Investors Debt investors

Investors

Treasury 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’s financing and financial risk management activities are centralized into Group Treasury to achieve benefits of scale and control.

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.

The Group’s 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 optimize the cost of capital.

The Group monitors net debt (total borrowings less cash and cash equivalents, short-term available for sale financial assets and financing derivative financial instruments) and until Dec 31st 2014 the Group had net debt of £1,543m (2013: £2,096m). The Group seeks to pay down net debt using cash generated by the business to maintain an appropriate level of financial flexibility.

Liquidity and capital

Our liquidity needs are driven by our ability to generate cash from operations and the level of borrowings (and related levels of headroom), the level of acquisition, the level of share repurchases and dividends, dispositions, target ratings for our debt and options available to us in the equity and debt markets. 

Bank: The Group has bilateral credit facilities with high-quality international banks. All of these facilities have similar or equivalent terms and conditions, and have a financial covenant, facilities and central cash and investments, are considered sufficient to meet the Group’s projected cash requirements.

Commercial paper: We obtain our funding primarily from the commercial paper market and have benefited from the low interest rate environment. We maintain committed back-up credit facilities, which have remained undrawn since FY 2009. At 31 December 2014, we had £3,500m in undrawn commitments.

Bonds: As part of our strategy to maintain financial flexibility, as well as to procure additional funding for future acquisitions, including both bolt-on acquisitions as well as acquisitions that may be more material in size, we increased the level of medium-term funding in 2013 with the placement of a US$1bn bond in the US debt market.

Interest rates, foreign exchange and commodities

Interest rates: The Group has both interest-bearing and non interest-bearing assets and liabilities. The Group monitors its interest expense rate exposure on a regular basis. The Group manages its interest rate exposure on its gross financial assets by using fixed rate term deposits.

Foreign exchange: The Group prepares its financial statements in Sterling but conducts business in many foreign currencies. 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. For transactions, it is the Group’s policy to monitor and, only where appropriate, hedge its foreign currency transaction exposures. These transaction exposures arise mainly from foreign currency receipts and payments for goods and services, and from the remittance of foreign currency dividends and loans. The local business units enter into forward foreign exchange contracts with Group Treasury to manage these exposures, where practical and allowed by local regulations. Group Treasury manages the Group exposures, and hedges the net position where possible, using spot and forward foreign currency exchange contracts.

Commodities: Due to the nature of its business the Group is exposed to commodity price risk related to the production or packaging of finished goods such as those that are oil-related, and a diverse range of other, raw materials. This risk is, however, managed primarily through medium-term contracts with certain key suppliers and is not viewed as being a material risk.

Commercial paper

Particulars

US commercial paper

Euro commercial paper

Issuer

Reckitt Benckiser Treasury Services PLC

Reckitt Benckiser Treasury Services PLC

Guarantor

Reckitt Benckiser Group PLC

Reckitt Benckiser Group PLC

Program size

USD 8.0 billion

EUR 1.0 billion

Dealers

J.P. Morgan Securities LLC

Barclays Capital Inc.

Citigroup Global Markets Inc.

Mizuho Securities USA Inc.

Merrill Lynch, Pierce, Fenner & Smith Inc.

Bank of America Merrill Lynch

Barclays

Citigroup

 

Issuing and Paying Agent

Citibank, N.A.

Deutsche Bank

Outstanding bonds

Issuer Issue date Currency Coupon (%) Amount ($mn) Maturity  
RBTS Sep-13 USD 2.125 500 Sep-18  
RBTS Sep-13 USD 3.625 500 Sep-23  

Credit ratings

Agency Short Term Rating Long Term Rating Long Term Outlook Last Change Date  
Moody's P-1 A1 Stable 09-Nov-2007  
S&P A-1 A+ Stable 24-Oct-2007  

Contacts

Simon Neville
Group Treasury Director

T +44 (0)1753 217 800

Richard Joyce
Director, Investor Relations

T +44 (0) 1753 217 800

IR@rb.com


RB
103-105 Bath Road
Slough
Berkshire, SL1 3UH
United Kingdom