 • Financial expert

• Holds Master’s degrees in

Finance and Accounting

• Has held senior ﬁnance

rolesand CFO roles at other

large companies

• Consumer goods

• Pharmaceuticals/healthcare

Margherita Della Valle

July 2020 5 of 6 • Financial expert

• Currently 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

• Consumer goods

• Technology

Elane Stock

25 October 2021 1 of 1 • Holds Master’s degrees

inFinance

• Consumer goods

• Emerging markets

1. There were six (four scheduled and two additional) Committee meetings (ﬁve of which were held by videoconference owing to COVID-19) during the year

2. Andrew was unable to attend one meeting owing to a prior commitment

3. Pam was unable to attend one meeting due to a scheduling conﬂict with the CRSEC Committee, of which she is Chair

4. Margherita was unable to attend one meeting owing to a prior commitment

5. Elane was eligible to attend one of the scheduled meetings during the year, having been appointed on 25 October 2021

Audit Committee Report (Continued)

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Financial StatementsGovernanceStrategic Report

135

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

minutes of the previous meeting(s).

Meetings are attended by senior representatives of the External

Auditor, and by the Group Head of Internal 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 on page 134.

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

• Kept abreast of changes in ﬁnancial reporting and governance

matters by way of technical updates throughout the year

• Annual review of risk management and internal controls

including in-depth review of risks across Group functions, and

of integrated risk management framework

• Monitored the Group’s risk assessment processes

Other items considered by the Committee at meetings during

the year

• Review of the 2020 preliminary results announcement, draft

unaudited Financial Statements and recommendation for

approval by the Board

• Review of the 2020 Annual Report and Accounts, the going

concern basis of preparation and Viability Statement, including

whether the Committee could recommend that the Board

approve the 2020 Annual Report and Accounts

• KPMG’s 2020 audit ﬁndings report, observations on Reckitt’s

internal controls for the 2020 ﬁnancial year, management

representation letter and report on the 2020 Annual Report

andAccounts

• KPMG’s ﬁnal non-audit fees for 2020 and approval of KPMG’s

2021 audit fees

• Review of the 2021 half-year results announcement, including

the going concern basis of preparation, and recommendation

for approval by the Board

• KPMG’s half-year review report ﬁndings to 30 June 2021 and

management representation letter

• KPMG’s assessment of its objectivity and independence

• KPMG’s strategy for the 2021 audit

• KPMG’s interim IT control ﬁndings relating to the 2021 audit

cycle and audit strategy update

• Work undertaken in respect of the 2020 internal audit plan and

monitoring of the 2021 internal audit plan

• Annual review of IT general controls, cyber security and

IToperations

• Internal controls, maturity assessment and controls

transformation roadmap

• Review of the company’s ‘ﬁnance for the future’ transformation

• Review of the Committee’s 2022 standing agenda and terms

ofreference

• Results of the performance reviews of the Committee,

theinternal audit function and external audit

• Annual tax function deep dive

• Annual review and approval of Group Treasury policies

Signiﬁcant and key ﬁnancial reporting matters

The key matters reviewed and evaluated by the Committee during

the year were as follows.

Accounting and ﬁnancial reporting

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 2021 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 on page 210,

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 signiﬁcant ﬁnancial judgements in relation to the 2021 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.

136

Audit Committee Report (Continued)

Boardroom, Global

Headquarters,

Turner House,

Slough, UK

At 31 December 2021 management determined that the Group’s

goodwill and indeﬁnite-lived intangible assets remained

recoverable and no impairment charges were required

(2020:impairment charge of £985 million).

The cash-generating unit for which headroom is most limited,

other than Biofreeze which was acquired and recorded at fair

value during the year, is Infant Formula and Child Nutrition (IFCN).

Accordingly, management has included disclosures in the

FinancialStatements in relation to its IFCN impairment assessment,

the key estimates underpinning the IFCN recoverable amount

andthe sensitivity of the IFCN recoverable amount to reasonable

changes in key assumptions. The Committee has reviewed

thesedisclosures, included within Note 1, and considers

themappropriate.

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 the approach of the local authorities is

particularly difﬁcult to predict. The level of provisioning for these

investigations is an area where management and tax judgement

are important. The Committee debated the key judgements made

with management, including relevant professional advice that may

have been received in each case, and considers the level of tax

provisions recognised and the associated disclosures to be

appropriate.

Trade spend accruals

Trade spend remains a signiﬁcant cost for the Group, and the main

judgements relate to trade accruals, speciﬁcally the timing of

recognition and the amount of accruals for trade spend. In 2021,

the Committee reviewed the accuracy and utilisation of trade

spend accruals recorded in the 31 December 2020 ﬁnancial

statements, given the increased uncertainty and judgement

inestimation of these accruals due to the COVID-19 pandemic.

TheCommittee focused on the level of trade spend accruals

atthe year end to ensure they are sufﬁcient and appropriate.

Legal liability provisioning

At 31 December 2021, a provision of £180 million (2020: £232

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. 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.

Acquisition of Biofreeze

The purchase price allocation exercise following the acquisition of

Biofreeze involved signiﬁcant judgement to determine the split of

the purchase price between brand intangible assets and goodwill.

Management engaged external valuation experts to support

theallocation exercise. The Committee reviewed the work

performed by management and the external experts, challenged

the judgements underpinning the valuation, and considers the

allocation of the purchase price between intangible assets and

goodwill to be appropriate.

Other key ﬁnancial reporting matters

Other key matters reviewed and evaluated in relation to the

2021Group Financial Statements considered by the Committee,

together with a summary of the actions taken, were as follows.

Loss in relation to the Nutrition strategic review

The determination of the loss on disposal of IFCN China following

the strategic review involved judgement to allocate intangible

assets, including the IFCN brands and goodwill that arose on

theacquisition of Mead Johnson Nutrition, to the disposal group.

The calculation of the loss on disposal was reviewed during the

year by the Committee to assess the calculation, particularly in the

context of the allocation of intangible assets. The Committee also

reviewed the disclosure of the net assets disposed and the loss

ondisposal, and was satisﬁed that the loss was calculated and

disclosed appropriately.

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 103. The use of a

ﬁve year period for the viability review was approved by the Board

in 2021 as it is the period of the Group’s long-term forecasting

process and covers the various business cycles.

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

137

Fair, balanced and understandable

The Committee reviewed the 2021 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 2021 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 2021 Annual Report and Financial Statements,

taken as a whole, met its objectives and accordingly we

recommended to the Board that the 2021 Annual Report and

Financial Statements be approved and we supported the Board

inmaking its statement on page 192.

Financial Reporting Council correspondence

During 2021, the company received two letters from the Financial

Reporting Council (FRC) in relation to its thematic review of

APMs contained in the company’s 2020 Annual Report and Financial

Statements. The ﬁrst letter outlined that certain areas of the

disclosure on APMs were an example of better practice. The second

letter provided suggestions to improve the current APM disclosures,

which have been incorporated into this Annual Report. The FRC

didnot raise any formal comments which required a response

fromthe company. The nature of the FRC review is that it provides

no assurance that the annual report and accounts are correct in

allmaterial respects. The FRC’s role is not to verify the information

but is to consider compliance with reporting requirements.

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. Following a routine second line of defence review, an

investigation was commissioned by management to assess

evidence supporting the creation, utilisation and release of certain

operational expenditure and trade investment accruals within the

Hygiene GBU. Although the investigation did not identify any

material misstatement in relation to the years ended 2020 and

2021, certain remediation actions are being undertaken by

management to improve the control processes regarding accruals

and provisions.

There were no signiﬁcant failings or weaknesses during the year

meriting disclosure in this report. Reckitt’s ongoing controls

transformation program in preparation for internal controls

changes arising from the BEIS consultation, together with the

above mentioned investigation, has identiﬁed certain control

improvement opportunities that management is currently

undertaking. The Committee reported tothe Board in February

2022 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 120). 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 210 under Accounting policies.

The company’s External Auditor’s report, setting out its work and

reporting responsibilities, can be found on pages 193 to 204. 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 88 to 102.

The Viability Statement can be found on page 103.

The Statement of Directors’ Responsibilities on page 192 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. A new Group Head of Audit was

appointed on 1 September 2021 with objectives that are designed

to develop the function in line with the strategy of the Business.

138

Audit Committee Report (Continued)

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.

It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, as well as establishing

the 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 of

over 150 system-agnostic controls across key ﬁnancial processes.

Corporate control is responsible for reporting and monitoring

of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. The Committee receives a report at each

meeting summarising any notable controls activity since the

previous meeting.

Internal audit

The Committee is responsible for reviewing and monitoring the

effectiveness of the internal audit function. The Group Head of

Internal 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 Internal Audit and the internal audit function is

considered as part of the annual internal audit effectiveness review.

Further details can be found on page140.

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.

Due to the COVID-19 pandemic, the internal audit approach

andplan for 2021 continued through a series of ‘operational

resilience reviews’, focusing on priority areas of the business.

In2021 routine internal audit work delivered audits which

covered31% (by net revenue) of Reckitt’s global commercial

business and 39% (by industrial sales) of global manufacturing

facilities. 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. There are no

current plans to commence an external audit tender. The company

will be required to conduct its next external audit tender no later

than 2027. For the year ended 31 December 2021, 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, Richard Broadbelt, has completed his fourth year as lead

audit partner. A new lead audit partner, Andrew Bradshaw, will

begin in 2022 following a transition period with Richard Broadbelt

in the 2021 audit cycle, before leading the audit for the year ended

31 December 2022.

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

139

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

• Report on audit ﬁndings in relation to the IFCN

impairmentassessment

• Review of going concern and the Viability Statement

• Draft audit opinion

• Draft management representation letters

• Draft engagement letter

• Review of KPMG’s 2021 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 more timely and 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 2021 were £16.5

million, of which £0.6 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 2021, non-audit and audit-related fees were

3.8% of the audit fees. Details of services provided by the External

Auditor are set out in Note 4 on page 218.

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 2021, KPMG identiﬁed its

own safeguards in place to protect its independence and

conﬁrmed its independence in February 2022 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. In the opinion of

the Committee, the relationship with the External Auditor works

well; 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 2022 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 2022. 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 20 May 2022.

KPMG had no connection with any 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. Lintstock Ltd is independent of and has no

connections to the company.

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 particularly positive

feedback given on the Committee’s composition, the

management of Committee meetings, Committee processes and

support, the Committee’s assessment of the work of the internal

audit function; and its relationships with the Group Head of Internal

Audit and the CFO. It was noted that a greater focus on risk

appetite and structured deep dives including KPIs tracking and

external benchmarking would be helpful in the coming year. It was

also noted that there would be value in GBU CFOs attending the

Committee meetings periodically.

The Board, having had sight of the results of the Committee’s

performance review, considers the Committee to be

operatingeffectively.

140

Audit Committee Report (Continued)

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

internal audit function to use this ‘risk intelligence’ to move towards

a risk-based approach and broader range of strategic and

operational audits.

The independence of the Group Head of Internal 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May 2021. 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 sample size of respondents was

increased to include markets and entities not in Group scope but

instatutory scope, to ensure coverage globally of a signiﬁcant

number of entities. The survey covered the four competency

areasin the FRC’s Guidance on Audit Quality, Practice aid for Audit

Committees (published in December 2019) (Guidance): judgement;

quality control; skills and knowledge; and mindset and culture.

The Committee reviewed the results of the FRC’s Audit Quality

Review of KPMG’s audit of the ﬁnancial statements of Reckitt

Benckiser Group plc for the year ended 31 December 2020 at its

meeting in November 2021. The scope of the review included the

audit of signiﬁcant risk areas, oversight of the work of component

auditors and communications with the Committee. No areas for

improvement were noted in the report and three areas of good

practice were highlighted, including the audit of the IFCN

impairment assessment, the audit team’s oversight and involvement

with component auditors and the involvement of the Engagement

Quality Control Reviewer. The Committee was satisﬁed with the

outcome which was rated ‘good’, being the highest potential rating

awarded by the FRC, with no key ﬁndings noted.

Overall the Committee is satisﬁed with the effectiveness,

expertise, quality, review, and in particular, professional scepticism

and challenge from the External Auditor and believes that KPMG

remains best placed to conduct a high-quality audit of the Group

for the 2022 ﬁnancial year.

Andrew Bonﬁeld

Chair of the Audit Committee

Reckitt Benckiser Group plc

13 April 2022

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

141

CORPORATE

RESPONSIBILITY,

SUSTAINABILITY,

ETHICS AND

COMPLIANCE

COMMITTEE REPORT

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 2021.

This report details how the Committee has discharged its role and responsibilities during

the year under review 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.

Committee priorities for 2022

• 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 its 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, including the impact of COVID-19 and any associated risks to the Group

• Continued focus on delivering the safety, quality, and compliance agenda

“Our dedication to good

governance ensures that

ourleaders operate with

integrity and compassion.

Anethical business is

astrong and resilient

business, which is evident

inour results.”

Pam Kirby

Chair of the Corporate

Responsibility, Sustainability, Ethics

and Compliance Committee

142

Committee membership

The members of the Committee during the year were:

Member from Meetings attended

Pam Kirby (Chair) Chair and member of the Committee for the whole year 4 of 4

Nicandro Durante Member for the whole year

4 of 4

Mehmood Khan Member for the whole year

4 of 4

Chris Sinclair Member for the whole year

4 of 4

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 as a

whole 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 Head of Group

Secretariat acted as Secretary to the Committee.

Meetings

The Committee is expected to meet at least three times per year.

In 2021, the Committee held four meetings, three of which were

held virtually due to COVID-19. 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, Head of Group

Compliance, Head of Corporate Affairs & Chief Sustainability

Ofﬁcer, Head of External Communications and Affairs, Global

Director of Sustainability, Environment and Human Rights, Chief

Safety Ofﬁcer, and Global Head of Regulatory 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, Head of Group Compliance,

Head of Corporate Affairs & Chief Sustainability Ofﬁcer and

GroupHead of Audit without other invitees being present, as

wellas a private meeting of the Committee members. Copies of

Committee papers are provided to all Board Directors in advance

of each meeting and minutes of each Committee meeting are

provided to the Board.

In addition to reviewing matters at our Committee meetings, the

Committee Chair held regular meetings with our CEO, Chief R&D

Ofﬁcer, Head of Corporate Affairs & Chief Sustainability Ofﬁcer,

and the Chief Ethics & 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.

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 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.

Activity during the year

Standing agenda items reviewed by the Committee throughout

the year

The Committee has a number of standing agenda items which

itconsiders in line with its terms of reference:

• Reviewing the constitution, terms of reference and

performance of the Committee

• Assessment, benchmarking and 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 compliance

with the company’s Speak Up Policy and review of reports

• In conjunction with the Audit Committee, 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 and the effectiveness of anti-money laundering

systems and controls

• Monitoring and reviewing processes for risk assessment for

corporate responsibility, sustainability, and compliance and

ethical conduct

• 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

• 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 to it

Corporate Responsibility, Sustainability, Ethics and Compliance Committee Report

(Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

143

Speciﬁc matters which were considered by the Committee at

its meetings during the year are shown below:

• Product safety evaluation, product integrity review and product

lifecycle management

• Supply chain quality performance

• Corporate employee health and safety

• Regulatory matters review and remediation programmes

• 2021 compliance and ethics priorities

• Ethics and compliance maturity evolution and communication plan

• Ethics and compliance scorecard

• Corporate security

• Annual compliance training

• Corporate policies

• Employee pulse survey – ‘Doing the right thing, always’

• Data privacy: Brexit and data incidents reported

• Third-party due diligence

• External affairs

• Fight for Access Fund

• IFCN progress, including position on sugars

• IFCN update – breast-milk substitute call to action

• Sustainability matters and target tracking

• Building on COP26 momentum on sustainability

• COVID-19 impact and related matters

Some of the key achievements in the reporting period follow.

Sustainability

2021 was a signiﬁcant year in our environmental social and

governance (ESG) and sustainability agenda. At the end of 2020, we

measured our performance against our initial sustainability targets,

achieving 2020 environmental goals on carbon and water in

manufacturing and improving our social impact, but also recognising

the need to strengthen our focus on product sustainability

throughout our value chain. External scrutiny of packaging and

plastics continued alongside greater recognition of the importance

of biodiversity and reafﬁrmation of the signiﬁcance of climate action

both for business and society. Our work up to 2021 built strong

foundations in these areas, most notably through our work on

plastics and our science-based targets approach on climate change

with ambitions to reach net zero. Together with a greater emphasis

on sustainable product formulation and even wider social impact

within both our business and value chain, these formed the basis of

our Sustainability Ambitions for 2030 which we launched in March

2021. Our ambition to reach half the world with products that enable

a cleaner, healthier world, while engaging two billion people through

our purpose-led brands, programmes and campaigns will help us

deliver lasting societal impact through a stronger business. In

delivering our speciﬁc ambitions on sustainable products, climate

action, inclusion and human rights we help deliver the United Nation’s

Sustainable Development Goals (SDGs) and our own ambitions for

ahealthier planet and fairer society. Our latest materiality review

reafﬁrms that we are focused on the issues that matter most – for

our business, for wider society and for our stakeholders. This was

conﬁrmed during 2021 as we communicated our Sustainability

Ambitions widely, and built new partnerships with stakeholders,

especially customers and governments, to help deliver them.

The United Nations COP26 conference was a great demonstration

of this and of our wider ESG and sustainability approach. As the

ofﬁcial hygiene partner at COP26, we helped deliver a safe

conference that furthered climate action. We also drew attention

to the increasingly obvious connection between climate change

and public health. This needs concerted cross-sectoral action

toprotect people’s health around the world, and Reckitt is well

placed to drive and support that action. Our purpose-led brands’

activity on health literacy and preventative health and hygiene

measures help address exactly that. At the same time, through our

brands and the sustainable products we design, we help tackle

climate change when people use our products every day, by

saving energy and water. Again, at COP26, we drew attention

tohow brands and business can connect with consumers

everywhere to promote this and create subtle but important

changes in behaviour that help address societal issues.

COP26 also saw our announcement of new programmes on

ecosystems and biodiversity. The opportunities and risks within

ecosystems, for a variety of issues such as climate change,

resource resilience or even new health solutions, are increasingly

visible. Stakeholders including governments, consumers and

investors recognise this within their support for stronger policy

frameworks and reporting activity through nature-related ﬁnancial

risk reporting. Our new partnership with the University of Oxford

Nature Based Insetting team is helping us assess ecosystem

impacts and then build measurable interventions to reduce risk

and strengthen ecosystems for the future. It complements our

partnership with the University of Cambridge‘s Centre for Risk

Studies on climate change.

Reckitt’s stand at

COP26, Glasgow, UK

144

We have continued to progress on climate change by further

reducing carbon and greenhouse gases through increased use of

renewable electricity and energy efﬁciency. There has been similar

progress on water, with increased efﬁciency in manufacturing

alongside the development of water harvesting and catchment

area management. Collectively, these have enabled our ﬁrst

netwater-neutral site, at Hosur in India. Our increased focus

onsustainable products is led by ongoing development of our

Sustainable Innovation Calculator which is now used in each Global

Business Unit’s product development innovation programme. It

helps measure carbon, water, chemical and packaging footprints in

new products for our global brands, targeting their reduction to

enable more sustainable products in the future.

2021 also saw Reckitt strengthen its sustainable sourcing activity

with a focus on key ingredients including palm oil and latex.

Wehave reafﬁrmed our commitment to only using certiﬁed

sustainable palm oil. This is enabled by roadmaps with our

suppliers together with our collaboration with other Consumer

Goods Forum members and our own partner, Earthworm

Foundation, on landscape programmes. We began the certiﬁcation

of latex through the Fair Rubber Association (FRA). We are working

with plantations in Malaysia and smallholder farmers in Thailand to

certify latex production, strengthen agronomy, protect ecosystems

and support sustainable livelihoods and communities to safeguard

them and latex production for the future.

Our ESG and sustainability agenda was a continuing element of this

Committee’s work, but also supported wider Board engagement.

Listening Sessions on infant nutrition and ecosystems supported

our oversight of the business’s strategy and approach, bringing

external expert perspective to the attention of Board members.

Safety, quality, regulatory and compliance

At the start of the year, the Consumer Safety and Regulatory

functions were aligned under our Chief R&D Ofﬁcer, which has

delivered further continuity across the innovation and product

lifecycle management, enabling greater effectiveness and

efﬁciency. Quality, Employee Health and Safety and Quality

Compliance functions are aligned under the Chief Supply

Ofﬁcer,which has delivered further continuity around critical

manufacturing and logistics processes and the necessary product

quality requirements.

R&D

• Ingredients: Science platforms delivering new innovative

solutions in areas of packaging and science of sustainability –

e.g. Gaviscon coatings replacing outside plastic sleeve, Finish

packaging recycled content, fundamentals of polymer science

leading to upgraded shelf life performance, PU condom launch

and optimisation of material usage and manufacturing yields to

reduce waste

• Product Lifecycle Management (PLM): The PLM system is now

deployed across a number of sites and global functions with

focus on data governance and platforms required to ensure

efﬁcient data ﬂow and compliance. Continued learnings from

deployment are being applied to the programme approach

moving forward

• Animal testing for product safety: A new ‘Alternatives to

Animal Testing’ corporate policy was developed, emphasising

Reckitt’s commitment to minimising animal testing and using

alternatives where possible. Consumer safety is our number

one priority, and Reckitt must comply with the regulations

where our products are marketed. This may on limited

occasions require animal studies to support the safety or

efﬁcacy of certain ingredients and/or products, when no

scientiﬁcally validated alternative test is available. It is our policy

not to conduct or commission tests unless scientiﬁcally justiﬁed

or required by government or scientiﬁc agencies. This same

policy is applied to our suppliers and third parties. Reckitt does

not test cosmetic products or any of its ingredients on animals

and supports a worldwide ban to end cosmetic product testing

on animals. Reckitt is committed to eliminating animal testing of

our products as far as possible, applying the principles of ‘3Rs’

(Reduce, Reﬁne and Replace). Reckitt does not conduct animal

testing on cosmetic ingredients or raw materials for the

purposes of safety assessment, nor do we request our

suppliers to do this. In cases where animal testing is required,

we ensure that we use accredited and certiﬁed third-party

laboratories. Reckitt has no animal testing research facilities and

does not conduct in-house animal research. We do not request

third-party suppliers to conduct testing on our behalf. As part

of our commitment to ending animal testing, we are continuing

to collaborate with the scientiﬁc community and a number of

trade association partners to accelerate the development of

alternative approaches and methodologies, while ensuring

consumer safety and delivering product efﬁcacy

Product integrity review: Completion of a 4.5-year programme to

review the safety and compliance of Reckitt’s portfolio in response

to the Humidiﬁer Sanitiser (HS) tragedy. At peak a workforce of

90dedicated cross-functional scientists reviewed over 21,000

stock-keeping units (SKUs) across 173 markets, manufactured at

over 280 locations. A comprehensive review of the company’s

response to the HS tragedy was also conducted. It found that

Reckitt’s product safety systems and processes had been

appropriately remediated since 2016.

• Brexit: Required changes have been implemented with

updated and adapted items such as testing protocols, to ensure

execution and no loss of business continuity

• Regulatory matters: The Committee continued to monitor

regulatory issues in many jurisdictions and the business’s

readiness to adapt. A new Public Policy & Advocacy Group of

cross-functional experts has been established to strengthen

this capability and ensure continued and long-term focus on

Reckitt’s policy priorities

• Our overall approach to CRSEC activities has moved to

continuous improvement, with a more effective topical

approach, as evidenced by the survey conducted in Q3

• COVID-19: Our focus continued to enable science support for

our products and consumer knowledge, drawing on medical

insight and product knowledge as new variants emerged

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 & Audit Management. Progress continues on both

leading and lagging indicators across business units

• EH&S: enhanced programmes at factories; robust COVID-19

protocols and a strong performance maintained despite

COVID-19 related disruptions; and strong progress on

assetprotection

• Transformation in Consumer Relations is reaching its conclusion

in Q1 2022 and will bring us data from our consumers to

driveimprovements

Corporate Responsibility, Sustainability, Ethics and Compliance Committee Report

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145

Legal and compliance

• Culture of Integrity: Following the publication of Reckitt’s new

Compass and Code of Conduct in 2020, helping us ensure that

every employee has a clear understanding of the behaviours

we want to adopt and of the principles and values which we

uphold, in 2021 Reckitt rolled out a survey to measure the

‘Culture of Integrity’ within the organisation. This was done

through a company-wide ‘Doing the Right Thing, Always’ pulse

survey in Q2 2021. The survey obtained 19,498 responses, with

rich feedback provided

On the back of employees’ feedback on their feeling of

empowerment to ‘Do the Right Thing, Always’, Reckitt devised

a detailed action plan and put robust measures in place to

continuously enhance its Culture of Integrity. As an example

ofthe actions taken, the Company:

i. Continued the roll-out of the Honest Reﬂections on Ethics

training sessions, aimed at equipping employees with a

better understanding of the trade-offs involved in taking

risks and ‘getting the job done’ as opposed to making

ethical business decisions and ‘Doing the Right Thing,

Always’. To date, the ethics and compliance teams have

deployed the Honest Reﬂections on Ethics campaign to

thousands of employees worldwide and – in particular – to

those operating in high-risk countries and covering positions

with signiﬁcant decision-making inﬂuence, such as general

management and commercial functions.

ii. Expanded the scope of the annual mandatory compliance

training to cover also the topic of human rights. Reckitt’s

mandatory training curriculum now spans from the Code of

Conduct to product safety, from human rights to privacy and

cyber security, from anti-bribery & corruption to competition

law. In 2021, over 94% of the employee base completed the

annual mandatory compliance training.

iii. Developed and rolled out role-speciﬁc training to high-risk

functions and jurisdictions on matters such as data privacy,

competition law and corporate security.

• Speak Up: 2021 was an opportunity to continue raising

awareness of the conﬁdential Speak Up service, available

toemployees and third parties to ask questions and raise

concerns on potential violations of regulations, internal policies

or any misconduct observed at Reckitt

Increased awareness of the Speak Up service, both internally

and externally, and availability of the Speak Up hotline externally,

led to a substantial increase in the volume of Speak Up cases

received in 2021. To ensure the increase in cases were managed

and investigated in a timely manner, in-depth Speak Up

investigation training was delivered to individuals responsible

forleading investigations, from ethics & compliance or other

relevant functions.

By the end of 2021, Reckitt had received 606 Speak Up reports.

Most cases were investigated and closed, and some are still

under investigation. 49% of Speak Up reports were considered

to be substantiated or partially substantiated during 2021.

Further to the above, Reckitt also took action to strengthen the

level of maturity of the controls relating to its top three areas of

risk exposure: data privacy, third-party non-compliances, and

bribery and corruption. Further information on actions taken

over 2021 is reported below.

• Data privacy: In 2020, the Group Privacy Ofﬁce (under the

leadership of our Group Data Protection Ofﬁcer) embarked

onthe implementation of a long-term risk improvement

programme aimed at advancing Reckitt’s privacy practices

andaligning Reckitt’s residual risk exposure with its appetite.

As part of the ongoing implementation of its improvement

programme, in 2021 the Group Privacy Ofﬁce completed

anumber of workstreams, such as:

i. Strategy: Reckitt’s Improvement Programme Roadmap was

baselined, shared with several jurisdictions and localised to

allow each market to include further targeted actions to

meet local laws and regulations.

ii. Governance: a ‘Ways of Working’ manual outlining the

roleofthe Group Privacy Ofﬁce, Heads of Privacy, Privacy

Counsels and of selected functions with respect to

theimplementation of the privacy programme and to

business-as-usual data-handling practices was created

andsupplemented through documented job descriptions

for stated stakeholders.

iii. Training: data privacy training was delivered to Reckitt’s

employee base; in addition, employees in high-risk functions

and jurisdictions were also assigned additional role-speciﬁc

training which, over the course of 2021, has been completed

by 10,439 employees.

• Third-party non-compliances: Over 2021, Reckitt also

strengthened its third-party risk management practices and

reafﬁrmed its ability to assess third parties before entering into

a business relationship with them

In March 2021, Reckitt rolled out its enhanced third-party due

diligence process with some of its highest-risk operating sites.

Thenew process tailors the thoroughness of due diligence

assessments to each third party’s risk proﬁle, thus allowing Reckitt

to focus its attention on the areas where it matters the most and

thoroughly investigate the third parties which pose a high inherent

risk to our organisation. Following the roll-out to high-risk sites

inMarch 2021, the new due diligence process is being integrated

with the workﬂows and systems in place to enable third-party

creation and contract negotiation. The integrated due diligence

process is due to be launched across the rest of the organisation

inQ1 2022. This year, 13,505 third parties have been assessed via

the due diligence process.

We recognise that, whilst the execution of third-party due

diligence assessments is important, it is only one of the

components of an effective third-party risk management

programme. As such, in 2021 Reckitt also:

i. Developed guidelines setting out the most typical red ﬂags

which may be identiﬁed in the course of a due diligence

assessment, and practical ways to resolve them.

146

ii. Strengthened Reckitt’s third-party risk management toolkit

through the development of i) Third-party training to ensure

our business partners understand Reckitt’s expectations

ofthem and can familiarise themselves with practical

dosand don’ts; ii) Supplementary material which may be

distributed to third parties needing to strengthen their

compliance position.

iii. Devised ways to continuously monitor changes in

thirdparties’ criticality, and risk proﬁle through the

implementation of a robust assurance mechanism.

• Anti-bribery and corruption: To reinforce Reckitt’s

commitment to preventing any form of bribery and corruption,

between Q4 2020 and Q1 2021 Reckitt engaged Transparency

International (the leading anti-corruption NGO overseeing

anti-bribery and anti-corruption-related activities globally) to

carry out a benchmarking assessment on its Anti-Bribery and

Anti-Corruption programme against industry peers

The assessment found that Reckitt’s Anti-Bribery and Anti-

Corruption programme compares favourably against industry

peers with positive scores in important areas such as: senior

leaders’ commitment, monitoring risks, managing high-risk areas

and providing adequate training on bribery and corruption risks.

Furthermore, as part of its ongoing efforts in countering bribery

and corruption, during 2021 Reckitt:

i. Updated its Anti-Bribery Policy, Conﬂicts of Interest Policy

and supporting Standard Operating Procedures.

ii. Updated its Third Party Code of Conduct and rolled it out to

its suite of third parties.

iii. Created new processes and channels via which third parties

can report conﬂicts of interest.

iv. Handled a total of 3,785 Conﬂicts of Interest Disclosures

throughout 2021.

v. Handled a total of 642 Gifts & Entertainment Disclosures

throughout 2021.

• Compliance monitoring capabilities: To measure the

effectiveness of its Ethics & Compliance programme, Reckitt

also advanced its compliance monitoring capabilities. Data

analytics techniques were leveraged wherever possible to

gather insights on Reckitt’s state of compliance against the

requirements of the company’s policies and procedures. When

instances suggesting that our practices deviate from policy

requirements are identiﬁed, the Ethics & Compliance team

investigates them and devises supporting risk-mitigation plans.

The risk metrics and performance data gathered through

Reckitt’s growing data analytics capabilities are also being used

to support the business in executing periodic assessment of its

compliance risk exposure year on year.

External affairs

Policy and advocacy

Board Listening Sessions

In 2021, the Board undertook two Listening Sessions with key

external stakeholders, in line with section 172 of the Companies Act

2006 (the Act). At these sessions we invited a broad spectrum of

external speakers representing diverse opinions ranging from:

NGOs to investors; governments to consumers and retail partners

to industry. The 2021 sessions were focused on: the Power of

Nutrition (26 May) and Nature-based Solutions (6 October). After

each Listening Session a summary of our external speakers’ insights

and recommendations were produced and shared with the Board.

In 2022, our Listening Sessions will include a deep dive on

‘Self-Care’, one of the four global problems our Reckitt business

strategy focuses on.

Wet wipes and single-use plastic (SUP)

We are engaging with the UK Government regarding the proposals

to ban problematic plastic items, in an effort to reduce the strain

on waste management systems. Our consultation involves

highlighting our progress made on eliminating plastic in wet wipes,

particularly in Dettol products.

Build Back Better Business Council

Reckitt’s CEO was appointed to the UK government’s Build Back

Better Business Council (BBBBC), which brought together

government and business leaders to drive economic recovery

andgrowth across the UK, enable the transition to a net-zero

economy by 2050 and promote ‘Global Britain’. The work of the

council focuses on the three priority pillars of skills, innovation

andinfrastructure.

Laxman Narasimhan has also been appointed as a member of the

Levelling Up Advisory Council and is chairing Opportunity Humber,

a private sector initiative to help drive the growth of the Humber

region and ensure it is delivering its full potential for the UK.

This spring Reckitt also launched the Oh Yes! Net Zero campaign

inHull. This is a Reckitt-created coalition in collaboration with

theUniversity of Hull, Hull City Council and over 30 companies

toachieve net zero in a region that has the UK’s largest Industrial

Cluster CO

emissions.

Greater transparency

Reckitt became one of the ﬁrst FTSE companies to go beyond UK

gender pay reporting requirements in 2020, increasing its scope to

ﬁve markets: China, India, Mexico, the UK and the US. In 2021, we

doubled (to ten) the number of markets covered by the report,

which represents almost 70% of our global Reckitt workforce.

In December 2021, we published our annual tax strategy, as

required by HMRC. Since 2016, it has been a legal requirement for

large UK companies to publish their tax strategies. Reckitt goes

over and above the legal requirements and includes voluntary

disclosures in the report.

In 2021, Reckitt was one of the 173 companies who took part in the

Workforce Disclosure Initiative (WDI), leading the way on

transparency around workforce issues. It represents the fourth

year Reckitt has submitted data to WDI.

Corporate Responsibility, Sustainability, Ethics and Compliance Committee Report

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147

In May 2021, Reckitt was ranked ﬁrst (out of nine breast-milk

substitute (BMS) manufacturers) in the ﬁrst ATNI Spotlight on

Lobbying Report.

Responsible business

Signiﬁcant progress on our sugar commitment

In October 2020, we outlined our speciﬁc commitments on sugar

for our Infant Formula and Child Nutrition (IFCN) portfolio, to be

implemented by March 2024. We have made signiﬁcant progress,

and as of November 2021, we were at 90% of our commitments,

with plans in place to meet our original target of full compliance

byMarch 2024.

ATNI and the BMS Marketing Index 2021

The Access to Nutrition Initiative (ATNI) undertook an independent

evaluation of our BMS Marketing Policy, internal systems, and

on-the ground marketing practices in the Philippines and Mexico.

This work was conducted in 2019/20, with the resulting report

published in May 2021. Reckitt improved its ranking from ﬁfth

(outof six BMS manufacturers) to fourth (out of nine BMS

manufacturers), and with a score of 32% (versus 10%), this

represents more than a three-fold increase compared to the ATNI

BMS Marketing Index in 2018. This signiﬁcant improvement is a

direct result of our BMS Marketing Policy, and our improved

transparency, disclosure and reporting on our BMS practices.

We published our response to the ATNI Marketing Index 2021 in

December. We engaged extensively with ATNI on the ﬁndings,

andas of January 2022, were the only company to date that

hadresponded.

FTSE4Good and independent veriﬁcations

Following our acquisition of Mead Johnson Nutrition in 2017,

weparticipated in the ﬁrst FTSE4Good veriﬁcation of our

BMSmarketing practices over 2019-2021. The assessment was

carried out at our corporate head ofﬁce, and in two countries,

thePhilippines and Mexico. Whilst the veriﬁcation reports

identiﬁed a number of areas for improvement, we are proud of

thesigniﬁcant progress we have made in our marketing practices,

four years post acquisition.

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), we are apprised on

progress and developments in the marketing of our BMS products.

We employ a number of monitoring activities, and have

summarised below the key items from 2021:

• We completed our reporting on the responsible marketing of

BMS: summarising alleged non-compliances of our BMS

marketing practices versus the BMS Marketing Policy and/or

local legislation for 2020. Similar reports are available for earlier

years, and we will publish the report for 2021 later this year.

• We undertake independent veriﬁcations of our IFCN marketing

practices in two countries each year. The reports for Thailand

and Colombia, as well as our response and corrective action

plan are available www.reckitt.com/sustainability/purpose-led-

brands/infant-and-child-nutrition/policies-and-progress-reports.

Reckitt Global Hygiene Institute

Reckitt provided a founding donation of $25 million to set up

theReckitt Global Hygiene Institute (RGHI) as an independent

US-based non-proﬁt 501(c)(3) foundation in mid-2020. RGHI’s

mission is to enable and accelerate hygiene science to improve

public health through better outcomes and behaviours. It is guided

by an external panel of globally recognised public health experts.

In 2021, RGHI initiated several research grants and held its ﬁrst

‘open call’ for three-year post-doctoral fellowships in hygiene,

awarding ﬁve of these from a large worldwide pool of applicants.

RGHI has attracted the support of several key organisations

including the World Bank, Chatham House, the Task Force for

Global Health and the UN’s Hand Hygiene for All, as well as a wide

network of academic institutions including Harvard, Emory and

Stanford universities and the Water Institute.

Committee performance review

Following the key outcomes of the 2020 performance review,

theCommittee reviewed its manner of Committee meeting

preparation so that more concise, focused pre-reads were

submitted to the Committee before meetings, and meetings

themselves focused on interactive discussion.

In 2021, a performance review of the Committee was conducted

as part of the Board’s external performance review, conducted

byLintstock Ltd. Lintstock Ltd is independent of and has no

connections to the company.

The performance review of the Committee utilised a bespoke

questionnaire, sent to Committee members. The 2021 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.The time and input in meetings and the facilitation of virtual

meetings were rated highly. The composition of the Committee

was also highlighted, with members having a good balance of

knowledge and appropriate capabilities. It was noted that the

Committee played an important role in monitoring Reckitt’s

conduct with regard to its corporate and societal obligations and

compliance with laws, regulations, codes of conduct and internal

policies and procedures. To continually improve Committee

performance in 2022, the value of incorporating focused deep

dives into agendas would be beneﬁcial. It was also recommended

that the Committee receive continual updates on ESG reporting

requirements and regulatory changes.

The Board, having had sight of the results of the Committee’s

evaluation, considers the Committee to be operating effectively.

Pam Kirby

Chair of the Corporate Responsibility, Sustainability, Ethics and

Compliance Committee

Reckitt Benckiser Group plc

13 April 2022

148

DIRECTORS’

REMUNERATION

REPORT

Contents of Directors’ Remuneration Report

148 Letter from the Chair

155 Reckitt’s remuneration at a glance

158 Remuneration Committee governance

160 Directors’ Remuneration Policy

168 Annual Report on Remuneration

182 Additional remuneration disclosures

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.

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 2021.

In line with the three-year lifecycle, a new Directors’ Remuneration Policy is being put

forward for a binding shareholder vote at our AGM on 20 May 2022. On the following pages,

I have shared the context for the key decisions the Committee took during 2021, in

particular the decisions we took in connection with the updated Directors’ Remuneration

Policy, how we rewarded performance achieved during the year in line with the current

shareholder-approved Policy, decisions relating to remuneration arrangements in 2022

should the new Policy be approved and the context of wider workforce remuneration.

In light of the Committee’s review of the Directors’ Remuneration Policy and how this is

cascaded to the wider workforce, I have met and corresponded with many of our largest

shareholders and shareholder advisory bodies over the past year to discuss Reckitt’s

remuneration philosophy and the proposed changes to the Policy for 2022. I am pleased

tosay that we have had the beneﬁt of substantive feedback from more than 50% of our

shareholder register and that the majority of shareholders providing input were supportive

of the changes we are making to our Remuneration Policy, to even further align with the

strategic priorities of the Group. On behalf of the Remuneration Committee, I would like to

thank shareholders and their advisory bodies for the time taken and their feedback, which

has provided valuable input and assisted the Committee in developing the proposals. In

particular, this proposed Policy strengthens the link between remuneration and Reckitt’s

strategic priorities, and provides further alignment with shareholders and our sustainability

ambitions through new performance measures in the Long Term Incentive Plan (LTIP).

“Central to our remuneration

philosophy are the principles

of pay for performance

andshareholder, as well

asstrategic, alignment.”

Mary Harris

Chair of the Remuneration

Committee

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

149

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. 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.

As noted in the Chair of the Board’s statement, our workforce

hasshown itself to be adaptable and highly effective in very

taxingconditions. I am incredibly proud of their resilience

andcommitment which have brought tangible improvements

toexecution across the Group. Our top leadership team has

integrated well and is making rapid inroads towards achieving

ourstrategic objectives, with the transformation ﬁrmly on track.

Our strategy seeks to drive a return to sustainable, mid-single-digit

revenue growth, with margins in the mid-20s by the mid-2020s

whilst ensuring return on capital is enhanced, in order to deliver

creation of value for shareholders. The repositioning of our

business towards higher growth is demonstrated in the

divestments of IFCN China, Scholl and E45 and the successful

acquisition of Biofreeze.

Sustainability is also a key strategic priority for Reckitt. In 2021

welaunched our sustainability ambitions, ‘For a Cleaner, Healthier

World’. They set out our 2030 ambitions and are backed by more

than £1 billion of planned investment over the next ten years to

ensure we meet our goals. As set out on page 16 of the Strategic

Report, our science-based targets support a 65% reduction in

operational greenhouse gas (GHG) emissions, and an increase

to50% of net revenue from more sustainable products by 2030.

We have been making tangible progress through the year and

aretherefore pleased that this has been recognised externally.

Forexample, we re-joined the Dow Jones Sustainability Index and

were also awarded a Gold Class 2022 Sustainability Award from

S&P Global. We have an improved MSCI ESG rating from A to AA,

and a Sustainalytics score at 22.9, positioning Reckitt in the top 15%

of our industry group. Our ambition, by 2030, is to reach half the

world with products that contribute to a cleaner, healthier world,

and engage two billion people in our programmes, partnerships

and campaigns to create a positive impact and support the UN

Sustainable Development Goals.

To reinforce our remuneration philosophy, the new Policy proposes

that the majority of the Executive Directors’ remuneration

packages continue to be made up of variable at-risk pay,

whichwillbe linked to stretching ﬁnancial and newly proposed

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.

Key proposed changes to the Remuneration Policy

andimplementation of the Policy for 2022

Our current Remuneration Policy was approved at the 2019 AGM.

Asigniﬁcant number of changes were made to the remuneration

framework at that time to ensure that the management team is

rewarded appropriately for delivering against our key strategic

priorities, to reﬂect the global nature of our business and to deliver

signiﬁcant beneﬁts for shareholders.

These changes included: i) a reduction in the maximum LTIP award

limits; ii) the introduction of bonus deferral, a holding period to

allLTIP awards, and a post-employment shareholding requirement;

iii) alignment of Executive Director pension arrangements to the

wider workforce; iv) expansion of malus and clawback terms; and

v) the introduction of additional performance measures of net

revenue and return on capital employed (ROCE) to LTIP awards.

In developing the new Policy over the past year, the Remuneration

Committee was mindful of the UK Corporate Governance Code,

engaged extensively with shareholders and their representatives,

and ensured that the Policy continues to incentivise delivery of

theGroup’s strategic priorities and creation of shareholder value.

The Committee also took into account the views of the Board,

management, employees and other key stakeholders on our

remuneration policies and practices across the Group, as well as

understanding market practice, both in the UK and amongst our

global peers.

Following this comprehensive review, the Committee has

concluded that the structure of remuneration under the current

Policy remains ﬁt for purpose and supports the strategy of the

Group to rejuvenate sustainable growth, as well as our principles

ofownership and pay for performance.

In particular, having reviewed and substantially changed the

remuneration structure as part of the last Policy review, the focus

of the proposed changes are on what we pay for. The Committee

is keen to ensure that the LTIP performance measures are aligned

with our forward-looking strategy to create shareholder value,

through the rejuvenation of sustainable growth, and therefore

isproposing the changes described below.

Changes to LTIP performance measures

The Committee is proposing to introduce Relative Total Shareholder

Return (TSR) as a measure under the LTIP to directly align executives

with the shareholder experience. In addition wepropose ESG

measures to align with our 2030 sustainability ambitions.

Having taken into account shareholder feedback we propose to

remove EPS and reduce the weighting on net revenue, to maintain

the weighting on ROCE once the ESG measures have been

introduced, as follows:

• Like-for-like (LFL) net revenue growth (40% weighting)

• ROCE (25% weighting)

• Relative TSR (25% weighting)

• ESG (10% weighting, split equally between two metrics)

150

Relative TSR is proposed as it directly aligns LTIP participants

withthe shareholder experience and will only reward for TSR

outperformance against our peers. Relative TSR will be measured

against a group of 19 global companies primarily drawn from

theconstituents of the MSCI World House & Personal Products

Index, along with other competitors to ensure peers that are

appropriately comparable to Reckitt (further detail, including

anexplanation of the selection of peers is set out on page 180).

The composition of the peer group directly reﬂects shareholder

feedback received during the consultation. The targets will be

inline with UK best practice, with threshold vesting for median

performance and only vesting in full for upper quartile

performance or above.

Our sustainability ambitions, ‘For a Cleaner, Healthier World’,

werecommunicated externally in April 2021 and the proposed

ESGmeasures in the LTIP are directly aligned to these ambitions.

Further details on these are set out on page 180 of this report.

The ESG metrics take into account shareholder views that

measures should stem from the wider ESG strategy and should

betransparent, quantiﬁable and measurable. We are therefore

proposing two equally weighted ESG measures for the 2022award:

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) which measures the

environmental footprint of new products using carbon, water,

plastics, ingredients and packaging indicators. It includes Scope

3 consumer use (including the carbon and water impact from

consumer use), which is the most impactful lifecycle stage

ofour products

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 from our 2015 baseline. For the

purposes of reward outcomes, any offsetting activities will

notcount towards achievement of these targets

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. The Remuneration Committee intends

tokeep the ESG measures under review over the lifecycle of

thisRemuneration Policy, and to consider the inclusion of other

measures, for example Scope 3 carbon emissions. However,

theseare currently in the early stages of implementation and the

Committee determined that the two measures outlined above are

the most appropriate for the 2022 LTIP award as they are based

onrigorous methodology and independently assured. Further

detail and rationale for these measures, including targets for the

2022 LTIP can be found on page 180.

There are no changes proposed to the measurement of net

revenue growth or ROCE performance measures used under

theLTIP.

There are no changes proposed to the annual bonus structure or

performance measures, which will remain based on net revenue

and adjusted proﬁt before tax on a multiplicative basis, a structure

which requires outperformance in both measures, with deferral of

one-third of the bonus into shares.

The measures used across the bonus and LTIP schemes are

balanced between top-line and bottom-line performance,

combining revenue, proﬁt, and return ﬁnancial measures alongside

a measure directly aligned to the shareholder experience and a

measure linked to our sustainability ambitions. The Remuneration

Committee is of the view that this is a balanced set of measures

linked to our Compass and Purpose and fully aligned with our

forward-looking business strategy.

LTIP award limits

As previously approved by shareholders, our LTIP award sizes are

expressed as a ﬁxed number of performance share options and

performance shares, to provide full alignment with investors.

The award size is determined by the Remuneration Committee

taking into account performance, the prevailing share price, market

data and our pay positioning philosophy. In the event of a material

increase or decrease in the share price prior to grant, the

Committee will consider whether the prevailing award size

remains appropriate and adjust it appropriately.

Taking into account shareholder sentiment and the current external

environment, the Committee has introduced a new, lower, normal

operational limit on the number of LTIP performance share options

and performance shares that can be granted to an Executive

Director, which will not be greater than 200,000 performance share

options and 100,000 performance shares, reduced from 300,000

performance options and 150,000 performance shares in the

previous Remuneration Policy.

In addition, for future LTIP awards, we are proposing that dividend

equivalents will accrue on performance share awards granted

under the LTIP that ultimately vest subject to performance in order

to align participants with the overall shareholder experience and

tobring Reckitt in line with UK best practice. These dividend

equivalents will be delivered in shares, in line with shareholder

guidance. This change does not apply to performance share

options granted under the LTIP.

Directors’ Remuneration Report (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

151

Further detail and rationale for the changes can be found in the ‘Directors’ Remuneration Policy’ section and a summary of the key features of

Reckitt’s remuneration arrangements is shown below:

Notable features of Reckitt’s remuneration arrangements under the new Remuneration Policy

Reinforcing shareholder alignment

• Mandatory bonus deferral of one-third of

any bonus earned into awards over Reckitt

shares for three years

• Two-year holding period for LTIP awards

which starts at the end of the three-year

performance period

• Shareholding requirements for Executive

Directors of over c.1200% and c.850% of

salary

for CEO and CFO respectively, which

are the most demanding in the UK market

These requirements are more than double

the annual LTIP award

• Two-year post-employment shareholding

requirement of 50% of the shareholding

requirement (or actual shareholding on

leaving if lower). This is more than 600% of

salary

for the CEO and 425% for the CFO,

and is more stretching and onerous than

almost all other UK-listed companies’

in-employment shareholding requirements

• Formal mechanism to enforce the

post-employment shareholding

requirementthrough our external share

planadministrators

Supporting business strategy

• Annual bonus based on achievement of

objective ﬁnancial performance measures,

being net revenue and adjusted proﬁt

before income tax

• Multiplicative approach for the formulaic

calculation of annual bonus outturns

ensuresthat:

• outperformance on both top line and

bottom line is required for maximum

payouts; and

• underperformance in any one of the

performance metrics will reduce the

overall bonus payout despite

outperformance of the other.

For example, if proﬁt is below threshold

then a zero bonus would be paid regardless

of net revenue performance

• Vesting of the LTIP subject to achievement

against a range of metrics which measure

different aspects of Group performance,

balanced between top-line and bottom-line

performance, combining revenue and return

ﬁnancial measures alongside a measure

directly aligned to the shareholder

experience and a measure linked to our

sustainability ambitions

Rewarding fairly and responsibly

• Executive Director pension contribution

at10% of salary, in line with our wider

UKworkforce

• Robust and thorough assessment of

performance in the round before

determining annual bonus payouts and LTIP

vesting. The Committee will use discretion

ifit is considered appropriate

• Malus and clawback provisions apply to

bonus and LTIP in line with best practice

shareholder guidelines

1. Based on the average closing share price in Q4 2021 of £59.84

2. Compared against constituents of the FTSE 30

3. Using a Black-Scholes valuation of 10% for performance share options

Remuneration decisions in relation to portfolio management

During 2021, the active management of the portfolio saw a 9%

portfolio turnover, including the strategic disposal of IFCN China

and Scholl and the acquisition of Biofreeze – a major step forward

in our strategy to rejuvenate sustainable growth. This activity to

strengthen the portfolio has meant that the targets set at the

beginning of each award under the Annual Performance Plan (APP)

and LTIP needed to be reviewed to ensure they remained

appropriate. In line with our current shareholder-approved

Remuneration Policy and shareholder views on adjusting targets,

the APP and LTIP targets were adjusted where needed to ensure

that participants are no better or worse off and in line with

shareholder expectations as follows.

Adjusting the APP for the 2021 ﬁnancial year

The Committee resolved that for the APP, we included the

performance of disposed assets within the performance of the

year assessment until the closing date of sale. In order to ensure

we assessed performance on a fair and consistent basis the

targets were adjusted to include performance of disposed assets

to the date of sale and exclude them for the period of the year

that Reckitt no longer owned them. In respect of acquisitions,

weincluded the performance from the closing date of acquisition

and also increased the targets accordingly.

Adjusting in-ﬂight LTIP performance measures

For the 2020-2022 and 2021-2023 LTIP awards, the Remuneration

Committee has determined to adjust the targets for the disposal

of IFCN China, given the size of this transaction, to ensure that the

new targets are no harder or easier to achieve than the original

targets. A consistent approach has been taken across all three

performance measures and the adjustments are in line with

generally accepted shareholder principles where there has been

material portfolio management.

• The original EPS targets were set as ﬁnal year EPS values,

based on a plan which included IFCN China at the time

thetargets were set. These targets have been reduced to

recognise the impact of the reduced proﬁt expected in the

ﬁnal year of the LTIP cycle due to the disposal of IFCN China

• The LFL net revenue targets have been reduced slightly to

recognise that the expected revenue growth for IFCN China

when the targets were set was higher than the remaining

portfolio. The challenge in the new targets for the remaining

portfolio remains equal to the original targets

• The ROCE targets have been increased to reﬂect that

IFCNChina was a lower return business than the remaining

portfolio and again the new targets contain the same level of

challenge as was contained in the original targets when set

Further detail, including full disclosure of the original targets and

the new targets for each award cycle is set out on page 181.

The Remuneration Committee decided that for the 2019-2021 LTIP

award, given the timing of the IFCN China sale is such that it was

under the Group’s ownership for most of the performance period,

no adjustments were to be made to the LTIP targets set at the

start of the performance period.

152

Sustainability: We re-joined the Dow Jones Sustainability Index

and were also awarded a Gold Class 2022 Sustainability Award

from S&P Global. We have an improved MSCI ESG rating from A to

AA, and a Sustainalytics score at 22.9, positioning Reckitt in the top

15% of our industry group. In the face of signiﬁcant input cost

pressures, our supply chain continued to signiﬁcantly improve and

our commitment to quality in supply was a contributing factor in

Reckitt’s readmission to the Dow Jones Sustainability Index. Last

year, we committed the equivalent of 1% of net proﬁt over three

years to social impact investments. This year, ahead of schedule,

we achieved it, with investments in more than 50 countries, worth

over £38 million via the Reckitt Fight for Access Fund, and

engaging 30 million people.

Challenges: The Committee also reviewed the signiﬁcant

challenges that the business faced during the year and how

leadership responded to them. This included the weak cold

andﬂuseason and a deteriorating input cost environment given

commodity and freight cost inﬂation increasing to double digits.

Taking all of the above into account, the Committee determined

that the level of annual bonus payout is appropriate and justiﬁed

and that no discretion would be applied.

Vesting of the 2019-2021 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 2019 LTIP was

dependent on stretching LFL net revenue growth, EPS and ROCE

targets which constitute a broader set of performance measures

than in previous LTIP award cycles.

The Committee determined that for the 2019-2021 LTIP award,

given the timing of the disposals in 2021 is such that they have

been under the Group’s ownership for most of the performance

period, no reductions will be made to the LTIP targets. Further

detail is set out on page 171.

As set out in the 2020 Directors’ Remuneration Report, as the

goodwill impairment in respect of IFCN reduces the capital

employed it has the potential to increase the calculation of ROCE

for LTIP purposes. The Committee has ensured that the impairment

has not led to an increase in vesting in respect of the proportion of

the LTIP related to ROCE, by adding this back in the calculation of

Capital Employed.

The Committee is satisﬁed that this treatment is fair to participants

and aligned with the shareholder experience. As set out on page

172, the resultant vesting is that 21.5% of the total award vests,

with vesting in respect of net revenue growth, reﬂecting the

strong growth over the performance period, but with zero vesting

in respect of the EPS and ROCE targets, as performance was

below threshold of the stretching targets set.

As set out in more detail on page 172, the Committee also

evaluated the performance of both the Group and the CEO (the

CFO is not a participant in this LTIP award cycle) in the round using

the performance assessment framework and concluded that the

total vesting level of 21.5% is justiﬁed and appropriate in this

context and that no discretion would be applied.

There is a further two-year holding period attached to Laxman

Narasimhan’s LTIP award.

Annual bonus in respect of 2021 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.

As it does every year, the Committee evaluated the performance of

both the Group and the Executive Directors in the round and with

regard to broader circumstances to assess whether the formulaic

level of annual bonus payout is appropriate and justiﬁed, as

described below.

From a ﬁnancial perspective, 2021 was another strong year for

Reckitt with growth ahead of expectations and resulting in

two-year stacked LFL net revenue growth signiﬁcantly better than

peers. LFL net revenue growth was 3.5%, outperforming market

expectations and is notable progress on top of excellent growth

last year, resulting in 17.4% growth on a two-year stacked basis.

Wealso saw strong momentum, with brands less sensitive to

COVID-19 dynamics, representing c.70% of the portfolio, growing,

on average, by mid-single digits in each quarter of 2021.

The adjusted operating margin (excluding IFCN China) was 22.9%

inline with guidance and our operating proﬁt was £2.9 billion. The

dividend was maintained at 174.6p. As set out in further detail on

pages 168 to 171, these results reﬂect strong performance ahead

of expectations and demonstrate that the transformation is ﬁrmly

on track. Based on targets set, the 2021 annual bonus for the CEO

and CFO is 91.3% of maximum, in line with all other employees on

the same Group-wide measures.

The framework which the Committee applied in a thorough

evaluation of the performance of the Group and the Executive

Directors in the round is set out on page 156. In addition to the

ﬁnancial operating performance as summarised above, this year’s

assessment included, amongst others, the following areas:

Strategic delivery: The Committee has recognised that during

the year we have continued to strengthen the business. Our

innovation pipeline is 50% higher than the previous year and our

productivity capabilities are now ﬁrmly embedded within the

business. Our execution has improved and has been recognised

byboth customers and suppliers. Based on the most recent

Advantage survey of retailers, the percentage of our markets rated

‘top tier’ by our customers improved by 20 percentage points, to

46%. For example, we were named Walmart’s supplier of the year,

reﬂecting the improvements in sales excellence capabilities.

Wehave been actively managing the portfolio to focus on higher

growth, with 9% portfolio turnover.

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 2021 with 62% of our core CMUs holding or

gaining market share; Reckitt’s LFL net revenue growth of 3.5%

represents strong growth and is markedly ahead of market

expectations. On a two-year stacked growth basis our growth

of17.4% is signiﬁcantly better than peer group average.

People and Culture: During the year there was the successful

embedding of several Diversity & Inclusion (D&I) and employee

wellbeing initiatives. We have also rolled out our Leadership

Behaviours which are a key part of our leadership development

programme and annual review process. Our efforts have been

recognised as we have recently been named in Fortune’s 2022

World’s Most Admired Companies list.

Directors’ Remuneration Report (Continued)

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153

2021 single ﬁgure

The impact of this bonus payment and LTIP vesting is a total single

ﬁgure of £5.97 million for the CEO and £3.07 million for the CFO,

noting that the CFO was not with the Group at the time the

2019-2021 LTIP awards were made. The majority of this is variable

pay, linked to stretching ﬁnancial targets:

Singe ﬁgure illustration (£m)

CEO

CFO

£m

1 2 43 5 6

Fixed remuneration

Annual bonus (shares)

Annual bonus (cash)

LTIP

2022 remuneration

The Committee reviewed base salary levels for both the CEO

andCFO and determined that it was appropriate to award

a3%increase in line with the salary increase budget for our

UKemployee base and taking into account Group and individual

performance. Salaries for 2022 are £1,008,000 and £721,000 for the

CEO and CFO, respectively. The CEO’s salary remains towards the

lower end of FTSE 30 market practice.

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 2022 annual bonus

will be the same as for 2021. In line with prior years, the Committee

has set the performance targets at a stretching level taking into

account 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 2022,

which have been reviewed in light of share price performance,

Group performance and individual performance. Laxman

Narasimhan’s 2022 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 2022. As described earlier in this letter,

the Committee is proposing changes to the LTIP performance

measures and for the 2022 awards these will be LFL net revenue

growth, ROCE, Relative TSR and ESG (split equally between

twometrics).

As disclosed in last year’s Remuneration Report it was the

Committee’s intention to further review the Chair of the Board’s

fee during 2021 to ensure that the fee remains reﬂective of the

enlarged scope of the role and time commitment over recent

years, as well as considering market practice. Having undertaken

this assessment, the fee for the Chair of the Board has been

increased by 10% to £627,000, effective from 1 January 2022.

25%of the fee continues to be paid in shares. The new fee level

remains below the median of the FTSE 30.

During the year the 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 basic NED

fee is being increased by 3% to £98,000, with effect from 1 January

2022. 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

The Remuneration Committee has considered the remuneration of

Reckitt’s wider workforce during the year and has been provided

with a comprehensive overview of workforce remuneration

andrelated policies, as well as the alignment of incentives and

rewards with culture. It reviewed information on salary structures,

bonus design and targets, the LTIP, share ownership, Reckitt’s

International Transfer Policy, approach to employee beneﬁts and

the 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.

In particular, the Committee also reviewed incentive arrangements

for the wider workforce in light of the Remuneration Policy review,

and the changes to the LTIP performance measures will be applied

to all employees who also receive performance-based awards

under the LTIP. The Committee also took wider workforce salary

increases into account when determining base salary increases

forthe CEO and CFO as discussed above.

We have been voluntarily paying the Living Wage to all employees

and on-site contractors within the UK for a number of years and

have been formally accredited as a UK Living Wage Employer since

2020. Given the increasing global focus on living wage and the

associated business, societal and wider economic beneﬁts, we

areexploring how we could expand the Living Wage commitment

across our wider global footprint. Consequently, we are developing

our Sustainable Livelihood Framework (of which living wage is a

component) to outline our approach and will be piloting it within

selected factories in Thailand and India.

Our all-employee share plans are key to fostering a culture of

ownership amongst our employees. We currently have 50% of

oureligible global employees participating. These award-winning

share plans give our people the opportunity to save in order to

purchase Reckitt shares at a 20% discount to the share price at the

start of the period. In offering these plans, we make a conscious

effort to ensure that they are all inclusive and accessible to all

colleagues. To facilitate this, we utilise a global network of around

100 local champions and provide communications in 28 languages

in various formats, including letters to employees without an

emailaddress, desk drops, webinars, virtual drop-in sessions with

speciﬁc contacts at each site for support. The annual enrolment

period for our UK and global plans this year beneﬁted from an

enhanced and refreshed communication campaign which led to

another successful launch and strong employee take-up.

As discussed in the Strategic Report our employment policies drive

gender equality in our teams. We have mentoring schemes for

female employees, gender-balanced shortlists and proportional

targets at senior management level. Additionally, we continue to

review and monitor the gender pay gap of our workforce closely.

To increase transparency on this issue, we have again voluntarily

disclosed the gender pay gap for our ten largest markets by

workforce size in our 2021 report, which including the UK, make up

around 70% of our global permanent workforce. Further details of

our gender pay gap are on page 178 of this report.

154

Directors’ Remuneration Report (Continued)

We have also continued with several initiatives that were launched

in 2020. These include the Stronger Together conversation series,

aﬁve-year commitment focusing on diversity and inclusion (D&I)

and belonging topics that matter most to our people, and the

establishment of a D&I board comprising senior leaders and

sponsors of our Employee Resource Groups (ERGs) and chaired

bythe CEO, to lead the D&I strategic agenda across Reckitt.

In March 2021 we launched our global wellbeing programmes for

leaders at all levels in partnership with Hintsa and Tignum, global

leaders in this ﬁeld. We have also provided a rich bank of resources

for all employees to access, including global wellbeing sessions,

focusing on balance, burnout and the importance of mental

energyattracting over 3,000 participants each time. In July 2021

we launched a global employee pulse survey, focusing on

understanding our employee demographics and getting insights

on Leadership Behaviours and diversity topics.

Finally, as the designated NED for engagement with the company’s

workforce I have had the same access to internal communications

materials, channels and events, such as the Stronger Together

conversations, as Reckitt employees and have been involved in

keyconversations with the workforce allowing me to feed back

employees’ views to the Remuneration Committee as well as the

Board. As set out in the Strategic Report, each year the company

holds several round-table discussions with employees and

organises site visits during which town hall meetings and smaller

group discussions with our people take place.

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.

Further information on wider workforce remuneration, and how

this compares to the remuneration of our Executive Directors,

isset out on pages 175 to 177.

Committee changes

During the year Olivier Bohuon joined the Board and Remuneration

Committee, whilst Elane Stock stepped down from the Committee

– I would like to welcome Olivier to the Committee and also thank

Elane for her valuable contributions to the Committee during

hertenure.

This will be my last Directors’ Remuneration Report as I will be

stepping down as Remuneration Committee Chair after the

AGM,although I will remain a member of the Committee. Upon

conﬁrmation at the AGM, Alan Stewart will take over the role of

Remuneration Committee Chair. I would like to welcome Alan to

the Committee and wish him well in his new role. I would like to

thank my fellow Committee members during my tenure as Chair

for their insight and commitment and also shareholders for their

feedback and active engagement on remuneration whilst I have

been Chair.

Conclusion

I trust that you will ﬁnd this report a clear account of the way in

which the Committee implemented the current Remuneration

Policy during 2021 and of the Committee’s proposed new

Remuneration Policy.

I look forward to your support as we put the new Policy to a

binding vote of shareholders at the upcoming AGM, as it continues

to drive the appropriate behaviours and performance to support

the Group’s business strategy and delivery of shareholder value.

Iwill be available to answer any questions shareholders may have

at the company’s AGM on 20 May 2022.

Mary Harris

Chair of the Remuneration Committee

Reckitt Benckiser Group plc

13 April 2022

Do the

right thing.

Always.

Put consumers

and people ﬁrst

Build shared

success

Seek out new

opportunities

Strive for

excellence

Pay for

performance

Strategic

alignment

Shareholder

alignment

CEO

Fixed pay

Annual bonus

Target 2022 package

Maximum 2022 package

LTIP

26%

67%

34%

35%

31%

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

155

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.

1. High proportion of variable pay

Note: Value of the CEO’s target and maximum 2022 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.

2. Attract and retain the best

globaltalent

• Engage highly performance-driven

individuals

• Reﬂect global competitive practice

across our industry peer group

4. Ensure alignment with strategy

across the business

• Alignment of performance metrics

with strategic priorities

• Alignment across the business of

metrics and ownership

3. Market-leading share ownership policy

In-employment shareholding

requirement

Post-employment

shareholding requirement

Number of

Value of

% of 2021

salary

Number of

Value of

% of 2021

salary

CEO 200,000 £11,968,000 1200% 100,000 £5,984,000 600%

CFO 100,000 £5,984,000 850% 50,000 £2,992,000 425%

1. Based on the average closing share price in Q4 2021 of £59.84

2. Reﬂecting 50% of in-employment shareholding requirement as a minimum

Combining Reckitt’s Compass, strategy and remuneration philosophy drives Reckitt’s remuneration principles

Context for remuneration at Reckitt

Reckitt’s Compass Reckitt’s remuneration philosophyReckitt’s strategic priorities

• Rejuvenate Reckitt to deliver

shareholder value

• Restore organic top-line growth

• Achieve sustainable increased

medium-term earnings growth

• Maintain disciplined capital allocation

• Embed sustainability ambitions

RECKITT’S REMUNERATION AT A GLANCE

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) etc.

Compare outcome with

overall Group

performance

E.g. market share,

competitor

benchmarking,

sustainability, people and

culture, strategic

progress, wider

stakeholder experience

and analyst feedback

Consider any other

events and other input

E.g. Reputation/risk-

related, any change of

accounting standards.

Draw on input from other

Committees and

management functions

and consider the impact

of any external headwinds

or tailwinds

Consistency of

outcomes

E.g. Compare with

historical use of

discretion; consider

whether bonus and LTIP

outcomes are consistent

What is the formulaic outcome for APP and LTIP?

Committee to consider year-on-year change, whether this reﬂects performance trend and impact on the single ﬁgure outcome

Final APP and LTIP outcomes

Committee to agree whether adjustments are required to formulaic results and

determine the ﬁnal outcomes for APP payouts and LTIP vesting

156

Summary of our proposed Remuneration Policy

Element Key features of operation

of proposed Policy

How we will implement

for2022

Link to strategy 2022 2023 2024 2025 2026 2027

Salary, beneﬁts

and pension

• Salary increases and

pension contribution

setin context of

widerworkforce

• Salaries and beneﬁts

setcompetitively

againstpeers

• 3% salary increase, in line

with wider workforce

• Pension contribution of

10% of salary in line with

the wider workforce in

theUK

• To enable the total

package to support

recruitment and retention

Annual bonus

(APP)

• Target bonus of 120% of

salary for CEO and 100%

for CFO

• One-third deferred into

awards over Reckitt

shares for three years

• Malus and clawback

provisions apply

• Targets set for net revenue

and adjusted proﬁt before

income tax

• Threshold performance

results in zero payout,

withmaximum of

3.57xtarget for truly

exceptionalperformance

on both metrics

• 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

LTI P Performance

shares and

performance

options

• Three-year performance

period and two-year

holding period

• Malus and clawback

provisions apply until two

years after vesting

• Options have seven years

to exercise post vesting

• Targets set for LFL net

revenue growth (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

• 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

Award

granted

Award

vests

Holding

period

ends

Shareholding

requirements

• CEO: 200,000 shares

• CFO: 100,000 shares

• Period of eight years from

appointment to achieve

• Two-year shareholding

requirement post-

departure

• Promotes long-term

alignment with

shareholders

• Promotes focus on

management of

corporaterisks

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 it applied is illustrated below.

Directors’ Remuneration Report (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

157

Executive Director shareholding

Reckitt operates a market-leading shareholding requirement

withan eight-year timeframe for achievement and a two-year

post-employment holding period. The chart below illustrates

theprogress towards this of the Executive Directors.

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000

Shareholding requirement

Current shareholding £5.4m

£2.5m

Shareholding requirement

Current shareholding

Shares held

2022 vesting

Shares deferred from annual bonus

CEO

CFO

1. Current shareholding value based on the average closing share price in Q4

2021 of £59.84

2. Includes shares owned outright and shares subject to post-vesting

holdingrestrictions

3. This is the estimated number of shares awarded, after tax under the Deferred

Bonus Plan, including those to be deferred from the 2021 annual bonus

4. For Laxman Narasimhan this is the number of shares vesting in May 2022 under

the 2019 LTIP

Pay outcomes for current Executive Directors in the year

2021 ﬁxed remuneration

Base salary Pension

CEO CFO CEO CFO

£979,000 £700,000 10% of salary 10% of salary

2021 variable remuneration

Annual performance plan

The performance outcome for the annual bonus was 91.3% of

maximum in light of achievement against both metrics, which is in

line with all other employees on the same Group-wide measures.

A third of the bonus is deferred, by way of an award over

Reckittshares.

Base salary Target Multiplier Delivery

Cash Shares

CEO £979,000

120%

3.26

2/3 1/3

CFO £700,000 100%

Long Term Incentive Plan

Performance

options

Performance

Vesting as a

percentage

of maximum Delivery

Options Shares

CEO 150,000 75,000

21.5%

32,250 16,125

2021 single ﬁgure

The single ﬁgure for 2021 is comprised of the elements in the

graph below.

CEO

CFO

£m

1 2 43 5 6

Fixed remuneration

Annual bonus (shares)

Annual bonus (cash)

LTIP

158

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:

Mary Harris (Chair) Chris Sinclair

Olivier Bohuon

Elane Stock

Nicandro Durante

1. Joined the Board as a Non-Executive Director on 1 January 2021 and appointed onto the Remuneration Committee on the same date

2. Stepped down from the Committee on 25 October 2021

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.

On behalf of, and subject to approval by, the Board of Directors, the Committee primarily:

• regularly reviews and provides feedback on the company’s overall remuneration strategy;

• in respect of the Chair of the Board, the Executive Directors and members of the Group Executive Committee, sets, reviews

and approves:

• remuneration policies, including annual bonuses and long-term incentives;

• 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;

• takes into account employees’ views on remuneration; and

• when determining Executive Director 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 ﬁve scheduled meetings. The attendance of members at meetings is set out in the table

on page 118. In addition, during the year the Committee considered ad-hoc topics between meetings.

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 the 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.

Directors’ Remuneration Report (Continued)

REMUNERATION COMMITTEE GOVERNANCE

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Financial StatementsGovernanceStrategic Report

159

The table below summarises the key activities at the Committee’s meetings in 2021:

Meeting Topic

February 2021 • Reviewed performance to 2020 in respect of bonus outcomes and LTIP vesting

• Carried out assessment of wider performance of the company and Executive Directors

• Final approval of 2020 bonus payout

• Final approval of 2018-2020 LTIP vesting

• Conﬁrmed the 2021 bonus performance targets

• Agreed 2021 LTIP award date, performance measures and weighting

• Reviewed feedback from shareholders

• Reviewed disclosures in the Directors’ Remuneration Report

May 2021 • Discussed and agreed approach to the review of the 2022 Directors’ Remuneration Policy and wider workforce

remuneration arrangements

• Reviewed performance conditions used in bonus and LTIP

• Reviewed 2021 AGM voting and wider market trends

• Reviewed shareholder/proxy guidelines and UK best practice

• Approved 2021 LTIP measures, deﬁnitions and targets

July 2021 • Thorough review of Remuneration Policy, including:

• Reviewed prior shareholder feedback on remuneration arrangements

• Discussed bonus and LTIP performance measures

• Reviewed framework for APP target setting

• Considered assessment of performance to date for 2021 bonus targets and LTIP

• Discussed principles for adjusting incentives for M&A activities

September 2021 • Agreed initial proposals for the 2022 Directors’ Remuneration Policy, including performance measures and other

amendments to policy

• Determined approach to shareholder consultation

• Reviewed framework for target setting process and ‘performance in the round assessment’

• Approved principles for adjusting APP targets for M&A and assessed performance to date for 2021 APP

• Reviewed market data on remuneration packages for the Group Executive Committee

• Reviewed wider workforce remuneration arrangements

• Approved awards under the all-employee share plans for UK participants

November 2021 • Reviewed feedback from shareholder consultation on the Directors’ Remuneration Policy

• Reviewed updates to shareholder guidelines and corporate governance

• Finalised proposals for the 2022 Directors’ Remuneration Policy

• Agreed changes to wider workforce remuneration arrangements as part of the Remuneration Policy review

• Determined 2022 remuneration packages for Executive Directors

• Determined 2022 remuneration packages for Group Executive Committee members

• Reviewed current shareholdings for senior employees with share ownership requirements

• Determined 2022 bonus targets

• Approved awards under all-employee share plans for participants outside the UK

• Approved revised Remuneration Committee terms of reference

• Reviewed Remuneration Committee effectiveness

• Considered assessment of performance to date for the 2021 bonus

160

This section of the report sets out the Remuneration Policy for

Executive Directors and Non-Executive Directors, which shareholders

will be asked to approve at the 2022 AGM on 20 May 2022 and, if

approved, will take effect from this date. Until this time, the Policy

approved by shareholders on 9 May 2019 will continue to apply.

The Policy was developed over the course of the last year.

TheCommittee undertook a thorough review of remuneration

arrangements with a particular focus on alignment to Reckitt’s

Purpose and Compass, as well as the forward-looking business

strategy and priorities. Input was received from Remuneration

Committee members, the Chair of the Board, other Non-Executive

Directors and management (including the CEO, CFO, CHRO),

andother key stakeholders, whilst ensuring that conﬂicts of

interest were suitably mitigated. Input was also provided by the

Committee’s appointed independent advisors throughout the

process. The Committee undertook an extensive consultation

process with shareholders whilst developing the new Policy. The

remuneration policies and practices across the whole of the Group,

and market practice, both in the UK and against our global peers,

were also taken into account. The key features of our approach

were also assessed against the principles of clarity, simplicity,

riskmanagement, predictability, proportionality and alignment

toculture and as described on page 167.

A signiﬁcant number of changes were made to the remuneration

framework as part of the previous Policy approved by shareholders

in 2019, including: i) a reduction in the maximum LTIP award limits;

ii) the introduction of bonus deferral, a holding period to all LTIP

awards, and a post-employment shareholding requirement;

iii)alignment of pension arrangements to the wider workforce;

iv)expansion of malus and clawback terms to include corporate

failure; and v) the introduction of additional performance measures

of net revenue and ROCE to LTIP awards.

Following a comprehensive review, the Committee has concluded

that the current Policy remains ﬁt for purpose and supports the

strategy of the Group to rejuvenate sustainable growth as well

asour principles of ownership and pay for performance – and

therefore only minor changes to the Policy are proposed.

The Committee considered the following areas of the current

Policy (amongst others) when determining that the overall Policy

remains appropriate:

• Annual bonus structure – the current bonus structure is aligned

tothe Group’s pay-for-performance culture, requiring

outperformance of both metrics to achieve above-target

outturns, and is well understood by participants. This approach

iscascaded throughout the Group

• Combination of performance shares and performance share

options – the LTIP structure strongly incentivises future share price

growth, providing strong alignment to the shareholder experience,

whilst also requiring strong performance against stretching

targets. Unlike many other share option schemes, these are

performance share options and are subject to the same stretching

performance measures and targets as the performance shares,

inaddition to the inherent requirement for the share price to

increase, which ensures alignment with shareholder value creation

• Granting LTIP awards as a ﬁxed number of shares/options –

thisapproach incentivises share price growth and is well

understood across the organisation. It also mitigates the effect

of any potential ‘windfall gains’ due to share price falls and

subsequent recovery. There is a robust adjustment mechanism

in place – award levels are reviewed every year by the

Committee taking into account the share price, company

performance, individual performance, and the approach for

thewider employee population

• Post-employment shareholding requirement – Executive

Directors are required to hold the lower of 50% of their

shareholding requirement or their actual shareholding

atdeparture, for a period of two years. The Committee

isoftheview that this is appropriate on the basis that the

in-employment requirements are market-leading amongst

UK-listed companies (based on current share price levels the

CEO’s shareholding requirement is c.1200% of salary). At 50%

ofthe in-employment requirement, the post-employment

requirement is more stretching than almost all other UK-listed

companies’ in-employment requirements and is more than

theannual LTIP award

On this basis, the focus of the review of the Policy was on what

wepay for. In particular, the Committee is keen to ensure that

performance measures are aligned with our forward-looking

strategy and therefore is proposing the changes set out below.

The Committee has reviewed the annual bonus and LTIP

performance measures, taking into account the views raised

byourshareholders in recent years and to ensure alignment with

our strategy to rejuvenate sustainable growth. The Committee

isproposing to introduce Relative TSR into the LTIP scheme to

directly align participants with the shareholder experience, as

wellas ESG measures to align participants with our sustainability

ambitions. Taking into account shareholder feedback, we propose

to remove EPS and reduce the weighting on net revenue to ensure

that the weighting on ROCE remains the same once the ESG

measure has been introduced. Full details of the performance

measures to be used going forwards are set out in the Annual

Report on Remuneration.

Again taking into account shareholder feedback, the Committee

hasintroduced a new, lower operational limit on the number of

performance share options and performance shares that can

granted to an Executive Director, under the LTIP which will not

begreater than 200,000 performance share options and 100,000

performance shares. The previous limit of 300,000 performance

share options and 150,000 performance shares will remain in place

for exceptional circumstances only and the Committee would

consult with shareholders if it used this headroom.

We are also proposing that, in line with typical market practice

amongst UK-listed companies, dividend equivalents will accrue on

performance share awards granted under the LTIP that ultimately

vest subject to performance. These dividend equivalents will be

delivered in shares, in line with shareholder guidance. This change

does not apply to performance share options granted under the LTIP.

DIRECTORS’ REMUNERATION POLICY

Directors’ Remuneration Report (Continued)

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161

Executive Director Remuneration Policy Table

Fixed pay policy for Executive Directors

Component purpose and link to

strategy

Operation Opportunity

Base salary

To enable the total package to

support recruitment and retention

Base salaries are normally reviewed annually,

typically with effect from 1 January.

Salary levels/increases take account of a number

offactors including (but not limited to):

• salary increases awarded across the Group

asawhole; and

• individual performance.

The Committee also reviews market data for the

FTSE 30 excluding ﬁnancial services and also the

company’s remuneration peer group, comprising

international companies of a similar size and scope

of operations.

Salary increases for Executive Directors will not

normally exceed those of the wider workforce,

which take into account performance.

Increases may be made above this level to take

account of individual circumstances, which may

include (but are not limited to):

• Increase in the size or scope of the role or

responsibilities

• Increase to reﬂect the individual’s development

and performance in the role – for example,

where a new incumbent is appointed on a

below-market salary

Salaries in respect of the year under review (and

for the following year) are disclosed in the Annual

Report on Remuneration.

To avoid setting expectations of Executive

Directors and other employees, no maximum salary

is set under the Remuneration Policy.

Where increases are awarded in excess of those

tothe wider employee population, the Committee

will provide the rationale in the relevant year’s

Annual Report on Remuneration.

Pension

To provide appropriate levels of

retirement beneﬁt

Executive Directors may receive contributions into

a deﬁned contribution pension scheme, a cash

allowance or a combination thereof.

Base salary is the only element of remuneration

that is pensionable.

The maximum pension contribution or allowance

for Executive Directors will be in line with that

available to UK employees or to participants in the

pension plan relevant to the country where they

are employed, if different. For UK employees this

iscurrently 10% of base salary.

Beneﬁts

To enable the total package to

support recruitment and retention

Executive Directors receive beneﬁts which consist

primarily of the provision of a company car/

allowance and healthcare, although the package

can include other beneﬁts that the Committee

deems appropriate, for example, (but not limited

to) the cost of legal fees or preparing tax returns

(including tax thereon). Beneﬁts include the

provision of a car and driver for business use,

including travel from home to ofﬁce, and any tax

liability that may be due on this beneﬁt.

Relocation allowances and international transfer-

related beneﬁts may also be paid (including tax

thereon), where required.

Executive Directors are also eligible to participate

in the all-employee Sharesave Scheme on the

same basis as all employees.

Whilst there is no maximum level of beneﬁts

prescribed, they are generally set at an appropriate

market-competitive level determined by

theCommittee.

Beneﬁts in respect of the year under review,

andparticipation in the all-employee Sharesave

Scheme, are disclosed in the Annual Report

onRemuneration.

162

Variable pay policy for Executive Directors

Component purpose and

link to strategy

Operation Opportunity Performance measures

Annual bonus

To drive strong

performance, with

signiﬁcant reward for

overachievement of

annual targets

Use of deferral for

longer-term

shareholderalignment

Targets are set by the Committee

atthe start of the year. At the

endofthe year, the Committee

determines the extent to which

thesehave been achieved.

Performance is assessed on an annual

basis, using a combination of the

payouts for performance against each

of the targets.

At least one-third of bonus payouts are

deferred into share awards (in the form

of options or conditional awards) for a

period of three years.

The Committee has discretion to adjust

the formulaic bonus outcomes both

upwards and downwards (including to

zero) to ensure alignment of pay with

performance, e.g. in the event

performance is impacted by

unforeseen circumstances outside of

management control.

Annual bonuses and deferred bonus

awards are subject to malus and

clawback provisions.

Target opportunity:

• CEO: 120% of salary

• Other Executive Directors:

100% of salary

Maximum opportunity:

• 3.57x target

• CEO: 428% of salary

• Other Executive Directors:

357% of salary

Dividend equivalents accrue on

deferred share awards during the

deferral period.

Performance measures may

be a mix of ﬁnancial and

non-ﬁnancial measures. For 2022

the bonus is based on 100%

ﬁnancial measures.

Financial performance will be

assessed against one or more

keymetrics of the business

determined on an annual basis.

The weighting between different

metrics will be determined

eachyear according to

businesspriorities.

For performance below

threshold, the bonus payout

willbe nil.

Further details, including the

performance measures for the

current ﬁnancial year, are

disclosed in the Annual Report

onRemuneration.

LTIP (performance

shareoptions and

performance

shareawards)

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

The LTIP comprises grants of

performance share options and/or

performance share awards (based on

aﬁxed number), which vest subject

tothe achievement of stretching

performance targets.

The LTIP has a performance period

ofatleast three years. Additionally,

there is normally a two-year holding

period following the end of the

performance period.

The performance conditions are

reviewed before each award

cycletoensure they remain

appropriately stretching.

The Committee has discretion to adjust

the formulaic LTIP outcomes both

upwards and downwards (including to

zero) to improve the alignment of pay

with value creation for shareholders

and to ensure the outcome is a fair

reﬂection of the performance of the

company and the individual.

Awards granted under the LTIP

arealsosubject to malus and

clawbackprovisions.

The Committee calibrates LTIP share

and option grant sizes as a ﬁxed

number to provide full alignment with

investors, with a robust adjustment

mechanism in place to ensure that the

value of an Executive Director’s total

remuneration is appropriate.

The award size is determined by the

Committee taking into account

performance, the prevailing share

price, market data and our pay

positioning philosophy.

Notwithstanding the above, the

normal limit on the number of options

and shares that can be granted to an

individual in respect of any ﬁnancial

year will be 200,000 options and

100,000 shares (and 300,000 options

and 150,000 shares in exceptional

circumstances). Details of the LTIP

opportunity in respect of each year

will be disclosed in the Annual Report

on Remuneration.

Dividend equivalents may accrue on

performance share awards that vest.

Neither dividends nor dividend

equivalents accrue on unvested or

vested performance share options

before they are exercised.

Vesting of the LTIP is subject

tocontinued employment

andthe achievement of

stretching targets.

Performance measures may be a

mix of ﬁnancial and non-ﬁnancial

measures (including ESG). For

2022 the LTIP is based on 90%

ﬁnancial measures and 10% on

ESG measures.

Threshold performance will result

in 20% of maximum vesting. The

vesting level will increase on a

sliding scale from this threshold

to 100% vesting for stretch levels

of performance.

Further details, including the

performance targets attached to

the LTIP in respect of each year,

are disclosed in the Annual

Report on Remuneration.

Notes to the Policy Table

Performance measure selection and approach to target setting

The measures used under the annual bonus are selected to reﬂect the Group’s main priorities for any given ﬁnancial year. With regard to the

LTIP, the Committee regularly reviews the performance measures to ensure that they align well with the company’s strategy and with our

shareholders’ interests. A combination of net revenue growth, ROCE, Relative TSR and ESG are considered the most appropriate 2022 LTIP

performance measures for a number of reasons:

Directors’ Remuneration Report (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

163

• they are aligned to the company’s strategic priorities;

• they combine a focus on top-line growth and proﬁtability,

alsocapturing how efﬁcient proﬁt generation has been;

• they provide well-recognised and accepted measures of the

company’s underlying ﬁnancial performance;

• they include focus on shareholder value creation;

• they provide a link to our 2030 sustainability ambitions; and

• they are measures that the plan participants can directly

impact, and are easily measurable from time to time.

Targets applying to the bonus and LTIP are reviewed annually,

based on a number of internal and external reference points.

Bonus targets take into account prevailing growth rates in Reckitt’s

peer group, and as appropriate across the healthcare and/or FMCG

industries more broadly. LTIP targets reﬂect industry context,

expectations of what will constitute performance at the top of

thepeer group, and factors speciﬁc to the company.

The rules of the LTIP allow the Committee, to waive or change

performance conditions (including how performance is measured)

in accordance with their terms or if anything happens which

causes the company reasonably to consider it appropriate

(including in contemplation of a corporate event), provided that

any changed performance conditions will be no more difﬁcult to

satisfy. The same principles apply to the annual bonus scheme.

Malus and clawback

The Committee has the discretion to apply malus and/or clawback

in the event of the following circumstances in relation to awards

under the annual bonus, Deferred Bonus Plan or the LTIP in the

circumstances set out in the relevant plan rules and award

documentation which includes:

• a material misstatement of the company’s ﬁnancial results;

• gross misconduct by a participant (or serious misconduct in

relation to malus). This includes reputational damage as a result

of the misconduct;

• an erroneous calculation in assessing the number of shares

subject to an award or the payout/vesting outcome; and/or

• corporate failure of the company.

In these circumstances, the Committee may adjust the amount of

cash bonus payable and/or operate clawback of the annual bonus

for up to three previous years. Deferred bonus awards are subject

to malus and clawback until the third anniversary of grant and the

clawback period applicable to LTIP awards ends on the earlier of

(i) the second anniversary of the vesting date and (ii) the ﬁfth

anniversary of the date of grant.

Shareholder alignment

The Committee recognises the importance of aligning Executive

Directors’ and shareholders’ interests through executives building

up signiﬁcant shareholdings in the company. Executive Directors

are expected to acquire a signiﬁcant number of shares over a

period of eight years and retain these until retirement from the

Board of Directors.

The shareholding requirement for the current CEO is 200,000

shares and for the current CFO is 100,000 shares. The shareholding

requirement for new Executive Directors will be determined at

thetime of appointment, taking into account a number of factors,

including (but not limited to) the LTIP award levels, share price

atthe time of appointment and market practice. Details of the

Executive Directors’ personal shareholdings will be provided in the

Annual Report on Remuneration.

A formal post-employment shareholding requirement applies to

Executive Directors. They are required to hold the lower of 50%

oftheir shareholding requirement or their actual shareholding

atdeparture, for a period of two years. The Committee is of the

view that this is appropriate on the basis that the in-employment

requirements are market leading amongst UK-listed companies

(based on current share price levels the CEO’s shareholding

requirement is c.1200% of salary). At 50% of the in-employment

requirement, the post-employment requirement is more stretching

than almost all other UK-listed companies’ in-employment

requirements and is more than the annual LTIP award.

The Committee retains discretion to amend the post-employment

shareholding requirement in exceptional circumstances

(forexample, in the case of ill-health).

Remuneration Policy for other employees

Reckitt’s approach to setting remuneration is consistent across

theGroup, with consideration given to the level of experience,

responsibility, individual performance and remuneration paid for

comparable roles in comparable companies.

The principles that apply to Executive Directors are cascaded

toother employees. Approximately 16,000 employees are eligible

to participate in an annual bonus scheme with similar metrics to

those used for the Executive Directors, in order to drive alignment

and a focus on results. Opportunities and speciﬁc performance

conditions vary by organisational level, with business area-speciﬁc

metrics incorporated where appropriate. Senior managers who

comprise c.600 employees are eligible to participate in the LTIP

with performance conditions the same as the Executive Directors,

although award sizes vary by organisational level. In addition, the

Group Leadership Team are also required to build up signiﬁcant

shareholdings in Reckitt. The current shareholding requirement

levels are between 10,000 and 50,000 shares which generally

represents between 2x to 6x base salary.

All UK employees are eligible to participate in the company’s

Sharesave plan on identical terms, with similar plans also operated

for employees working outside of the UK.

Legacy arrangements and amendments to the Policy

This Policy is intended to apply with effect from 20 May 2022,

subject to shareholder approval at the AGM.

The Committee reserves the right to make any remuneration

payments and payments for loss of ofﬁce (including exercising

anydiscretions available to it in connection with such payments)

notwithstanding that they are not in line with the Policy set out in

this report where the terms of the payment were agreed (i) before

the Policy came into effect (provided that the commitment to

make the payment complied with any applicable Remuneration

Policy of the company at the time it was agreed) or (ii) at a time

when the relevant individual was not a Director of the company

and, in the opinion of the Committee, the payment was not in

consideration for the individual becoming a Director of the

company. For these purposes ‘payments’ includes the Committee

satisfying awards of variable remuneration, and an award over

shares is ‘agreed’ at the time the award is granted.

The Committee may make minor amendments to the Policy to

aidits operation or implementation without seeking shareholder

approvals (e.g. for regulatory, exchange control, tax or

administrative purposes or to take account of a change in

legislation) provided that any such change is not to the material

advantage of the Director.

164

In the event of a variation of capital in the company which impacts the value of a share, which may include, but is not limited to, a capitalisation

or rights issue, consolidation, subdivision or reduction of capital, stock-split or demerger, then:

• the maximum number of share awards and options which may be granted under the LTIP may be adjusted to ensure that the overall

maximum value of awards would be the same immediately before and after any such event; and

• the maximum number of shares subject to an award granted under the LTIP or the Deferred Bonus Plan, the option price (where applicable)

and the identity of the company whose shares are subject to the award may be adjusted in accordance with the rules of the plan, as the

Committee considers appropriate. The Committee can also, subject to the rules of the plan, require that awards are automatically

exchanged for awards over shares in another company which are, in the opinion of the Committee, equivalent.

Non-Executive Director remuneration

Non-Executive Directors do not have service agreements but are engaged on the basis of a letter of appointment. In line with the UK

Corporate Governance Code (July 2018) guidelines, all Directors are subject to re-election annually at the AGM.

It is the policy of the Board of Directors that Non-Executive Directors are not eligible to participate in any of the company’s bonus, share

option, long-term incentive or pension schemes. An element of the basic fee is, however, paid in Reckitt shares.

Details of the policy on fees paid to our Non-Executive Directors are set out in the table below:

Component and objective Approach of the company

Fees (cash and shares)

To attract and retain

Non-Executive Directors

ofthe highest calibre with

broad commercial

experience relevant to

thecompany

The fees paid to Non-Executive Directors are determined by the Board of Directors, with recommendations

providedby the Chair of the Board and CEO. The fees of the Chair of the Board are determined by the

RemunerationCommittee.

Additional fees may be payable for acting as the Senior Independent Non-Executive Director, as Chair and/or a

member of a Committee or for other additional responsibilities (including the Designated NED for engagement with

the company’s workforce).

Fee levels may be reviewed annually, with any adjustments normally effective from 1 January. Fees are reviewed by

taking into account external advice on best practice and competitive levels, in particular at FTSE 30 companies. Time

commitment and responsibility are also taken into account when reviewing fees.

Chair of the Board and Non-Executive Director fees are normally delivered partly in cash and partly in Reckitt shares

or equivalent (e.g. ADRs) which must normally be held until retirement from the company. The fees paid to the Chair

of the Board and Non-Executive Directors in respect of the year under review (and for the following year), including

the split between cash and shares, are disclosed in the Annual Report on Remuneration.

Aggregate fees are limited by the company’s Articles of Association. Travel and expenses for Non-Executive

Directors (including the Chair of the Board) 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. The

company may also meet the costs (including tax thereon) of providing tax advice and tax return assistance for the

Chair of the Board and Non-Executive Directors.

Scenarios of total remuneration

The charts below provide an estimate of the potential future total remuneration for the Executive Directors. Four scenarios of potential

outcomes are provided based on underlying assumptions shown in the notes to the chart. It should be noted that the LTIP awards granted

inayear do not normally vest until on or after the date of the AGM which follows the end of the performance period.

CEO CFO

Minimum

£1.2m

£3.5m

£ 10.9m

£16.7m

100%

34% 35% 31%

11% 40%

7% 26%

49%

67%

Target

Maximum



Maximum



Long-term incentives Salary, pension and beneﬁtsAnnual bonus

£0.0m

£16.7m

Minimum £0.8m

£2.1m

£6.3m

£9.4m

100%

38% 34% 27%

13% 41%

9% 27%

46%

64%

Target

Maximum

Maximum

£0.0m

£9.4m

Directors’ Remuneration Report (Continued)

1 Excluding share price growth

2 Including 50% share price growth

Notes

The scenarios in the chart above have been calculated on the following assumptions:

The ‘Minimum’ scenario reﬂects base salary, pension and beneﬁts (i.e. ﬁxed

remuneration), being the only elements of the Executive Directors’ remuneration

package not linked to performance. This is based on the base salary and pension

allowance as at 1 January 2022 and an illustrative value of the beneﬁts, based on

amounts paid in 2021.

The ‘On-target’ scenario illustrates ﬁxed remuneration as above, plus target payout

of annual bonus and threshold vesting of the LTIP.

The ‘Maximum excluding 50% share price growth’ scenario sets out ﬁxed remuneration,

plus full maximum payout of the annual bonus and full vesting of the LTIP awards.

The ‘Maximum including 50% share price growth’ scenario sets out ﬁxed

remuneration, plus full maximum payout of the annual bonus, full vesting of the LTIP

awards and 50% share price growth.

As LTIP awards are set as a ﬁxed number of shares and options, the LTIP value is

based on the number of shares and share options to be granted to the Executive

Directors, in 2022. The value has been calculated assuming a share price at grant of

£59.84. Under the disclosure requirements the ﬁrst three scenarios above exclude

share price appreciation; share options have therefore been valued using a

Black-Scholes option pricing model and assumptions aligned to the three-year

performance period, at 10% of the assumed face value. The ﬁnal scenario includes

a 50% share price growth assumption, over the performance period, in line with

legislation. It should be noted that if the share price appreciation over the

performance period is greater than that assumed then the actual total

remuneration may be more than that shown in the above charts.

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

165

External appointments

With the approval of the Board of Directors in each case, and

subject to the overriding requirements of the company, Executive

Directors may accept external appointments as a Non-Executive

Director of another company and retain any fees received.

Consideration of conditions elsewhere in the company

Across Reckitt, remuneration is reviewed regularly with the

intention that all employees are paid appropriately in the context

of their local market and given their role, experience and

performance. The company seeks to promote and maintain good

relations with employee representative bodies – including trade

unions and works councils – as part of its employee engagement

strategy, and consults on matters affecting employees and

business performance as required in each case by law and

regulation in the jurisdictions in which the company operates.

The company publishes annually to all employees details of

executive remuneration and also invites employees to ask any

questions or provide any feedback they may have on the topic.

Aspart of the recent review of remuneration arrangements and

inthe development of the Directors’ Remuneration Policy over the

past year, the Committee took into account the views of senior

management and other employees. The company commissioned

external consultants to undertake detailed stakeholder interviews

with senior management on remuneration arrangements which

apply to them and their teams and, in addition, Reckitt operated

focus groups with employees to understand views on the

incentives. The Board also conducted formal Listening Sessions

with employees. Groups of colleagues with a wide range of

backgrounds met in person and virtually with Board members to

discuss topics such as inclusion, consumer focus, innovation and

R&D, business transformation and sustainability.

The Committee reviews the overall pay framework of the Group

including internal relativities, gender pay and participation

inall-employee share plans. The company encourages share

ownership amongst employees and those who hold shares will

beable to participate in the vote on the Directors’ Remuneration

Policy at the AGM.

Consideration of shareholder views

The Committee considers shareholder views received during the

year and at the Annual General Meeting each year, as well as

guidance from shareholder representative bodies more broadly,

inshaping the Remuneration Policy. The Committee Chair speaks

with many of the company’s largest shareholders on the subject of

executive remuneration and the Committee is grateful for all of the

feedback which is provided. In developing this Policy, the company

consulted with its major shareholders and amended its proposal

based on the feedback received. This included changes to the

peer group of companies to be used to measure Reckitt’s Relative

TSR performance for the purposes of the LTIP. The majority of

shareholders are supportive of the company’s philosophy and

policy on remuneration, and the Committee will continue to keep

its Remuneration Policy under regular review, to ensure it continues

to reinforce the company’s long-term strategy and aligns closely

with shareholders’ interests. The Committee will continue to

consult our major shareholders before making any signiﬁcant

changes to our Remuneration Policy.

Approach to recruitment remuneration

External appointment

In cases of hiring or appointing a new Executive Director from

outside the company, the Remuneration Committee may make use

of all existing components of remuneration, as follows:

Component Approach

Base

salary

The base salaries of new appointees will be

determined by reference to relevant market data,

experience and skills of the individual, internal

relativities and their current basic salary. Where new

appointees have initial base salaries set below market,

or the previous incumbent’s salary, the shortfall may

be managed with phased increases subject to their

development in the role.

Pension The maximum pension contribution or allowance for

new appointees will be in line with that available to

UK employees or to participants in the pension plan

relevant to the country where they are employed, if

different. For UK employees this is currently 10% of

base salary.

Beneﬁts New appointees will be eligible to receive beneﬁts

which may include (but are not limited to) the

provision of a car allowance, car and driver,

healthcareand any necessary relocation expenses

inline with the ongoing Remuneration Policy

(including tax thereon).

Annual

bonus

The structure described in the Policy Table

willapplyto new appointees with the relevant

maximum opportunity.

LTIP New appointees will be granted awards under the

LTIP on the same terms as other executives, as

described in the Policy Table. LTIP grants can take the

form of performance share awards, performance

share options or a combination of the two.

The overall limit of variable remuneration will be as set out in the

Policy Table, taking into account the maximum value of the annual

bonus and the maximum awards of options and share awards

under the LTIP.

The Committee may make an award in respect of a new

appointment to ‘buy out’ incentive arrangements forfeited on

leaving a previous employer, including by utilising Listing Rule 9.4.2,

i.e. over and above the approach outlined in the table above.

Indoing so, the Committee will consider relevant factors

includingany performance conditions attached to these awards

and the likelihood of those conditions being met, with the intention

that the value awarded would be no higher than the expected

value of the forfeited arrangements and would be made on a

like-for-like basis.

Internal promotion

In cases of appointing a new Executive Director by way of internal

promotion, the policy will be consistent with that for external

appointees, as detailed above; except that where an individual

hascontractual commitments made prior to their promotion to

Executive Director level, the company will continue to honour

these arrangements even in instances where they would not

otherwise be consistent with the prevailing Directors’

Remuneration Policy at the time of appointment.

166

Recruitment of a new Non-Executive Director

In recruiting a new Non-Executive Director, the Remuneration Committee will use the policy as set out in the table on page 164. A base fee

inline with the prevailing fee schedule will be payable for membership of the Board of Directors, with additional fees payable for acting

asSenior Independent Non-Executive Director, as Chair or member of a Committee, or for other additional responsibilities (including the

Designated NED for engagement with the company’s workforce). Fees will normally be delivered partly in cash and partly in Reckitt shares

tobe held until retirement from the company.

The fee for a new Non-Executive Chair of the Board will be set with reference to the time commitment and other requirements of the role

and the experience of the candidate. To provide context for this decision, appropriate market data would also be referenced.

Service contracts and exit payment policy

Executive Director service contracts, including arrangements for early termination, are carefully considered by the Committee. In accordance

with general market practice, each of the Executive Directors has a rolling service contract which is terminable on 12 months’ notice and this

practice will also apply for any new Executive Directors. In such an event, the compensation commitments in respect of their contracts could

amount to up to one year’s remuneration based on base salary and beneﬁts in kind, and pension rights, during the notice period. Termination

payments may take the form of payments in lieu of notice. Copies of Executive Director service contracts are available to view at the

company’s registered ofﬁce.

The Committee may agree exit payments in connection with a Director’s cessation of ofﬁce or employment where the payments are made

ingood faith in discharge of an existing legal obligation (or by way of damages for breach of such an obligation) or in settlement of any claim

arising in connection with the cessation of a Director’s ofﬁce or employment. This may include the provision of outplacement support. The

Group may also pay reasonable fees for a departing Director to obtain independent legal advice in relation to their termination arrangements

and nominal consideration for any agreement to any contractual terms protecting the company’s rights following termination.

The company’s policy on any termination payments is to consider the circumstances on a case-by-case basis, taking into account the relevant

contractual terms in the executive’s service contract and the circumstances of the termination. The table overleaf summarises how awards

under the annual bonus (including deferred bonus awards) and LTIP are typically treated in speciﬁc circumstances, with the ﬁnal treatment

remaining subject to the Committee’s discretion as provided under the rules of the plan.

Reason for cessation Timing of vesting/payment Calculation of vesting/payment

Annual bonus

Voluntary resignation or termination

with ‘cause’

Not applicable. No bonus to be paid for the ﬁnancial year.

All other circumstances Following the end of ﬁnancial year. Bonuses will be paid only to the extent that objectives set

atthe beginning of the plan year have been met. Any such

bonus will normally be paid on a pro-rata basis up to the

termination date and will be subject to deferral requirements

where applicable.

Deferred bonus share awards

Voluntary resignation or termination

with ‘cause’

Not applicable. Unvested awards lapse, unless the Committee, at its

discretion, decides otherwise.

All other circumstances Subject to the original time horizons,

unlessthe Committee, at its discretion,

decides these will vest on cessation

ofemployment.

Shares vest in full.

LTIP

Voluntary resignation or termination

with ‘cause’

Not applicable. Unvested awards lapse. From the 2022 LTIP award, vested

but unexercised options lapse. Vested share awards and

theresultant shares from vested and exercised share

optionawards in the holding period after the end of the

performance period are retained, with the holding period

continuing to apply (unless the Committee decides that they

will be released early), save that they will lapse if the holder

is summarily dismissed.

Directors’ Remuneration Report (Continued)

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Financial StatementsGovernanceStrategic Report

167

Reason for cessation Timing of vesting/payment Calculation of vesting/payment

Ill-health, injury, permanent disability,

retirement with the agreement of

the company, the participant’s

employing entity ceasing to be

under the control of the company,

transfer of the undertaking in which

the participant works outside the

Group, redundancy or any other

reason that the Committee

determines in its absolute discretion.

Awards will vest in line with the original

performance, vesting and holding periods

(unless the Committee decides that they

will be released early, in the case of awards

in the holding period).

The Committee determines whether and to what extent

outstanding awards vest based on the extent to which

performance conditions have been achieved and the

proportion of the performance period worked.

In the event of an employee leaving the Group due to

ceasing to be under the control of the company, transfer

ofundertaking, or change of capital structure, such as

demerger, IPO, etc., the Committee will retain the discretion

for awards to be exchanged for new equivalent awards in

the new company, where appropriate and permitted by the

rules of the LTIP.

Death As soon as practicable after date of death

(which could be at the end of the relevant

ﬁnancial year). No holding period will apply.

Performance conditions will be measured at the end of

theﬁnancial year in which the holder dies, and awards may

be reduced to reﬂect the proportion of the performance

period worked.

Change of control On change of control. Awards will vest to the extent that any performance

conditions have been satisﬁed (unless the Committee

determines that the performance conditions should not apply).

Awards will also be reduced pro rata to take into account the

proportion of the performance period not completed, unless

the Committee decides otherwise.

Awards may alternatively be exchanged for new equivalent

awards in the acquirer or another company where appropriate.

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. The current full Policy was approved by shareholders at the AGM on 9 May 2019 and can be found in the 2018 Directors’

Remuneration Report, including notes, on pages 98 to 106. It is also available on our website in the Corporate Governance section.

When determining the new Policy, provision 40 of the UK Corporate Governance Code was taken into account as follows:

Clarity 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.

Simplicity 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.

Risk 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.

Predictability 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.

168

The rest of this report sets out how we have implemented the previous shareholder-approved Remuneration Policy in 2021, and how we

intend to implement the revised Policy in 2022, subject to shareholder approval of the revised Policy. It also provides detail of the remuneration

decisions in relation to the impact of the management of the portfolio over 2021.

2021 PERFORMANCE AND REMUNERATION OUTCOMES

In reviewing Executive Director remuneration, the Remuneration Committee 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.

Base salary

Base salaries are reviewed taking into account the salary increases for the wider workforce and individual performance. During 2021, the

Remuneration Committee reviewed salaries and determined that there would be a 3% salary increase for the CEO and CFO in 2022, taking into

account Group and individual performance, in line with the salary increase budget for the UK wider workforce. The CEO’s salary remains

towards the lower end of FTSE 30 market practice.

The table below sets out annual base salaries with effect from 1 January 2022:

Executive Director

Annual base salary

2021

Annual base salary

from 1January 2022

Percentage

increase

Laxman Narasimhan £979,000 £1,008,000 3%

Jeff Carr £700,000 £721,000 3%

Annual bonus in respect of 2021 performance

Executive Director 2021 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 1.89 for outperformance of the stretching range set by the Committee

• The two individual multipliers are then multiplied together to provide the total performance multiplier

Net revenue

multiplier

(up to 1.89x)

Adjusted proﬁt

before tax multiplier

(up to 1.89x)

Performance

multiplier

(Threshold = 0x

Target = 1.0x

Max = 3.57x)

• The performance multiplier can range from zero for performance at threshold or below, to 3.57 for truly exceptional performance 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

Delivery

Cash Shares

Performance

multiplier

Target

bonus

Final

bonus outcome

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

• Similarly, underperformance in one of the performance metrics will reduce the overall bonus payout, even in the case of outperformance

ofthe other

Directors’ Remuneration Report (Continued)

ANNUAL REPORT ON REMUNERATION

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

169

• 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)

• One-third of any APP is deferred into an award over Reckitt

shares, to strengthen alignment with shareholders

2021 performance targets

The Remuneration Committee set targets for the Executive

Directors at the beginning of the 2021 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 and to the change in

business strategy.

During the year, the active management of the portfolio saw a 9%

portfolio turnover, including the strategic disposal of IFCN China

and Scholl and the acquisition of Biofreeze – a major step forward

in our strategy to rejuvenate sustainable growth. This activity

tostrengthen the portfolio has meant that the targets set at

thebeginning under the APP needed to be reviewed to ensure

they remained appropriate. 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 Committee resolved to include the performance of disposed

assets within the performance of the year assessment until the

closing date of sale. In order to ensure we assessed performance

on a fair and consistent basis the targets were adjusted to include

performance of disposed assets to the date of sale and exclude

them for the period of the year that Reckitt no longer owned

them. In respect of acquisitions, we included the performance

from the closing date of acquisition and also increased the targets

accordingly. The Committee considers that these revised targets

maintain the same levels of stretch and that participants were no

worse or better off.

2021 ﬁnancial performance against APP targets

As stated earlier in the Annual Report, 2021 marked a year of

growth ahead of expectations and a strong year in terms of

revenue. LFL net revenue growth was 3.5%, outperforming market

expectations of approximately -0.4% at the time targets were

set,and building on the outstanding growth of last year gives a

two-year stacked growth of 17.4%, signiﬁcantly ahead of the peer

group average. For the purpose of annual bonus calculations, after

the adjustments for the acquisitions and disposals, net revenue

growth was 2.2% to £13.95 billion (on a constant foreign exchange

basis). This strong year reﬂects market share growth with 62% of

our core CMUs holding or gaining share.

For 2021, operating margin (excluding IFCN China) was 22.9%,

inlinewith guidance, resulting in the bonus metric of adjusted

proﬁt before income tax (on a constant foreign exchange basis)

of£2.84 billion which reﬂects performance towards the top end

ofthe target range set by the Committee at the start of the year.

The chart below illustrates this performance compared to

thetargets.

Performance

Measure

Net revenue

Adjusted

proﬁt before

income tax

Threshold

(zero bonus)

Maximum

(3.57 x target)

Actual

£13.22bn £13.95bn

1.77x

1.84x

£14.06bn

£2.58bn £2.84bn £2.85bn

Achieved

As illustrated above, 2021 net revenue and adjusted proﬁt

beforeincome tax both approached the maximum level of the

performance ranges set for the 2021 annual bonus resulting in a

formulaic bonus multiplier of 3.26x of target (91.3% of maximum).

These results reﬂect the strong 2021 performance ahead of

expectations, the strengthened portfolio and strong momentum.

For example, brands less sensitive to COVID-19 dynamics,

representing c.70% of the portfolio grew, on average by mid-single

digits in each quarter of 2021. We are ﬁrmly on track with our

transformation programme to achieve our target of mid-single

digits net revenue growth and adjusted operating margins in the

mid-20s by the mid-2020s.

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 156 and more details

aresetout overleaf.

Competitor performance

Top-line performance signiﬁcantly better than peers

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

Reckitt (ex. IFCN China)

Peer group average

2020 growth 2021 growth

3.5% 17.4%*13.9%

3.3% 8.5%*5.2%

*2-year stacked growth

1. Peer group data based on latest data publicly available for FY 2021.

Where this data was not available, comparison is based on latest results

covering Q3 2021 or later

Portfolio performance and mid-single-digit growth

of portfolio* already growing at >5%

c.70%

* Excluding brands more impacted by COVID-19 – Lysol, Dettol and

cold and ﬂu brands

Adjusted operating margin ahead of peers

Reckitt (ex. IFCN China)

Peer group average

22.9%

20.9%

20.0% 21.0% 22.0%

23.0%

1. Peer group data based on latest data publicly available for FY 2021.

Where this data was not available, comparison is based on latest results

covering Q3 2021 or later

Strong market share performance

of core CMUs holding/gaining share

+62%

170

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

• Strong progress in repositioning

ourbusiness towards higher growth:

We entered the important US analgesic

market with the acquisition of the high

growth Biofreeze business, whilst

divesting our lower growth businesses,

of IFCN China, Argentina, Scholl

andE45.Approximately 9% of the

portfoliorepositioned

• Strong market share performance:

62%of our Core Category Market Units

(CMUs), held or gained share

• New corporate brand launched in

March 2021: Reﬂects our refreshed

outlook and Purpose. The

redevelopment of the corporate identity

from RB to Reckitt is a key milestone for

the company’s ongoing journey of

transformation towards sustainable

growth and reﬂects our renewed

Purpose and strategy. The new brand is

built on how stakeholders recognise the

brand; it is more powerful, consistent,

and impactful. The launch saw high

levels of engagement across all

stakeholder groups, and was met by

almost universal acclaim

• Drove new business and channels:

OurGlobal Business Solutions (GBS)

hasfurther developed its channel

andgeographic footprint through

partnerships with operators such as

Diversey. E-commerce net revenue,

excluding IFCN China, grew by 17% in

2021, resulting in a two-year stacked

growth of 85% and now accounts for

12% of group net revenue

• Improvement in regulatory capability:

Our regulatory capability has improved in

both the quality and the speed with

which we operate. Our innovation

pipeline value is 50% higher than the

previous year and our investment in

digital has driven continued high growth

in our e-commerce platforms

• Stronger R&D function: We launched

the Innovation Council to harmonise

innovation across each GBU, market and

functions including Marketing, R&D and

Supply. The Global R&D function now

includes Regulatory, Global Safety

Assurance (GSA) and Operational

Excellence, driving greater partnerships

and operational efﬁciencies. Frontline

resources have been deployed in-market

to drive proximity to consumers

• Signiﬁcant focus on embedding Diversity

and Inclusion:

• Since launching our ﬁve-year

commitment in June 2020, the Stronger

Together conversation series has

continued to create opportunities for

sharing inspiring and challenging stories

from our colleagues across the world.

Seven live global events in 2021 reached

almost 30,000 people

• Employee Resource Groups (ERGs) are

employee networks that aim to raise

theproﬁle of underrepresented people.

Three global ERGs have all made progress

in their respective areas with a focus on

gender balance, the LGBTQ+ community,

and race and ethnicity. The ERGs are

represented on the Global Inclusion

Boardand provide input on consumer

perspectives which informs our

innovation process

• Initiated the Conscious Inclusion

programme in order to promote the

beneﬁts of conscious inclusion. Almost

90% of our senior managers have

attended these sessions so far

• Focus on employee wellbeing:

• All through the pandemic we have

focussed on ‘Doing the right thing’ and

‘Putting our Consumers and People ﬁrst’.

In every country we took necessary

stepsto help our colleagues with

theconsequences of the pandemic

(e.g.facilitating vaccination drives in many

emerging markets, EAP support etc.)

• In March 2021 we launched our global

wellbeing programmes for leaders at all

levels in partnership with global leaders in

this ﬁeld. Together, we delivered bespoke

wellbeing resources including one-to-one

and group performance coaching,

training, social learning events and access

to resources via digital apps

• Embedded our hybrid working model,

taking into consideration direct feedback

received from our employees through

surveys. Launched our ‘Future of Work’

approach, providing greater ﬂexibility and

creating a seamless, inclusive and

consistent experience in a hybrid world.

Our approach is underpinned by the 4 Cs

– Connect, Create, Coach and Collaborate

– which will help to guide choices around

where employees work

• Rolled out Leadership Behaviours: These

behaviours are a key part of our leadership

development programme and annual review

process. In the June 2021 Glint survey,

colleagues scored leadership highly in all

categories. The highest scores registered

were for decisiveness, purpose and

speaking direct with respect and over 75%

of employees feel a positive impact of

Leadership Behaviours launched in 2021

• Launch of our Sustainability Ambitions,

‘

For a Cleaner, Healthier World’

• Launched in March 2021, this sets out our

2030 ambitions and is backed by more than

£1 billion of planned investment over the

next ten years to ensure we meet our goals

• Achieved 66% reduction in absolute carbon

in operations since 2015, 100% renewable

electricity purchased for our manufacturing

operations and 24.9% of 2021 net revenue

from more sustainable products

• Ongoing development of our Sustainable

Innovation Calculator, now used in each

GBU’s product innovation programme

toenable more sustainable products in

thefuture

• Sustained commitments to aid programmes:

Including investments worth over £38 million

viathe Reckitt Fight for Access Fund and

distributing 24 million products to worthy causes

such as the Red Cross with 3.4 million people

across 50 countries measurably impacted by our

social impact work

• Hygiene partner of the United Nations COP26

conference: Partnered to deliver a safe

conference that furthered climate action.

Co-authored a white paper with EcoHealth

Alliance and the London School of Hygiene and

Tropical Medicine, setting out the risks to human

health of unabated climate change and presented

recommendations to address these potentially

existential threats

• Strengthened sustainable sourcing activity,

supporting more sustainable livelihoods and

working conditions for our suppliers: Focus on

key ingredients including palm oil and latex

through various initiatives, and collaboration

with, for example, Consumer Goods Forum

members and our own partner, Earthworm

Foundation, on landscape programmes; initiated

certiﬁcation of latex through the Fair Rubber

Association and currently working with

plantations in Malaysia and smallholder farmers

inThailand to certify latex production, protect

ecosystems and support sustainable livelihoods

and communities

• Early signatory and the ﬁrst consumer

packaged goods company to join Amazon’s

Climate Pledge: This commits us to net-zero

emissions by 2040. We now sell over 60

products which are labelled as Climate Pledge

Friendly on Amazon

• External benchmarks of progress: Reckitt

retained its position in the FTSE4Good Index

with ongoing delivery through our ESG agenda

and Sustainability Ambitions, coupled with

transparent reporting of our progress and

systems. We re-joined the Dow Jones

Sustainability Index and were also awarded

aGold Class 2022 Sustainability Award from

S&P Global. We have an improved MSCI ESG

rating from A to AA, and a Sustainalytics score

at 22.9, positioning Reckitt in the top 15% of our

industry group

Directors’ Remuneration Report (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

171

Decision on 2021 bonus outcomes

Taking into account the very strong year of ﬁnancial performance, ahead of expectations, the management to strengthen the portfolio and

the wider assessment of performance as described above, which sees the transformation ﬁrmly on track, 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:

Base salary x

Target

bonus x

Performance

multiplier =

Total

bonus = Cash

Deferred into

Laxman Narasimhan £979,000 x 120% x 3.26 = £3,829,848 = £2,553,232 £1,276,616

Jeff Carr £700,000 x 100% x 3.26 = £2,282,000 = £1,521,333 £760,667

Vesting of the 2019 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. The 2019 LTIP awards were made following the approval of

the Group’s Remuneration Policy in May 2019. The award was made to Laxman Narasimhan on 5 August 2019. Jeff Carr was not with the Group

at the time these awards were made.

2019 performance targets

Vesting of awards under the 2019 LTIP was dependent on the performance conditions set out in the table below.

Threshold

(20% vesting)

Maximum

(100% vesting)

EPS growth (3-year CAGR)

(50% weighting – 25% actual FX; 25% constant FX) 4% 9%

LFL net revenue growth (3-year CAGR)

(25% weighting) 2% 6%

ROCE (ﬁnal year)

(25% weighting) 10.8% 12.8%

The performance assessment is provided below:

Assessment of performance versus targets

As discussed under the ‘Remuneration decisions in relation to portfolio management’ section of the Chair’s letter, the Remuneration

Committee decided that for the 2019-2021 LTIP award, given the timing of the IFCN China sale is such that it was under the Group’s ownership

for most of the performance period, no adjustments were to be made to the LTIP targets set at the start of the performance period.

For the portion of the LTIP awards subject to ROCE performance, as stated in our 2018 Annual Report, ROCE is measured in the ﬁnal year of the

performance period and is measured using the same principles as the ROCE ﬁgure disclosed elsewhere in the Annual Report, other than the

fact that ROCE for LTIP purposes is measured on a constant currency basis. This is on a consistent basis in line with the deﬁnition agreed when

targets were set. This means that capital employed has been calculated on a monthly average basis including IFCN China for the period of

ownership by Reckitt of January through to August 2021. IFCN China is also included in the adjusted operating proﬁt after tax for the whole

period of ownership ensuring that the numerator and denominator of the ROCE calculation are on a consistent basis.

Similarly, no adjustments have been made to targets for the adverse impact on ROCE of other acquisitions and disposals, e.g. the acquisition of

Biofreeze or the sale of Scholl. Finally, as disclosed in the 2020 Annual Report, we have ensured that the goodwill impairment in respect of IFCN

did not lead to an increase in vesting in respect of the proportion of the LTIP related to ROCE by adjusting the capital employed accordingly.

172

The chart below illustrates performance compared to the targets. As set out below, the strong LFL net revenue growth over the three-year

performance period results in 21.5% vesting in respect of this element of the award. The remainder of the award related to EPS growth and

ROCE will not vest as performance was below the stretching targets set.

Performance measure

Total vesting 21.5%

LFL net revenue growth CAGR

(25% weighting)

2% 5.3%

Threshold

(20% vesting)

Vesting

(% of total award)

Maximum

(100% vesting)

21.5%

EPS CAGR – actual FX

(25% weighting)

4%-5.3%

0.0%

EPS CAGR – constant FX

(25% weighting)

4%-2.9%

0.0%

ROCE (ﬁnal year)

(25% weighting)

10.8%10.3%

0.0%

12.8%

Achieved

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 156. The Committee took into account the progress on delivery of the strategy and wider people, culture and sustainability in 2021 as

disclosed on page 170 of this report and over the performance period of the 2019 LTIP, as disclosed in previous Annual Reports as well as the

shareholder experience.

Delivery of shareholder value: £6,480 million of shareholder value generated

Market capitalisation as at 1 January 2019 (£m)

Shareholder value as at 31 December 2021 (£m)

50,000

30,000

42,542

42,542 3,7142,766

34,00032,000 36,000 38,000 40,000 42,000 44,000 46,000 48,000

Market capitalisation as at 1 January 2019 (£m) Increase in market capitalisation Dividends paid 2019 – 2021

Decision on 2019 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 2019 LTIP award to the CEO will vest as detailed below. These awards did not accrue

dividends during the vesting period.

Interests

held

Exercise

price Vesting %

Interests

vesting

price

Estimated

value

CEO awards – Laxman Narasimhan

Performance shares 75,000 n/a 21.5% 16,125 £59.8 4 £964,920

Performance share options 150,000 £63.72 21.5% 32,250 £59.8 4 £0

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 the last quarter of 2021 of £59.84.

The actual value at vesting will be disclosed in the 2022 Annual Report

There is a further two-year holding period attached to Laxman Narasimhan’s LTIP award which means that vested performance shares (net of

tax withholding) will not be released to the CEO until 1 January 2024, 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 Mr Narasimhan until 1 January 2024.

Directors’ Remuneration Report (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

173

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 2021,

based on the information set out in the previous sections. This is compared to the prior year ﬁgure:

Executive Directors

Laxman Narasimhan Jeff Carr

2021

2020

2021

2020

Base salary 979,000 950,000 700,000 494,545

Taxable beneﬁt

95,322 251,689 16,756 12,201

Pension beneﬁt

97,900 95,000 70,000 49,455

Annual bonus

3,829,848 4,069,800 2,282,000 1,765,526

LTIP

964,920 n/a n/a n/a

Buyout arrangements

3,067,845

Fixed remuneration 1,172,222 1,296,689 786,756 556,201

Variable remuneration 4,794,768 4,069,800 2,282,000 1,765,526

Total 5,966,990 8,434,334 3,068,756 2,321,727

1. Joined the Board and was appointed as CFO on 9 April 2020

2. Beneﬁts for Laxman Narasimhan in 2021 primarily consist of car, healthcare, and tax ﬁling support as a result of his relocation. For Jeff Carr the beneﬁts include car allowance

and healthcare. Where relevant the costs above include a gross-up for tax

3. The company paid the Executive Directors 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 prospective pension on a deﬁned contribution basis, with no deﬁned beneﬁt accrual

4. Annual bonus reﬂects ﬁnancial performance approaching the maximum level of the performance ranges set for the 2021 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 91.3% of the

maximum level in line with the formulaic outcome is appropriate as set out on pages 168 to 171. One-third of this is deferred into share awards for three years

5. Reﬂects the estimated value of LTIP performance share options and performance shares granted to Laxman Narasimhan in August 2019, which are due to vest on 20 May

2022 at 21.5% of maximum. Valued using an average share price over Q4 2021 of £59.84. See the relevant section on pages 171 and 172 for more details. 0.2% is attributable

to share price growth over the vesting period. The Committee did not apply discretion in determining the remuneration resulting from the 2019 LTIP vesting as a result of

share price appreciation

6. The buyout includes awards made to Laxman Narasimhan, related to legacy arrangements implemented by his previous employer. The value of this buyout was estimated in

the 2020 Annual Report. The long-term share award vested at 52.6% of target on 25 March 2021 and the long-term cash award was paid at 110% of target in March 2021. The

value has been restated to reﬂect this and the actual closing Reckitt share price on the date of vesting of £64.12 for the long-term share award, including accumulated

dividends. 6.63% of the value of the share award included in the buyout is attributable to share price growth over the vesting period

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

Shareholding requirement

Current shareholding £5.4m

CFO

Shareholding requirement

£2.5m

Current shareholding

200,000

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000

Shares held

Shares deferred from annual bonus

2022 vesting

1. Current shareholding value based on the average closing share price in Q4 2021 of £59.84

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 2021 annual bonus

4. For Laxman Narasimhan this is an estimate of the number of shares vesting in May 2022 under the 2019 LTIP, after tax

174

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.1200% and c.850% of salary for the CEO and CFO, respectively (based on a share price of £59.84).

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 awarded to the CEO as buyout for legacy awards from his

previous employer and 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.600% of salary for the CEO and c.425% 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 2021:

Performance shares Options held

Shareholding

requirement

(number of

shares)

Total

beneﬁcial

interests

(number of

shares)

awarded

under the

Deferred

Bonus Plan

To vest

in2022

Unvested,

subject to

performance

Vested but

not exercised

To vest

in2022

Unvested,

subject to

performance

Laxman Narasimhan 200,000 56,917 25,199 8,546 150,000 0 32,250 300,000

Jeff Carr 100,000 30,000 11,592 n/a 80,000 0 n/a 160,000

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 2021 annual bonus

3. This is an estimate of the number of shares vesting to Laxman Narasimhan in May 2022 under the 2019 LTIP, after tax as detailed on page 172

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 187.

2021 LTIP awards (audited)

The table below sets out the LTIP awards which were made to Laxman Narasimhan and Jeff Carr on 28 May 2021. These awards do not accrue

dividends during the performance period. 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.

Date

of grant

over which

awards

granted

Market

price at

date of

award

Exercise

price

Face

value

Performance period

Exercise/vesting

period

Holding

period

Performance shares

Laxman Narasimhan 28 May 2021 75,000 £63.68 n/a £4,776,000 1 Jan 2021–31 Dec 2023 May 2024 1 Jan 2026

Jeff Carr 28 May 2021 40,000 £63.68 n/a £2,547,200 1 Jan 2021–31 Dec 2023 May 2024 1 Jan 2026

Performance share options

Laxman Narasimhan 28 May 2021 150,000 £63.68 £64.67 £0 1 Jan 2021–31 Dec 2023 May 2024–May 2031 1 Jan 2026

Jeff Carr 28 May 2021 80,000 £63.68 £64.67 £0 1 Jan 2021–31 Dec 2023 May 2024–May 2031 1 Jan 2026

1. The market price on the 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 based on the market price at the date of award and assumes the performance criteria are met to achieve full vesting. For performance-based share

options based on the face value of the potential gain at award assuming full vesting, calculated as the difference between market price and exercise price. The face value of

shares under option is £9,552,000 for Laxman Narasimhan and £5,094,400 for Jeff Carr if calculated as the number of shares multiplied by the market price at date of award

As disclosed in the 2020 Annual Report, the performance measures and weightings used for the 2021 LTIP were unchanged from the 2020 LTIP

award, being 50% based on net revenue, 25% based on ROCE and 25% based on EPS (split equally between actual exchange rate and

constant exchange rate).

Directors’ Remuneration Report (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

175

Net revenue continues to be measured as LFL 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. As stated in our 2018 Annual Report the deﬁnition of

ROCE used for the purposes of the LTIP differs from that disclosed elsewhere in the Annual Report as it is measured on a constant currency

basis. EPS is measured on a total adjusted diluted basis, as shown in the Group’s Financial Statements, as this provides an independently

veriﬁable measure of performance. It is measured using both constant and actual foreign exchange bases (with an equal weighting on each)

and is based on the ﬁnal year of the performance period. The Committee disclosed the targets which apply to these LTIP awards in June 2021.

As discussed in the Chair’s letter and set out in further detail on page 181, during 2021, the active management of the portfolio saw a 9%

portfolio turnover, including the disposals of IFCN China and Scholl and the acquisition of Biofreeze, a major step forward in our strategy to

rejuvenate sustainable growth. This activity to strengthen the portfolio has meant that the targets set at the beginning of each award under

the LTIP needed to be reviewed to ensure they remained appropriate. In line with our current shareholder-approved Remuneration Policy and

shareholder views on adjusting targets, the LTIP targets were adjusted where needed to ensure that participants are no better or worse off

and in line with shareholder expectations. Further detail on these adjustments and the vesting schedule that applies to awards granted under

the 2021-2023 LTIP are presented on page 181.

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

International Transfer Policy, 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. In addition, as part of the wider review of remuneration arrangements and in the development of the Directors’ Remuneration

Policy over the past year, the Committee took into account views of senior management and other employees. The company commissioned

external independent consultants to undertake detailed stakeholder interviews with senior management on remuneration arrangements

which apply to them and their teams, and internally, Reckitt operated focus groups with employees to understand views on incentives. 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.

As mentioned in the Chair’s letter, in March 2021 we launched our global wellbeing programmes for leaders at all levels in partnership with

Hintsa and Tignum, global leaders in this ﬁeld. We have also provided a rich bank of resources for all employees to access including global

wellbeing sessions, focusing on balance, burnout and the importance of mental energy and attracting over 3,000 participants each time. In

July 2021 we launched a global employee pulse survey, focusing on understanding our employee demographics and getting insights on our

Leadership Behaviour and diversity topics.

As discussed in the Strategic Report our employment policies drive gender equality in our teams. We have mentoring schemes for female

employees, gender-balanced shortlists and proportional targets at senior management level. We have also continued with several initiatives

that were launched in 2020, such as the Stronger Together conversation series, a ﬁve-year commitment focusing on diversity and inclusion

(D&I) and belonging topics that matter most to our people. During 2021, another seven virtual global sessions have been held, reaching almost

30,000 people, with more watching the sessions later on demand. Our Global Inclusion Board comprises senior leaders and sponsors of our

Employee Resource Groups (ERGs) and is chaired by the CEO, who leads the D&I strategic agenda across Reckitt.

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 2021 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 town hall 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 68 to 73.

176

The table below summarises the remuneration structure for the wider workforce:

Element Implementation below the Board Comparison with Executive Director

remuneration

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 average total pay during 2021 to all employees across the Group is £48,445 and we

review pay ratios of the Chief Executive Ofﬁcer’s total remuneration to the remuneration

of UK employees, as set out on page 178 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 are developing our global Sustainable Livelihood Framework (of

which living wage is a component) to outline our approach and will be piloting it within

selected factories in Thailand and India.

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.

Annual

bonus

Our Annual Performance Plan (APP) is operated consistently across the organisation

andhas more than 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.

Annual bonuses for Executive Directors

are directly related to Reckitt’s

ﬁnancial performance measured

by net revenue and adjusted proﬁt

before income tax targets. 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.

Long-term

incentives

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 2022 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 2022 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.

All-

employee

share plans

We operate an award-winning 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.

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.

Around 50% of Reckitt employees have signed up to one of our three share plans with

total savings of around £171 million across all cycles. Over the last three-year period,

2019-2021, just over 6,900 employees saved in one of our plans, making a gain of around

10% over the period.

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 28

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.

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.

Executive Directors are eligible

to participate in the all-employee

Sharesave Scheme on the same

basis as all employees.

Directors’ Remuneration Report (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

177

Element Implementation below the Board Comparison with Executive Director

remuneration

ownership

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 £42 million

and the aggregate actual holding is currently £15

million

which reﬂects good progress towards the requirement given the

changes to the Group Executive Committee over the past two years.

Overall the total shareholding requirement for all employees with requirements is

£80 million,

with the current actual holding being £48 million.

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.

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 market

These are equivalent to c.1200% and

c.850% of salary

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 174 sets out

the progress of the Executive

Directors towards their

shareholding requirements.

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.

Our Executive Directors 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.

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. 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.

Executive Directors receive beneﬁts

which consist primarily of the provision

of a company car/allowance, pension

scheme, risk insurances and healthcare.

In addition, Executive Directors are

eligible for the beneﬁts available

to the wider UK workforce, as

described in this table.

1. Based on the average closing share price in Q4 2021 of £59.84

2. Compared against constituents of the FTSE 30

178

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People and Communities heading of our Sustainability section. To increase transparency on this issue Reckitt voluntarily discloses

thegender pay gap for our ten largest markets by workforce size, including the UK, which together make up around 70% of our global

permanent workforce.

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.

A summary of the gender pay statistics is also included below:

• The gender pay gap in the UK for the year to April 2021 is -7.4% at median and 5.0% at mean

• This compares to the year to April 2020 when the gender pay gap was -6.1% at median and 5.1% 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.

In line with the requirements, the total pay and beneﬁts paid to both Laxman Narasimhan and Rakesh Kapoor whilst in the role of CEO have

been combined to calculate the total CEO pay for 2019. It should be noted that for Laxman this included both the one-off relocation beneﬁts

and the buyout in respect of legacy arrangements provided by his previous employer.

For 2020, the pay ratio reﬂects the actual buyout awards to Laxman that are in respect of legacy arrangements from his previous employer

and which vested in March 2021. This is disclosed in the 2020 column of the single ﬁgure table on page 173 of this report. The disclosure will,

over time, cover a ten-year rolling period.

CEO

Year Method 25th percentile pay ratio Median pay ratio 75th percentile pay ratio

2021 Option A 1:170 1:121 1:78

2020 Option A 1:244 1:177 1:100

2019 Option A 1:158 1:115 1:70

The calculations reﬂect the application of Reckitt’s reward policy across the organisation as set out in the section on wider workforce

payarrangements.

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 173.

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 2022, following the end of the ﬁnancial year.

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 2021 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 2021:

25th

percentile

Median

pay

75th

percentile

Total employee pay and beneﬁts £35,045 £49,261 £76,581

Salary component £28,268 £40,906 £67,771

In addition, Note 5 to the Financial Statements sets out the total employment costs and average number of employees globally, during 2021.

Based on these, the average global pay during 2021 was £48,445 and consequently the pay ratio between the CEO and average global

employee was 1:123.

Directors’ Remuneration Report (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

179

IMPLEMENTATION OF DIRECTORS’ REMUNERATION POLICY FOR 2022 OUTCOMES

Salary

As set out earlier in this report, there will be a 3% increase in salaries for 2022 for the CEO and the CFO in line with the budgeted average

increase for the UK workforce. The CEO’s salary will be £1,008,000 and the CFO’s will be £721,000.

Pension

The CEO and CFO are 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.

Annual bonus in respect of 2022 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 2022 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. 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 2022 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 2022.

2022 LTIP awards

Award levels

There are no changes to the LTIP award levels for the CEO or CFO for 2022. These have been reviewed in light of share price performance,

Group performance and individual performance. Laxman Narasimhan’s 2022 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 May 2022 AGM.

Performance conditions

As disclosed in the Chair’s letter, the Committee reviewed the performance measures with the aim of ensuring alignment with our strategy to

rejuvenate sustainable growth. The 2022 LTIP performance conditions and weightings are as follows; each element is considered

independently:

• 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 2022 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 previously stated, our guidance is for LFL net revenue growth of 1-4%, for 2022

withalonger-term target of mid-single-digit growth. 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. This represents an increased threshold compared to the 2021 LTIP target.

ROCE

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. As stated in our 2018 Annual Report the deﬁnition of ROCE used for the purposes of the LTIP differs from that disclosed in the

Annual Report, as it is measured on a constant currency basis. 20% of this element will vest for achieving 13.2% increasing to full vesting for

achieving 15.2%.

180

Relative TSR

Relative TSR directly aligns LTIP participants with the shareholder experience and will only reward for TSR outperformance against our peers.

The Committee deliberated over the constituents of the Relative TSR peer group as part of the Committee’s review of the Remuneration

Policy. The proposed group of 19 companies represents companies that we compete with for capital and which shareholders compare us to

and is also an appropriate group to incentivise LTIP participants to outperform.

Relative TSR will be measured against a group of 19 global companies that directly reﬂects shareholder feedback received during the

consultation. The peer companies are primarily drawn from the constituents of the MSCI World House & Personal Products Index. The

Committee determined to also include appropriate comparators that form part of the broader ‘Fast Moving Consumer Goods’ industry and are

subject to similar industry dynamics and market challenges as Reckitt. The Committee was also keen to have a sufﬁcient number of companies

in the peer group so that the relative TSR comparison remains robust throughout the performance period. 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 2022 LTIP award is set out below:

Beiersdorf Danone JDE L’Oréal Shiseido

Church & Dwight Essity Kao Mondelēz Unicharm

Clorox Estée Lauder Kimberly-Clark Nestlé Unilever

Colgate Palmolive Henkel Lindt Procter & Gamble

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

The introduction of ESG measures aligns participants with, and incentivises delivery of, our 2030 sustainability ambitions. There are two equally

weighted metrics for the 2022 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 24.9% of net revenue from more

sustainable products in 2021 and have set the targets for this measure based on the Plan to 2030, such that 20% of this element will vest

forachieving 30% of net revenue from more sustainable products increasing to full vesting for achieving 33%.

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 65% reduction in GHG emissions in operations increasing to full vesting for achieving a 69% reduction. The

threshold of a 65% reduction is in line with 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.

Summary of 2022 LTIP targets

Performance will be assessed for each measure, at the end of the three-year performance period. Performance will be assessed on a sliding

scale as set out below:

Threshold

(20% vesting)

Maximum

(100% vesting)

LFL net revenue growth (3-year CAGR)

(40% weighting) 2.0% 5.0%

ROCE (ﬁnal year)

(25% weighting) 13.2% 15.2%

Relative TSR

(25% weighting) Median Upper quartile

ESG: % of net revenue from more sustainable products (ﬁnal year)

(5% weighting) 30% 33%

ESG: % reduction in GHG emissions in operations (ﬁnal year)

(5% weighting) 65% 69%

Directors’ Remuneration Report (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

181

REMUNERATION DECISIONS IN RELATION TO PORTFOLIO MANAGEMENT

During 2021, the active management of the portfolio saw a 9% portfolio turnover, including the disposals of IFCN China and Scholl and the

acquisition of Biofreeze, a major step forward in our strategy to rejuvenate sustainable growth. This activity to strengthen the portfolio has

meant that the targets set at the beginning of each award under the APP and LTIP needed to be reviewed to ensure they remained

appropriate. In line with our current shareholder-approved Remuneration Policy and shareholder views on adjusting targets, the LTIP targets

were adjusted where needed to ensure that participants are no better or worse off and in line with shareholder expectations as follows.

Adjusting in-ﬂight LTIP performance measures

For the 2020-2022 and 2021-2023 awards, the Committee has determined to adjust the targets for the disposal of IFCN China, given the size of

this transaction, to ensure that the new targets are no harder or easier to achieve than the original targets.

A consistent approach has been taken across all three performance measures and the adjustments are in line with generally accepted

shareholder principles where there has been material portfolio management.

• The original EPS targets were set as ﬁnal year EPS values, based on a plan which included IFCN China at the time the targets were set.

These targets have been reduced to recognise the impact of the reduced proﬁt expected in the ﬁnal year of the LTIP cycle due to the

disposal of IFCN China

• The LFL net revenue targets have been reduced slightly to recognise that the expected revenue growth for IFCN China when the targets

were set was higher than the remaining portfolio. The challenge in the new targets for the remaining portfolio remains equal to the

originaltargets

• The ROCE targets have been increased to reﬂect that IFCN China was a lower return business than the remaining portfolio and again the

new targets contain the same level of challenge as was contained in the original targets when set

The tables below show the original targets, the impact of IFCN China and the new targets for the remaining period of the in-ﬂight awards. The

Committee will continue to monitor future portfolio activity across the Group, if any, and may decide to adjust the targets again, if appropriate.

2020 LTIP targets

Original targets

Adjusted targets for portfolio

management

Threshold

(20% vesting)

Maximum

(100% vesting)

Threshold

(20% vesting)

Maximum

(100% vesting)

LFL net revenue growth (3-year CAGR)

(50% weighting) 2.0% 5.0% 1.9% 4.9%

ROCE (ﬁnal year)

(25% weighting) 11.8% 13.1% 13.5% 14.8%

EPS (ﬁnal year) on a constant foreign exchange basis

(12.5% weighting) 323 pence 360 pence 304 pence 341 pence

EPS (ﬁnal year) on an actual foreign exchange basis

(12.5% weighting) 302 pence 337 pence 283 pence 318 pence

2021 LTIP targets

Original targets

Adjusted targets for portfolio

management

Threshold

(20% vesting)

Maximum

(100% vesting)

Threshold

(20% vesting)

Maximum

(100% vesting)

LFL net revenue growth (3-year CAGR)

(50% weighting) 1.0% 5.0% 0.9% 4.9%

ROCE (ﬁnal year)

(25% weighting) 12.3% 14.0% 13.7% 15.4%

EPS (ﬁnal year) on a constant foreign exchange basis

(12.5% weighting) 327 pence 401 pence 308 pence 382 pence

EPS (ﬁnal year) on an actual foreign exchange basis

(12.5% weighting) 308 pence 379 pence 289 pence 360 pence

182

Percentage change in the remuneration of Directors

Following amendments to UK reporting regulations, companies 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, i.e. the same individuals or roles appear in the 2020 and 2021 populations.

2020/21 2019/20

Salary/fee Beneﬁts Bonus Salary/fee Beneﬁts Bonus

All UK employees

5.9% 6.2% -8.9% 4.5% 1.5%

505.4%

Andrew Bonﬁeld 2.4% n/a n/a 4.1% n/a n/a

Olivier Bohuon

n/a n/a n/a n/a n/a n/a

Jeff Carr (CFO)

41.5% 37.3% 29.3% n/a n/a n/a

Nicandro Durante 1.9% n/a n/a 14.1% n/a n/a

Mary Harris 2.0% n/a n/a 14.4% n/a n/a

Mehmood Khan 2.7% n/a n/a 4.7% n/a n/a

Pam Kirby 2.0% n/a n/a 7.3% n/a n/a

Sara Mathew

2.7% n/a n/a 1 09.3% n/a n/a

Laxman Narasimhan (CEO)

3.1% –62.1% -5.9% 117.3% –23.4% 1747.2%

Chris Sinclair (Chair of the Board) 3.6% n/a n/a 10.0% n/a n/a

Elane Stock 2.7% n/a n/a 4.7% n/a n/a

Margherita Della Valle

105.4% n/a n/a n/a n/a n/a

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 and 2020 and similarly between 2020 and 2021. It only includes colleagues employed in both years in the comparison

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. Olivier Bohuon was appointed to the Board on 1 January 2021 and so no comparison is shown for 2020 to 2021

4. Jeff Carr joined on 9 April 2020 so no comparison is shown for 2019 to 2020. The percentage change shown for 2020 to 2021 reﬂects actual remuneration received during

2020 for service from Jeff Carr’s appointment on 9 April 2020 to 31 December 2020

5. Sara Mathew was appointed to the Board in July 2019 and the comparison reﬂects that the 2019 fee was only received for part of the year. Similarly, the salary/fee, beneﬁts

and bonus for Jeff Carr and Margherita Della Valle (where applicable) for 2020 reﬂects the time served on the Board

6. Laxman Narasimhan received no increase to his annual salary during 2020. The percentage change shown in 2019 to 2020 above reﬂects actual salary received during 2019

for service from his appointment on 16 July to 31 December 2019

7. Margherita Della Valle joined on 1 July 2020 so no comparison is shown for 2019/2020

The change in annual bonus for all UK employees reﬂects the performance of the company in 2021 which resulted in lower bonuses in 2021

compared to 2020. For reference, the 2020 annual bonus for UK employees was 505.4% higher than that paid in 2019 due to performance of

the company in 2020 compared to 2019.

Relative importance of spend on pay

The table below shows shareholder distributions (i.e. dividends) and total employee pay expenditure for 2020 and 2021, along with the

percentage change in both.

2021

£m

2020

£m

% change

2020/21

Total shareholder distribution

1,246 1,241 0.4%

Total employee expenditure

2,276 2,302 -1.1%

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

ADDITIONAL REMUNERATION DISCLOSURES

Directors’ Remuneration Report (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

183

Exit payments made in the year (audited)

No exit payments were made to Executive Directors during the year.

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 2012. This shows the growth in the

value of a hypothetical holding of £100 invested on 31 December 2011. 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.

Total Shareholder Return since 1 January 2012

£ value of £100 invested at 1 January 2012

Reckitt FTSE 100 Source: Thompson Reuters Datastream

20222012 2013 2014 2015 2016 2017 2018 2019 2020 2021

100

150

200

250

300

100

110

126

130

161

131

184

130

226

154

253

173

260

158

232

185

244

164

267

194

266

100

The table below sets out the single ﬁgure of total remuneration for the role of CEO over the last ten years.

(£000)

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

CEO single ﬁgure of remuneration

Laxman Narasimhan £4,599

£8,434

£5,967

Rakesh Kapoor £8,411 £6,840 £12,787 £25,527 £15,289 £8,999 £14,314 £938

Annual bonus

(as a percentage of maximum) 53% 100% 72% 100% 0% 0% 84% 12%

100% 91%

LTIP vesting

(as a percentage of maximum) 100% 40% 40% 80% 50% 50% 65% 0%

n/a

21.5%

1. Includes buyouts in respect of legacy arrangements from previous employer, restated, and reﬂects the actual value of the buyout award that vested

2. Zero for Rakesh Kapoor

3. Laxman Narasimhan was not with the Group at the time these awards were granted

184

Single total ﬁgure of 2021 remuneration for Non-Executive Directors and implementation for 2022 (audited)

The following Non-Executive Director fee policy was in place for the year ended 31 December 2021. The table also sets out the fees that will

apply from 1 January 2022.

2021 fees 2022 fees

Role

Cash fee

Fee

delivered

in Reckitt

shares Cash fee

Fee

delivered

in Reckitt

Base fees

Chair of the Board £427,500 £142,500 £470,250 £156,750

Non-Executive Director £71,250 £23,750 £73,500 £24,500

Additional fees

Chair of Committee £35,000 – £35,000 –

Member of Committee £20,000 – £20,000 –

Designated Non-Executive Director for engagement with the company’s workforce £20,000 – £20,000 –

Senior Independent Director £30,000 – £30,000 –

The fee for the Chair of the Board has been increased to £627,000, an increase of 10%. 25% of the fee continues to be paid in shares.

Asdisclosed in last year’s Remuneration Report the Committee reviewed the Chair of the Board’s fee during 2021 to reﬂect the enlarged

scope of the role and time commitment required over recent years and ensure that the fee remains broadly competitive and aligned to the

market. The new fee level remains below the median of the FTSE 30.

The base fee for NEDs has been increased to £98,000, an increase of 3%, broadly in line with the salary increase budget across the UK

workforce. In line with last year, the proportion delivered in Reckitt shares continues to be 25% of the base fee (£24,500).

In addition, subject to shareholder approval of the new Remuneration Policy, NEDs will become eligible to receive support from the company

to complete a UK tax return, if required. Under the current Remuneration Policy, the Chair of the Board and NEDs are not eligible to receive

beneﬁts and so the ﬂexibility to provide this beneﬁt has been included in the revised Remuneration Policy that is presented for approval.

Anybeneﬁts provided to NEDs will be disclosed in the 2022 Directors’ Remuneration Report.

The table below sets out a single ﬁgure for the total remuneration received by each Non-Executive Director for the year ended 31 December

2021 and the prior year:

2021 fees 2020 fees

Cash Shares Total Cash Shares Total

Chris Sinclair £427,50 0 £142,500 £570,000 £412,500 £137,500 £550,000

Andrew Bonﬁeld £106,250 £23,750 £130,000 £105,250 £21,750 £127,000

Olivier Bohuon

£91,250 £23,750 £115,000 – – –

Nicandro Durante £141,250 £23,750 £165,000 £140,250 £21,750 £162,000

Mary Harris £126,250 £23,750 £150,000 £125,250 £21,750 £147,000

Mehmood Khan £91,250 £23,750 £115,000 £90,250 £21,750 £112,000

Pam Kirby £126,250 £23,750 £150,000 £125,250 £21,750 £147,000

Sara Mathew £91,250 £23,750 £115,000 £90,250 £21,750 £112,000

Elane Stock £91,250 £23,750 £115,000 £90,250 £21,750 £112,000

Margherita Della Valle

£91,250 £23,750 £115,000 £45,125 £10,875 £56,000

1. Olivier Bohuon was appointed to the Board on 1 January 2021

2. Margherita Della Valle joined the Board on 1 July 2020. 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.

Directors’ Remuneration Report (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

185

Summary of shareholder voting at the 2021 AGM

The following table shows the results of the voting on the 2020 Directors’ Remuneration Report at the 2021 AGM and 2019 Directors’

Remuneration Policy at the 2019 AGM:

Votes for

For

Votes

against

Against

% Total

Votes

withheld

Approve the 2020 Directors’ Remuneration Report 43 4,137,976 82% 92,915,499 18% 527,053, 475 7,630,753

Approve the Directors’ Remuneration Policy 461,396,628 87% 66,134,073 13% 527,530,701 1,370,761

The Remuneration Committee has had extensive discussions with shareholders with a view to obtaining shareholder support for our

remuneration arrangements. In particular, in 2019, following a comprehensive consultation with our major shareholders, we made a number

ofchanges to the Remuneration Policy, to further align Executive Directors’ remuneration with shareholders’ interests. This resulted in

shareholders supporting the 2018 Directors’ Remuneration Report and the Directors’ Remuneration Policy, with a signiﬁcantly increased

marginof support compared to the previous vote on Policy in 2016.

The Chair of the Remuneration Committee has had extensive dialogue with shareholders during 2021 on the proposed changes to the

Remuneration Policy, including engaging with shareholders representing more than 50% of our shareholder register. The majority of

shareholders providing input were supportive of the changes we are making to our Remuneration Policy to even further align with the

strategic priorities of the Group. We are grateful to shareholders and their advisory bodies for the time taken and their feedback, which

hasprovided valuable input and assisted the Committee in developing the proposals.

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:

Length of service as at

31 December 2021

Name Date of appointment

Years Months

Chris Sinclair 10 February 2015 (appointed Chair of the Board on 3 May 2018) 6 11

Olivier Bohuon 1 January 2021 1 0

Andrew Bonﬁeld 1 July 2018 3 6

Nicandro Durante 1 December 2013 8 1

Mary Harris 10 February 2015 6 11

Mehmood Khan 1 July 2018 3 6

Pam Kirby 10 February 2015 6 11

Sara Mathew 1 July 2019 2 6

Elane Stock 1 September 2018 3 4

Margherita Della Valle 1 July 2020 1 6

Executive Directors’ service contracts contain a 12-month notice period, as set out in the Directors’ Remuneration Policy. Laxman Narasimhan

was appointed to the Board as CEO-Designate on 16 July 2019 and became CEO on 1 September 2019. 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.

186

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 2021, Deloitte LLP also

provided the Group with advice 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 £412,500

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 LTIP

(audited)

Grant

date

1.1.21

Granted

during

the year

Exercised/

vested

during the

year

(including

dividend

shares)

Lapsed

during

the year

31.12.21

Option

price

(£)

Market

price at

date of

award

(£)

Market

price at

date of

exercise/

vesting

(£)

Exercise/

vesting period

Laxman Narasimhan

Performance-

based share options 05.08.19 150,000 0 – – 150,000 63.72 May 2022-Aug 2029

01.05.20 150,000 0 – – 150,000 65.20 May 2023-May 2030

28.05.21 150,000 – – 150,000 64.67 May 2024-May 2031

Performance-

based share awards 05.08.19 75,000 0 – – 75,000 59.72 May 2022

01.05.20 75,000 0 – – 75,000 65.70 May 2023

28.05.21 75,000 – – 75,000 63.68 May 2024

Buyout awards

05.08.19 84,717 0 26,354 59, 254 0 59.72 64.12 Mar 2021

Jeff Carr

Performance-

based share options 01.05.20 80,000 – – – 80,000 65.20 May 2023-May 2030

28.05.21 80,000 – – 80,000 64.67 May 2024-May 2031

Performance-

based share awards 01.05.20 40,000 – – – 40,000 65.70 May 2023

28.05.21 40,000 – – 40,000 63.68 May 2024

1. Vesting of these awards is subject to performance conditions set by the Remuneration Committee

2. Buyout awards in respect of legacy awards from previous employer that vest subject to PepsiCo performance and include 891 dividends accrued on vested shares

Directors’ Remuneration Report (Continued)

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187

Directors’ interests in shares in the Deferred Bonus Plan

(audited)

Grant

date

1.1.21

Granted

during

the year

Exercised/

vested

during the

year

Lapsed

during

the year

31.12.21

Option

price

(£)

Market

price at

date of

award

(£)

Market

price at

date of

vesting

(£)

Vesting

period

Laxman Narasimhan

Deferred Bonus Plan 23.03.20 1,259 0 – – 1,259 58.35 – Mar 2023

Deferred Bonus Plan

23.03.20 3,832 0 – – 3,832 58.35 – Mar 2023

Deferred Bonus Plan 25.03.21 0 21,124 – – 21,124 64.22 – Mar 2024

Jeff Carr

Deferred Bonus Plan 25.03.21 0 9,163 – – 9,163 64.22 – Mar 2024

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

aforementioned award under the Deferred Bonus Plan

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

Grant

date

1.1.21

Granted

during

the year

Exercised

during the

year

Lapsed

during the

year

31.12.21

Option

price

(£)

Market

price at

exercise

(£)

Exercise

period

Laxman Narasimhan 02.09.19 379 0 – – 379 47.4 4 – Feb 23-Jul 23

Jeff Carr 31.08.21 0 403 – – 403 44.56 – Feb 25-Jul 25

There have been no changes to the Directors’ interests as set out in the above tables between 31 December 2021 and 13 April 2022.

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 13 April 2022 had the following beneﬁcial interests in the ordinary shares of

the company:

13 April

2022

31 December

2021

31 December

2020

Olivier Bohuon

711 711 –

Andrew Bonﬁeld 639 639 403

Jeff Carr 30,000 30,000 20,000

Nicandro Durante 1,105 1,105 883

Mary Harris 2,784 2,784 2,554

Mehmood Khan 594 594 399

Pam Kirby 4,998 4,998 3,768

Sara Mathew

487 487 244

Laxman Narasimhan 56,917 56,917 42,104

Chris Sinclair 11,328 11,328 9,906

Elane Stock 2,487 2,487 2,246

Margherita Della Valle 296 296 74

1. Olivier Bohuon was appointed to the Board on 1 January 2021

2 Sara Mathew held her shares in the form of 2,436 American Depositary Receipts (ADR). Each ADR is equivalent to ﬁve ordinary shares at 10 pence each in the company

3. No person who was a Director (or a Director’s connected person) on 31 December 2021 and at 13 April 2022 had any notiﬁable share interests in any subsidiary

4. 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.

Mary Harris

Chair of the Remuneration Committee

Reckitt Benckiser Group plc

13 April 2022

188

Introduction

The Directors present their report, together with the Financial

Statements of the Group for the year ended 31 December 2021,

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 103. 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 104 to 127 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 2021, and are

incorporated into this Directors’ Report by reference:

Acquisitions and disposals 250-252

Awards under employee share schemes and

long-term incentive schemes 245-249

Corporate Governance Statement including

internal control and risk management statements 104-127

Statement of Directors’ Responsibilities, including

disclosure ofinformation to the Auditor 192

Disclosure of greenhouse gas (GHG) emissions 73

Employment policy and employee involvement 190

Engagement with employees, suppliers, customers

and others 52-65 and 68-71

Environmental, social and

governance (ESG) matters 16-21, 50-73 and 88-102

Financial risk management and ﬁnancial instruments 229-236

Future developments in the business 02-103

Post Balance Sheet events 252

Research and development activities 10-67

Shareholder information 268-270

Sustainability and corporate responsibility 10-67

Viability Statement 103

Charitable donations 270

Subsidiary undertakings (including overseas branches) 259-267

Information on the Board’s stakeholder engagement and activities

is set out in the s172 Statement, which can be found on pages 68

to 71.

There is no additional information requiring disclosure under Listing

Rule 9.8.4R .

Results and dividends

The Consolidated Income Statement can be found on page 205.

The loss for the year attributable to equity shareholders of the

company amounted to £32 million.

The Directors resolved to pay an interim dividend of 73.0 pence

per ordinary share (2020: 73.0 pence), which was paid to

shareholders on 14 September 2021.

The Directors recommend a ﬁnal dividend for the year of 101.6

pence per share (2020: 101.6 pence) which, together with the

interim dividend, makes a total dividend for the year of 174.6 pence

per share (2020: 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 9 June 2022 to shareholders on the register at the close

of business on 29 April 2022.

Directors

Details of the company’s Directors who served during the ﬁnancial

year ended 31 December 2021 can be found on pages 108 to 113.

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 2022 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

2022 Notice of AGM. Information on the service agreements of

Executive Directors can be found in the Directors’ Remuneration

Report on pages 148 to 187. 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.

REPORT OF THE

DIRECTORS

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

189

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 2021 at the company’s expense.

Directors’ interests

A statement of Directors’ interests in the share capital of the

company is shown on page 187 of the Directors’ Remuneration

Report. Details of Executive Directors’ options to subscribe for

shares in the company are included on page 186 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 148 to 187.

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 2021.

Share capital

As at 31 December 2021, the company’s issued share capital

consisted of 736,535,179 ordinary shares of 10 pence each of which

714,412,199 were with voting rights and 22,122,980 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 2021 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 2022 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 2022, whichever

is the sooner.

Under section 561 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make non-pre-emptive issues for cash up to a nominal amount

representing less than 10% of the company’s issued share capital

as at the latest practicable date prior to the publication of the

Notice of AGM. The resolution would also permit Directors, within

the same aggregate limit, to sell for cash, shares that may be held

by the company in Treasury.

In accordance with the Pre-Emption Group’s Statement of

Principles, the Investment Association Share Capital Management

Guidelines and the Pensions and Lifetime Savings Associations’

Corporate Governance Policy and Voting Guidelines 2019, the

Directors conﬁrm their intention that, other than in relation to a

rights issue, no more than 5% of the issued ordinary share capital

ofthe company, exclusive of treasury shares, will be issued for cash

on a non-pre-emptive basis and no more than 7.5% of the share

capital of the company, exclusive of Treasury shares, will be

allotted for cash under a non-pre-emptive basis over a rolling

three-year period without prior consultation with shareholders, in

each case other than in connection with an acquisition or speciﬁed

capital investment which is announced contemporaneously with

the allotment or which has taken place in the preceding six-month

period and is disclosed in the announcement of the allotment.

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 2021 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 2021.

At the 2022 AGM, the Directors will seek to renew the authority

granted to them. Such authority, if approved, will be limited to a

maximum of 71,480,000 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.

The company’s present intention is to hold shares acquired under

this authority in treasury to satisfy outstanding awards under

employee share incentive plans.

190

Report of the Directors (Continued)

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.

Employees

During 2021, the Group employed an average of 41,800 (2020:

43,500) employees worldwide, of whom 4,670 (2020: 4,328) 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 46

to 49 and pages 55 to 56.

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 well-being. 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 14 to 15.

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 around 50% 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

from page 245 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section 366 and section 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 period ending

31 December 2022.

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

191

Financial instruments and risk

The ﬁnancial risk management objectives and policies of the

Group are set out in Note 15, from page 229 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 2022, 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.

Substantial shareholdings

As at 31 December 2021, 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

interest

% of

voting

rights

Massachusetts Financial

Services Company 16 January 2013

Indirect 5.00

Morgan Stanley Investment

Management Limited 20 May 2020 Direct 5.04

1 Under a section 793 CA 2006 request, Massachusetts Financial Services

Company conﬁrmed on 8 January 2021 that its aggregate holding had

increased. The voting percentage was not disclosed

As at 13 April 2022, 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 104 to 127.

Annual General Meeting (AGM)

The forthcoming AGM of Reckitt Benckiser Group plc will be held

on 20 May 2022 at 2.00pm 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.

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

Catheryn O’Rourke

Company Secretary

Reckitt Benckiser Group plc

103-105 Bath Road

Slough, Berkshire SL1 3UH

Company registration number: 6270876

Legal Entity Identiﬁer: 5493003JFSMOJG48V108

13 April 2022

192

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 are required to prepare the Group Financial Statements in

accordance with International Accounting Standards in conformity

with the requirements of the Companies Act 2006 (CA 2006) and

applicable law and have elected to prepare the Parent Company

Financial Statements in accordance with UK accounting standards,

including FRS 102, ‘The Financial Reporting Standard applicable in

the UK and Republic of Ireland’. In addition, the Group Financial

Statements are required under the UK Disclosure Guidance and

Transparency Rules to be prepared in accordance with

International Financial Reporting Standards adopted pursuant to

Regulation (EC) No 1606/2002 as it applies in the European Union.

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 their 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

• For the Group Financial Statements, state whether they have

been prepared in accordance with International Accounting

Standards in conformity with the requirements of the

Companies Act 2006, International Financial Reporting

Standards adopted pursuant to Regulation (EC) No 1606/2002

asit applies in the European Union and, due to a requirement

ofthe US SEC, state they have been prepared in accordance

with IFRS as issued by the International Accounting Standards

Board (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 Parent Company Financial Statements

• Assess the Group and Parent Company’s ability to continue

asagoing concern, disclosing, as applicable, matters related

togoing concern

• 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

CA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 comply 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.

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

• 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

Catheryn O’Rourke

Company Secretary

Reckitt Benckiser Group plc

103-105 Bath Road

Slough, Berkshire SL1 3UH

13 April 2022

STATEMENT OF DIRECTORS’

RESPONSIBILITIES

IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

193

1 Our opinion is unmodiﬁed

We have audited the Financial Statements of Reckitt Benckiser

Group plc (“the Company”) for the year ended 31 December 2021

which comprise the Group Income Statement, Group Statement of

Comprehensive Income, Group Balance Sheet, Group Statement of

Changes in Equity, Group Cash Flow Statement, and the related

Notes, including the accounting policies in Note 1 to the Group

Financial Statements, and the Parent Company Balance Sheet,

Parent Company Statement of Changes in Equity and the related

Notes, including the accounting policies in Note 1 to the Parent

Company Financial Statements.

In our opinion:

• the Financial Statements give a true and fair view of the

stateof the Group’s and of the Parent Company’s affairs as

at31 December 2021 and of the Group’s loss 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 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”).

In our opinion the Group Financial Statements have been properly

prepared in accordance with IFRS as issued by the IASB.

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 our report to the Audit Committee.

We were ﬁrst appointed as auditor by the Shareholders on 3 May

2018. The period of total uninterrupted engagement is for the

fourﬁnancial years ended 31 December 2021. The Group lead

engagement partner is required to rotate after ﬁve years. This

isRichard Broadbelt’s fourth year as lead engagement partner.

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. No non-audit services prohibited by

that standard were provided.

Overview

Materiality:

Group Financial

Statements as

a whole

£135 million (2020: £150 million)

5.2% (2020: 5.1%) of normalised Group proﬁt/loss

before tax as deﬁned in section 3

Coverage 76% (2020: 79%) of Group Net Revenue 83%

(2020: 83%) of total proﬁts and losses that made

up Group loss/proﬁt before tax 84% (2020: 87%)

of Group total assets

Key audit matters vs 2020

Recurring risks Revenue recognition in relation to trade

spend arrangements and associated

accruals

Recoverability of goodwill and indeﬁnite

life intangible assets relating to the IFCN

Cash Generating Unit (CGU)

Provisions for uncertain tax positions

(UTPs)

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

Event driven New: Allocation of consideration

between the Biofreeze brand intangible

and goodwill

INDEPENDENT AUDITOR’S

REPORT

TO THE MEMBERS OF RECKITT BENCKISER GROUP PLC

194

Independent Auditor’s Report (Continued)

2 Key audit matters: our assessment of risks of material misstatement

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, in arriving at our audit opinion above, together with our key

audit procedures to address those matters and, as required for public interest entities, our results from those procedures. These matters were

addressed, and our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the Financial

Statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate

opinion on these matters.

Revenue recognition in

relation to trade spend

arrangements and

associated accruals

Trade spend accruals: (£1,137

million; 2020: £1,275 million)

Refer to page 136 (Audit

Committee Report), Note 1 on

page 216 (accounting policy)

and Note 21 on page 240

(ﬁnancial disclosures).

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. Conversely, weaker ﬁnancial performance may create a

bias to understate 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, 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.

Our procedures included:

Accounting policies: We critically assessed the appropriateness of the Group’s accounting policies relating

to trade spend.

Historical comparisons: We 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.

With the assistance of KPMG Forensic specialists, we assessed the results of the investigation performed by

management to assess evidence supporting the creation, utilisation and release of certain accruals within the

Hygiene GBU. 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. We performed an

assessment of whether an overstatement of accruals identiﬁed through these procedures was material.

Tests of detail: We focused our testing on those trade spend accruals we considered to be more judgemental

or potentially subject to management bias and fraud. For a sample of these trade spend accruals, we:

• 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.

Incorporating unpredictability into our audit: A requirement of auditing standards is that we undertake

procedures which are deliberately unexpected and could not have reasonably been predicted by

management. We performed unpredictable procedures over certain trade spend accruals in seven out of

scope components in different geographic locations in the current year.

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

the detailed testing described is inherently the most effective means of obtaining audit evidence in this area.

Our results:

We found the trade spend accruals recognised to be acceptable (2020 result: acceptable).

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

195

Recoverability of goodwill

and indeﬁnite life intangible

assets relating to the IFCN

CGU

IFCN goodwill and indeﬁnite

life intangible assets (£5,668

million; 2020: £9,849 million)

Impairment charge (£nil

million; 2020: £985 million)

Refer to page 136 (Audit

Committee Report), Note 1 on

page 216 (accounting policy)

and Note 9 on pages 222 to

225 (ﬁnancial disclosures).

The risk: forecast-based valuation

The recoverability of goodwill and indeﬁnite life intangible assets relating to the Infant and Child Nutrition

(“IFCN”) cash generating unit (“CGU”) is assessed using forecast ﬁnancial information within a discounted cash

ﬂow model (“the model”).

The disposal of IFCN China in 2021, and the resulting impact on the composition of the CGU has reduced the

risk around the recoverability of goodwill and indeﬁnite life intangible assets. Nonetheless, the model remains

highly sensitive to changes in key assumptions, both in relation to forecast ﬁnancial performance, in particular,

Net Revenue growth and margin improvements, as well as external factors such as discount rates and

terminal growth rates.

The speciﬁc assumptions considered most critical are the impact of long term birth rate trends, future

category growth, the commercial success of new product launches including adult nutrition, the expansion of

specialty nutrition, the ability to pass on inﬂationary pressures through price rises, and the delivery of margin

improvements through productivity initiatives.

While the current year carrying amount of the IFCN CGU is supported by the value of the model, the

recoverable amount of the IFCN CGU is subject to a high degree of estimation uncertainty.

When conducting an impairment assessment, there is an inherent risk of fraud that the Group may use

assumptions that are overly optimistic and which could result in no impairment charge being recognised.

The effect of these matters is that, as part of our risk assessment, we determined that the value in use of the

IFCN CGU has a high degree of estimation uncertainty and there exists a reasonably possible set of changes

in key assumptions that would result in a change to the IFCN valuation in excess of our materiality for the

Group Financial Statements as a whole and possibly many times that amount. The Group Financial Statements

(note 9) disclose the sensitivity estimated by the Group.

2 Key audit matters: our assessment of risks of material misstatement continued

196

Our procedures included:

Sensitivity analysis: We considered the sensitivity of the recoverable amount of the IFCN CGU to reasonably

possible changes in key assumptions, identiﬁed changes to these assumptions since previous forecasts, and

focused our attention on those assumptions we considered to be most sensitive, judgemental or otherwise

prone to management bias.

Historical comparisons: We compared the actual performance of IFCN since acquisition against previous

budgets and forecasts to assess the Group’s ability to forecast accurately and considered the impact on our

evaluation of forecast growth. We critically challenged the margin projections by reference to those achieved

historically, forecast volume trends, forecast and realised savings from the productivity programme and the

Group’s historic ability to pass on cost inﬂation through price rises.

We challenged the Group on the forecast commercial success of new product launches, particularly in

relation to adult nutrition, and its ability to deliver forecast Net Revenue growth by assessing the Group’s past

experience in bringing new or improved products to market.

Benchmarking assumptions: We critically evaluated differences between Net Revenue growth assumptions

within the model and external market data relating to projected growth for the product category. We

critically challenged the Group on its assumptions relating to the expectations of long term birth rates and

inﬂationary effects including through comparison to external market data sources.

We benchmarked margin assumptions against industry competitors, external market volume growth

forecasts and our assessment of the Group’s ability to achieve productivity savings. We also benchmarked

the terminal growth rate assumptions against long-term estimates of inﬂation.

Personnel interviews: We compared judgements made centrally to direct discussions with Nutrition GBU

leadership, country General Managers and Finance Directors. We considered and challenged the Group’s

assumptions with reference to any alternative views provided.

We corroborated the consistency of key assumptions used within the model to papers presented to, and

minutes taken at, meetings of the Board.

Our valuation expertise: We independently derived a reasonable range of appropriate discount rates, with

the assistance of our own valuation specialists, compared these to those calculated by the Group and

challenged differences in assumptions between the calculations. We benchmarked the recoverable amount

of the IFCN CGU using implied earnings multiples to comparative companies, historic transactions within the

industry, including the Group’s disposal of IFCN China in 2021, and stockbrokers’ reports with the assistance of

our own valuation specialists.

Assessing transparency: We considered the adequacy of the disclosures provided by Note 9 of the Group

Financial Statements in relation to relevant accounting standards. We paid particular attention to the

transparency of the sensitivity disclosures, including that they appropriately reﬂect uncertainty inherent in the

assessment of recoverable amount, as well as the impact of reasonable changes in key assumptions.

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.

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 (2020 result: we found the goodwill and indeﬁnite life intangible

assets, and the related impairment charge, to be acceptable).

2 Key audit matters: our assessment of risks of material misstatement continued

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Provisions for uncertain tax

positions (UTPs)

(£770 million; 2020: £950

million)

Refer to page 136 (Audit

Committee Report), Note 1 on

page 216 (accounting policy)

and Note 22 on page 240

(ﬁnancial disclosures).

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, taking into

account the Group’s internally derived key assumptions such as the risk rating applied to a certain jurisdiction

and the consequential percentage applied to calculate the provision, falls within an acceptable range.

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.

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.

Historical comparisons: We assessed the historical accuracy of the provision level following any recent court

judgements and results of relevant tax authority audits and considered the impact on the remaining provision.

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 above.

Our results:

We found the level of uncertain tax provisioning to be acceptable (2020 result: acceptable).

2 Key audit matters: our assessment of risks of material misstatement continued

198

Contingent liabilities arising

from the amendment to the

South Korean Humidiﬁer

Sanitiser (HS) law

Refer to page 136 (Audit

Committee Report), Note 1 on

page 216 (accounting policy)

and Note 20 on page 239

(ﬁnancial disclosures).

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.

Our procedures included:

Enquiry of lawyers: We enquired of the Group’s internal and external counsel to obtain an understanding of

this year’s 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 law amendment,

and the ability to reliably estimate such economic outﬂow.

We corroborated the consistency of the judgement made by management to inquiries 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 timing 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.

Our results:

We found the Group’s treatment of the impact of the HS law amendment as contingent liabilities to be

acceptable (2020: acceptable).

Allocation of consideration

between the Biofreeze

brand intangible and

goodwill

Biofreeze brand intangible

asset £564 million; goodwill

£271 million.

Refer to page 136 (Audit

Committee Report), Note 1 on

page 211 (accounting policy)

and Note 29 on pages 250 to

252 (ﬁnancial disclosures).

The risk: forecast based valuation

On 12 July 2021, the Group purchased the Biofreeze and TheraPearl brands from Performance Health for

cashconsideration of £766 million. The acquisition was accounted for as a business combination with net

identiﬁable acquired assets of £495 million – substantially comprising of the Biofreeze brand intangible of

£564 million – and goodwill of £271 million being recognised.

The Biofreeze brand intangible is recognised at fair value at the date of acquisition. To estimate fair value, the

Directors use a discounted forecast cash ﬂow model (‘the model’), which requires the application of complex

valuation techniques and is sensitive to changes in key assumptions. Any changes in identiﬁable asset

valuation would impact the value of goodwill recognised.

Key assumptions in the model include forecast ﬁnancial performance, in particular net revenue and margin

growth; as well as external factors such as forecast growth of the topical analgesic category as a whole and

discount rates.

As part of our risk assessment, we therefore determined that the allocation of consideration between the

Biofreeze brand intangible and goodwill is dependent upon a number of key assumptions. There exists a

reasonably possible set of changes in such assumptions that could result in a material change to value of

consideration allocated to the Biofreeze brand intangible.

2 Key audit matters: our assessment of risks of material misstatement continued

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Our procedures included:

Sensitivity analysis: We considered the sensitivity of the Biofreeze brand intangible 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: We evaluated the Net Revenue growth assumptions in the model with

reference to historic Biofreeze performance and external market data relating to projected growth for the

product category as a whole.

Personnel interviews: We compared judgements made centrally to direct discussions with the relevant

Finance Directors and Sales Managers. We considered and challenged the Group’s assumptions with

reference to any alternative views provided in-market.

Valuation expertise: With the assistance of our own valuation specialist we evaluated the basis used by the

Group to value the acquired intangible assets. We challenged the appropriateness of the key assumptions

underlying the Biofreeze brand intangible valuation, including the discount rate used.

We performed the tests above rather than seeking to rely on any of the Group’s controls because the nature

of the balances is such that we would expect to obtain audit evidence primarily through the detailed

procedures described.

Our results:

We found the Group’s valuation of the Biofreeze brand intangible and the consequential goodwill balance at

the acquisition date to be acceptable (2020 result: n/a).

Recoverability of the Parent

Company’s investment in

the subsidiary, Reckitt

Benckiser Limited

(£15,001 million, 2020: £14,975

million)

Refer to page 257

(accounting policy) and page

258 (ﬁnancial disclosures).

The risk: low risk, high value

The carrying amount of the Parent Company’s investment in its subsidiary, Reckitt Benckiser Limited,

represents 99.5% (2020: 99.6%) 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 procedures included:

Comparing valuations: We performed a reconciliation of 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 tests above rather than seeking to rely on any of the company’s controls because the

nature of the balance is such that we would expect to obtain audit evidence primarily through the detailed

procedures described above.

Our results:

We found the Company’s conclusion that there is no impairment of its investment in the subsidiary to be

acceptable (2020 result: acceptable).

2 Key audit matters: our assessment of risks of material misstatement continued

Group loss before tax normalised

to exclude adjusting items

£2,593 million (2020: £2,934 million)

Group Materiality

£135 million

(2020: £150 million)

£135 million

Whole ﬁnancial

statements materiality

(2020: £150 million)

£100 million

Range of materiality at

48components

(£8 million to £100 million)

(2020: 54components

(£8 million to £100 million))

£6.0 million

Misstatements reported

to the Audit Committee

(2020: £7 million)

Group loss before tax normalised

to exclude adjusting items

Group materiality

Full scope for Group audit

purposes 2021

76%

(2020: 79%)

24%

76%

79%

82%

17%

Group Net Revenue

Group total assets

Key:

Audit of account balances 2021

21%

16%

13%

84%

86%

83%

(2020: 83%)

17%

83%

84%

(2020: 87%)

Full scope for Group audit

purposes 2020

Speciﬁed risk-focused

procedures 2020

Residual components 2020Residual components 2021

Group proﬁts and losses

that made up Group loss

before tax

200

3 Our application of materiality and an overview of the scope

of our audit

Materiality

Materiality for the Group Financial Statements as a whole was set

at £135 million, determined with reference to a benchmark of

normalised Group loss before tax, of which it represents 5.2%. In

2020 materiality for the Group Financial Statements as whole was

set at £150 million with reference to a benchmark of normalised

Group proﬁt before tax (PBT), of which it represented 5.1%.

We normalised PBT (2020: PBT) by adding back adjustments that

do not represent the normal, continuing operations of the Group.

The items we adjusted for were acquisition advisor costs,

inventory fair value adjustments, losses on disposal of brands,

reclassiﬁed foreign exchange translation on liquidation of

subsidiaries and other individually material items of income or

expense as deﬁned on pages 85 to 86 totalling £2,854 million

(2020: £1,061 million).

Materiality for the Parent Company Financial Statements as a whole

was set at £65 million (2020: £75 million) determined with

reference to a benchmark of Parent Company total assets of

£15,071 million (2020: £15,034 million) of which it represents 0.4%

(2020: 0.5%).

In line with our audit methodology, 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. Performance materiality was

set at 75% (2020: 75%) of materiality for the ﬁnancial statements as

a whole, which equates to £100 million (2020: £110 million) for the

Group and £49 million (2020: £55 million) for the parent Company.

We applied this percentage in our determination of performance

materiality because we did not identify any factors indicating an

elevated level of risk.

We agreed to report to the Audit Committee any corrected or

uncorrected identiﬁed misstatements exceeding £6.0 million

(2020: £7.0 million) in addition to other identiﬁed misstatements

that warranted reporting on qualitative grounds.

Scope

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 loss/proﬁt

before tax and Group total assets. Of the Group’s 422 (2020: 429)

reporting components, as instructed by us, component teams in 20

countries (2020: 21 countries) subjected 47 (2020: 54) to full scope

audits for Group purposes and 1 (2020: 1) to an audit of account

balance over inventory, cost of sales, property, plant and

equipment, trade payables and cash. The component for which we

performed work other than an audit for Group reporting purposes

was not individually signiﬁcant but was included in the scope of our

Group reporting work in order to provide further coverage over the

Group’s results. The components within the scope of our work

accounted for the percentages illustrated opposite.

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201

The Group team performed procedures on the items excluded

from normalised Group loss before tax (2020: Group proﬁt

beforetax).

The remaining 24% (2020: 21%) of Group Net Revenue, 17% (2020:

17%) of total proﬁts and losses that made up Group loss/proﬁt

before tax and 16% (2020: 13%) of Group total assets is represented

by a number of other reporting components, none of which

individually represented more than 1% (2020: 3%) of any of Group

Net Revenue, total proﬁts and losses that made up Group proﬁt

before tax or Group total assets. For these residual 374 (2020: 375)

components, we performed analysis at an aggregated Group level

to re-examine our assessment that no signiﬁcant risks of material

misstatement exist in those components.

The scope of the audit work performed was predominately

substantive as we placed limited reliance upon the Group’s internal

control over ﬁnancial reporting.

Team Structure

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.

Due to the continuation of travel restrictions imposed as a result of

COVID-19, the Group audit team was again unable to physically visit

any overseas components in 2021 (2020: no components). Instead,

the virtual communication and oversight strategy implemented in

2020 remained in place between the Group audit team and

component auditors. This included:

• Virtual global planning conferences led by the Group audit

team to discuss key audit risks and obtain input from

component auditors;

• Instructions issued by the Group audit team to component

auditors setting out the signiﬁcant areas to be covered,

including the relevant key audit matters identiﬁed above and

the information to be reported back to the Group audit team;

• Approval by the Group audit team of the component materiality

for all components, which ranged from £8 million to £100 million

(2020: £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 and by the Group

audit team at 1 out-of-scope component locations, the latter to

incorporate an element of unpredictability into our audit and to

reconﬁrm our risk;

• 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

3 Our application of materiality and an overview of the scope

of our audit continued

• Review of key working papers within component audit ﬁles

(using remote technology capabilities) to understand and

challenge the audit approach and audit ﬁndings of each

component audit.

The work on 46 of the 48 components (2020: 52 of the 54

components) was performed by component auditors and the rest,

including the audit of the Parent Company, was performed by the

Group audit team.

4 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. This included considering the Group’s

exposure to supply chain risks, physical risks, regulatory risks, market

risks, and consumer preference risks. We considered that the key

estimate or judgement contained within the ﬁnancial statements

for which climate change could have the greatest impact was the

recoverability of goodwill and indeﬁnite life intangible assets

relating to the IFCN CGU and considered the adequacy of the

Group’s sensitivity disclosures in relation to the impact of climate

change on the impairment test. We concluded that, given the likely

impact of the Group’s current climate plans, climate-related risks

were not a key assumption in the value in use calculation.

While the impact of climate change on the Group is inherently

uncertain, our risk assessment was therefore that the impact of

climate change does not currently have a material impact on the

ﬁnancial statements. Climate change therefore only had a limited

impact on the overall audit strategy, the allocation of resources in

the audit and directing the efforts of the engagement team.

We have read the Group’s TCFD Summary on pages 66 to 67 of the

Strategic Report and considered the consistency of this disclosure

with the ﬁnancial statements and our audit knowledge.

5 Going Concern

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”).

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:

• In relation to the COVID-19 pandemic, disruption at a number of

the Group’s key production facilities, the viability of key

suppliers and customers, and the impact of consumer demand

for the Group’s brands;

• A signiﬁcant product safety issue leading to reputational

damage with customers, consumers or regulators; and

• The impact of a signiﬁcant business continuity issue, outside of

those risks presented by the COVID-19 pandemic, affecting the

Group’s manufacturing facilities or those of its suppliers.

202

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.

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.

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 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 relating to IFCN arising from

external pressure to demonstrate improved business

performance since the disposal of IFCN China in 2021.

Further detail in respect of both matters is set out in the key audit

matter disclosures in section 2 of this report.

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.

We discussed with the audit committee matters related to actual

or suspected fraud, which included the results of an investigation

commissioned by management 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.

Identifying and responding to risks of material misstatement

related to compliance with laws and regulations

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, through

inquiries with the Directors and other management (as required

byauditing standards), and from inspection of the Group’s

regulatory and legal correspondence, relevant discussion with the

Group’s external legal counsel and inspection of the policies and

procedures regarding compliance with laws and regulations.

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.

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.

Our conclusions based on this work:

• 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

192 is materially consistent with the Financial Statements and

our audit knowledge.

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.

6 Fraud and breaches of laws and regulations – ability to detect

Identifying and responding to risks of material misstatement

due to fraud

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:

• 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 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;

• Consultation with our own forensic specialists to assist us in

identifying fraud risks based on their experience of comparable

businesses, similar sectors; as well as of the geographies in

5 Going Concern continued

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203

6 Fraud and breaches of laws and regulations – ability to detect

continued

The potential effect of these laws and regulations on the Financial

Statements varies considerably.

Firstly, 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.

Secondly, 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.

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.

Further detail in respect of the effect of ongoing litigation relating

to the HS issue in South Korea is set out in the key audit matter

disclosures in section 2 of this report.

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.

7 We have nothing to report on the 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.

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.

Based solely on that work we have not identiﬁed material

misstatements in the other information.

Strategic report and directors’ report

Based solely on our work on the other information:

• 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

In our opinion the part of the Directors’ Remuneration Report to be

audited has been properly prepared in accordance with the

Companies Act 2006.

Disclosures of emerging and principal risks and longer-term

viability

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.

Based on those procedures, we have nothing material to add or

draw attention to in relation to:

• the Directors’ conﬁrmation within the Viability Statement (page

103) 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;

• the principal and emerging risk 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.

204

9 Respective responsibilities

Directors’ responsibilities

As explained more fully in their statement set out on page 192, 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.

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

and the terms of our engagement by the Company. 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 the further matters we are required to state

to them in accordance with the terms agreed with the company,

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.

Richard Broadbelt (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants

15 Canada Square

London

E14 5GL

13 April 2022

We are also required to review the Viability Statement, set out on

page 103 under the Listing Rules. Based on the above

procedures, we have concluded that the above disclosures are

materially consistent with the Financial Statements and our audit

knowledge.

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.

Corporate governance disclosures

We are required to perform procedures to identify whether there

is a material inconsistency between the Directors’ corporate

governance disclosures and the Financial Statements and our

audit knowledge.

Based on those procedures, we have concluded that each of the

following is materially consistent with the Financial Statements

and our audit knowledge:

• 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.

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.

We have nothing to report in this respect.

8 We have nothing to report on the other matters on which we

are required to report by exception

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.

We have nothing to report in these respects.

7 We have nothing to report on the other information in the

Annual Report continued

Independent Auditor’s Report (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

205

GROUP INCOME STATEMENT

For the year ended 31 December

Note

2021

£m

2020

£m

CONTINUING OPERATIONS

Net Revenue 2 13,234 13 ,99 3

Cost of sales (5, 5 5 8) (5 , 5 5 8)

Gross proﬁt 7, 6 7 6 8, 43 5

Loss on disposal of intangible assets and related businesses 29 (3 , 51 8) –

Impairment of goodwill and other intangible assets 9 – (985)

Other net operating expenses 3 (4 ,9 6 2) (5 , 29 0)

Total net operating expenses (8,480) (6 , 2 7 5)

Operating (loss)/proﬁt 2 (8 0 4) 2 ,1 6 0

Foreign exchange net gains on liquidation of subsidiaries 6 76 6 –

Other net ﬁnance expense 6 (21 9) (286)

Net ﬁnance income/(expense) 6 5 47 (286)

Share of loss of equity-accounted investees, net of tax (3) (1)

(Loss)/proﬁt before income tax (2 6 0) 1 , 87 3

Income tax credit/(charge) 7 208 (72 0)

Net (loss)/income from continuing operations (52) 1 ,1 5 3

Net income from discontinued operations 30 31 50

Net (loss)/income (21) 1, 2 03

Attributable to non-controlling interests 11 16

Attributable to owners of the parent company (32) 1 ,1 87

Net (loss)/income (21) 1, 2 03

Basic (loss)/earnings per ordinary share

From continuing operations (pence) 8 (8. 8) 160.0

From discontinued operations (pence) 8 4.3 7. 0

From total operations (pence) 8 (4 . 5) 1 6 7. 0

Diluted (loss)/earnings per ordinary share

From continuing operations (pence) 8 (8. 8) 1 5 9. 3

From discontinued operations (pence) 8 4.3 7. 0

From total operations (pence) 8 (4 . 5) 166. 3

206

GROUP STATEMENT OF

COMPREHENSIVE INCOME

For the year ended 31 December

Note

2021

£m

2020

£m

Net (loss)/income (21) 1, 2 03

Other comprehensive expense

Items that have or may be reclassiﬁed to the Income Statement in subsequent years

Net exchange losses on foreign currency translation, net of tax 7 (3 74) (2 07)

Reclassiﬁcation of foreign currency translation reserves on disposal or liquidation of foreign operations,

net of tax 26 (5 5 0) –

Gains/(losses) on net investment hedges, net of tax 7 84 (75)

Gains/(losses) on cash ﬂow hedges, net of tax 7 30 (17)

(8 1 0) (29 9)

Items that will not be reclassiﬁed to the Income Statement in subsequent years

Remeasurements of deﬁned beneﬁt pension plans, net of tax 7 133 (6 0)

Revaluation of equity instruments – FVOCI 7 (1) 19

132 (41)

Other comprehensive expense, net of tax (678) (3 4 0)

Total comprehensive (expense)/income (6 9 9) 863

Attributable to non-controlling interests 11 16

Attributable to owners of the parent company (7 1 0) 8 47

Total comprehensive (expense)/income (6 9 9) 863

Total comprehensive (expense)/income attributable to owners of the parent company arising from:

Continuing operations (74 1) 7 97

Discontinued operations 31 50

(7 1 0) 8 47

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

207

As at 31 December

Note

2021

£m

2020

£m

ASSETS

Non-current assets

Goodwill and other intangible assets 9 18,868 22 ,979

Property, plant and equipment 10 2 ,1 78 2, 2 33

Equity instruments 11, 15 194 136

Deferred tax assets 12 197 2 58

Retirement beneﬁt surplus 23 355 226

Other non-current receivables 14 149 14 6

Total non-current assets 2 1 ,9 41 2 5, 978

Current assets

Inventories 13 1 , 459 1 , 59 2

Trade and other receivables 14 1 ,92 6 1,92 1

Derivative ﬁnancial instruments 15 61 30

Current tax recoverable 22 155 125

Cash and cash equivalents 16 1 , 2 61 1,646

Total current assets 4,8 62 5,314

Assets held for sale 143 –

Total assets 2 6 ,9 4 6 31 , 2 92

LIABILITIES

Current liabilities

Short-term borrowings 17 (2,485) (76 3)

Provisions for liabilities and charges 18 (19 1) (243)

Trade and other payables 21 (5,26 7) (5 ,74 2)

Derivative ﬁnancial instruments 15 (52) (1 1 8)

Current tax liabilities 22 (93) (72)

Total current liabilities (8, 0 8 8) (6 ,9 3 8)

Non-current liabilities

Long-term borrowings 17 (7, 0 7 8) (9, 7 9 4)

Deferred tax liabilities 12 (2,806) (3, 5 62)

Retirement beneﬁt obligations 23 (31 8) (37 2)

Provisions for liabilities and charges 18 (4 4) (4 9)

Non-current tax liabilities 22 (826) (1 , 021)

Other non-current liabilities 21 (333) (397)

Total non-current liabilities (11,405) (1 5 ,1 9 5)

Total liabilities (1 9, 49 3) (2 2 ,1 3 3)

Net assets 7, 4 5 3 9,1 5 9

EQUITY

Capital and reserves

Share capital 24 74 74

Share premium 253 252

Merger reserve (1 4, 2 29) (1 4 , 229)

Other reserves 26 (1 ,1 8 9) (379)

Retained earnings 22 ,49 0 23 , 3 97

Attributable to owners of the parent company 7, 3 9 9 9, 1 1 5

Attributable to non-controlling interests 54 4 4

Total equity 7, 4 5 3 9,1 5 9

The Financial Statements on pages 205 to 252 were approved by the Board of Directors and signed on its behalf on 13 April 2022 by:

Christopher Sinclair Laxman Narasimhan

Director Director

Reckitt Benckiser Group plc Reckitt Benckiser Group plc

GROUP BALANCE SHEET

208

Notes

capital

£m

premium

£m

Merger

reserves

£m

Other

reserves

£m

Retained

earnings

£m

Total

attributable

to owners

of the

parent

company

£m

Non-

controlling

interests

£m

Total

equity

£m

Balance at 1 January 2020

74 2 45 (1 4, 2 29) (8 0) 23,353 9, 3 6 3 44 9 ,40 7

Comprehensive income

Net income – – – – 1 ,1 87 1 ,1 87 16 1, 2 03

Other comprehensive

(expense)/income – – – (2 9 9) (4 1) (3 4 0) – (3 4 0)

Total comprehensive (expense)/

income

– – – (2 9 9) 1 ,1 4 6 8 47 16 86 3

Transactions with owners

Treasury shares reissued 24 – 7 – – 124 13 1 – 1 31

Share-based payments 25 – – – – 1 5 15 – 15

Purchase of ordinary shares by

employee share ownership trust – – – – (4) (4) – (4)

Tax on share awards 7 – – – – 4 4 – 4

Cash dividends 28 – – – – (1 , 241) (1 , 241) (1 6) (1 , 2 57)

Total transactions with owners

– 7 – – (1 ,1 0 2) (1,0 95) (16) (1,111)

Balance at 31 December 2020

74 252 (1 4, 2 29) (379) 23 , 39 7 9, 1 1 5 4 4 9,1 5 9

Comprehensive income

Net (loss)/income – – – – (32) (32) 11 (21)

Other comprehensive

(expense)/income – – – (81 0) 132 (67 8) – (6 7 8)

Total comprehensive (expense)/

income

– – – (8 1 0) 100 (7 1 0) 11 (69 9)

Transactions with owners

Treasury shares reissued 24 – 1 – – 79 80 – 80

Purchase of ordinary shares by

employee share ownership trust – – – – (5) (5) – (5)

Issuance of shares to non-

controlling interest – – – – – – 7 7

Share-based payments 25 – – – – 30 30 – 30

Cash dividends 28 – – – – (1 , 24 6) (1 , 24 6) (17) (1 , 26 3)

Transactions with non-

controlling interests 27 – – – – 135 135 – 135

Disposal of non-controlling

interest in IFCN China

29 – – – – – – 9 9

Total transactions with owners

– 1 – – (1 ,0 07) (1 , 0 06) (1) (1, 0 07)

Balance at 31 December 2021

74 253 (1 4, 2 29) (1 ,1 8 9) 22 , 49 0 7, 3 9 9 54 7, 4 5 3

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

GROUP STATEMENT OF

CHANGES IN EQUITY

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

209

GROUP CASH FLOW

STATEMENT

For the year ended 31 December

Note

2021

£m

2020

£m

CASH FLOWS FROM OPERATING ACTIVITIES

Operating (loss)/proﬁt from continuing operations (8 0 4) 2 ,1 6 0

Losses on sale of property, plant and equipment and intangible assets 3,4 42 3

Depreciation, amortisation and impairment 481 1, 4 57

Share-based payments 30 15

Increase in inventories (57) (317)

(Increase)/decrease in trade and other receivables (1 3 0) 94

(Decrease)/increase in payables and provisions (126) 1 ,1 45

Cash generated from continuing operations 2,836 4 , 5 57

Interest paid (251) (32 3)

Interest received 29 56

Tax paid (91 5) (76 2)

Net cash ﬂows attributable to discontinued operations 29 (2) (1 0)

Net cash generated from operating activities 1,697 3, 518

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (373) (3 94)

Purchase of intangible assets (77) (92)

Proceeds from the sale of property, plant and equipment 9 10

Proceeds from sale of intangible assets and related businesses, net of cash disposed 1,622 –

Acquisition of businesses (91 5) –

Purchase of equity instruments and convertible notes (27) (36)

Net cash generated from / (used in) investing activities 239 (512)

CASH FLOWS FROM FINANCING ACTIVITIES

Treasury shares reissued 24 80 131

Purchase of ordinary shares by employee share ownership trust (5) (4)

Proceeds from borrowings 17 38 2,903

Repayment of borrowings 17 (1 , 0 4 4) (4 , 5 8 3)

Dividends paid to owners of the parent company 28 (1, 2 4 6) (1 , 241)

Dividends paid to non-controlling interests (17) (16)

Other ﬁnancing activities (92) (47)

Net cash used in ﬁnancing activities (2 , 28 6) (2, 8 57)

Net (decrease) / increase in cash and cash equivalents (3 5 0) 149

Cash and cash equivalents at beginning of the year 1 ,64 4 1 , 5 47

Exchange losses (35) (52)

Cash and cash equivalents at end of the year 1, 2 59 1,64 4

Cash and cash equivalents comprise:

Cash and cash equivalents 16 1 , 2 61 1,646

Overdrafts 17 (2) (2)

1, 2 59 1,64 4

210

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 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 2021.

These amended standards and interpretations have not had a

signiﬁcant impact on the Group Financial Statements.

• Interest Rate Benchmark Reform – Phase 2 (Amendments to

IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

A number of new standards are effective for annual periods

beginning on or after 1 January 2022 and earlier application

ispermitted; however, the Group has not early adopted the

neworamended standards in preparing these consolidated

Financial Statements.

• Onerous Contracts – Cost of Fulﬁlling a Contract (Amendments

to IAS 37).

• Property, Plant and Equipment: Proceeds before Intended Use

(Amendments to IAS 16).

• Classiﬁcation of Liabilities as Current or Non-current

(Amendments to IAS 1).

• Annual Improvements to IFRS Standards 2018–2020

• Reference to the Conceptual Framework (Amendments to IFRS 3)

• 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)

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 2021, the Group had cash

andcash equivalents of £1.3 billion. The Group also had access

tocommitted borrowing facilities of £4.5 billion, which were

undrawn at year-end and are not subject to renewal until 2024

onwards. Further detail is contained within the Viability Statement

on page 103.

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.

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.

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.

NOTES TO THE

FINANCIAL STATEMENTS

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

211

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 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.

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.

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 Group Financial Statements up to the point on

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. Once this is completed, control is passed to the

liquidator and any amounts previously recognised in other

comprehensive income in respect of that subsidiary, including

exchange gains or losses on foreign currency translation, are

reclassiﬁed to the Income Statement, and included within net

ﬁnance income/(expense).

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.

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.

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.

1 Accounting Policies continued

212

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.

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.

Income tax

Income tax on the proﬁt/(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.

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.

(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.

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).

Notes to the Financial Statements (Continued)

1 Accounting Policies continued

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

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(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.

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 ten years or less; motor vehicles and

computer equipment over ﬁve 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

US$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.

Right of use assets

At commencement date, right of use assets are measured at cost,

which comprises the following:

• 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 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.

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.

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.

1 Accounting Policies continued

214

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.

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.

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 instruments (FVOCI)

Equity instruments (FVOCI) are investments that are neither held

for trading nor classiﬁed as investments in subsidiaries, associates

or joint arrangements. Subsequent to their initial recognition,

equity instruments (FVOCI) 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.

1 Accounting Policies continued

Notes to the Financial Statements (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

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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 restricted share 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 proﬁt or loss 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.

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 proﬁt or loss.

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 ﬁnance

income/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 proﬁt or loss 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 HS

issue) 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 of these assets (Note 9).

1 Accounting Policies continued

216

• 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).

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 2021, the Group recognised impairment losses of £nil (2020: £985

million, all of which related to IFCN goodwill). In addition to the

estimates outlined above, the IFCN impairment assessment

incorporated estimates relating to future birth rates and future

WIC tendering in the US. Refer to Note 9 for further information,

including details on the sensitivity of IFCN value-in-use to

reasonable changes in key assumptions.

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

provisions made in respect of these matters represent the most

accurate measurement 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) will in all likelihood be different from the

provision recognised. The net liabilities recognised in respect of

uncertain tax positions as at 31 December 2021 are £770 million

(2020: £950 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 across 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 2021,

the Group recognised total accruals of £1,137 million (2020: £1,275

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 12% (2020: 12%)

difference between those initial estimates and ﬁnal settlement

would cause a material adjustment in the next ﬁnancialyear.

Other estimates

Set out below are other estimates where there is a risk of

adjustment to the carrying amounts of assets and liabilities

withinthe next ﬁnancial year, but the risk of a material adjustment

is not signiﬁcant.

Legal provisions:

The Group recognises legal provisions in line with the Group’s

provisions policy. 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 potential loss, considering all available

information, external advice and historical experience. As at

31 December 2021, the Group recognised legal provisions of £180

million (2020: £232 million) in relation to a number of historical

regulatory and other matters in various jurisdictions.

Deﬁned beneﬁt pension plan:

The value of the Group’s deﬁned beneﬁt pension plan obligations

is dependent on a number of key assumptions. These assumptions

include the rate of increase in pensionable salaries, the discount

rate to be applied, the level of inﬂation and the life expectancy of

the schemes’ members. Details of the key assumptions and the

sensitivity of the principal schemes’ carrying value to changes in

the assumptions are set out in Note 23.

1 Accounting Policies continued

Notes to the Financial Statements (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

217

2 Operating Segments

The Group’s operating segments comprise of 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 2021 and 31 December 2020 is as follows:

Year ended 31 December 2021

Hygiene

£m

Health

£m

Nutrition

£m

Adjusting

Items

£m

Total

£m

Net Revenue 5,911 4,646 2,677 – 13,234

Depreciation & amortisation (111) (146) (105) (61) (423)

Operating proﬁt/(loss) 1,401 1,187 289 (3,681) (804)

Net ﬁnance Income 547

Share of loss from associates (3)

Loss before income tax (260)

Income tax credit 208

Net loss from continuing operations (52)

1. 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.

In 2021, Nutrition net revenue excluding IFCN China was £2,294 million (2020: £2,426 million) and Nutrition adjusted operating proﬁt excluding IFCN China was £356 million

(2020: £377 million)

Year ended 31 December 2020

Hygiene

£m

Health

£m

Nutrition

£m

Adjusting

Items

£m

Total

£m

Net Revenue 5,816 4,890 3,287 – 13,993

Depreciation & amortisation (128) (142) (122) (80) (472)

Operating proﬁt 1,505 1,334 462 (1,141) 2,160

Net ﬁnance expense (286)

Share of loss from associates (1)

Proﬁt before income tax 1,873

Income tax (720)

Net income from continuing operations 1,153

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 details on adjusting items is included in pages 81 to 87.

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 and Greater China (US and Greater China being the two

biggest countries outside the country of domicile) and that from all other countries is:

2021

£m

Greater

China

£m

All other

countries

£m

Total

£m

Net Revenue 739 3,873 1,112 7,510 13,234

Goodwill and other intangible assets 1,843 9,905 393 6,727 18,868

Property, plant and equipment 316 669 164 1,029 2,178

Other non-current receivables 29 63 – 57 149

1. Greater China represents mainland China, Hong Kong and Taiwan

218

2020

£m

Greater

China

£m

All other

countries

£m

Total

£m

Net Revenue 811 3,955 1,561 7,666 13,993

Goodwill and other intangible assets 2,018 9,473 4,303 7,185 22,979

Property, plant and equipment 324 563 170 1,176 2,233

Other non-current receivables 25 55 1 65 146

1. Greater China represents mainland China, Hong Kong and Taiwan

Major customers are typically large grocery chains, mass markets and multiple retailers. The Group’s customer base is diverse with only one

customer (2020: none) accounting for more than 10% of net revenue. This customer accounts for £1,337 million (2020: £1,351 million) and has

revenue across all segments.

3 Analysis of Other Net Operating Expenses

2021

£m

2020

£m

Distribution costs (3,460) (3,611)

Research and development (313) (288)

Other administrative expenses (1,190) (1,393)

Other net operating income 1 2

Other net operating expenses (4,962) (5,290)

A net foreign exchange loss of £2 million (2020: £5 million loss) has been recognised through the Income Statement.

4 Auditor Remuneration

During the year, the Group (including its overseas subsidiaries) obtained the following services from the company’s Auditor and its associates.

2021

£m

2020

£m

Audit services pursuant to legislation

Audit of the Group’s Annual Report and Financial Statements 6.4 4.4

Audit of the Financial Statements of the Group’s subsidiaries 9.5 7.5

Audit-related assurance services 0.5 0.6

Total audit and audit-related services 16.4 12.5

Fees payable to the company’s Auditor and its associates for other services

Other Assurance services 0.1 0.2

Total non-audit services 0.1 0.2

16.5 12.7

5 Employees Staff Costs

The total employment costs, including Directors, were:

Note

2021

£m

2020

£m

Wages and salaries 1,935 1,970

Social security costs 251 263

Other pension costs 23 60 54

Share-based payments 25 30 15

Total staff costs 2,276 2,302

Executive Directors’ aggregate emoluments are disclosed in the Directors’ Remuneration Report.

Compensation awarded to key management (the Group Executive Committee) was:

2021

£m

2020

£m

Short-term employee beneﬁts 25 26

Share-based payments 9 9

34 35

2 Operating Segments continued

Notes to the Financial Statements (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

219

Staff numbers

The monthly average number of people employed by the Group, including Directors, during the year was:

2021

’000

2020

’000

North America 5.0 4.7

Europe/ANZ 14.8 14.1

Rest of world 22.0 25.1

41.8 43.9

6 Net Finance Income/(Expense)

2021

£m

2020

£m

Foreign exchange net gain on liquidation of subsidiaries

Gains on liquidation 1,048 –

Losses on liquidation (282) –

Total foreign exchange net gain on liquidation of subsidiaries 766 –

Other ﬁnance income

Interest income on cash and cash equivalents 29 61

Movement on put option liability 14 –

Finance income on tax balances 1 –

Other ﬁnance income 1 16

Total other ﬁnance income 45 77

Other ﬁnance expense

Interest payable on borrowings (244) (276)

Finance expense on tax balances – (26)

Movement on put option liability – (9)

Other ﬁnance expense (20) (52)

Total other ﬁnance expense (264) (363)

Other net ﬁnance expense (219) (286)

Net ﬁnance Income/(expense) 547 (286)

During 2021, as a result of the simpliﬁcation of the Group’s legal entity structure, a number of entities were liquidated and the cumulative

foreign exchange reserves were recycled to the Income Statement, resulting in a net foreign exchange gain of £766 million, principally from

the liquidation of intermediate ﬁnancing and holding companies.

7 Income Tax Expense

2021

£m

2020

£m

Current tax 711 740

Adjustment in respect of prior periods 53 (45)

Total current tax 764 695

Origination and reversal of temporary differences (1,089) (56)

Impact of changes in tax rates 185 81

Total deferred tax (904) 25

Cumulative foreign exchange on deferred tax balances reclassiﬁed to the Income Statement (68) –

Income tax (credit)/charge (208) 720

Current tax includes tax incurred by UK entities of £133 million (2020: £135 million). This is comprised of UK corporation tax of £55 million

(2020:£85 million) and overseas tax suffered of £78 million (2020: £50 million). UK current tax is calculated at 19% (2020: 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 £915 million (2020: £762 million). The variance from the current tax charge of £711 million is attributable to

movements on non-current tax liabilities (shown in Note 22) and timing differences arising between accrual and payment of income tax liabilities.

5 Employees Staff Costs continued

220

Origination and reversal of temporary differences includes adjustments in respect of prior periods of £86 million beneﬁt (2020: £22 million expense)

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).

The total tax charge on the Group’s (loss)/proﬁt for the year can be reconciled to the notional tax charge calculated at the UK tax rate as follows:

Continuing operations

2021

£m

2020

£m

(Loss)/proﬁt before income tax (260) 1,873

Tax at the notional UK corporation tax rate of 19% (2020: 19%) (49) 356

Effect of:

Overseas tax rates 112 43

Movement in provision related to uncertain tax positions (43) 41

Net impact of divestments and assets reclassiﬁed to held for sale (264) –

Unrecognised tax losses, other unrecognised tax assets and deferred tax liability on unremitted earnings 68 (38)

Cumulative foreign exchange on deferred tax balances reclassiﬁed to the Income Statement (68) –

Withholding and local taxes 43 31

Reassessment of prior year estimates (33) (23)

Impact of changes in tax rates 185 81

Non-taxable foreign exchange gain arising from legal entity simpliﬁcation (Note 6) (146) –

Permanent differences (13) 229

Income tax (credit)/charge (208) 720

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 examining the detail of

the Pillar Two rules and the tax accounting impact will be considered when the rules are translated into UK domestic legislation. Pillar Two is

expected to be effective from 1 January 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.

The net impact of divestments and assets reclassiﬁed to held for sale represents the net tax effect of the sale of IFCN China, Scholl, EnfaBebé

and the reclassiﬁcation of E45 to held for sale. The bases on which tax charges are calculated differ from the accounting bases.

Other movements on deferred tax assets and liabilities relates to the impairment of deferred tax assets previously recognised on losses and

the recognition of deferred tax liabilities on unrepatriated earnings (Note 12) (2020: previously unrecognised losses).

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 results from the revaluation of deferred tax liabilities relating to intangible 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 (2020: 19%). This tax rate change will increase the company’s future tax charge on

proﬁts arising in the UK.

Permanent differences in 2020 principally related to the non-deductible impairment of IFCN.

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

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

During the year the European Commission’s (EC) challenge that the UK Controlled Foreign Company (CFC) Legislation up to 31 December 2018

partially represented state aid was heard before the General Court. The Group’s application to annul the EC decision on the CFC Group

Financing Exemption was registered in the General Court on 4 November 2019 and our application was stayed pending the outcome of

thishearing which is expected in 2022. Management’s continued assessment is that no uncertain tax provision is required for this potential

exposure. Further, the EC’s challenge to certain aspects of the Gibraltar tax system was heard in front of the General Court during 2021.

Thisimpacts a former MJN subsidiary and a preliminary judgement was received in April 2022 which is currently under review.

Notes to the Financial Statements (Continued)

7 Income Tax Expense continued

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

221

The tax (charge)/credit relating to components of other comprehensive income is as follows:

2021 2020

Before

tax

£m

Tax

(charge)/

credit

£m

After

tax

£m

Before

tax

£m

Tax

(charge)/

credit

£m

After

tax

£m

Net exchange (losses) on foreign currency translation (374) – (374) (207) – (207)

Reclassiﬁcation of foreign currency translation reserves on

disposal or liquidation of foreign operations (550) – (550) – – –

Gains/(losses) on cash ﬂow and net investment hedges 118 (4) 114 (95) 3 (92)

Remeasurement of deﬁned beneﬁt pension plans (Note 23) 179 (46) 133 (75) 15 (60)

Revaluation of equity instruments – FVOCI (1) – (1) 31 (12) 19

Other comprehensive loss (628) (50) (678) (346) 6 (340)

Current tax – 1

Deferred tax (Note 12) (50) 5

(50) 6

The tax credited/(charged) directly to the Statement of Changes in Equity during the year is as follows:

2021

£m

2020

£m

Current tax 4 6

Deferred tax (Note 12) (4) (2)

– 4

8 Earnings Per Share

2021

pence

2020

pence

Basic (loss)/earnings per share

From continuing operations (8.8) 160.0

From discontinued operations 4.3 7.0

Total basic (loss)/earnings per share (4.5) 167.0

Diluted (loss)/earnings per share

From continuing operations (8.8) 159.3

From discontinued operations 4.3 7.0

Total diluted (loss)/earnings per share (4.5) 166.3

Basic

Basic earnings per share is calculated by dividing the net (loss)/income attributable to owners of the Parent Company from continuing

operations (2021: £63 million loss, 2020: £1,137 million income) and discontinued operations (2021: £31 million income; 2020: £50 million income)

by the weighted average number of ordinary shares in issue during the year (2021: 713,758,909; 2020: 710,907,200)

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 Restricted Share Scheme 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 2021 there were 10,683,109 (2020: 1,865,524) 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.

2021 Average

number of

2020 Average

number of

On a basic basis 713,758,909 710,907,200

Dilution for Executive Share Awards

– 61,251

Dilution for Employee Sharesave Scheme Options outstanding

– 2,778,499

On a diluted basis 713,758,909 713,746,950

1. As there was a loss in 2021, the effect of potentially dilutive shares is anti-dilutive

7 Income Tax Expense continued

222

9 Goodwill and Other Intangible Assets

Brands

£m

Goodwill

£m

Software

£m

Other

£m

Total

£m

Cost

At 1 January 2020 17,811 11,516 416 175 29,918

Additions 3 – 84 5 92

Disposals – – (1) – (1)

Reclassiﬁcations – – (10) 10 –

Exchange adjustments (141) (108) 1 (5) (253)

At 31 December 2020 17,673 11,408 490 185 29,756

Additions 5 – 72 – 77

Arising on business combinations 596 370 – 76 1,042

Disposals (4,494) (1,543) (2) – (6,039)

Reclassiﬁcations to held for sale (112) (28) – – (140)

Exchange adjustments (220) 5 (13) 5 (223)

At 31 December 2021 13,448 10,212 547 266 24,473

Accumulated amortisation and impairment

At 1 January 2020 390 5,054 136 77 5,657

Amortisation and impairment 63 985 55 25 1,128

Disposals – – (1) – (1)

Exchange adjustments (4) – – (3) (7)

At 31 December 2020 449 6,039 190 99 6,777

Amortisation and impairment 39 – 66 27 132

Disposals (143) (1,176) (2) – (1,321)

Exchange adjustments (3) 21 (2) 1 17

At 31 December 2021 342 4,884 252 127 5,605

Net book value

At 31 December 2020 17,224 5,369 300 86 22,979

At 31 December 2021 13,106 5,328 295 139 18,868

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 £28 million (2020: £37 million).

The majority of brands, all of goodwill and certain other intangibles are considered to have indeﬁnite lives for the reasons noted in the

accounting policies and therefore are subject to an annual impairment review. The MJN global brand, acquired MJN WIC contracts and a

number of small non-core brands 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:

Net book value

2021

£m

2020

£m

Indeﬁnite life assets

Brands 12,983 16,857

Goodwill 5,328 5,369

Other 39 36

Total indeﬁnite life assets 18,350 22,262

Finite life assets

Brands 123 367

Software 295 300

Other 100 50

Total ﬁnite life assets 518 717

Total net book value of intangible assets 18,868 22,979

Notes to the Financial Statements (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

223

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:

2021

GCGU/CGU

Indeﬁnite

life assets

£m

Goodwill

£m

Total

£m

Health 5,455 3,350 8,805

Hygiene 1,760 45 1,805

IFCN 4,260 1,408 5,668

VMS 971 248 1,219

Biofreeze 576 277 853

13,022 5,328 18,350

2020

GCGU/CGU

Indeﬁnite

life assets

£m

Goodwill

£m

Total

£m

Health 6,028 3,354 9, 382

Hygiene 1,780 45 1,825

IFCN 8,124 1,725 9,849

VMS 961 245 1,206

16,893 5,369 22,262

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 GCGUs. The CGUs tested

separately in 2021 are shown below.

Indeﬁnite life assets excluding goodwill

2021

£m

Intimate Wellness 2,124

Oriental Pharma 51

Indeﬁnite life assets excluding goodwill

2020

£m

Intimate Wellness (previously called Sexual Wellbeing) 2,170

Oriental Pharma 49

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 calculations, 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 steady or progressively declining 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.

9 Goodwill and Other Intangible Assets continued

224

For the Health and Hygiene GCGUs as well as the Intimate Wellness and VMS CGUs, any reasonably possible change in the key valuation

assumptions would not imply possible impairment. The recoverable amount for these GCGUs and CGUs was determined utilising a pre-tax

discount rate of 9% (Health, Hygiene and Intimate Wellness) or 10% (VMS) and a terminal growth rate of either 2.5% (Health, Intimate Wellness

or VMS) or 2% (Hygiene).

For the Biofreeze CGU, following acquisition on 12 July 2021, the recoverable amount was calculated using the income approach on a fair value

less costs of disposal basis utilising a post-tax discount rate of 11% representative of the geographical spread and product portfolio. An eight

year cash ﬂow model was used with a terminal growth rate of 2.5%. The key assumptions in determining the recoverable amount include net

revenue growth rates, gross margins and discount rates. The fair value measurement of Biofreeze is categorised within level 3 of the fair value

hierarchy, based on inputs into the valuation technique used. At 31 December 2021, the fair value was determined to be consistent with the

acquisition price for Biofreeze, such that there was no headroom between the recoverable amount and the net book value of £762 million.

Asthere is no headroom between recoverable amount and net book value, if future trading was to fall below the model this would result in

animpairment in the associated goodwill in the Biofreeze CGU given the recent acquisition of the business.

IFCN

On 15 June 2017, the Group acquired 100% of the issued share capital of MJN for cash consideration of £13,044 million ($16,642 million). The

acquisition was treated as a business combination and hence both the assets acquired, and liabilities assumed, were brought onto the Group

Balance Sheet at their fair value.

Following impairment losses of £5,037 million in 2019 and £985 million in 2020, at 31 December 2020 IFCN was recorded at its then recoverable

amount of £8,810 million. Following these impairment losses, no headroom remained between the IFCN recoverable amount and net book

value at 31 December 2020.

On 5 June 2021, the Group announced the deﬁnitive agreement to sell IFCN China to Primavera Capital Group for an implied enterprise value

of $2.2 billion. On announcement of the deﬁnitive agreement to sell IFCN China, the global IFCN CGU was split into two CGUs, being IFCN and

IFCN China (the disposal group). The disposal of IFCN China completed on 9 September 2021, with the Group recognising a pre-tax loss on

disposal of £3.3 billion in the year to 31 December 2021, see Note 29.

The recoverable amount for the remaining IFCN business has been determined on a value-in-use basis. The value-in-use of IFCN was

determined 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 steady or progressively declining terminal growth rate. At 31 December 2021, management has

determined that the recoverable amount of IFCN is higher than its carrying value, such that no impairment is required.

The determination of the recoverable amount for IFCN at 31 December 2021 incorporates certain key assumptions, some of which are subject

to considerable uncertainty. These assumptions include but are not limited to the effects of the COVID-19 pandemic, the estimation of future

birth rates, the commercial success of new product launches, including adult nutrition, and the expansion of specialty nutrition. Although there

is headroom between the IFCN recoverable amount and its carrying value, changes to these assumptions, or any deterioration in other macro

or business-level assumptions supporting the IFCN recoverable amount could reduce this headroom or could necessitate the recognition of

impairment losses in future periods.

The key assumptions used in the estimation of value in use within the 2021 impairment assessment of the remaining IFCN business are outlined

below. Following the disposal of IFCN China, the 2021 key assumptions are not directly comparable to those of the 2020 impairment

assessment that related to the global IFCN CGU.

2021

Pre-tax discount rate 9.7%

Terminal growth rate 2%

Annual growth in Net Revenue between 2022 and 2026

3% to 4%

Annual growth in Gross Margin between 2022 and 2026

4% to 6%

2020

Pre-tax discount rate 9.6%

Terminal growth rate 2.5%

Annual growth in Net Revenue between 2021 and 2030

3% to 5%

Annual growth in Gross Margin between 2021 and 2030

3% to 6%

1. At constant exchange rates, excluding the impact of future foreign exchange movements

9 Goodwill and Other Intangible Assets continued

Notes to the Financial Statements (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

225

The key estimates incorporated within the determination of the IFCN recoverable amount in 2021 are summarised below:

Key estimates Commentary

Market In the US, management expects market conditions to be relatively stable, with birth-rates steadily returning to pre-COVID

trends. Tendering for WIC contracts continues to remain highly competitive.

Within ASEAN and LATAM, management expects conditions to remain relatively stable, with net revenue growth broadly in

line with regional inﬂation.

Net Revenue In the short to medium term, management expects to achieve net revenue growth (excluding the impact of foreign

exchange movements) of between 3% and 4% per annum. This is expected to be achieved through a mix of ongoing

premiumisation, price increases, and revenues from new products/category launches including adult nutrition and the

expansion of speciality nutrition.

Margins In the short to medium term, management expects IFCN margins (both gross and operating) to increase from current levels

as IFCN realises beneﬁts from Reckitt’s on-going productivity programme, and operational leverage from the growth of

adult nutrition. Cost inﬂation in the short term is expected to be offset with price increases.

Discount rate Management determined an IFCN speciﬁc weighted average cost of capital (WACC) and the implied pre-tax discount rate

with the support of a third-party expert. In addition, management performed benchmarking against other comparable

companies. For valuation purposes management used the upper end of the calculated range in 2021 to reﬂect uncertainty in

certain key assumptions.

Terminal

growth rate

Management engaged a third-party expert to help calculate an IFCN -speciﬁc terminal growth rate. Management is satisﬁed

with the reasonableness of this rate when compared against independent market growth projections and long-term

country inﬂation rates.

The table below shows the sensitivity of the recoverable amount to reasonable changes in key assumptions. The table assumes no related

response by management (e.g. to drive further cost savings) and is hence theoretical in nature.

2021

£m

Expected Net Revenue growth rates (2022 to 2026

) adjusted by 100bps +510 / -500

Expected EBIT growth rates (2022 to 2026

) adjusted by 100bps +/- 190

Terminal growth rate (applied from 2027) adjusted by 50bps +490 / -410

Pre-tax discount rate adjusted by 50bps +410 / -360

2020

£m

Expected Net Revenue growth rates (2021 to 2030

) adjusted by 100bps +/-900

Expected EBIT growth rates (2021 to 2030

) adjusted by 100bps +/- 600

Terminal growth rate (applied from 2031) adjusted by 50bps +600 / -500

Pre-tax discount rate adjusted by 50bps +700 / -600

The table below shows the percentage movement in the 2021 key assumptions that (individually) would be required to reach the point at

which the IFCN value in use approximates its carrying value. In 2020, the global IFCN CGU had no headroom between the recoverable amount

and the net book value.

2021

Expected Net Revenue growth rates (2022-2026

) 140bps decrease

Expected EBIT growth rates (2022-2026

) 390bps decrease

Terminal growth rate 90bps decrease

Pre-tax discount rate 100bps decrease

1. At constant exchange rates, excluding the impact of future foreign exchange movements

9 Goodwill and Other Intangible Assets continued

226

10 Property, Plant and Equipment

Land and

buildings

£m

Plant and

equipment

£m

Right of use

Assets

£m

Assets under

construction

£m

Total

£m

Cost

At 1 January 2020 1,152 1,937 353 324 3,766

Additions 27 58 89 309 483

Disposals (9) (48) (21) (6) (84)

Reclassiﬁcations 98 183 – (281) –

Exchange adjustments (23) (29) (12) (14) (78)

At 31 December 2020 1,245 2,101 409 332 4,087

Additions 20 61 110 292 483

Arising on business combinations

5 15 – – 20

Disposals (81) (210) (50) (8) (349)

Reclassiﬁcations (Including held for sale) 51 151 – (207) (5)

Exchange adjustments (20) (45) (8) (1) (74)

At 31 December 2021 1,220 2,073 461 408 4,162

Accumulated depreciation and impairment

At 1 January 2020 381 1,181 64 – 1,626

Charge for the year 62 185 80 – 327

Disposals (8) (46) (17) – (71)

Impairment 1 1 – – 2

Exchange adjustments (5) (20) (5) – (30)

At 31 December 2020 431 1,301 122 – 1,854

Charge for the year 58 168 71 – 297

Disposals (33) (105) (34) – (172)

Impairment 38 8 1 5 52

Reclassiﬁcations (including held for sale) (2) 1 (1) – (2)

Exchange adjustments (10) (32) (3) – (45)

At 31 December 2021 482 1,341 156 5 1,984

Net book value

As at 31 December 2020 814 800 287 332 2,233

As at 31 December 2021 738 732 305 403 2,178

At 31 December 2021, the Group’s right of use assets included land & buildings of £284 million (2020: £267 million) and other assets of £21 million

(2020: £19 million). The Group recognised depreciation of £58 million (2020: £66 million) on the land & buildings and depreciation of £13 million

(2020: £14 million) on the other assets.

The Group has commitments to purchase property, plant and equipment of £80 million (2020: £96 million).

11 Equity Instruments

2021

£m

2020

£m

Equity investments – fair value other comprehensive income

171 114

Investments in associates accounted for using the equity method 23 22

Total equity instruments 194 136

1. Equity investments is composed of £114 million (2020: £94 million) representing 13% of the outstanding units in Packable Holdings LLC (previously Pharmapacks LLC),

£33million representing 8% of issued shared capital in Jadestone One Cayman Limited which was received as part of the consideration for the sale of IFCN China

(see note 29), £14 million (2020: £16 million) representing less than 1% of the issued share capital of China Pharmaceutical Resources Limited and £10 million (2020: £4 million)

of other equity investments

Investments accounted for using the equity method predominantly relates to the Group’s investment in Your.MD AS (trading as Healthily). The

Group has recognised a loss of £3 million (2020: £1 million) within the Group Income Statement with respect to this investment. There are no

gains or losses recognised within other comprehensive income with respect to the Group’s associates.

Notes to the Financial Statements (Continued)

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12 Deferred Tax

Deferred tax

Accelerated

capital

allowances

£m

Intangible

assets

£m

Short-term

temporary

differences

£m

Tax

losses

£m

Retirement

beneﬁt

obligations

£m

Total

£m

At 1 January 2021 (55) (3,766) 427 52 38 (3,304)

Credited/(charged) to the Income Statement 3 864 59 (24) 2 904

(Charged) to other comprehensive income – – (4) – (46) (50)

(Charged) directly to equity – – (4) – – (4)

Arising on business acquisitions/ disposals 4 (151) (31) – – (178)

Exchange differences (1) 30 (5) (1) – 23

At 31 December 2021 (49) (3,023) 442 27 (6) (2,609)

2021

Accelerated

capital

allowances

£m

Intangible

assets

£m

Short-term

temporary

differences

£m

Tax

losses

£m

Retirement

beneﬁt

obligations

£m

Total

£m

Deferred tax assets (2) (37) 189 24 23 197

Deferred tax liabilities (47) (2,986) 253 3 (29) (2,806)

Deferred tax (49) (3,023) 442 27 (6) (2,609)

Deferred tax

Accelerated

capital

allowances

£m

Intangible

assets

£m

Short-term

temporary

differences

£m

Tax

losses

£m

Retirement

beneﬁt

obligations

£m

Total

£m

At 1 January 2020 (42) (3,710) 381 44 38 (3,289)

(Charged)/credited to the Income Statement (14) (78) 70 10 (13) (25)

Credited/(charged) to other comprehensive income – – (8) – 13 5

Exchange differences 1 22 (16) (2) – 5

At 31 December 2020 (55) (3,766) 427 52 38 (3,304)

2020

Accelerated

capital

allowances

£m

Intangible

assets

£m

Short-term

temporary

differences

£m

Tax

losses

£m

Retirement

beneﬁt

obligations

£m

Total

£m

Deferred tax assets 4 (64) 244 48 26 258

Deferred tax liabilities (59) (3,702) 183 4 12 (3,562)

Deferred tax (55) (3,766) 427 52 38 (3,304)

Deferred tax assets and liabilities have been offset where they relate to income taxes levied by the same taxation authority.

Certain deferred tax assets in respect of corporation tax losses and other temporary differences totalling £2,091 million (2020: £1,534 million)

have not been recognised at 31 December 2021 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 becomes sufﬁciently probable.

13 Inventories

2021

£m

2020

£m

Raw materials and consumables 383 352

Work in progress 70 87

Finished goods and goods held for resale 1,006 1,153

Total inventories 1,459 1,592

The total cost of inventories recognised as an expense and included in cost of sales amounted to £5,292 million (2020: £5,309 million).

Thisincludes inventory write-offs and losses of £191 million (2020: £187 million).

The Group inventory provision at 31 December 2021 was £151 million (2020: £119 million).

228

14 Trade and Other Receivables

Amounts falling due within one year

2021

£m

2020

£m

Trade receivables 1,587 1,584

Less: Provision for impairment of receivables (36) (27)

Trade receivables – net 1,551 1,557

Other receivables 291 290

Prepayments and accrued income 84 74

Trade and other receivables 1,926 1,921

The carrying amounts of the Group’s trade and other receivables are denominated in the following currencies:

Currency analysis

2021

£m

2020

£m

US dollar 574 477

Euro 302 281

Sterling 167 155

Brazilian Real 128 117

Other currencies 755 891

Trade and other receivables 1,926 1,921

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

2021

£m

2020

£m

Not overdue 1,318 1,346

Up to 3 months overdue 219 193

Over 3 months overdue 50 45

Trade receivables 1,587 1,584

At 31 December 2021, a provision of £36 million (2020: £27 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 2021, trade receivables of £233 million (2020: £211 million) were past due but not impaired. These receivables were not

impaired because having considered their nature and historical collection experience, recovery of the unprovided amounts is expected in

duecourse.

b. Other receivables

Other receivables includes recoverable indirect tax of £212 million (2020: £213 million). This contains £2 million (2020: £3 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 2021 of £149 million (2020: £146 million) includes non-current indirect tax, long-term

prepayments, and non-current derivatives of £1 million (2020: £19 million)

d. Financial instruments (Note 15)

At 31 December 2021 £1,926 million (2020: £1,918 million) of the current and non-current receivables totalling £2,075 million (2020: £2,067

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.

Notes to the Financial Statements (Continued)

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15 Financial Instruments and Financial Risk Management

Financial instruments by category

At 31 December 2021 Note

Amortised

cost

£m

Derivatives

used for

hedging

£m

Fair value

through

the

Income

Statement

£m

Equity

instruments

£m

Carrying

value

total

£m

Assets as per the Balance Sheet

Current and non-current trade and other receivables 14d 1,926 – – – 1,926

Derivative ﬁnancial instruments – FX forward exchange

contracts 17 – 41 21 – 62

Equity instruments – FVOCI 11 – – – 171 171

Cash and cash equivalents 1,261 – – – 1,261

Liabilities as per the Balance Sheet

Borrowings (loans and overdrafts)

37 – – – 37

Lease obligations 328 – – – 328

Bonds 7,969 – – – 7,969

Senior notes 1,229 – – – 1,229

Derivative ﬁnancial instruments – FX forward exchange

contracts – 16 36 – 52

Derivative ﬁnancial instruments – Interest rate swaps 21 – 22 – – 22

Derivative ﬁnancial instruments – Cross currency interest

rate swaps 21 – 49 – – 49

Current and non-current trade and other payables 21 5,193 – – – 5,193

At 31 December 2020 Note

Amortised

cost

£m

Derivatives

used for

hedging

£m

Fair value

through

the

Income

Statement

£m

Equity

instruments

£m

Carrying

value

total

£m

Assets as per the Balance Sheet

Current and non-current trade and other receivables 14d 1,918 – – – 1,918

Derivative ﬁnancial instruments – FX forward exchange

contracts – 24 6 – 30

Derivative ﬁnancial instruments – Interest rate swaps 14c – 7 – – 7

Derivative ﬁnancial instruments – Cross currency interest

rate swaps 14c – 12 – – 12

Equity instruments – FVOCI 11 – – – 114 114

Cash and cash equivalents 1,646 – – – 1,646

Liabilities as per the Balance Sheet

Borrowings (commercial paper, bank loans & overdrafts)

691 – – – 691

Lease obligations 313 – – – 313

Bonds 8,041 – – – 8,041

Senior notes 1,221 – – – 1,221

Term loans 291 – – – 291

Derivative ﬁnancial instruments – FX forward exchange

contracts – 50 68 – 118

Current and non-current trade and other payables 21 5,777 – – – 5,777

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

230

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).

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 2021

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Assets as per the Balance Sheet

Derivative ﬁnancial instruments – FX forward exchange contracts – 62 – 62

Equity instruments – FVOCI 14 114 43 171

Liabilities as per the Balance Sheet

Derivative ﬁnancial instruments – FX forward exchange contracts – 52 – 52

Derivative ﬁnancial instruments – Interest rate swaps – 22 – 22

Derivative ﬁnancial instruments – Cross currency interest rate swaps – 49 – 49

At 31 December 2020

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Assets as per the Balance Sheet

Derivative ﬁnancial instruments – Interest rate swaps – 7 – 7

Derivative ﬁnancial instruments – Cross currency interest rate swaps – 12 – 12

Derivative ﬁnancial instruments – FX forward exchange contracts – 30 – 30

Equity instruments – FVOCI 16 – 98 114

Liabilities as per the Balance Sheet

Derivative ﬁnancial instruments – FX forward exchange contracts – 118 – 118

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 equity instruments – FVOCI

was determined using both quoted share price information (level 1 classiﬁcation) and other non-market information (level 3 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 and 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 2021 is a liability of £8,238 million (2020: £8,562 million) and the fair value of the senior

notes as at 31 December 2021 is a liability of £1,400 million (2020: £1,445 million). The fair value of the bonds and senior notes was derived using

quoted market rates in an active market (level 1 classiﬁcation).

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 – e.g. 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.

Notes to the Financial Statements (Continued)

15 Financial Instruments and Financial Risk Management continued

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The following table sets out the carrying amounts of recognised ﬁnancial instruments that are subject to the above agreements.

At 31 December 2021

Gross amounts

ofrecognised

ﬁnancial assets/

liabilities in the

Balance Sheet

£m

Related ﬁnancial

instruments that

are not offset

£m

Net

amount

£m

Financial assets

FX forward exchange contracts 62 (32) 30

Other ﬁnancial assets 1,261 – 1,261

1,323 (32) 1,291

Financial liabilities

FX forward exchange contracts (52) 32 (20)

Other ﬁnancial liabilities (73) – (73)

(125) 32 (93)

At 31 December 2020

Financial assets

FX forward exchange contracts 30 (27) 3

Other ﬁnancial assets 1,665 – 1,665

1,695 (27) 1,668

Financial liabilities

FX forward exchange contracts (118) 27 (91)

Other ﬁnancial liabilities (2) – (2)

(120) 27 (93)

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 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.

15 Financial Instruments and Financial Risk Management continued

232

The notional principal amount of the outstanding forward foreign exchange contracts at 31 December 2021 was £7,036 million receivable

(2020: £6,146 million) and £7,027 million payable (2020: £6,234 million).

The Group held forward foreign exchange contracts designated as cash ﬂow hedges primarily in Euro, Sterling, US dollar, Canadian dollar,

Australian dollar, Philippine peso and Mexican peso. The notional value of the payable leg resulting from these ﬁnancial instruments was

asfollows:

Cash Flow Hedge Proﬁle

2021

£m

2020

£m

Euro 327 444

Sterling 310 423

US dollar 273 438

Canadian dollar 113 84

Australian dollar 107 92

Philippine peso 54 46

Mexican peso 51 53

Other 422 708

1,657 2,288

These forward foreign exchange contracts are mainly expected to mature over the period January 2022 to December 2022 (2020: January

2021 to December 2021). Of the total amount, £11 million (2020: nil) is due between 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 (2020: immaterial).

Gains and losses recognised in other comprehensive income and the hedging reserve on forward exchange contracts in 2021 of £30 million

gain, net of tax (2020: £17 million loss, 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 2021, the Group had forward contracts used for cash ﬂow hedging with total fair value of £15 million asset (2020: £26 million

liability). 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 £6 million (2020: £8 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, US dollar/Canadian dollar, and Euro/Australian dollar.

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.

As at 31 December 2021, the Group had designated a 2023 US dollar bond totalling $500 million (2020: $500 million), 2030 Euro bond totalling

€850 million (2020: €850 million) and forward currency swap contracts totalling €750 million (2020: nil) as the hedging instruments in a net

investment hedge relationship. During the year commercial paper of €750 million (2020: €750 million) was also in a hedge relationship,. As the

commercial paper was repaid during the year, this relationship was ended as it was replaced with the forward currency swap contracts.

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 2021 was a £84 million gain (2020: £75 million loss). 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/ swaps would be £19

million loss and £51 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 2021 no material ineffectiveness (2020: no material

ineffectiveness) has been recognized 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 2021, was a £6 million gain (2020: £2 million loss).

Notes to the Financial Statements (Continued)

15 Financial Instruments and Financial Risk Management continued

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(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.

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

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 LIBOR, 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 2021 no material ineffectiveness (2020: 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 £10 million (2020: £14 million) or decrease of

£10 million (2020: £14 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 is being undertaken globally, including the replacement of some interbank offered

rates (IBORs) with alternative nearly risk-free rates (referred to as ‘IBOR reform’).

The Group’s main exposure to IBOR reform is through cross currency interest rate swaps that reference a ﬂoating Sterling LIBOR. The swaps

were executed as hedging instruments of the €850 million bond maturing in 2026 in which the Group pays interest on a ﬂoating sterling

ratebased on 3-month GBP LIBOR. As the swap agreements are governed by contracts based on the International Swaps and Derivatives

Association (ISDA)’s master agreements, by adhering to the ISDA LIBOR Fallback Protocol during the year ended 31 December 2021, the Group

amended contractual terms of ﬁnancial instruments indexed to the relevant LIBORs, such that these will be replaced by risk-free rates after

IBOR cessation, thereby removing IBOR reform-related uncertainty.

During 2021, the Group’s committed bank facilities totalling £4,500 million (2020: £5,500 million) were amended or renewed to include rate

switch provisions, thus addressing IBOR reform, predominantly in the form recommended by the Loan Market Association. These committed

facilities were undrawn at 31 December (2020: undrawn).

At 31 December, the Group had contracts of cross currency interest swap liabilities with a carrying value of £49 million referenced to GBP

LIBOR but with appropriate fallback clauses (2020: Unreformed contracts of cross currency interest swap asset of £12 million)

On 5 March 2021, the FCA conﬁrmed that certain LIBOR benchmark settings – including the 3-month USD benchmark – would continue to be

published until 30 June 2023. Consequently, the Group expects that the $750 million ﬂoating rate note maturing in June 2022 that references

3-month USD LIBOR will not be affected by IBOR reform. 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.

15 Financial Instruments and Financial Risk Management continued

234

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.

2021

Counterparty

Credit

rating

Limit

£m

Exposure

£m

Financial institution A A+ 250 210

Financial institution B A+ 250 160

Financial institution C A+ 250 147

Financial institution D A+ 250 127

Financial institution E A+ 250 115

Financial institution F A 200 115

Financial institution G A 200 102

Financial institution H AAA 300 83

Financial institution I A 200 70

Financial institution J A+ 250 54

2020

Counterparty

Credit

rating

Limit

£m

Exposure

£m

Financial institution A AAA 300 201

Financial institution B A+ 150 141

Financial institution C A+ 150 130

Financial institution D AAA 300 125

Financial institution E A 125 121

Financial institution F A+ 143 102

Financial institution G A+ 100 96

Financial institution H A 103 93

Financial institution I A 116 93

Financial institution J AAA 300 85

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 2022 and 2044.

The Group has various borrowing facilities available to it. The Group has bilateral credit facilities with high-quality international banks and has

aﬁnancial covenant, which is not expected to restrict the Group’s future operations.

At the end of 2021, the Group had long-term debt excluding lease liabilities of £6,812 million (2020: £9,553 million), of which £6,445 million

(2020: £6,889 million) is repayable in more than two years. In addition, the Group has committed borrowing facilities totalling £4,500 million

(2020: £5,500 million), of which £4,500 million (2020: £3,500 million) expires after more than two years. These facilities were undrawn at year

end. 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 2021 calculated in accordance with the Articles of Association was £22,197 million

(2020:£27,345million).

The table on the next page analyses the Group’s ﬁnancial liabilities and the derivatives which will be settled on a net basis 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.

Notes to the Financial Statements (Continued)

15 Financial Instruments and Financial Risk Management continued

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At 31 December 2021

Total

£m

Less than

1 year

£m

Between

1 and 2

years

£m

Between

2 and 5

years

£m

Over

5 years

£m

Bonds (8,642) (2,552) (496) (2,430) (3,164)

Senior notes (1,855) (53) (53) (690) (1,059)

Trade payables (2,064) (2,064) – – –

Other payables (3,129) (3,048) (81) – –

At 31 December 2020

Total

£m

Less than

1 year

£m

Between

1 and 2

years

£m

Between

2 and 5

years

£m

Over

5 years

£m

Commercial paper (671) (671) – – –

Bonds (8,843) (174) (2,527) (2,119) (4,023)

Term loans (297) (3) (294) – –

Senior notes (1,888) (52) (52) (706) (1,078)

Trade payables (2,159) (2,159) – – –

Other payables (3,643) (3,418) (53) (172) –

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 2021

Less than

1 year

£m

Between

1 and 2

years

£m

Between

2 and 5

years

£m

Over

5 years

£m

FX forward exchange contracts

Outﬂow (7,016) (10) (1) –

Inﬂow 7,024 11 1 –

Cross currency interest rate swap

Outﬂow (9) (9) (770) –

Inﬂow 3 3 723 –

Interest rate swap

Outﬂow (3) (3) (9) (10)

Inﬂow 5 5 16 21

At 31 December 2020

Less than

1 year

£m

Between

1 and 2

years

£m

Between

2 and 5

years

£m

Over

5 years

£m

FX forward exchange contracts

Outﬂow (6,234) – – –

Inﬂow 6,146 – – –

Cross currency interest rate swap

Outﬂow (9) (9) (26) (785)

Inﬂow 3 3 8 773

Interest rate swap

Outﬂow (3) (3) (10) (16)

Inﬂow 5 5 17 29

15 Financial Instruments and Financial Risk Management continued

236

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.

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.

Note

2021

£m

2020

£m

Cash and cash equivalents including overdrafts 1,259 1,644

Financing liabilities 17 (9,637) (10,598)

Net debt 8,378 8,954

Total equity 7,453 9,159

15,831 18,113

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 2021, 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 £8,378 million (2020: £8,954 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 a Supply

Chain Financing 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 £372 million (2020: £392 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

2021

£m

2020

£m

Cash at bank and in hand 587 499

Short-term bank deposits 674 1,147

Cash and cash equivalents 1,261 1,646

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, £66 million (2020: £136 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.

Notes to the Financial Statements (Continued)

15 Financial Instruments and Financial Risk Management continued

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237

17 Financial Liabilities – Borrowings

Current Note

2021

£m

2020

£m

Bank loans and overdrafts

22 20

Commercial paper – 671

Bonds 2,401 –

Lease liabilities 19 62 72

Total short-term borrowings 2,485 763

Bonds 5,568 8,041

Senior notes 1,229 1,221

Term loans – 291

Other non-current borrowings 15 –

Lease liabilities 19 266 241

Total long-term borrowings 7,078 9,794

Total borrowings 9,563 10,557

Derivative ﬁnancial instruments 76 43

Less overdrafts presented in cash and cash equivalents in the cash ﬂow statement (2) (2)

Total ﬁnancing liabilities 9,637 10,598

1. Bank loans are denominated in a number of currencies: all are unsecured and bear interest based on market short term interest rates

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:

Assets Liabilities

2021 (£m) Current

Non-

Current

Non-

Current

Derivative ﬁnancial instruments (ﬁnancing liabilities) 31 – (36) (71)

Derivative ﬁnancial instruments (non-ﬁnancing liabilities) 30 1 (16) –

At 31 December 2021 61 1 (52) (71)

1. Included within Other non-current receivables on the Balance Sheet

2. Included within Other non-current liabilities on the Balance Sheet

Assets Liabilities

2020 (£m) Current

Non-

Current

Non-

Current

Derivative ﬁnancial instruments (ﬁnancing liabilities) 6 19 (68) –

Derivative ﬁnancial instruments (non-ﬁnancing liabilities) 24 – (50) –

At 31 December 2020 30 19 (118) –

1. Included within Other non-current receivables on the Balance Sheet

Reconciliation of movement in ﬁnancing liabilities to cash ﬂow statement

2021

£m

2020

£m

At 1 January 10,598 12,298

Proceeds from borrowings 38 2,903

Repayment of borrowings (1,044) (4,583)

Other ﬁnancing cash ﬂows (92) (47)

Total ﬁnancing cash ﬂows (1,098) (1,727)

New lease liabilities 109 86

Exchange, fair value and other movements 28 (59)

Total non-cash ﬁnancing items 137 27

At 31 December 9,637 10,598

238

Maturity of borrowings (excluding lease liabilities)

2021

£m

2020

£m

Bank loans and overdrafts repayable:

Within one year or on demand 22 20

Other borrowings repayable:

Within one year:

Commercial paper – 671

Bonds 2,401 –

After one year and in less than ﬁve years:

Bonds 2,546 4,194

Senior notes 572 569

Term loans – 291

After ﬁve years or longer:

Bonds 3,022 3,847

Senior notes 657 652

Other non-current borrowings 15 –

9,213 10,224

Gross borrowings (unsecured) 9,235 10,244

18 Provisions for Liabilities and Charges

Legal

provisions

£m

Other

provisions

£m

Total

provisions

£m

At 1 January 2020 151 83 234

Charged to the Income Statement 160 19 179

Utilised during the year (13) (13) (26)

Released to the Income Statement (61) (27) (88)

Reclassiﬁcations (2) 2 –

Exchange adjustments (3) (4) (7)

At 31 December 2020 232 60 292

Charged to the Income Statement 39 10 49

Utilised during the year (69) (4) (73)

Released to the Income Statement (15) (11) (26)

Exchange adjustments (7) – (7)

At 31 December 2021 180 55 235

Provisions have been analysed between current and non-current as follows:

2021

£m

2020

£m

Current 191 243

Non-current 44 49

235 292

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 2021, the Group recognised legal provisions of £180 million (2020: £232 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 majority of these matters, £144 million (2020: £192 million) is recorded as a current provision as it is possible the matter

could be settled in the next 12 months, however, it is possible that they may not be. Legal provisions includes £75 million (2020: £83 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.

Notes to the Financial Statements (Continued)

17 Financial Liabilities – Borrowings continued

Reckitt Annual Report and Accounts 2021

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239

19 Lease Liabilities

Maturity analysis – contractual undiscounted cash ﬂows

2021

£m

2020

£m

Within one year 64 86

Later than one and less than ﬁve years 222 176

After ﬁve years 140 122

Total undiscounted lease liabilities at 31 December 426 384

Lease liabilities included in the statement of ﬁnancial position at 31 December 328 313

Current 62 72

Non-current 266 241

1. Interest on lease liabilities amounted to £13 million (2020: £13 million)

20 Contingent Liabilities and Assets

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 RB Korea’s (RBK) compensation plan was established. These include asthma, toxic hepatitis, child

interstitial lung disease, bronchitis and upper airway disease. On 29 October 2021, the South Korean Government published a report that

concluded epidemiological correlation exists between HS use and asthma, ILD and pneumonia. Our expert advisors have reviewed the report

and concluded 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 of up to the amount previously collected for the SRF.

Further, under the amended HS law, HS victims will no longer be classiﬁed as Categories 1 to 5 based on the likelihood that HS exposure

caused their lung injury. As RBK’s compensation plan was dependent on the previous classiﬁcation system, it will no longer be possible for

thecompensation plan to operate and it is now closed. The pending civil actions ﬁled by HS claimants against RBK will also be impacted by

the amended HS law, e.g. due to the lowered causation standard of ‘epidemiological correlation’. Thus, we have seen the number of civil

claimants to increase, primarily seeking awards for mental distress and lost income (for portions not already covered by the IRF).

The HS mediation committee (HSMC) was established in October 2021 and has been meeting with claimant groups and industry companies

todiscuss various issues related to designing a comprehensive mediation plan to cover all HS victims. It is our current understanding that the

HSMC plans to announce a mediation proposal in the second quarter of 2022. Reckitt Korea will not be bound to accept its mediation proposal

and could not do so without ﬁnancial support from the Group.

The Group currently has a provision of £75 million (2020: £83 million) in relation to the HS issue in South Korea. In addition, there are further

potential costs that either are not considered probable or 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 and 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.

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.

240

21 Trade and Other Payables

2021

£m

2020

£m

Trade payables 2,064 2,159

Other payables 100 92

Other tax and social security payable 155 164

Accruals 2,948 3,327

Trade and other payables 5,267 5,742

Included within accruals is £1,137 million (2020: £1,275 million) in respect of amounts payable to trade customers and government bodies for

trade spend.

Other Non-current Liabilities

2021

£m

2020

£m

Financial liability in respect of put option to non-controlling interest

– 148

Interest accrued on tax balances 135 157

US employee related payables 46 39

Derivative ﬁnancial instruments 71 –

Other 81 53

Other non-current liabilities 333 397

1. In 2020, this liability was in respect of the present value of the expected redemption amount of a written put option granted to the non-controlling interest. As described in

Note 27 this option has lapsed in the year to 31 December 2021 and has accordingly been credited to equity

Financial instruments (Note 15)

At 31 December 2021 £5,193 million (2020: £5,777 million) of the current and non-current payables totalling £5,600 million (2020: £6,139 million)

are ﬁnancial liabilities. These mainly related to amounts owed to suppliers in respect of goods or services and are typically non-interest

bearing. Amounts that are not ﬁnancial instruments comprise of employee related liabilities, social security liabilities and accrued interest.

22 Current and Non-current Tax Assets and Liabilities

2021

£m

2020

£m

Current tax liabilities 93 72

Non-current tax liabilities 826 1,021

Total current and non-current tax liabilities 919 1,093

Included in total current and non-current tax liabilities is an amount of £770 million (2020: £950 million) relating to tax contingencies primarily

arising in relation to transfer pricing.

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.

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 at

5 April 2019. The Group agreed that its aim was to eliminate the pension plan technical provisions deﬁcit in the UK by the end of 2020. Funding

levels are monitored on an annual basis and the current agreed annual deﬁcit reduction contributions are £nil. It is expected that contributions

to the UK deﬁned beneﬁt plan in 2022 will be £nil (2021: £nil).

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 has

yet been reached.

Notes to the Financial Statements (Continued)

Reckitt Annual Report and Accounts 2021

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241

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 ten 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 Retiree Health Care Plan, a full independent actuarial valuation is carried out on an annual basis. The most recent valuation was

carried out on 1 January 2022. For the Mead Johnson & Company, LLC Medical Plan, the most recent valuation was carried out at 1 January

2022. 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 2022 will be £7 million (2021: £7 million).

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 2019) and the US Medical plan valuations to 31 December 2021. The UK plans have a weighted average duration of the

deferred beneﬁt obligation of 17.0 years (2020: 17.0 years).

Signiﬁcant actuarial assumptions

The signiﬁcant actuarial assumptions used in determining the Group’s net liability for the UK and US (Medical) plans as at 31 December were:

2021 2020

US (Medical)

Rate of increase in pensionable salaries 5.4 – 5.1 –

Rate of increase in deferred pensions during deferment 3.4 – 3.1 –

Rate of increase in pension payments 3.25 – 2.9 –

Discount rate 1.9 2.7 1.5 2.3

Inﬂation assumption – RPI 3.4 – 3.1 –

Annual medical cost inﬂation – 5.0-8.0 – 5.0-8.5

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:

2021 2020

UK years US years UK years US years

Number of years a current pensioner is expected to live beyond 60:

Male 27.5 25.1 27.5 25.3

Female 28.9 27.2 28.7 27.3

Number of years a future pensioner is expected to live beyond 60:

Male 28.7 26.8 28.8 27.0

Female 30.2 28.8 30.0 28.9

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 2020 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-2020

No adjustment has been made for the impact of COVID-19 on mortality assumptions as it is too early to conclude on any evidence to support

the impact.

23 Pension and Post-Retirement Commitments continued

242

Amounts recognised on the Balance Sheet

The amounts recognised on the Balance Sheet are as follows:

2021

£m

2020

£m

Balance Sheet liability for:

US (Medical) (107) (125)

Other (211) (247)

Liability on Balance Sheet (318) (372)

Balance Sheet assets for:

UK 298 188

Other 57 38

Asset on Balance Sheet 355 226

Net pension asset/(liability) 37 (146)

The funded and unfunded amounts recognised on the Balance Sheet are determined as follows:

2021 2020

£m

(Medical)

£m

Other

£m

Total

£m

(Medical)

£m

Other

£m

Total

£m

Present value of funded obligations (1,486) – (481) (1,967) (1,547) – (538) (2,085)

Fair value of plan assets 1,788 – 496 2,284 1,754 – 510 2,264

Surplus/(liability) of funded plans 302 – 15 317 207 – (28) 179

Present value of unfunded obligations – (107) (169) (276) – (125) (181) (306)

Irrecoverable surplus (4) – – (4) (19) – – (19)

Net pension surplus/(liability) 298 (107) (154) 37 188 (125) (209) (146)

The UK surplus of £298 million (2020: £188 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.

Group plan assets are comprised as follows:

2021 2020

£m

(Medical)

£m

Other

£m

Total

£m

(Medical)

£m

Other

£m

Total £

Equities 178 – 202 380 182 – 217 399

Government bonds 215 – 230 445 682 – 137 819

Corporate bonds 356 – 25 381 395 – 92 487

Real Estate/property – unquoted 113 – 19 132 110 – 51 161

Insurance contracts 388 – – 388 350 – – 350

Other assets – unquoted 538 – 20 558 35 – 13 48

Fair value of plan assets 1,788 – 496 2,284 1,754 – 510 2,264

In 2021, the Trustees of two of the UK pension plans entered into an annuity buy-in agreement which covers, in aggregate, £48 million of

pension liabilities (valued under IAS19 at 31 December 2021). The buy-in involved the purchase of a bulk annuity policy under which the insurer

will pay the UK pension funds amounts equivalent to the beneﬁts payable to members. This purchase was conducted by the trustees to

ensure the pension fund had an asset that would match its obligation to members. 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)

is recorded within Other comprehensive income.

In 2020 the trustees of the principle UK pension plan entered into a similar arrangement, a similar immaterial downward remeasurement of

pension assets was recorded within Other comprehensive income. At 31 December 2021 this arrangement covered £340 million (2020: £350

million) of pension liabilities (valued under IAS19).

At 31 December 2021 the Group has not committed to any Buy-out arrangements in respect of any of the UK pension schemes.

Notes to the Financial Statements (Continued)

23 Pension and Post-Retirement Commitments continued

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Included in Other assets are £466 million (2020: nil) relating to liability driven investment funds. This is a bespoke pooled investment vehicle

with underlying listed bonds and structured notes. The trustees have purchased these investments during the year to lower risk within the

portfolio without reducing potential returns. 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:

2021 2020

£m

(Medical)

£m

(Medical)

£m

Active participants (1) (45) – (50)

Participants with deferred beneﬁts (646) (1) (687) (2)

Participants receiving beneﬁts (839) (62) (860) (73)

Present value of obligation (1,486) (107) (1,547) (125)

The movement in the Group’s net surplus/(deﬁcit) is as follows:

Present value of obligation Fair value of plan assets

£m

(Medical)

£m

Other

£m

Total

£m

(Medical)

£m

Other

£m

Total

£m

At 1 January 2020 1,506 130 704 2,340 (1,741) – (534) (2,275)

Current service cost 4 1 4 9 – – – –

Interest expense/(income) 28 4 14 46 (32) – (15) (47)

32 5 18 55 (32) – (15) (47)

Remeasurements:

Return on plan assets, excluding

amounts included in interest income – – – – (54) – (17) (71)

Losses/(gains) from changes in

demographic assumptions 9 (1) (2) 6 – – – –

Losses from change in ﬁnancial

assumptions 88 12 55 155 – – – –

Experience (gains)/losses (9) (10) 3 (16) – – – –

88 1 56 145 (54) – (17) (71)

Exchange differences – (4) (15) (19) – – 20 20

Contributions – employers – – – – (6) (7) (8) (21)

Payments from plans:

Beneﬁt payments (79) (7) (44) (130) 79 7 44 130

As at 31 December 2020 1,547 125 719 2,391 (1,754) – (510) (2,264)

Current service cost – 1 9 10 – – – –

Administrative costs 2 – – 2 – – – –

Interest expense/(income) 23 3 9 35 (26) – (5) (31)

25 4 18 47 (26) – (5) (31)

Remeasurements:

Return on plan assets, excluding

amounts included in interest income – – – – (76) – (30) (106)

Losses/(gains) from changes in

demographic assumptions 1 (6) 4 (1) – – – –

(Gains) from change in ﬁnancial

assumptions (27) (5) (33) (65) – – (1) (1)

Experience (gains)/losses 8 (3) 4 9 – – – –

(18) (14) (25) (57) (76) – (31) (107)

Exchange differences – – (5) (5) – – 4 4

Contributions – employers – – – – – (8) (11) (19)

Payments from plans: – – – – – – – –

Beneﬁt payments (68) (8) (57) (133) 68 8 57 133

As at 31 December 2021 1,486 107 650 2,243 (1,788) – (496) (2,284)

23 Pension and Post-Retirement Commitments continued

244

Amounts recognised in the Income Statement

The charge for the year ended 31 December is shown below:

2021

£m

2020

£m

Deﬁned contribution plans 48 45

Deﬁned beneﬁt plans (net charge excluding interest)

UK 2 4

US (Medical) 1 1

Other 9 4

Total pension costs included in operating proﬁt (Note 5)

60 54

Income Statement charge included in ﬁnance expense – –

Income Statement charge included in proﬁt before income tax 60 54

Remeasurement losses/(gains) for

UK 94 34

US (Medical) 14 1

Other 56 39

164 74

1. The Income Statement charge recognised in operating proﬁt includes current service cost, past service cost and administrative costs

2. Remeasurement (gains) excludes £15 million (2020: £1 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:

2021 Change in assumption

Change in deﬁned

beneﬁt obligation

Discount rate Increase 0.1% Decrease by 1.6%

RPI increase Increase 0.1% Increase by 0.9%

Life expectancy Members live 1 year longer Increase by 4.0%

2020 Change in assumption

Change in deﬁned beneﬁt

obligation

Discount rate Increase 0.1% Decrease by 1.7%

RPI increase Increase 0.1% Increase by 1.0%

Life expectancy Members live 1 year longer 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. Both the UK and 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 decrease in government and corporate bond yields will increase plan liabilities, although this will be partially offset

by an increase in the value of the plans’ bond holdings

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). The majority of the plans’ assets are

either unaffected by (ﬁxed interest bonds) or loosely correlated with (equities) inﬂation, meaning that an increase in inﬂation will also increase

the deﬁcit. In the US plans, the pensions in payment are not linked to inﬂation, so this is a less material risk.

Notes to the Financial Statements (Continued)

23 Pension and Post-Retirement Commitments continued

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

245

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 result in higher sensitivity to changes in life expectancy. In 2020 the principle UK scheme reduced its

exposure by purchasing an insurance product that will pay the pensions of some of the scheme’s pensioners. In 2021 two other UK pension

schemes purchased a similar insurance policy.

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 large 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 a prudent diversiﬁcation and appropriate interest and inﬂation hedging.

24 Share Capital

Issued and fully paid

Equity

ordinary

number

Nominal

value £m

At 31 December 2020 736,535,179 74

At 31 December 2021 736,535,179 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.

Allotment of ordinary shares and release of treasury shares

During the year nil ordinary shares (2020: nil ordinary shares) were allotted and 1,677,112 ordinary shares were released from Treasury (2020:

2,988,443) to satisfy vestings/exercises under the Group’s various share schemes as follows:

2021 2020

Ordinary shares of 10p

Number of

Consideration

£m

Number of

Consideration

£m

Executive Share Options – exercises 860,697 41 2,774,400 120

Restricted Shares Awards – vesting 164,867 – 5,804 –

Total under Executive Share Option and Restricted Share Schemes 1,025,564 41 2,780,204 120

Senior Executives Share Ownership Policy Plan – vesting – – – –

Savings-Related Share Option Schemes – exercises 651,548 39 208,239 11

Total 1,677,112 80 2,988,443 131

In 2021, 1,677,112 Treasury shares were released (2020: 2,988,443), leaving a balance held at 31 December 2021 of 22,122,980 (2020: 23,800,092).

Proceeds received from the reissuance of Treasury shares to exercise share options were £80 million (2020: £131 million).

25 Share-Based Payments

The Group operates a number of incentive schemes, including a share option scheme, a restricted share scheme, and other share award

schemes. All schemes are equity-settled. The total charge for share-based payments for the year was £30 million (2020: £15 million).

Executive share awards

Executive share awards, comprising both Executive Share Options and Restricted Share Awards, are awarded to the senior management

team. Executive Share Options are awarded at an exercise price determined on grant date and become payable on exercise – following

satisfaction of performance criteria. Restricted Share Awards entitle the recipient to receive shares at no cost following satisfaction of the

following performance criteria and continued employment.

For awards granted before December 2012:

Adjusted earnings per share growth over three years (%) <6% 6% 7% 8% ≥9%

Proportion of awards vesting (%) Nil 40% 60% 80% 100%

For awards granted in December 2013 and thereafter:

Adjusted earnings per share growth over three years (%) <6% 6% Between 6% and 10% ≥10%

Proportion of awards vesting (%) Nil 20% Straight-line vesting between 20% and 100% 100%

23 Pension and Post-Retirement Commitments continued

246

For awards granted in May 2019:

Weighting

Threshold

(20%

vesting)

Maximum

(100%

vesting)

Adjusted EPS growth at actual FX rates (three-year CAGR) 25% 4% 9%

Adjusted EPS growth at constant FX rates (three-year CAGR) 25% 4% 9%

Net Revenue growth (three-year CAGR) 25% 2% 6%

Return on capital employed (in ﬁnal year) 25% 10.8% 12.8%

For awards granted in May 2020:

Weighting

Threshold

(20%

vesting)

Maximum

(100%

vesting)

Adjusted EPS at actual FX rates (in ﬁnal year) 12.5% 302p 337p

Adjusted EPS at constant FX rates (in ﬁnal year) 12.5% 323p 360p

Net Revenue growth (three-year CAGR) 50.0% 2.0% 5.0%

Return on capital employed (in ﬁnal year) 25.0% 11.8% 13.1%

For awards granted in May 2021 and thereafter:

Weighting

Threshold

(20%

vesting)

Maximum

(100%

vesting)

Adjusted EPS at actual FX rates (in ﬁnal year) 12.5% 308p 379p

Adjusted EPS at constant FX rates (in ﬁnal year) 12.5% 327p 401p

Net Revenue growth (three-year CAGR) 50% 1% 5%

Return on capital employed (in ﬁnal year) 25% 12.3% 14.0%

The cost is spread over the three years of the performance period. For Group 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 after four or ﬁve

years. 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 2021 and 31 December 2020 are included in the tables following which

analyse the charge for 2021 and 2020. 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.

Notes to the Financial Statements (Continued)

25 Share-Based Payments continued

Reckitt Annual Report and Accounts 2021

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247

Table 1: Fair value

The most signiﬁcant awards are share options and restricted shares, details of which have been provided below.

Black-Scholes model assumptions

Award Grant date

Exercise

price at

grant

Modiﬁed

exercise

price

Performance

period

Share price

on grant

date

Volatility

Dividend

yield

% Life years

Risk-free

interest

rate

Fair value

of one

award

Share options

2013 3 December 2012 39.14 38.06 2013–15 39.66 20 4.3 4 0.61 3.29

2014 11 December 2013 47.83 46.51 2014–16 46.69 19 3.7 4 0.76 3.85

2015 1 December 2014 50.57 50.57 2015–17 52.40 17 4.0 4 1.03 4.34

2016 2 December 2015 63.25 63.25 2016–18 64.15 18 2.9 4 1.07 6.75

2017 1 December 2016 67.68 67.68 2017–19 66.28 18 3.0 4 0.46 5.54

2018 30 November 2017 64.99 64.99 2018–20 64.86 18 3.4 4 0.68 5.58

2019 10 May 2019 60.83 60.83 2019–21 61.45 20 3.7 4 0.83 5.89

2020 1 May 2020 65.20 65.20 2020–22 65.70 21 2.6 4 0.55 7.96

2021 28 May 2021 64.67 64.67 2021–23 63.68 22 2.1 4 0.20 7.84

Restricted shares

2018 30 November 2017 – – 2018–20 64.86 18 3.4 4 0.68 56.71

2019 10 May 2019 – – 2019–21 61.40 19 3.7 4 0.83 53.02

2020 1 May 2020 – – 2020–22 65.70 21 2.6 4 0.55 59.17

2021 28 May 2021 – – 2021-23 63.68 22 2.1 4 0.20 58.65

Table 2: Share awards movements 2021

Movement in number of options

Award

Options outstanding

at 1 January 2021

number

Granted/

adjustments

number

Lapsed

number

Exercised/

vested

number

Options outstanding

at 31 December 2021

number

Share options

2012 151,411 – (2,057) (149,354) –

2013 247,750 – – (79,343) 168,407

2014 457,296 – (13,350) (159,136) 284,810

2015 742,966 – (15,000) (295,000) 432,966

2016 1,120,802 – (383,399) (169,850) 567,553

2017 573,907 – (82,376) (850) 490,681

2018 1,837,548 – (839,095) – 998,453

2019 2,086,058 – (261,796) – 1,824,262

2020 2,595,052 – (378,529) – 2,216,523

2021 – 3,075,575 (205,846) – 2,869,729

Restricted shares

2016 124,863 – (124,863) – –

2017 175 – (175) – –

2018 849,859 16,997 (389,368) (30,033) 447,455

2019 1,114,886 (13,884) (177,66 4) (57,737) 865,601

2020 1,404,377 7,242 (195,882) (84,995) 1,130,742

2021 – 1,738,153 (126,265) (22,836) 1,589,052

Other share awards

UK SAYE 738,410 383,424 (148,654) (102,653) 870,527

US SAYE 672,995 439,679 (95,794) (65,747) 951,133

Overseas SAYE 2,302,103 930,727 (673,300) (482,826) 2,076,704

SOPP 156,000 92,800 (33,403) (14,597) 200,800

Weighted average exercise price (share options) £60.97 £64.67 £64.05 £47.80 £62.58

1. Grant date and exercise price for each of the awards are shown in Table 1

25 Share-Based Payments continued

248

Table 3: Share awards movements 2020

Movement in number of options

Award

Options outstanding

at 1 January 2020

number

Granted/

adjustments

number

Lapsed

number

Exercised/

vested

number

Options outstanding

at 31 December 2020

number

Share options

2011 71,509 – (2,400) (69,109) –

2012 367,374 – (2,210) (213,753) 151,411

2013 646,593 – (2,057) (396,786) 247,750

2014 924,419 – (2,057) (465,066) 457,296

2015 1,298,544 – (5,000) (550,578) 742,966

2016 1,904,977 – (95,138) (689,037) 1,120,802

2017 1,841,056 – (1, 219,134) (48,015) 573,907

2018 2,171,480 – (331,924) (2,008) 1,837,548

2019 2,385,439 – (299,381) – 2,086,058

2020 – 2,626,735 (31,683) – 2,595,052

Restricted shares

2016 144,288 – (19,425) – 124,863

2017 824,061 – (546,909) (276,977) 175

2018 1,067, 280 – (190,262) (27,159) 8 49,859

2019 1,364,136 – (186,828) (62,422) 1,114,886

2020 – 1,448,758 (29,041) (15,340) 1,404,377

Other share awards

UK SAYE 746,570 184,943 (65,490) (127,613) 738,410

US SAYE 622,765 161,659 (55,048) (56,381) 672,995

Overseas SAYE 1,889,663 576,689 (149,851) (14,398) 2,302,103

SOPP 103,200 88,400 (12,800) (22,800) 156,000

Weighted average exercise price (share options) £58.43 £65.20 £65.77 £49.51 £60.97

1. Grant date and exercise price for each of the awards are shown in Table 1

For options outstanding at the year end the weighted average remaining contractual life is 4.58 years (2020: 5.42 years). Options outstanding

at 31 December 2021 that could have been exercised at that date were 1,946,341 (2020: 3,427,971) with a weighted average exercise price of

£57.03 (2020: £53.38).

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.

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 £61.60 (2020: £68.19).

Notes to the Financial Statements (Continued)

25 Share-Based Payments continued

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

249

Options and restricted shares granted during the year

Options and restricted shares granted during the year which may vest or become exercisable at various dates between 2022 and 2027 are

asfollows:

Price to

be paid

Number of

shares under

option

Executive share option and restricted share schemes

Reckitt Benckiser Long-term Incentive Plan – share options 64.67 3,075,575

Reckitt Benckiser Long-term Incentive Plan – restricted shares – 1,738,153

Reckitt Benckiser Group Senior Executive Share Ownership Policy Plan – 92,800

Total 4,906,528

Savings-related share option schemes

UK Scheme 44.56 383,424

US Scheme 44.56 439, 679

Overseas Scheme 44.56 930,727

Total 1,753,830

Options and restricted shares outstanding at 31 December 2021

Options and restricted shares which have vested or may vest at various dates between 2022 and 2027 are as follows:

Price to be paid £ Number of shares underoption

From To 2021 2020

Executive share option and restricted share schemes

Reckitt Benckiser Long-term Incentive Plan – Annual Grant – options 38.06 78.00 9,853,384 9,812,790

Reckitt Benckiser Long-term Incentive Plan – Annual Grant – restricted shares – – 4,032,850 3,494,160

Reckitt Benckiser Senior Executives Share Ownership Policy Plan – – 200,800 156,000

Total 14,087,034 13,462,950

Savings-related share option schemes

UK Scheme 44.56 62.44 870,527 738,410

US Scheme 44.56 62.44 951,133 672,995

Overseas Scheme 44.56 62.44 2,076,704 2,302,103

Total 3,898,364 3,713,508

26 Other Reserves

Hedging

Reserve

£m

Foreign

currency

translation

reserve

£m

Total other

reserves

£m

Balance at 1 January 2020 (2) (78) (80)

Other comprehensive income/(expense)

Losses on cash ﬂow hedges, net of tax (17) – (17)

Net exchange losses on foreign currency translation, net of tax – (207) (207)

Losses on net investment hedges – (75) (75)

Total other comprehensive expense for the year (17) (282) (299)

Balance at 31 December 2020 (19) (360) (379)

Other comprehensive income/(expense)

Gains on cash ﬂow hedges, net of tax 30 – 30

Net exchange losses on foreign currency translation, net of tax – (374) (374)

Gains on net investment hedges, net of tax – 84 84

Reclassiﬁcation of foreign currency translation reserves on disposal or liquidation of foreign

operations, net of tax – (550) (550)

Total other comprehensive income/(expense) for the year 30 (840) (810)

Balance at 31 December 2021 11 (1,200) (1,189)

25 Share-Based Payments continued

250

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 2021 a net gain of £550 million was reclassiﬁed to the income statement from foreign currency

reservesfollowing the disposal or liquidation of foreign operations, of which a net gain of £766 million related to the liquidation of subsidiaries

(see Note 6 for further details) offset by a loss of £216 million, made up of a £284 million arising from the disposal of certain businesses

(seeNote 29), less related tax credits of £68 million (see Note 7).

27 Related Party Transactions

The Group has symmetrical put and call options over the non-controlling shareholdings of RB & Manon Business Co. Ltd, RB & Manon Business

Limited, RB (China Trading) Limited, RB (Hygiene Home) HK Limited, RB & Manon Hygiene Home (HK) Limited and RB & Manon Hygiene Home

(Shanghai) Limited.

During the year ended 31 December 2021, the options were measured at fair value and as a result £14 million was credited to the income

statement during the year (see Note 6).

On 31 December 2021, notice to exercise the put and call options was not provided. As a result of the option notice not being received, this

option expired. As a result of the expiry of these options, the related liabilities of £135 million were de-recognised with their carrying value

credited to equity.

Other

The Group has related party relationships with its Directors and key management personnel (Note 5). Other related party relationships are

acknowledged in Note 11.

28 Dividends

2021

£m

2020

£m

Cash dividends on equity ordinary shares:

2020 Final paid: 101.6p (2019: Final 101.6p) per share 725 721

2021 Interim paid: 73p (2020: Interim 73p) per share 521 520

Total dividends for the year 1,246 1,241

The Directors are proposing a ﬁnal dividend in respect of the ﬁnancial year ended 31 December 2021 of 101.6p per share which will absorb

anestimated £726 million of Shareholders’ funds. If approved by Shareholders it will be paid on 9 June 2022 to Shareholders who are on the

29 Acquisitions, Disposals and Held for Sale

During the year ended 31 December 2021, the Group completed several acquisitions, accounted for as business combinations, and disposals.

Ineach case, 100% of the businesses were acquired or disposed unless stated otherwise. The Group did not have business disposals or

acquisitions during the year ended 31 December 2020.

Acquisitions

Acquisition of 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. The acquisition of Biofreeze and TheraPearl has been accounted for

as a business combination.

Included within the identiﬁable assets acquired are brands of £596 million, comprising Biofreeze (£564 million) and TheraPearl (£32 million),

customer relationships of £24 million and inventories of £26 million.

Goodwill of £271 million has been recorded on the acquisition, of which £151 million is a consequence of the requirement to record deferred

tax liabilities for certain acquired assets. Goodwill represents the future value which the Group believes it will obtain from innovation arising

from combining the acquired business with the Group’s existing businesses, which has not been recognised as an intangible asset at the

acquisition date. None of the goodwill is deductible for income tax purposes.

The Biofreeze acquisitions contributed £55 million to Group net revenue and £9 million to Group operating proﬁt since acquisition, with

transaction costs of £12 million. If the acquisition had taken place at the beginning of the year, Group net revenue would have been increased

by circa £50 million and the impact on Group net income would have been immaterial.

Notes to the Financial Statements (Continued)

26 Other Reserves continued

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

251

Other acquisitions

The Group also completed the following acquisitions during 2021 for cash consideration, all of which have been accounted for as

businesscombinations:

• 1 April 2021, the Maple Island USA dry processing plant, previously a co-packer for Enfagrow stage 3 and Metabolics, as an asset purchase.

• 4 May 2021, through a trade and asset purchase, a business distributing Reckitt products in the United Arab Emirates.

• 31 May 2021, a Chinese PU condom business through an acquisition of an 80% equity interest in Lanzhou Keshi Xixili Healthcare Technologies

Co Ltd.

The results of other acquisitions have been included in the Group’s ﬁnancial statements since the relevant acquisition dates. The effect of

these other acquisitions was immaterial to the Group.

The following table summarises the consideration paid and the fair values of assets acquired and liabilities assumed. The amount of

consideration transferred in excess of the value of total identiﬁable net assets is recorded as goodwill.

Biofreeze

£m

Others

£m

Total

£m

Brands and other intangible assets 620 52 672

Property, plant and equipment – 20 20

Inventories 26 – 26

Deferred tax liabilities (151) – (151)

Total identiﬁable net assets 495 72 567

Goodwill 271 99 370

Total 766 171 937

Cash consideration 766 149 915

Deferred consideration – 22 22

Total consideration 766 171 937

Disposals

The Group completed three disposals in 2021, 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. None of the disposals meets the deﬁnition of a discontinued operation

under IFRS as each disposal does not represent the disposal of either a separate major line of business or a geographical area of operations

for Reckitt. As such, the results of the disposed businesses are included in the continuing operations up to their date of disposal.

IFCN China

On 9 September 2021, the Group completed the sale of IFCN China to Primavera Capital Group for total cash consideration, net of disposal

costs, of £1,436 million. The consideration was principally represented by cash of £1,513 million and an 8% shareholding in the purchaser’s

acquisition entity. The disposal followed a comprehensive strategic review of IFCN China announced by the Group in February 2021. The

transaction was structured as a sale of the entirety of IFCN China (China, Hong Kong and Taiwan), including the manufacturing plants in

Nijmegen, the Netherlands and Guangzhou, China. The disposal included a royalty-free perpetual and exclusive license of the Mead Johnson

and Enfa family of brands in China. Reckitt continues to own the Mead Johnson and Enfa family of brands globally and operates these brands

in the rest of the world. On completion of the disposal, the Group recognized a pre-tax loss on disposal of £3,284 million included within total

net operating expenses. IFCN China formed part of the Nutrition segment.

29 Acquisitions, Disposals and Held for Sale continued

252

Other disposals

In 2021 the Group completed two other transactions:

• On 1 June 2021 the Group completed the sale of Scholl and certain other brands to Yellow Wood Partners, for cash consideration of

£272million. Scholl formed part of the Health operating segment.

• On 1 November 2021 the EnfaBebé brand was sold to the Roemmers Group. EnfaBebé formed part of the Nutrition operating segment.

The following table sets out the effect of the disposals completed in the year ended 31 December 2021:

IFCN China

£m

Others

£m

Total

£m

Cash consideration 1,513 279 1,792

Non-cash consideration:

– Fair value of equity instrument 33 – 33

– Fair value of seller’s indemnities (48) – (48)

Disposal costs (62) (11) (73)

Total consideration, net of disposal costs 1,436 268 1,704

Goodwill and other intangible assets 4,276 442

4,718

Property, plant and equipment 173 – 173

Inventories 154 24 178

Cash and cash equivalents 168 2 170

Trade receivables and other assets 97 8 105

Trade payables and other liabilities (408) (7) (415)

Net Assets disposed 4,460 469 4,929

Non-controlling interest (9) – (9)

Cumulative foreign exchange reclassiﬁed to the Income Statement (251) (33) (284)

Loss on disposal, before tax (3,284) (234) (3,518)

1 The £442 million comprises of £374 million relating to Scholl, and £68 million relating to EnfaBebé

Assets held for sale

On 24 December 2021, the Group entered into an agreement for the sale of the E45 brand and related sub-brands to Karo Pharma AB

for£200million and the sale completed on 1 April 2022. Associated intangible assets of £140 million (including £28 million of Goodwill) have

accordingly been presented within assets held for sale at the balance sheet date. The E45 brand and related sub-brands form part of the

Health operating segment.

Assets held for sale at 31 December 2021 also includes the carrying value of certain property assets which are being actively marketed for sale.

30 Discontinued Operations

In the year ended 31 December 2021, the Group recorded income of £31 million (2020: £50 million income) in discontinued operations,

inrelation to an agreement with Indivior plc to settle indemnity claims related to the Group’s previous settlement with the Department

ofJustice (DoJ), and related matters. The income in 2020 relates to the partial release of a provision relating to the 2019 settlement with

theDoJ in relation to Indivior plc matters, following a review of outstanding items relating to the DoJ settlement.

31 Post Balance Sheet Events

On 13 April 2022, it was announced that Reckitt has 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 as at 13 April 2022 were c.£130 million and on

disposal foreign exchange losses of c.£140 million would be recycled to the income statement. Any loss on disposal would be primarily non

cash and the Russian business contributed 2% to the Group’s revenue in 2021.

29 Acquisitions, Disposals and Held for Sale continued

Notes to the Financial Statements (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

253

The ﬁve-year summary below is presented on an IFRS basis. The years ending 31 December 2017, 31 December 2018, 31 December 2019,

31 December 2020, and 31 December 2021 show the results for continuing operations and exclude the impact of RB Food and

RBPharmaceuticals.

The balance sheet has not been restated for the impact of discontinued operations.

Income Statement

2021

£m

2020

£m

2019

£m

Restated

2018

£m

Restated

2017

£m

Net Revenue 13,234 13,993 12,846 12,597 11,449

Operating (loss)/proﬁt (804) 2,160 (1,954) 3,058 2,737

Net ﬁnance income/(expense) 547 (286) (153) (338) (238)

Share of loss of equity-accounted investees, net of tax (3) (1) – – –

(Loss)/proﬁt before income tax (260) 1,873 (2,107) 2,720 2,499

Income tax credit/(charge) 208 (720) (665) (536) 894

Attributable to non-controlling interests (11) (16) (13) (20) (17)

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

continuing operations (63) 1,137 (2,785) 2,164 3,376

Balance Sheet

Net assets 7,453 9,159 9,407 14,771 13,557

Key Statistics – Reported basis

Operating margin (6.1%) 15.4% (15.2%) 24.3% 23.9%

Diluted earnings per share, continuing (8.8p) 159.3p (393.0p) 305.2p 474.7p

Declared total dividends per ordinary share 174.6p 174.6p 174.6p 170.7p 164.3p

1. Restated for the adoption of IFRS 16. The 2017 balances have not been restated

2. Restated for the adoption of IFRS 15

FIVE YEAR SUMMARY

254

As at 31 December

Note

2021

£m

2020

£m

Fixed assets

Investments 2 15,001 14,975

Current assets

Debtors due within one year 3 45 56

Debtors due after more than one year 4 25 3

70 59

Current liabilities

Creditors due within one year 5 (10,898) (9,652)

Net current liabilities (10,828) (9,593)

Total assets less current liabilities 4,173 5,382

Creditors due after more than one year 5 (42) (30)

Provisions for liabilities and charges 6 (41) (43)

Net assets 4,090 5,309

EQUITY

Share capital 7 74 74

Share premium 253 252

Retained earnings 3,763 4,983

Total equity 4,090 5,309

The Financial Statements on pages 254 to 267 were approved by the Board of Directors on 13 April 2022 and signed on its behalf by:

Christopher Sinclair Laxman Narasimhan

Director Director

Reckitt Benckiser Group plc Reckitt Benckiser Group plc

Company Number: 06270876

PARENT COMPANY

BALANCE SHEET

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

255

capital

£m

premium

£m

Retained

earnings

£m

Total

equity

£m

Balance at 1 January 2020 74 245 6,168 6,487

Comprehensive income

Loss for the ﬁnancial year – – (79) (79)

Total comprehensive loss – – (79) (79)

Transactions with owners

Treasury shares reissued – 7 124 131

Share-based payments – – 3 3

Capital contribution in respect of share-based payments – – 12 12

Purchase of ordinary shares by employee share ownership trust – – (4) (4)

Cash dividends – – (1,241) (1,241)

Total transactions with owners – 7 (1,106) (1,099)

Balance at 31 December 2020 74 252 4,983 5,309

Comprehensive income

Loss for the ﬁnancial year – – (78) (78)

Total comprehensive loss – – (78) (78)

Transactions with owners

Treasury shares reissued – 1 79 80

Share-based payments – – 4 4

Capital contribution in respect of share-based payments – – 26 26

Purchase of ordinary shares by employee share ownership trust – – (5) (5)

Cash dividends – – (1,246) (1,246)

Total transactions with owners – 1 (1,142) (1,141)

Balance at 31 December 2021 74 253 3,763 4,090

Reckitt Benckiser Group plc has £3,102 million (2020: £4,347 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.

PARENT COMPANY STATEMENT

OF CHANGES IN EQUITY

256

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.

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 269. The nature of the

Group’s operations and its principal activities are set out in the

Strategic Report on pages 2 to 103.

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.

Going concern

The Directors considered it appropriate to adopt the going

concern basis of accounting in preparing the Company Financial

Statements.

Having assessed the principal risks and other matters discussed

inconnection with the Group’s Viability Statement as set out on

page 103 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.

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.

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;

(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.

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.

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.

NOTES TO THE PARENT COMPANY

FINANCIAL STATEMENTS

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

257

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 restricted share 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 only enters into basic ﬁnancial instrument

transactions that result in the recognition of basic ﬁnancial assets

and liabilities, including trade and other debtors and creditors and

loans to and from related parties. These transactions are initially

recorded at transaction price, unless the arrangement constitutes

a ﬁnancing transaction where the transaction is measured at the

present value of the future receipt discounted at a market rate of

interest, and subsequently recognised at amortised cost.

(i) Financial Assets

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.

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.

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.

1 Parent Company Accounting Policies continued

258

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 Company’s Directors are of the opinion that there are no

estimates and assumptions that have a signiﬁcant risk of causing a

material adjustment to the carrying amount of assets and liabilities

within the next ﬁnancial year.

Other estimates

Set out below are other estimates where there is a risk of

adjustment to the carrying amounts of assets and liabilities

withinthe next ﬁnancial year, but the risk of a material adjustment

is not signiﬁcant.

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 judgement 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 2021, the Company recognised legal provisions

of £41 million (2020: £43 million) in relation to a number of historical

regulatory matters. Refer to Note 6 of the Company Financial

Statements for further information.

Tax:

Creditors due after more than one year include management

judgements and estimates of the amount of tax payable on uncertain

tax positions. 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 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

Shares in

subsidiary

undertakings

£m

Cost

At 1 January 2020 14,963

Additions during the year 12

At 31 December 2020 14,975

Additions during the year 26

At 31 December 2021 15,001

Provision for impairment

At 1 January 2020 –

At 31 December 2021 –

Net book amounts

At 31 December 2020 14,975

At 31 December 2021 15,001

The Directors believe that the carrying value of the investments is

supported by their underlying net assets.

The subsidiary undertakings as at 31 December 2021, all of which

are included in the Group Financial Statements, are shown in

Note11 of the Company Financial Statements.

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, Reckitt Benckiser Scholl

India Private Limited, Mead Johnson Nutrition (India) Private Limited,

RB Hygiene Home India Private Limited, Reckitt Piramal Private

Limited, and Reckitt & Colman Management Services (Ireland)

Limited (in liquidation) which have a year ending 31 March; Lloyds

Pharmaceuticals which has a year ending 24 August; Reigate

Square Holdings Sàrl which has a year ending 31 August; Crookes

Healthcare Limited which has a year ending 31 January and Reckitt

Benckiser Healthcare (Ireland) Limited which has a year ending

30 November.

Additions during the year, and in 2020, 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

2021

£m

2020

£m

Amounts owed by Group undertakings 36 54

Other debtors 9 2

45 56

Amounts owed by Group undertakings are unsecured, interest free

and are repayable on demand (2020: same).

4 Debtors Due After More Than One Year

2021

£m

2020

£m

Deferred tax assets 1 3

Other receivables 24 –

25 3

Deferred tax assets consist of short-term timing differences.

5 Creditors

Creditors due within one year:

2021

£m

2020

£m

Amounts owed to Group undertakings 10,896 9,647

Taxation and social security 1 4

Other creditors 1 1

10,898 9,652

Included in the amounts owed to Group undertakings is an amount

of £10,889 million (2020: £9,548 million) which is unsecured, carries

interest at the 3M LIBOR equivalent fallback rate and is repayable

on demand (2020: 3M LIBOR). All other amounts owed to Group

undertakings are unsecured, non-interest bearing and are

repayable on demand (2020: same).

1 Parent Company Accounting Policies continued

Notes to the Parent Company Financial Statements (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

259

Creditors due after more than one year:

2021

£m

2020

£m

Non-current tax liabilities 38 30

Other creditors 4 –

42 30

6 Provisions for Liabilities and Charges

Legal

provisions

£m

Total

provisions

£m

At 1 January 2020 99 99

Charged to the Statement of

Comprehensive Income 4 4

Utilised during the year (4) (4)

Released to the Statement of

Comprehensive Income (56) (56)

At 31 December 2020 43 43

Charged to the Statement of

Comprehensive Income 6 6

Utilised during the year (8) (8)

At 31 December 2021 41 41

Provisions have been analysed between current and non-current

as follows:

2021

£m

2020

£m

Current 39 43

Non-current 2 –

41 43

Provisions relate to legal provisions in relation to a number of

historical matters. Refer to Note 18 of the Group Financial

Statements.

7 Share Capital

Issued and fully paid

Equity

ordinary

Nominal

value

£m

At 1 January 2021 736,535,179 74

At 31 December 2021 736,535,179 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.

8 Related Party Transactions

There were no transactions with related parties other than wholly

owned companies within the Group.

9 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 $8,250 million

bond (2020: $8,250 million) (two tranches of $2,500 million, one

tranche of $2,000 million, one tranche of $750 million and one

tranche of $500 million) and in relation to the issuance of a £500

million bond (2020: £500 million). 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 (2020: £5,500 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 (2020: $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.

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 (2020: two €850 million

bonds). Details are included in Note 15 of the Group

FinancialStatements.

Other contingent liabilities are disclosed in Note 20 of the Group

Financial Statements.

10 Post Balance Sheet Events

There are no events subsequent to the balance sheet date that

require disclosure.

11 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 2021, 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 2021, 14 legal entities and

apartnership were placed into liquidation as part of the review

(2020: nine legal entities). 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.

5 Creditors continued

260

Name Holding

Registered

ofﬁce and

share class

103-105 Bath Road Limited 100.00% 9, 23

2309 Realty Corporation 59.00% 2, 143

Access VC Limited 100.00% 9, 23

Airwick Industrie SAS 100.00% 9, 81

Anhui Guilong Pharmaceutical Trading

Company Limited 100.00% 1, 45

Apenas Boa Nutrição Indústria de Alimentos Ltda. 100.00% 9, 29

Beleggingsmaatschappij Lemore B.V. 100.00% 9, 130

Benckiser 100.00% 9, 176

Biofreeze IP Holdings, LLC 100.00% 8, 132

Blisa, LLC 100.00% 8, 73

Brand Acquisition Limited 100.00% 9, 110

Canterbury Square Holdings S.à.r.l. 100.00% 9, 120

Central Square Holding B.V. 100.00% 9, 130

Crookes Healthcare Limited* 100.00% 9, 104

Crookes Healthcare Limited 100.00% 9, 23

Cupal, Limited 100.00% 11, 23

Dakin Brothers Limited 100.00% 9, 23

Dorincourt Holdings (Ireland) Limited 100.00% 9, 104

Durex Limited 100.00% 9, 23

eRB Trading Limited 100.00% 9, 23

ERH Propack Limited* 100.00% 9, 96

Eros NewCo Limited 100.00% 9, 23

Exponential Health LLC 100.00% 9, 73

Fenla Indústria, Comércio e Administração Ltda 100.00% 9, 32

FF Homecare & Hygiene Limited 64.29% 11, 186

Gainbridge Investments (Cyprus) Limited 100.00% 9, 70

Glasgow Square Limited 100.00% 9, 23

Green, Young & Company Limited 100.00% 9, 23

Grosvenor Square Holding B.V. 100.00% 9, 130

Guilong Health Technology (Anhui) Co., Limited 100.00% 1, 45

Guilong Pharmaceutical (Anhui) Co. Ltd –

Xiamen branch† 100.00% 1, 47

Guilong Pharmaceutical (Anhui) Company Limited 100.00% 1, 46

Hamol Limited 100.00% 9, 23

Hamol NL B.V. 100.00% 9, 130

Helpcentral Limited 100.00% 9, 23

Howard Lloyd & Company, Limited 100.00% 9, 23

Kukident GmbH 100.00% 4, 83

Lanai Holdings 1.5, Inc. 100.00% 9, 73

Lanzhou Keshi Xixili Healthcare Technologies Co. Ltd 80.00% 13, 199

LI Pensions Trust Limited 100.00% 9, 23

Notes to the Parent Company Financial Statements (Continued)

Name Holding

Registered

ofﬁce and

share class

Linden Germany A Limited 100.00% 9, 23

Linden Germany B Limited 100.00% 9, 23

Lloyds Pharmaceuticals 100.00% 9, 23

London International Group Limited 100.00% 9, 23

London International Trading Asia Limited 100.00% 9, 88

LRC North America Inc. 100.00% 5, 73

LRC Products Limited 100.00% 9, 23

LRC Secretarial Services Limited 100.00% 9, 23

Maddison Square Holding B.V. 100.00% 9, 130

Manufactura MJN, S. de R.L. de C.V. 100.00% 9, 125

Mead Johnson & Company LLC 100.00% 8, 73

Mead Johnson do Brasil Comércio e Importação de

Produtos de Nutrição Ltda. 100.00% 9, 33

Mead Johnson do Brasil Comércio e Importação de

Produtos de Nutrição Ltda. – Itajaí Branch† 100.00% 1, 31

Mead Johnson Nutricionales de México,

S. de R.L. de C.V. 100.00% 9, 126

Mead Johnson Nutrition (Asia Paciﬁc) Pte. Ltd. 100.00% 9, 156

Mead Johnson Nutrition (Australia) Pty Ltd 100.00% 9, 20

Mead Johnson Nutrition (Canada) Co. 100.00% 4, 40

Mead Johnson Nutrition (Dominicana), S.A. 100.00% 4, 73

Mead Johnson Nutrition (Dominicana), S.A.† 100.00% 1, 190

Mead Johnson Nutrition (India) Private Limited 100.00% 9, 94

Mead Johnson Nutrition (Malaysia) Sdn Bhd 100.00% 9, 122

Mead Johnson Nutrition (Panama), S. de R.L. 100.00% 9, 140

Mead Johnson Nutrition (Philippines), Inc. 99.99% 9, 143

Mead Johnson Nutrition (Poland) Sp. z o.o 100.00% 14, 145

Mead Johnson Nutrition (Puerto Rico) Inc. 100.00% 9, 73

Mead Johnson Nutrition (Puerto Rico) Inc.† 100.00% 1, 150

Mead Johnson Nutrition (Singapore) Pte. Ltd. 100.00% 9, 156

Mead Johnson Nutrition (Thailand) Ltd. 100.00% 4, 169

Mead Johnson Nutrition (UK) Ltd* 100.00% 9, 177

Mead Johnson Nutrition (Venezuela) LLC 100.00% 8, 73

Mead Johnson Nutrition (Vietnam) Company Limited 100.00% 1, 189

Mead Johnson Nutrition Colombia Ltda 100.00% 9, 65

Mead Johnson Nutrition Company 100.00% 9, 73

Mead Johnson Nutrition Holdings (Singapore) Pte. Ltd. 100.00% 9, 156

Mead Johnson Nutrition Nominees LLC 100.00% 8, 73

Mead Johnson Nutrition Trading Poland Sp. z o.o 100.00% 14, 145

Mead Johnson Nutrition Venezuela, S.C.A. 100.00% 7, 187

Mead Johnson One C.V.^ 100.00% 8, 192

Mead Johnson Two C.V.^ 100.00% 8, 192

11 Subsidiary Undertakings continued

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

261

Name Holding

Registered

ofﬁce and

share class

Medcom Marketing And Prodazha Ukraine LLC 100.00% 1, 89

MJ UK Holdings Limited 100.00% 9, 23

MJ USA Holdings LLC 100.00% 8, 73

MJN Asia Paciﬁc Holdings LLC 100.00% 8, 73

MJN Global Holdings B.V. 100.00% 9, 130

MJN Holdings (Netherlands) B.V. 100.00% 9, 130

MJN Innovation Services B.V. 100.00% 9, 130

MJN International Holdings (UK), Ltd. 100.00% 9, 23

MJN U.S. Holdings LLC 100.00% 8, 73

New Bridge Holdings B.V. 100.00% 9, 130

Norwich Square Holding S.L.U. 100.00% 9, 161

Nurofen Limited 100.00% 9, 23

Optrex Limited 100.00% 9, 23

Oriental Medicine Company Limited 100.00% 9, 88

Oxy Reckitt Benckiser LLC 100.00% 1, 160

Performance Health, LLC 100.00% 8, 73

Pharmalab Limited 100.00% 9, 23

Propack Produkte für Haushalt und

Körperpﬂege GmbH 100.00% 9, 84

PT Mead Johnson Indonesia 90.10% 9, 99

PT Reckitt Benckiser Hygiene Home Indonesia 100.00% 9, 100

PT Reckitt Benckiser Hygiene Home Trading Indonesia 100.00% 9, 100

Pt Reckitt Benckiser Indonesia 100.00% 9, 101

PT Reckitt Benckiser Trading Indonesia 100.00% 9, 102

Qingdao London Durex Co., Limited 100.00% 9, 48

Qingdao New Bridge Corporate Management

Consulting Company Limited 100.00% 9, 48

R & C Nominees Limited 100.00% 9, 23

R & C Nominees One Limited 100.00% 9, 23

R & C Nominees Two Limited 100.00% 9, 23

RB & Manon Business Co., Limited 75.00% 1, 49

RB & Manon Business Limited 75.00% 9, 90

RB & Manon Hygiene Home (Shanghai) Limited* 100.00% 9, 50

RB & Manon Hygiene Home Limited 80.00% 9, 90

RB (China Trading) Limited 80.00% 2, 9, 23

RB (China) Holding Co. Limited 100.00% 1, 51

RB (Health) Colombia S.A.S 100.00% 9, 66

RB (Health) Malaysia Sdn Bhd 100.00% 9, 123

RB (Hygiene Home) Australia Pty Limited 100.00% 9, 21

RB (Hygiene Home) Czech Republic, spol s.r.o 100.00% 9, 71

RB (Hygiene Home) HK Limited 90.10% 2, 15, 38

RB (Hygiene Home) Hungary Kft 100.00% 9, 92

Name Holding

Registered

ofﬁce and

share class

RB (Hygiene Home) New Zealand Limited 100.00% 9, 134

RB (Hygiene Home) Poland Sp. z o.o 100.00% 9, 146

RB (Hygiene Home) Romania S.R.L. 100.00% 14, 151

RB (Hygiene Home) Slovakia spol. s.r.o 100.00% 9, 158

RB (Suzhou) Co. Ltd 100.00% 1, 64

RB Asia Holding Limited 100.00% 9, 23

RB Health (Canada) Inc. 100.00% 4, 41

RB Health (US) LLC 100.00% 8, 185

RB Health Ecuador Cía. Ltda 100.00% 9, 74

RB Health Manufacturing (US) LLC 100.00% 8, 185

RB Health México, S.A de C.V. 100.00% 2, 126

RB Health Nordic A/S 100.00% 9, 72

RB Health Nordic A/S sivuliike Suomessa† 100.00% 1, 79

RB Health Nordic A/S, ﬁlial† 100.00% 1, 165

RB Health Nordic, NUF† 100.00% 1, 137

RB Health Peru S.R.L. 100.00% 9, 141

RB Health Services, S.A de C.V. 100.00% 9, 126

RB Holding Europe Du Sud SAS 100.00% 9, 81

RB Holdings (Luxembourg) S.à.r.l. 100.00% 12, 120

RB Holdings (Nottingham) Limited 100.00% 9, 23

RB Holdings Luxembourg (2018) S.à.r.l. 100.00% 9, 120

RB Hygiene Home (Thailand) Limited 100.00% 9, 170

RB Hygiene Home Arabia FZE 100.00% 9, 179

RB Hygiene Home Austria GmbH 100.00% 9, 22

RB Hygiene Home Belgium SA/NV 100.00% 9, 27

RB Hygiene Home Deutschland GmbH 100.00% 1, 85

RB Hygiene Home France SAS 100.00% 9, 81

RB Hygiene Home India Private Limited 100.00% 9, 95

RB Hygiene Home Netherlands B.V. 100.00% 9, 130

RB Hygiene Home Nordic A/S 100.00% 9, 72

RB Hygiene Home Nordic A/S, ﬁlial† 100.00% 1, 165

RB Hygiene Home Nordic A/S, sivuliike Suomessa† 100.00% 1, 80

RB Hygiene Home Nordic NUF† 100.00% 1, 137

RB Hygiene Home Pakistan Limited 98.67% 9, 139

RB Hygiene Home Switzerland AG 100.00% 9, 167

RB Investment Co Limited 0.05% 9, 182

RB Ireland Hygiene Home Commercial Limited 100.00% 9, 105

RB LATAM Holding B.V. 100.00% 9, 130

RB Luxembourg (2016) Limited 100.00% 9, 23

RB Luxembourg (TFFC) S.à.rl. 100.00% 9, 120

RB Luxembourg Holdings (TFFC) Limited 100.00% 9, 23

11 Subsidiary Undertakings continued

262

Name Holding

Registered

ofﬁce and

share class

RB Luxembourg Holdings (TFFC) Limited† 100.00% 1, 120

RB Manufacturing LLC 100.00% 8, 73

RB Mexico Investments Limited 100.00% 9, 23

RB NL Brands B.V. 100.00% 9, 130

RB Reigate (2019) Ltd 100.00% 9, 23

RB Reigate (Ireland) Unlimited Company* 100.00% 2, 104

RB Reigate (UK) Limited 100.00% 9, 23

RB Salute Mexico S.A de C.V. 100.00% 9, 127

RB Square Holdings Spain S.L. 100.00% 2, 161

RB UK Commercial Limited 100.00% 9, 23

RB UK Hygiene Home Commercial Limited 100.00% 9, 23

RB USA (2019) Ltd 100.00% 9, 23

RB USA Holdings LLC 100.00% 8, 73

RB Winchester (Ireland) Unlimited Company* 100.00% 9, 104

RBHCR Health Reckitt Costa Rica Sociedad Anónima 100.00% 4, 67

Reckitt & Colman (Jersey) Limited 100.00% 9, 111

Reckitt & Colman (Overseas) Health Limited 100.00% 9, 23

Reckitt & Colman (Overseas) Hygiene Home Limited 100.00% 9, 23

Reckitt & Colman (Overseas) Limited 100.00% 9, 23

Reckitt & Colman (UK) Limited 100.00% 11, 23

Reckitt & Colman Capital Finance Limited 100.00% 12, 111

Reckitt & Colman (Guangzhou) Limited 100.00% 9, 52

Reckitt & Colman Holdings Limited 100.00% 9, 23

Reckitt & Colman Management Services (Ireland)

Limited* 100.00% 9, 104

Reckitt & Colman Pension Trustee Limited 100.00% 9, 23

Reckitt & Colman Sagrotan

Verwaltungsgesellschaft GmbH 100.00% 4, 85

Reckitt & Sons Limited 100.00% 9, 23

Reckitt Benckiser (Australia) Pty Limited 100.00% 11, 21

Reckitt Benckiser (Bangladesh) PLC 82.96% 9, 25

Reckitt Benckiser (Belgium) SA/NV 100.00% 9, 27

Reckitt Benckiser (Brands) Limited 100.00% 9, 23

Reckitt Benckiser (Brasil) Comercial de Produtos de

Hygiene, Limpeza e Cosméticos Ltda. 100.00% 9, 34

Reckitt Benckiser (Brasil) Comercial de Produtos de

Hygiene, Limpeza e Cosméticos Ltda.† 100.00% 1, 194

Reckitt Benckiser (Brasil) Comercial de Produtos de

Hygiene, Limpeza e Cosméticos Ltda.† 100.00% 1, 196

Reckitt Benckiser (Brasil) Comercial de Produtos de

Hygiene, Limpeza e Cosméticos Ltda.† 100.00% 1, 197

Reckitt Benckiser (Brasil) Ltda 100.00% 9, 35

Reckitt Benckiser (Brasil) Ltda† 100.00% 1, 199

Reckitt Benckiser (BVI) No. 1 Limited* 100.00% 9, 37

Name Holding

Registered

ofﬁce and

share class

Reckitt Benckiser (BVI) No. 2 Limited* 100.00% 9, 37

Reckitt Benckiser (BVI) No. 3 Limited* 100.00% 9, 37

Reckitt Benckiser (Canada) Inc. 100.00% 4, 42

Reckitt Benckiser (Cayman Islands) Limited 100.00% 9, 43

Reckitt Benckiser (Centroamérica) S.A. 100.00% 9, 67

Reckitt Benckiser (Channel Islands) Limited* 100.00% 9, 87

Reckitt Benckiser (Czech Republic), spol. s r.o. 100.00% 14, 71

Reckitt Benckiser (ENA) B.V. 100.00% 9, 133

Reckitt Benckiser (Granollers) SL 100.00% 9, 161

Reckitt Benckiser (Grosvenor) Holdings Limited 100.00% 9, 23

Reckitt Benckiser (Health) Holdings Limited 100.00% 9, 23

Reckitt Benckiser (Hygiene Home) Holdings Limited 100.00% 9, 23

Reckitt Benckiser (India) Private Limited 100.00% 9, 95

Reckitt Benckiser (Lanka) Limited 99.99% 9, 164

Reckitt Benckiser (Latvia) SIA 100.00% 9, 118

Reckitt Benckiser (Latvia) SIA Eesti ﬁlial† 100.00% 1, 78

Reckitt Benckiser (Latvia) SIA LT ﬁlialas† 100.00% 1, 119

Reckitt Benckiser (Malaysia) Sdn Bhd 100.00% 9, 124

Reckitt Benckiser (Near East) Limited 100.00% 9, 106

Reckitt Benckiser (New Zealand) Limited 100.00% 9, 135

Reckitt Benckiser (Pars) PJSC 100.00% 9, 103

Reckitt Benckiser (Poland) S.A. 100.00% 9, 147

Reckitt Benckiser (Portugal) S.A. 100.00% 9, 148

Reckitt Benckiser (Romania) S.R.L. 100.00% 13, 151

Reckitt Benckiser (RUMEA) Limited 100.00% 9, 23

Reckitt Benckiser (RUMEA) Limited – Dubai Branch† 100.00% 1, 180

Reckitt Benckiser (Singapore) Pte. Limited 100.00% 9, 157

Reckitt Benckiser (Slovak Republic), spol. s r.o. 100.00% 13, 158

Reckitt Benckiser (South America) Holding B.V. 100.00% 9, 130

Reckitt Benckiser (Spain) B.V. 100.00% 9, 130

Reckitt Benckiser (Switzerland) AG 100.00% 9, 167

Reckitt Benckiser (Thailand) Limited 45.00% 9, 171

Reckitt Benckiser (UK) Limited 100.00% 9, 23

Reckitt Benckiser (USA) Limited 100.00% 9, 23

Reckitt Benckiser AG 100.00% 9, 167

Reckitt Benckiser Arabia FZE 100.00% 9, 179

Reckitt Benckiser Arabia FZE† 100.00% 1, 181

Reckitt Benckiser Arabia Trading LLC 48.70% 9, 183

Reckitt Benckiser Argentina S.A. 100.00% 9, 18

Reckitt Benckiser Asia Paciﬁc Limited† 100.00% 1, 23

Reckitt Benckiser Asia Paciﬁc Limited 100.00% 9, 109

Notes to the Parent Company Financial Statements (Continued)

11 Subsidiary Undertakings continued

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

263

Name Holding

Registered

ofﬁce and

share class

Reckitt Benckiser Austria GmbH 100.00% 9, 22

Reckitt Benckiser Bahrain W.L.L 100.00% 9, 24

Reckitt Benckiser Brands Investments B.V. 100.00% 9, 130

Reckitt Benckiser BY LLC 100.00% 1, 26

Reckitt Benckiser Calgon B.V. 100.00% 9, 130

Reckitt Benckiser Chartres SAS 100.00% 9, 82

Reckitt Benckiser Chile S.A. 100.00% 9, 44

Reckitt Benckiser Colombia S.A. 100.00% 9, 68

Reckitt Benckiser Commercial (Italia) S.r.l. 100.00% 16, 107

Reckitt Benckiser Corporate Services Limited 100.00% 9, 23

Reckitt Benckiser d.o.o 100.00% 9, 69

Reckitt Benckiser Detergents GmbH 100.00% 9, 85

Reckitt Benckiser Deutschland GmbH 100.00% 4, 85

Reckitt Benckiser East Africa Limited 99.99% 9, 115

Reckitt Benckiser Ecuador S.A. 100.00% 9, 75

Reckitt Benckiser Egypt Limited 100.00% 9, 76

Reckitt Benckiser España S.L. 100.00% 9, 161

Reckitt Benckiser Ev ve Hjyen Ürünleri A.Ş. 100.00% 1, 174

Reckitt Benckiser Expatriate Services Limited 100.00% 9, 23

Reckitt Benckiser Fabric Treatment B.V. 100.00% 9, 130

Reckitt Benckiser Finance (2005) Limited 100.00% 3, 9, 23

Reckitt Benckiser Finance (2007) 100.00% 9, 23

Reckitt Benckiser Finance (2010) Limited 100.00% 9, 23

Reckitt Benckiser Finance (Ireland) Unlimited

Company* 100.00% 9, 104

Reckitt Benckiser Finance Company Limited 100.00% 9, 23

Reckitt Benckiser Finish B.V. 100.00% 9, 130

Reckitt Benckiser France SAS 100.00% 9, 81

Reckitt Benckiser FSIA B.V. 100.00% 9, 130

Reckitt Benckiser Global R&D GmbH 100.00% 4, 84

Reckitt Benckiser Health Argentina S.A. 100.00% 9, 18

Reckitt Benckiser Health Comercial Ltda 100.00% 9, 36

Reckitt Benckiser Health Comercial Ltda. – Itapevi

Branch† 100.00% 1, 30

Reckitt Benckiser Health Kazakhstan LLP 100.00% 1, 113

Reckitt Benckiser Health Kenya Limited 100.00% 9, 116

Reckitt Benckiser Health Limited 100.00% 9, 23

Reckitt Benckiser Healthcare (Central & Eastern

Europe) Limited 100.00% 9, 23

Reckitt Benckiser Healthcare (CIS) Limited 100.00% 9, 23

Reckitt Benckiser Healthcare (Ireland) Limited* 100.00% 9, 104

Reckitt Benckiser Healthcare (Italia) S.p.A 100.00% 9, 107

Name Holding

Registered

ofﬁce and

share class

Reckitt Benckiser Healthcare (MEMA) Limited 100.00% 9, 23

Reckitt Benckiser Healthcare (Philippines), Inc. 100.00% 5, 144

Reckitt Benckiser Healthcare (UK) Limited 100.00% 9, 23

Reckitt Benckiser Healthcare Australia Pty Limited 100.00% 9, 21

Reckitt Benckiser Healthcare B.V. 100.00% 9, 130

Reckitt Benckiser Healthcare France SAS 100.00% 9, 81

Reckitt Benckiser Healthcare India Private Limited 100.00% 9, 95

Reckitt Benckiser Healthcare International Limited 100.00% 9, 23

Reckitt Benckiser Healthcare LLC 100.00% 1, 153

Reckitt Benckiser Healthcare Manufacturing

(Thailand) Limited 45.00% 11, 172

Reckitt Benckiser Healthcare, Ltda 100.00% 16, 148

Reckitt Benckiser Healthcare S.A.U. 100.00% 2, 161

Reckitt Benckiser Hellas Healthcare S.A. 100.00% 9, 86

Reckitt Benckiser Hellas Hygiene Home S.A. 100.00% 9, 86

Reckitt Benckiser HK Limited Taiwan Branch† 100.00% 1, 168

Reckitt Benckiser Holding (Thailand) Limited 45.00% 5, 169

Reckitt Benckiser Holding GmbH & Co KG 100.00% 1, 85

Reckitt Benckiser Holdings (Channel Islands) Limited 100.00% 9, 87

Reckitt Benckiser Holdings (Channel Islands) Limited† 100.00% 1, 23

Reckitt Benckiser Holdings (Italia) S.r.l. 100.00% 16, 107

Reckitt Benckiser Holdings (Luxembourg) Limited 100.00% 11, 23

Reckitt Benckiser Holdings (Overseas) Limited 100.00% 9, 23

Reckitt Benckiser Holdings (TFFC) Limited 100.00% 9, 23

Reckitt Benckiser Holdings (USA) Limited 100.00% 9, 23

Reckitt Benckiser Holdings (USA) Limited† 100.00% 1, 120

Reckitt Benckiser Home Chemical Products Trading

(Shanghai) Co. Limited 100.00% 9, 53

Reckitt Benckiser Hong Kong Limited 100.00% 9, 88

Reckitt Benckiser Hong Kong Limited Taiwan Branch† 100.00% 1, 198

Reckitt Benckiser Household and Health Care

UkraineLLC 100.00% 1, 178

Reckitt Benckiser Household Products (China)

Company Limited 100.00% 1, 54

Reckitt Benckiser Hygiene Home Brands B.V. 100.00% 9, 130

Reckitt Benckiser Hygiene Home Egypt Limited* 100.00% 9, 77

Reckitt Benckiser Hygiene Home Ukraine LLC 100.00% 1, 178

Reckitt Benckiser Investments (No. 1) S.à.r.l. 100.00% 9, 120

Reckitt Benckiser Investments (No. 2) S.à.r.l. 100.00% 9, 120

Reckitt Benckiser Investments (No. 4) S.à.r.l. 100.00% 9, 120

Reckitt Benckiser Investments (No. 5) S.à.r.l. 100.00% 9, 120

Reckitt Benckiser Investments (No. 7) S.à.r.l. 100.00% 9, 120

Reckitt Benckiser Investments (No. 8) S.à.r.l. 100.00% 9, 120

11 Subsidiary Undertakings continued

264

Name Holding

Registered

ofﬁce and

share class

Reckitt Benckiser Investments Limited 100.00% 3, 9, 23

Reckitt Benckiser IP LLC 100.00% 1, 154

Reckitt Benckiser Ireland Limited 100.00% 9, 104

Reckitt Benckiser Italia S.p.A 100.00% 9, 107

Reckitt Benckiser Japan Limited 100.00% 9, 109

Reckitt Benckiser Jersey (No.1) Limited* 100.00% 9, 111

Reckitt Benckiser Jersey (No.1) Limited†* 100.00% 1, 23

Reckitt Benckiser Jersey (No.2) Limited* 100.00% 9, 111

Reckitt Benckiser Jersey (No.2) Limited†* 100.00% 1, 23

Reckitt Benckiser Jersey (No.3) Limited 100.00% 9, 111

Reckitt Benckiser Jersey (No.3) Limited† 100.00% 1, 23

Reckitt Benckiser Jersey (No.5) Limited 100.00% 9, 111

Reckitt Benckiser Jersey (No.5) Limited† 100.00% 1, 23

Reckitt Benckiser Jersey (No.7) Limited 100.00% 12, 111

Reckitt Benckiser Kazakhstan LLP 100.00% 1, 114

Reckitt Benckiser Kereskedelmi Kft 100.00% 14, 92

Reckitt Benckiser Laundry Detergents (No. 1) B.V. 100.00% 9, 130

Reckitt Benckiser Laundry Detergents (No. 2) B.V. 100.00% 9, 130

Reckitt Benckiser Lime-A-Way B.V. 100.00% 9, 130

Reckitt Benckiser Limited˚ 100.00% 9, 23

Reckitt Benckiser LLC 100.00% 8, 155

Reckitt Benckiser LLC 100.00% 8, 73

Reckitt Benckiser LLC in city Klin,

Moscow region, Russia† 100.00% 8, 89

Reckitt Benckiser Luxembourg (2010) Limited 100.00% 9, 23

Reckitt Benckiser Luxembourg (No. 1) Limited 100.00% 9, 23

Reckitt Benckiser Luxembourg (No. 2) Limited 100.00% 9, 23

Reckitt Benckiser Luxembourg (No. 3) Limited 100.00% 9, 23

Reckitt Benckiser Luxembourg (No. 4) Limited 100.00% 9, 23

Reckitt Benckiser Management Services Unlimited

Company 100.00% 3, 104

Reckitt Benckiser Marc B.V. 100.00% 9, 130

Reckitt Benckiser Mexico, S.A. de C.V. 100.00% 9, 126

Reckitt Benckiser Morocco Sarl AU 100.00% 9, 129

Reckitt Benckiser N.V. 100.00% 9, 130

Reckitt Benckiser N.V.† 100.00% 1, 120

Reckitt Benckiser Nigeria Limited 99.53% 9, 138

Reckitt Benckiser Oven Cleaners B.V. 100.00% 9, 130

Reckitt Benckiser Pakistan Limited 98.68% 9, 139

Reckitt Benckiser Peru S.A. 100.00% 9, 142

Reckitt Benckiser Pharmaceuticals

(Proprietary)Limited 100.00% 9, 159

Name Holding

Registered

ofﬁce and

share class

Reckitt Benckiser Porto Alto Lda 100.00% 16, 149

Reckitt Benckiser Power Cleaners B.V. 100.00% 9, 130

Reckitt Benckiser Production (Poland) Sp. z.o.o. 100.00% 9, 147

Reckitt Benckiser S.à.r.l. 100.00% 12, 120

Reckitt Benckiser Scholl India Private Limited 100.00% 9, 97

Reckitt Benckiser Service Bureau Limited 100.00% 9, 23

Reckitt Benckiser Services S.A. de C.V. 100.00% 9, 128

Reckitt Benckiser Services (Kenya) Limited 100.00% 9, 117

Reckitt Benckiser South Africa Health Holdings

(Pty)Limited 100.00% 9, 159

Reckitt Benckiser South Africa (Proprietary) Limited 100.00% 9, 159

Reckitt Benckiser Tatabanya Kft 100.00% 9, 92

Reckitt Benckiser Temizlik Malzemesi San. ve Tic. A.Ş. 100.00% 1, 175

Reckitt Benckiser Tiret B.V. 100.00% 9, 130

Reckitt Benckiser Treasury (2007) Limited 100.00% 11, 23

Reckitt Benckiser Treasury Services (Nederland) B.V. 100.00% 9, 133

Reckitt Benckiser Treasury Services plc 100.00% 9, 23

Reckitt Benckiser USA (2010) LLC 100.00% 8, 73

Reckitt Benckiser USA (2010) LLC† 100.00% 1, 23

Reckitt Benckiser USA (2012) LLC 100.00% 8, 73

Reckitt Benckiser USA (2013) LLC 100.00% 8, 73

Reckitt Benckiser USA (2013) LLC† 100.00% 1, 23

Reckitt Benckiser USA Finance (No.1) Limited 100.00% 9, 23

Reckitt Benckiser USA Finance (No.2) Limited 100.00% 9, 23

Reckitt Benckiser USA Finance (No.3) Limited 100.00% 9, 23

Reckitt Benckiser Vanish B.V. 100.00% 9, 130

Reckitt Benckiser Venezuela S.A. 100.00% 9, 188

Reckitt Colman Chiswick (OTC) Limited 100.00% 9, 23

Reckitt Piramal Private Limited 100.00% 9, 98

Reckitt Sanabil for Trading Co LLC 51.00% 13, 193

Reckitt Seton Limited 100.00% 11, 23

Reckitt Sonet (UK) Limited 100.00% 9, 23

Reigate Square Holdings S.à.r.l. 100.00% 9, 120

Relcamp Aie* 100.00% 9, 162

Scholl Latin America Limited*^ 100.00% 9, 191

Servicios Nutricionales Mead Johnson,

S. de R.L. deC.V. 100.00% 9, 126

Scholl Consumer Produdts Limited 100.00% 9, 23

Sonet Investments Limited 100.00% 9, 23

Sonet Overseas Investments Limited 100.00% 3, 9, 23

Sonet Prebbles Limited 100.00% 9, 23

Sonet Products Limited 100.00% 9, 23

Notes to the Parent Company Financial Statements (Continued)

11 Subsidiary Undertakings continued

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

265

Name Holding

Registered

ofﬁce and

share class

Sonet Seton UK Limited 100.00% 9, 23

Sphinx Holdings Company, Inc. 38.00% 5, 143

SSL (MG) Polymers Limited 100.00% 9, 23

SSL (RB) Products Limited 100.00% 9, 23

SSL Australia Pty Ltd 100.00% 6, 21

SSL Capital Ltd 100.00% 9, 112

SSL Healthcare (Shanghai) Ltd 100.00% 9, 55

SSL Healthcare Ireland Limited* 100.00% 9, 104

SSL Healthcare Manufacturing S.A.U.* 100.00% 9, 163

SSL Healthcare Sverige AB 100.00% 9, 166

SSL Holdings (USA) Inc. 100.00% 9, 73

SSL International plc 100.00% 9, 23

SSL Manufacturing (Thailand) Limited 45.00% 12, 173

SSL New Zealand Limited 100.00% 1, 135

SSL Products Limited 100.00% 3, 9, 23

Suffolk Finance Company Limited 100.00% 10, 23

Suffolk Insurance Limited 100.00% 4, 28

Tai He Tai Lai Culture Communication Co Ltd 100.00% 9, 56

TheraPearl LLC 100.00% 8, 184

Tubifoam Limited 100.00% 3, 9, 23

UpSpring LLC 100.00% 8, 93

W.Woodward, Limited 100.00% 9, 23

† Branch

* In liquidation

˚ Interest held directly by Reckitt Benckiser Group plc

^ Country of incorporation different to registered address

Footnotes for Note 11

Share Class

1 Capital Contribution/Charter Capital

2 A/B/C/D/E/F/G/H/I/K/J

3 Bonus

4 Common

5 Common/Preference

6 Cumulative Redeemable Preference/Ordinary

7 General Partner

8 Membership

9 Ordinary

10 Ordinary/Deferred

11 Ordinary/Preference

12 Ordinary A/B/C/D/E/F/G/H/I/K/J

13 Partnership

14 Partnership/Membership Interest

15 Preference

16 Quota

Registered Ofﬁces

17 Teniente General Richieri 15, Ciudad de Sunchales, Santa Fe, Argentina

18 Bucarelli 2609 PB A, Ciudad Autonoma de Buenos Aires, Argentina

19 Av Hipólito Alferez Bouchard, 4191 3°, Argentina

20 King & Wood Mallesons, ‘Governor Phillip Tower’ Level 61, 1 Farrer Place,

Sydney NSW 2000, Australia

21 Level 47, 680 George Street, Sydney NSW 2000, Australia

22 Guglgasse 15, Vienna, 1110, Austria

23 103-105 Bath Road, Slough, SL1 3UH, Berkshire, United Kingdom

24 Building 330, Road 1506, Block 115, Bahrain International Investment Park,

Hidd. Kingdom of Bahrain, Bahrain

25 58-59 Nasirabad Industrial Area, Chittagong 4209, Bangladesh

26 Of. 166, 66, K Liebknekhta st., Minsk, 220036, Belarus

27 20 Allée de la Recherche, Anderlecht, 1070 Brussels, Belgium

28 Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda

29 Estrada Fukutaro Yida, n. 930, Bairro Cooperativa, Sao Bernardo Do Campo,

Sao Paulo, 09852-060, Brazil

30 Av. Portugal, nº 1.100, Setor Rua 6 Parte A12, Bairro Itaqui, Itapevi, São Paulo,

06696-060, Brazil

31 Rodovia Antonio Heil, SC 486, Km 4, Bairro Itaipava, Armazém 1B, Itajaí, São

Paolo, CEP 88316-003, Brazil

32 Rodovia Raposo Tavares, 8015 Km 18, 1º andar, Sala 2, Jardim Arpoador, Sao

Paolo, CEP 05577-900, Brazil

33 Avenida Presidente Juscelino Kubitschek, n° 1909, 24° andar, Parte B, Torre

Norte, Condomínio São Paulo Corporate Towers, Vila Nova Conceição, Sao

Paolo – SP, CEP 04.543-907, Brazil

34 Avenida Presidente Juscelino Kubitschek, 1909 cj 24 e 25, Vila Nova

Conceição, São Paolo/SP, Brazil

35 Rodovia Raposo Tavares, 8015 km 18, Jardim Arpoador, Sao Paolo, CEP

05577-900, Brazil

36 Avenida Presidente Juscelino Kubitschek, n° 1909, 24° andar, Parte C, Torre

Norte, Condomínio São Paulo Corporate Towers, Vila Nova Conceição, Sao

Paolo, CEP 04.543-907, Brazil

37 Palm Grove House, PO Box 438, Road Town, Tortola, British Virgin Islands

38 22/F W Square, 314-324 Hennessy Road, Wanchai, Hong Kong

39 Soﬁa City – 1407, Lozenets Region, 22, Zlaten rog Str, 3rd Floor, Ofﬁce 4,

Bulgaria

40 Suite 600, 1741 Lower Water Street, Halifax, NS B3J 0J2, Canada

41 Suite 2300, 550 Burard Street, Vancouver, BC V6C 2B5, Canada

42 1680 Tech Avenue, Unit 2, Mississauga, ON L4W 5S9, Canada

43 PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands

44 Avenida Presidente Kennedy, Lateral 5454, Oﬁcina 1602, Vitacura, Región

Metropolitana, Chile

45 Intersection of Hongqi Road and Mingzhu Road, Dangtu Economic

Development Zone, Maanshan City, Anhui Province, China

46 Intersection of Hongqi Road and Mingzhu Road, Dangtu Economic

Development Zone, Maanshan City, Anhui Province, China

47 Unit 02, 11/F, Tower A Hedonic Center, 6 Songyue Road, Siming District,

Xiamen, China

48 No.1-13 Shangma, Aodong Road, High-tech Industrial Development Zone,

Qingdao City, Shandong Province, China

49 Room 1701, No. 1033, Zhao Jia Bang Road, Zuhui District, Shanghai, China

50 16/F, Xu Jia Hui International Plaza, No.1033 Zhao Jia Bang Road,

Shanghai, China

51 Unit B01, Room 401, Tower 2, Parkview Green Fang Cao Di, No.9 Dongdaqiao

Road, Chaoyang District, Beijing, China

52 No. 3, Canglian 1 Road, ETDZ, Guangzhou, China

53 C6-8 Site 6F, No.333 Futexi Road, Waigaoqiao Free Trade Zone,

ShanghaiCity, China

54 No. 34 East Beijing Road, Jingzhou, Hubei, 434001, China

11 Subsidiary Undertakings continued

266

55 Room 1605, No.660, Shangcheng Road, Shanghai, China

56 Room 2109, Floor 2, No.10 Chaoyangmenwai Street, Chaoyang District,

Beijing City, China

57 Unit B02-B04, Room 401, Unit 2, Building 9, Dongdaqiao Road, Chaoyang

District, Beijing, China

58 Room 2202, Yanheng Land Plaza, No.1, Section 2, Renmin South Road,

Jinjiang District, Chengdu, Sichuan Province, China

59 Room 11-13, 8/F, Global Plaza, 158 Wusi Road, Fuzhou City, Gulou District,

China

60 707, Hisense Venture Center, 17 Shandong Road, Shinan District, Qingdao,

Shandong Province, China

61 15/F, 755 Huaihai Middle Road, Huangpu District, Shanghai, China

62 Rooms 1408 and 1409, 14/F, Gaoxin No.9 Ofﬁce Building, Gaoxin 4th Road, Hi

Tech Zone, Xi’an City, Shanxi Province, China

63 #2, Xiayuan Road, Dongji Industry Zone of Economic and Technology District,

Guangzhou, Guangdong, China

64 No. 99, Changjiang Da Road, Fuqiao Town, Taicang City, China

65 Calle 76, No. 11-17, Ediﬁcio Torre, Los Nogales Piso 2, Bogota, CO, Colombia

66 Calle 76 No 11-17, Oﬁcina 301, Bogota, CO, Colombia

67 San Jose-Escazu En Escazu Corporate Center, Setimo Piso, Costado Sur De

Multiplaza Escazu, Costa Rica

68 Calle 46, 5-76, Cali, Colombia

69 Ulica Grada Vukovara 269d, 10 000 Zagreb, Hrvatska, Croatia

70 1 Lampousas Street, P.C. 1095, Nicosia, Cyprus

71 Vinohradská 2828/151, 130 00 Praha 3-Žižkov, Czech Republic

72 Vandtårnsvej 83A, DK-2860 Søborg, Denmark

73 251 Little Falls Drive, Wilmington DE 19808, United States

74 Av. Coruña 27-88 y Av. Orellana, Ediﬁcio Coruña Plaza, Piso 7,

Quito 170150, Ecuador

75 Oﬁcina 4C, Av. 12 de Octubre, #26-48 y Orellana, Ediﬁcio Mirage, Piso 4,

Quito, 170525, Ecuador

76 Polyium Building 22, Off Road 90, First District, 5th Settlement,

New Cairo, Egypt

77 Building A1, Second Floor, Plot #A14b01, Cairo Festival City, First District, Fifth

Settlement, New Cairo, Cairo, Egypt

78 Harju maakond, Rae vald, Rae küla, Raeküla tee 5, 75310, Estonia

79 Itsehallintokuja 6, 02600 Espoo, Finland

80 Självstyrelsevägen 6, Esbo, 02600, Finland

81 38 rue Victor Basch, 91300 Massy, France

82 102 rue de Sours, 28000 Chartres, France

83 Heinestrasse 9, 69469, Weinheim, Germany

84 Robert-Koch-Straße 1, 69115 Heidelberg, Germany

85 Darwinstrasse 2-4, 69115, Heidelberg, Germany

86 7 Taki Kavalieratou Street, Kiﬁssia, 145 64, Greece

87 1st & 2nd Floors, Elizabeth House, Les Ruettes Brayes, St Peter Port,

GY1 1EW, Guernsey

88 Rooms 2206-11, 22 Floor, Chubb Tower, Windsor House, 311 Gloucester Road,

Causeway Bay, Hong Kong

89 Klin City, Tereshkovoy Street, 1, 14160052/1, Moscow Region,

RussianFederation

90 Room 2001, 20/F, Greenﬁeld Tower, Concordia Plaza, No.1 Science Museum

Road, Tsim Sha Tsui, Kowloon, Hong Kong

91 40-Richchia Zhovtnia avenue, 120, 1 Block, Kyiv, 03127, Ukraine

92 Bocskai út 134-146, H-1113, Budapest, Hungary

93 4209 S. Industrial Drive, Suite 200, Austin TX 78744, United States

94 Unit No. 54, 5th Floor, Kalpataru Square, Andheri-Kurla Road, Maharashtra,

Mumbai, 400059, India

95 Plot No. 48, Industrial Area, Sector 32, Gurgaon – 122001, Haryana, India

96 30 Finsbury Square London EC2A 1AG

97 F73 and 74, Sipcot Industrial Park, Irungattukottai, Sriperumbudur TK,

Kancheepuram District, Tamilnadu, 602 117, India

98 Unit No. 54, 5th Floor, Kalpataru Square Andheri-Kurla Road, Andheri (East)

Mumbai, Maharashtra, 400059, India

99 Treasury Tower, District 8, Lantai 58, SCBD Lot 28, Jl. Jend. Sudirman Kav.

52-53, Kel. Senayan, Kec. Kebayoran Baru, Kota, Adm Jakarta Selatan, Prop,

DKI Jakarta, Indonesia

100 Treasury Tower 59th Floor, District 8, SCBD, Jalan Jendral Sudirman Kav

52-53, Jakarta, 12190, Indonesia

101 Gedung Treasury Tower, District 8, Level 58, SCBD Lot 28, Jalan Jend.

Sudirman Kav. 52-53, Kel. Senayan, Kec. Kebayoran Baru, Kota, Adm Jakarta

Selatan, Prov, DKI Jakarta, Indonesia

102 Jl. Raya Narogong, Chamber A.I, Kel. Pasirangin, Kec Cileungsi, Kab. Bogor.

Prop. Jawa Barat, Indonesia

103 1st Floor, Unit 11, No. 88 Baran Building, Sayed Road, Opposite Mellat Park,

Vali-e-Asr Avenue, Tehran, Islamic Republic of Iran

104 3rd Floor, Kilmore House, Park Lane, Spencer Dock, Dublin 1, Ireland

105 6th Floor, 2 Grand Canal Square, Dublin 2, Ireland

106 6 Hangar Street, PO Box 6440, I.Z. Neve Nee’man B Hod Hasharon,

4527703, Israel

107 Via Spadolini 7, 20141, Milano, Italy

108 3-20-14 Higashi-Gotanda, Shinagawa-ku, Tokyo, 141-0022, Japan

109 Sumitomo Fudosan Takanawa Park Tower 14F, 3-20-14 Higashi-Gotanda,

Shinagawa-ku, Tokyo, 141-0022, Japan

110 22 Grenville Street, St Helier, Jersey

111 IFC 5, St. Helier, JE1 1ST, Jersey

112 44 Esplanade, St Helier, JE4 9WG, Jersey

113 Bld. 15/A, Koktem-1, Almaty, 050040, Kazakhstan

114 Ofﬁce 302, Building 15a, Koktem-1, Micro District, Almaty City, Kazakhstan

115 Plot 209/2462, Likoni Road, Nairobi, Kenya

116 14 Riverside Drive, Arlington Building, 3rd Floor, Nairobi, 209/19, Kenya

117 LR.NO.1870/1/569, 2nd Floor, Apollo Centre, Ring Road Westlands, Kenya

118 Strēlnieku iela 1A – 2, Rīga, LV-1010, Latvia

119 Vilniaus m. Olimpiečių g. 1A, Lithuania

120 1 rue de la Poudrerie, Leudelange, L-3364, Luxembourg

121 Avenida Son On, No.1040, Centre Indusrial Brilliant 2 Andar, Taipa, Macau

122 Suite 1005, 10th Floor, Wisma Hamzag Kwong Hing, No. 1 Leboh Ampang,

50100 W.P. Kuala Lumpur, Malaysia

123 Unit No. 50-8-1, 8th Floor, Wisma Uoa Damansara, 50 Jalan Dungun,

Damansara Heights, 50490, Kuala Lumpur, Malaysia

124 Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, 50490,

Damansara Heights, Wilayah Persekutuan, Kuala Lumpur, Malaysia

125 Av de las Granjas 972, Col. Santa Barbara, Azcapotzalco, CDMX,

02230, Mexico

126 Av. Ejército Nacional Mexicano No.769, Corporativo Miyana Torre B, Piso 6,

Alcaldía Miguel Hidalgo, Colonia Granada, CP 11520, Mexico

127 Calzada de Tlalpan No. 2996, Col. Ex Hacienda Coapa, Del. Coyoacán, Cd. de

México, C.P. 04980, Mexico

128 Circuito Dr Gustavo Baz, 7, No. 7, Fracc Industrial El Pedregal, Atizapan de

Zaragoza, Edomex, Mexico

129 59 Boulevard Zerktouni, Residence Les Fleurs 6eme étage,

Casablanca, Morocco

130 Siriusdreef 14, 2132 WT, Hoofddorp, The Netherlands

131 225 North Canal Street, Floor 25, Chicago IL 60606, United States

132 112 North Curry Street, Carson City, NV, 89703, United States

133 Schiphol Boulevard 267, 1118 BH, Schiphol, The Netherlands

134 Level 1, 2 Fred Thomas Drive, Takapuna, Auckland, 0622, New Zealand

Notes to the Parent Company Financial Statements (Continued)

11 Subsidiary Undertakings continued

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

267

135 2 Fred Thomas Drive, Takapuna, Auckland, 0622, New Zealand

136 12 Montgomery Road, Yaba, Lagos, Nigeria

137 Henrik Ibsens gate 60A, 0255 Oslo, Norway

138 12, 11th Floor Heritage Place, 21 Lugard Avenue Ikoyi, Nigeria

139 Tenancy 04 & 05, 3rd Floor, Corporate Ofﬁce Block, Dolmen City, HC, Block

4, Scheme 5, Clifton, Karachi, 75600, Pakistan

140 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

141 Calle Dean Valdivia No.148, Torre 1, Oﬁc. 501, Urb. Jardín, San Isidro,

Lima, Peru

142 Av. Republica de Panama #2577, Urb. Santa Catalina, La Victoria, Lima, Peru

143 2309 Don Chino Roces Avenue Extension, Makati City, Philippines

144 3rd Floor Mead Johnson Nutrition Inc, 2309 Don Chino Roces Extension,

Makati City, Philippines

145 Ul. Wołoska 22, 02-675, Warsaw, Poland

146 Nowy Dwór Mazowiecki, Ul. Okunin 1, 05-100, Poland

147 ul. Okunin 1, 05-100, Nowy Dwor, Mazowiecki, Poland

148 Rua D. Cristóvão da Gama, n.º 1, 1º, C/D, 1400-116, Lisboa, Portugal

149 Estrada Malhada dos Carrascos, 12, Porto Alto, 2135-061, Samora Correia,

Portugal

150 Los Frailes Industrial Park, Ave. Esmeralda, Calle C # 475, Guaynabo, 00969,

Puerto Rico

151 89-97 Grigore Alexandrescu street, Building A, 5th ﬂoor, Sector 1, Bucharest,

Romania

152 Iancu de Hunedoara Boulevard, Nr. 48, 11th Floor, Crystal Tower Building,

1stDistrict, Bucharest, 011745, Romania

153 4, Shluzovaya emb, 3rd Floor, 115114, Moscow, Russian Federation

154 14 Kozhevnicheskaya Str, 115114, Moscow, Russian Federation

155 52/1, Kosmodamianskaya emb, 115054, Moscow, Russian Federation

156 80 Robinson Road, #02-00, 068898, Singapore

157 12 Marina Boulevard, #19-01 Marina Bay Financial Centre, 018982, Singapore

158 Drieňová 3, 821 08 Bratislava, Slovakia

159 8 Jet Park Road, Gauteng, Elandsfontein, 1406, South Africa

160 24th Floor, Two IFC, 10 Gukjegeumyung-ro, Youngdeungpo-gu, Seoul, 07326,

Republic of Korea

161 Carrer de Mataró, 28, 08403, Granollers, Barcelona, Spain

162 Fray Carbo, 24, 08400, Granollers, Spain

163 No.151, Avda. Can Fatjó, 08191, Rubí, Barcelona, Spain

164 No.25, Shrubbery Garden, Colombo-04, Sri Lanka

165 Vretenvägen 2, 4th Floor, 171 54 Solna, Sweden

166 Box 190, 101 23 Stockholm, Sweden

167 Richtistrasse 5, 8304, Wallisellen, Switzerland

168 6F., No. 136, Sec. 3, Ren’ai Road, Da’an Dist, Taipei City 1, R.O.C., 10657, Taiwan

169 No.388 Exchange Tower, 14th Floor, Sukhumvit Road, Klongtoey, Bangkok, TH

10110, Thailand

170 No. 388, Room No. 1903, Floor 19th Floor, Exchange Tower, Sukhumvit Road,

Sub-District Klongtoey, District Klongtoey, Bangkok, 10110, Thailand

171 No.388 Exchange Tower, 14th Floor, Sukhumvit Road, Klongtoey, Bangkok,

10110, Thailand

172 65 Moo 12 Lardkrabang-Bangplee Road, Bangplee Samutprakarn, 10540,

Thailand

173 100 Moo 5, Bangsamak Sub-District, Bangpakong District, Chachoengsao

Province 24180, Thailand

174 Orta Mahallesi Demokrasi, Caddesi Benckiser Sitesi No.92, Tuzla,

Istanbul, Turkey

175 Esentepe Mahallesi Büyükdere Caddesi Tekfen, Tower No: 209 A Blok D:2

34394 4., Levent, Şişli, İstanbul, Turkey

176 4th Floor, 115 George Street, Edinburgh, EH2 4JN, Scotland, United Kingdom

177 1020 Eskdale Road, Winnersh, Wokingham, RG41 5TS, United Kingdom

178 28A Stepana Bandery, Bld.G, Ofﬁce 80, 04073, Kyiv, Ukraine

179 Level 27, Tower B, JAFZA One, Jebel Ali Free Zone, Dubai, PO Box 16834,

United Arab Emirates

180 Ofﬁce 1801, 1803, 1804, Emaar Real Estate Burj Khalifa, Dubai,

United Arab Emirates

181 309, Floor 3, Dubai Science Park Labrotory Complex, Dubai,

United Arab Emirates

182 Unit 05, Level 3, Gate Village Building 04, Dubai Investment Financial Centre,

PO Box 677, Dubai, United Arab Emirates

183 Al Seer Corporate Ofﬁce, Behind Al Tayer Motors, Sheikh Zayed Road, Al

Quoz Industrial Area 3, Dubai, 31587, United Arab Emirates

184 4209 S. Industrial Drive, Suite 200, Austin TX 78744, United States

185 Corporation Service Company, 251 Little Falls Drive, Wilmington, New Castle

County DE 19808, United States

186 Northcliffe House, Young Street, London, W8 5EH, United Kingdom

187 Urb. Las Mercedes, Av. Orinoco cruce con Mucuchies Torre Nordic, Piso 1,

Oﬁcina 1 y 2, Municipio Baruta Caracas, Bolivarian Republic of Venezuela

188 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

189 Unit 401, 4th Floor, Metropolitan Building, No.235 Dong Khoi Street, Ben Nghe

Ward, District 1, Ho Chi Minh City, Vietnam

190 Av. Winston Churchill No. 1099 Torre Acrópolis, Piso 12, Santo Domingo,

Republic of Dominica

191 Incorporated: The Bahamas Registered ofﬁce: 23

192 Incorporated: The Netherlands Registered ofﬁce: 131

193 Ofﬁce number 51, Fifth Floor, Mukmal Plaza Center, Al Hamra District

Palestine Street, Jeddah City, Saudi Arabia, United Arab Emirates

194 Est Dona Maria Jose Ferraz Prado, 1481, Cond Dist. Park Embu II Modulo 06,

Chacaras Bartira, CEP – 06.845-070, Embu/SP, Brazil

195 Estm Maria Margarida Pinto Dona Belinha, 742, GalpaoO3 Bloco I/A, Extrema/

MG, Brazil

196 Rod Governador Mario Covas, 7270, KM 264 Parte RB, Serra/ES, Brazil

197 Rod Dom Gabriel Paulino Bueno Couto, 1606, Itupeva/SP, Brazil

198 6/F, No. 136, Sec. 3, Ren-ai Rd., Da-an Dist, Taipei 106, R.O.C., Taiwan

199 Ketian Aquatic Science and Technology Industrial Park, No. 3949 Kunlunshan

Avenue, Lanzhou New Area, Lanzhou City, Gansu Province, China

11 Subsidiary Undertakings continued

268

SHAREHOLDER INFORMATION

Annual General Meeting

Our Annual General Meeting (AGM) will be held on Friday 20 May

2022 at 2.00pm at 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.

2022 Financial calendar and key dates

Announcement of Quarter 1 trading

statement 29 April 2022

Annual General Meeting 20 May 2022

Record date for 2021 ﬁnal dividend 29 April 2022

Payment of 2021 ﬁnal ordinary dividend 9 June 2022

Announcement of 2022 interim results 27 July 2022

Record date for 2022 interim dividend 5 August 2022

Payment of 2022 interim ordinary dividend 14 September 2022

Announcement of Quarter 3 trading

statement 26 October 2022

Dividend

The Directors have recommended a ﬁnal dividend of 101.6 pence

per share, for the year ended 31 December 2021. Subject to

shareholder approval at the 2021 AGM, payment of the ﬁnal

dividend will be made on 9 June 2022 to all shareholders on the

applications to participate in the Dividend Reinvestment Plan

(DRIP) in respect of the 2021 ﬁnal dividend is 17 May 2022.

Detailson how to join the DRIP can be found in the DRIP section

ofthis report.

Mandatory Direct Credit

In September 2018, we changed the way we pay dividends to

shareholders and no longer pay dividends by cheque. This is

known as ‘mandatory direct credit’. The reasons and beneﬁts

forintroducing this change are:

• Shareholders receive dividend funds quicker

• We reduce our environmental impact

• We reduce the risk of cheque fraud

• We reduce the administration costs of issuing or

bankingcheques

To have your dividends paid directly into your bank account,

pleaselog on to the Computershare Investor Centre at

www.investorcentre.co.uk, or by telephone on +44 (0)370 703 0118.

We will hold your dividends for you until you provide valid

bankdetails and charges may be applied to reissue any

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.

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 at 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 (0)370 703 0118.

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 shareholder

communications in this way will:

• result in annual 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

that does so, Computershare will donate £1 to the Woodland Trust.

For more information on the Woodland Trust and all of their

campaigns please visit their website at www.woodlandtrust.org.uk.

Shareholders who have positively elected for electronic

communications will receive an email whenever shareholder

documents are available to view 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 2021 Annual Report and Notice of the 2022 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 payment dates and amounts

• Access to shareholder documents including the Annual Report

and Notice of AGM

• Share capital information

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

269

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 Reckitt shares using a share dealing

facility made available by Reckitt’s Registrar, Computershare; these

include 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 Reckitt’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.computershare.com/

dealing/uk. Shareholders must have their Shareholder Reference

Number (SRN) available. The SRN appears on share certiﬁcates.

Internet share dealing is currently limited to certain jurisdictions:

afull list ofcountries can be found on the Computershare website

at www.computershare.com/dealing/uk; select ‘Share Dealing’

andscroll down to access the ‘Permitted Jurisdictions’ form.

Postal share dealing service

The Postal Share Dealing Service offers a way to sell or purchase

shares (subject to availability). In order to use the service, you

mustbe a resident in the UK or one of the permitted jurisdictions

(see Permitted Jurisdiction form). If you wish to use the service,

download a postal dealing form and the Terms & Conditions at

www.computershare.com/dealing/uk. 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.

As a consequence of the UK leaving the European Union on

31 December 2020, the share dealing service offered through

Reckitt’s Registrar is unfortunately no longer available to

customerswith certiﬁcated shareholdings based in the European

Economic Area.

Detailed terms and conditions for both internet and postal dealing

are available upon request by calling +44 (0)370 702 0000.

Analysis of shareholders as at 31 December 2021

Distribution of shares by type of

shareholder

No. of

holdings Shares

Nominees and institutional investors 4,890 727,462,979

Individuals 10,865 9,072,200

Total 15,755 736,535,179

Size of shareholding

No. of

holdings Shares

1 – 500 9,480 1,778,023

501 – 1,000 2,359 1,710,462

1,001 – 5,000 2,307 4,750,203

5,001 – 10,000 330 2,328,862

10,001 – 50,000 598 14,4 49,794

50,001 – 100,000 201 14,200,830

100,001 – 1,000,000 372 123,350,995

1,000,001 and above 108 573,966,010

Total 15, 755 736, 535, 179

American Depositary Receipts

American Depositary Receipts (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 market (OTC) 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 Security Listing/Trading CUSIP/ISIN

RBGLY U.S. security (ADR) OTC Pink 756255204

RKT.L. Ordinary share London Stock

Exchange

GB00B24CGK77

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

Online via: www.shareowneronline.com

Telephone number for general queries: +1 800 990 1135

Telephone number from outside the US: +1 651 453 2128

Company Secretary

Catheryn O’Rourke

Registered ofﬁce

103-105 Bath Road, Slough

Berkshire SL1 3UH

Telephone: +44 (0)1753 217800

Registered and domiciled in England and Wales No. 6270876

Company status

Public Limited Company

Auditor

KPMG LLP

Solicitors

Slaughter and May/Linklaters LLP

Registrar and Transfer ofﬁce

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 write to, or telephone, the company’s

Registrar at the following address:

Computershare Investor Services PLC

The Pavilions, Bridgwater Road, Bristol BS99 6ZZ

Reckitt Shareholder helpline

Telephone: +44 (0)370 703 0118

Website: www.computershare.com/uk

270

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 (0)20 7930 3737 for more information about how to

proceed. Further details about ShareGift can be found at

www.sharegift.org.

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 (0)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 their 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.

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 (the Group) and certain of the plans and

objectives of the Group that are forward-looking statements.

Words such as ‘intends’, ‘targets’, or the negative of these terms

and other similar expressions of future performance or results,

andtheir negatives, are intended to identify such forward-looking

statements. In particular, all statements that express forecasts,

expectations and projections with respect to future matters,

including targets for Net Revenue, operating margin and cost

efﬁciency, are forward-looking statements. Such statements are

not historical facts, nor are they guarantees of future performance.

By their nature, forward-looking statements involve risk and

uncertainty because they relate to events and depend on

circumstances that will occur in the future. There are a number

offactors that could cause actual results and developments

todiffer materially from those expressed or implied by these

forward-looking statements, including many factors outside the

Group’s control. Among other risks and uncertainties, the material

or principal factors which could cause actual results to differ

materially are: the general economic, business, political and

socialconditions in the key markets in which the Group operates;

the ability of the Group to manage regulatory, tax and legal

matters, including changes thereto; the reliability of the Group’s

technological infrastructure or that of third parties on which

theGroup relies; interruptions in the Group’s supply chain

anddisruptions to its production facilities; the reputation of

theGroup’s global brands; and the recruitment and retention

ofkey management.

These forward-looking statements speak only as of the date of

this 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 2021 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.

Shareholder Information (Continued)

Reckitt Annual Report and Accounts 2021

Financial StatementsGovernanceStrategic Report

271

Notes

272

Notes

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Reckitt Benckiser Group plc

Registered ofﬁce

103-105 Bath Road,

Slough, Berkshire, SL1 3UH

Registered in England and Wales

No 6270876

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Reckitt Annual Report and Accounts 2021