RB HYGIENE HOME PAKISTAN LIMITED

ANNUAL REPORT 2019

For the year ended

December 31, 2019

CONTENTS

Particulars Page Number

Company Information 3

Notice of Meeting 4

Report of the Directors to Shareholders 5

Key Operating and Financial Data 10

Auditor’s Report to the Members 11

Balance Sheet 15

Profit and Loss Account 16

Statement of Changes in Equity 17

Cash Flow Statement 18

Notes to and Forming Part of Financial Statements 19

Pattern of Share Holding 46

Form of Proxy 48

BOARD OF DIRECTORS

Mr.Akbar A. Shah Chairman and Chief Executive Officer

Mr. Adil Saeed Khan Director

Mr. Atif Hashmi Director

COMPANY SECRETARY

Mr. Kashif Hameed

BANKERS

Citibank, N.A Pakistan Branch

Standard Chartered Bank (Pakistan) Limited

Deutsche Bank AG

Habib Bank Limited

AUDITORS

KPMG Taseer Hadi & Co., Chartered Accountants

SOLICITORS

Orr Dignam & Co

REGISTRARS

FAMCO Associates (Private) Limited

8-F, Next to Hotel Farhan,

Nursery, Block-6, P.E.C.H.S

Shahra-e-Faisal, Karachi-74000

Tel: 92-21 34480101-5

COMPANY INFORMATION

Company Information

RB HYGIENE HOME PAKISTAN LIMITED

NOTICE OF MEETING NOTICE is hereby given that the 1st Annual General Meeting of the Company will be held at 10:00 am on Wednesday April 29, 2020 at the RB Factory, F-18, S.I.T.E, Mauripur, Sindh Industrial Trading Estate, Karachi, to transact the following business:

1. To receive and consider the Audited Accounts of the Company for the year ended December 31, 2019 and the Reports of the Directors and Auditors thereon.

2. To declare dividend at the rate of PKR 938 per share for the year ended December 31, 2019 as recommended by the Directors.

3. To elect three (03) directors of the Company for a period of three years in accordance with the provisions of the Companies Act 2017. The names of the retiring directors are Akbar Ali Shah, Adil Saeed Khan and Atif Hashmi.

4. To appoint auditors and fix their remuneration.

BY ORDER OF THE BOARD

KASHIF HAMEED COMPANY SECRETARY

27th March 2020 Karachi NOTES:

(1) The Directors of the Company have fixed, under S159(1) of the Companies Act 2017, the number of directors to be elected at three (03). All directors shall be eligible to offer themselves for re-election. Any person who seeks to contest election for directorship of the Company shall file with the Company at its registered office, tenancy 04, third floor, corporate offices block, dolmen city, HC-3, Block 4, Scheme 5, Clifton, Karachi- 75600, Pakistan, (a) notice of intention to offer himself/herself as a director not later than fourteen days before the date of the meeting at which elections are to be held (b) Form 28 (Consent to Act as Director) prescribed under S159(3) of the Companies Act 2017 and S167(1) of the Companies Act 2017.

(2) The Share Transfer Books of the Company will remain closed from 21st April 2020 to 29th April 2020 both days inclusive.

(3) A Member entitled to attend the Annual General Meeting is entitled to appoint a proxy to attend and vote instead of him/her. No person shall act as proxy (expect for a corporation) unless he/she is entitled to be present and vote in his/her own right. The completed proxy form must be received at the Registered Office of the Company not less than 48 hours before the Meeting.

(4) Members are Requested to Notify any change in their addresses immediately to office of share Registrars of the Company FAMCO Associates (Pvt) Limited, 8-F, Next to Hotel Faran, Nursery, Block-6 P.E.C.H.S, Shahra-e-Faisal, Karachi.

Notice of Meeting

REPORT OF THE DIRECTORS’ TO THE SHAREHOLDERS

The Directors of RB Hygiene Home Pakistan Limited (“RB”) have the pleasure of

presenting the Annual Report together with audited accounts of the Company for the year

ended December 31, 2019.

COMPANY’S PRINCIPAL ACTIVITIES

RB has been involved in the manufacture, marketing and sale of home hygiene products.

In line with our motto of doing “better business” we have continued to provide innovative

solutions for healthier lives and happier homes.

BUSINESS REVIEW

Key Financial Highlights

2019

PKR in ‘000s

Sales 5,931,017

Gross Profit 3,874,332

Profit from Operations 1,488,793

Profit before Tax 1,592,768

Profit after Tax 1,109,806

TRADING PERFORMANCE

2019 was a year of stronger performance for us, our sales and gross margins were

recorded at PKR 5.9 Billon and 3.9 Billion respectively, thereby delivering 8% and 9%

growth as compared to previous year. Our two front line brands HARPIC and MORTEIN

continued to serve as growth engines for the company due to combined efforts of

dedicated focus and better in market executions. Market conditions, however, remained

tougher followed by stricter controls of FBR over the trading and sales operations across

the country. The exchange rate depreciation followed by steep rise in interest rates

continued to challenge the economic growth in the country.

The profit before tax (PBT) for the year grew by 4% to PKR 1.6 Billion (27% of sales)

whereas the tax charge was PKR 483 Million during the year.

Report of the Directors to Shareholders

RB has adequate internal financial controls which are recognized under International

Financial Control Framework and RB Group policy.

Unappropriated profit being carried forward

The unappropriated profit as at 31-12-2019 was PKR 1.1 Billion which is being carried

forward for 2020.

Dividend

Earnings per share

2019

Rs. *1,069

*EPS for 2019 is based on the number of shares to be issued under the approved scheme

of arrangement.

The Board of Directors has recommended a final cash dividend of Rs. 938/- per share.

There was no interim dividend declared within 2019. Therefore, the total dividend for the

year 2019 amounts to Rs. 938/- per ordinary share of Rs.10 each.

DIRECTORS FOR 2019

Following served as the directors of the Company during 2019:

• Akbar Ali Shah (Chief Executive Officer)

• Adil Saeed Khan

• Munazza Kasmani

• Atif Hashmi Changes on Board of Directors

Ms. Munazza Farooq Kasmani resigned from the BOD (w.e.f. June 28, 2019) and Mr. Atif

Hashmi was appointed as Director (w.e.f. June 28, 2019) in place of Ms. Munazza Farooq

Kasmani.

Current Directors

• Akbar Ali Shah (Chief Executive Officer)

• Adil Saeed Khan

• Atif Hashmi PATTERN OF SHAREHOLDING AND HOLDING COMPANY

The pattern of shareholding has been annexed to this report Company’s Holding

Company is Reckitt Benckiser plc, which is incorporated in the United Kingdom.

PRINCIPAL RISK AND UNCERTAINTIES

We have a well established risk management framework and effective internal control

mechanism, which helps us identify the key risks impacting the business. The key

business risks include:

1- Slower economic growth including higher inflation and PKR/USD parity continue

to impact the business of the company. The devaluation adversely impacted the

imports of the company followed by continued restrictions on hedging by State

Bank of Pakistan.

2- The higher tax rates have also increased the inflationary pressures on the

economy, thereby potentially impacting the price increase initiatives of the

company.

3- The higher interest rates continue to challenge the economic growth and potential

of increase in demand in the economy. This in turn affects the company’s overall

growth targets for next year and onwards.

DISCLOSURE REGARDING RECONSTRUCTION OF COMPANY

Further to the disclosure in Reckitt Benckiser Pakistan Limited’s 2018 directors’ report

annexed with the annual report of the said company, the Scheme of Arrangement was

submitted for approval of shareholders in the extra ordinary general meeting of the

shareholders held on 26 June 2019. Subsequent to shareholders approval, creditors’

consent was also sought. The Hon’ble High Court of Sindh has also approved the Scheme

of Arrangement vide order dated 25 September 2019. The Scheme of Arrangement came

into operation on the date of submission of High Court order approving the Scheme to the

Securities & Exchange Commission of Pakistan vide Company letter dated 1 October

2019. The Board subsequently resolved that in order to facilitate the implementation of

the aforesaid Scheme of Arrangement and in compliance with the directions of the High

Court of Sindh in its order dated 25 September 2019, the Register of Members and Share

Transfer Books of RB Pakistan Limited be closed for a period of seven (7) days from 10

January 2020 to 16 January 2020, (both days inclusive. Consequently, the Register of

Members and Share Transfer Books were closed, and entitlement registers were

prepared for determining the new entitlements as at the Record Date. Once the new

entitlement were determined, the Board of Reckitt Benckiser Pakistan Limited approved

the allotment of shares accordingly to the Qualifying Shareholders (as defined in the

Scheme of Arrangement) on 21 January 2020. Subsequently, new share certificates are

ready for collection in accordance with the said Company’s notice to shareholders dated

03 January 2020.

OCCUPATIONAL SAFETY & HEALTH

RB recognizes the importance of occupational safety and health for all its employees. All

facilities of the company including the warehouses, are compliant with international safety

standards.

SOCIALLY POSITIVE ACTIVITIES – BUSINESS WITH A PURPOSE

The Company has been executing various socially beneficial to create awareness related

to hygiene through public service messages and purpose-led copies across various

media channels.

In addition, locally, we undertake several branded marketing activities but with an attempt

to incorporate socially responsible & beneficial messages. Below are some of the

campaigns that have been undertaken:

1. Dengue Ab Nahi – educating masses across various forums on how to prevent

oneself from mosquitoes that carry dengue to reduce the number of incidences of

the disease

2. Harpic Muhalla Program – educating homemakers on how to clean and maintain

hygienic toilets within their households to reduce disease incidence and ensure

safe sanitation

3. Harpic Heroes – recognizing and raising awareness around World Toilet Day

regarding the important role of cleaners (maids, sweepers, etc.) in providing a

clean and hygienic environment to live in

4. Harpic sponsored public toilet – supported the Ministry of Railway in building

public toilets for one of the platforms at the Lahore Railway Station

MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION FROM END OF FINANCIAL TILL DATE OF REPORT No such changes or commitments.

FUTURE PROSPECT OF PROFIT

RB has been on a well-established journey with a focused, strategic evolution from a

household cleaning company to a world leader in consumer health. As we look to the

future, we are well positioned for long term, sustainable growth, from the excellent

portfolio of brands within each of our more focused and agile Business Units. For 2020

we expect to continue our growth momentum through improved innovation pipeline,

robust go-to-market plan and investment behind Brands. Moreover, the demerger

provides a platform for future growth and outperformance in both companies. We remain

committed to executing on this important project and will continue to evaluate

opportunities to maximise shareholder value in the longer run.

TRADING RESULTS 2019

Rs in 000s

Sales and Services 5,931,017

Gross Profit 3,874,332

Profit before tax 1,592,768

Taxes 482,962

Net Earnings 1,109,806

BALANCE SHEET

Share Capital* -

Capital and Revenue Reserves 1,452,091

Other Reserves 10,379

Shareholders' Equity 1,462,470

Net deferred liabilities (4,154)

1,458,316

Represented by:

Fixed assets 104,446

Investment in equity accounted investee 6,250

Long term Loans/deposits -

Net current assets 1,347,620

1,458,316

STATISTICS

Gross profit in percentage of sales (%) 65.32

Profit before tax in percentage of sales (%) 26.85

Inventory turnover (times) 4.48

Total assets turnover (times) 1.87

Fixed asset turnover (times) 44.85

Current ratio 1.80

Return on capital employed (%) 75.89

Net earnings per share (Rs.) 1069.24

Dividend declared per share (Rs.) 938.00

KEY OPERATING AND FINANCIAL DATA

* The Share Capital of the company as at December 31, 2019 is PKR 30, being 03 qualification

shares issued to the direcotrs of the company. Subsequently, 1037,935 shares were issued in

accordance with the Scheme of Arrangement for reconstruction of Reckitt Benckiser Pakistan

Limited, approved by the Court.

Key Operating and Financial Data

Auditor’s Report to the Members

Balance Sheet

Profit and Loss Account

Statement of Changes in Equity

Cash Flow Statement

Notes to and Forming Part of Financial Statements

RB HYGIENE HOME PAKISTAN LIMITEDCATEGORIES OF SHAREHOLDINGAS AT DECEMBER 31, 2019

SNO. Shareholders CategoryNo. of

ShareholderNo. of Shares Percentage

1 Directors, Chief Executive Officer, and

their spouse and minor children (to be

confirm by Company)3 3 100

2 Associated Companies, Undertakings

and related Parties (to be confirm by

Company)

- - -

3 NIT and ICP4 Banks, Development Financial

Institutions, Non Banking Financial

Institutions

- - -

5 Insurance Companies6 Modarabas and Mutual Funds7 Share holders holding 10% - - -

8 General Public :a. local - - -

b .Foreign9 Others - - -

Total (excluding : share holders

holding 10%)3 3 100

RB HYGIENE HOME PAKISTAN LIMITEDPATTERN OF SHAREHOLDINGAS AT DECEMBER 31, 2019

NO OF SHAREHOLDERS FROM TO TOTAL SHARES

3 1 100 3

3 3

NO. OF SHARESHOLDINGS

Pattern of Share Holding

RB HYGIENE HOME PAKISTAN LIMITEDCATEGORIES OF SHAREHOLDINGAS AT JANUARY 31, 2020

SNO. Shareholders CategoryNo. of

ShareholderNo. of Shares Percentage

1 Directors, Chief Executive Officer, and their spouse and minor

children (to be confirm by Company) 3 3 0

2 Associated Companies, Undertakings and related Parties (to be

confirm by Company) - - -

3 NIT and ICP

4 Banks, Development Financial Institutions, Non Banking Financial

Institutions- - -

5 Insurance Companies

6 Modarabas and Mutual Funds

7 Share holders holding 10% - - -

8 General Public :

a. local - - -

b .Foreign

9 Others - - -

Total (excluding : share holders holding 10%)3 3 0

RB HYGIENE HOME PAKISTAN LIMITEDPATTERN OF SHAREHOLDINGAS AT JANUARY 31, 2020

NO OF SHAREHOLDERS FROM TO TOTAL SHARES

374 1 100 6,142 23 101 500 4,124

4 501 1,000 3,500

1 365,001 370,000 366,574 1 655,001 660,000 657,598

403 1,037,938

NO. OF SHARESHOLDINGS

The Company Secretary

RB Hygiene Home Pakistan Limited

3rd Floor, Tenancy 04, Corporate Office Block,

Dolmen City, HC Block 4,

Scheme 5, Clifton

Karachi

I / We ____________________________________________________________________________________________________________

of ____________________________________________________________________________________________________(full address)

being a member of RB Hygiene Home Pakistan Limited hereby appoint ________________________________________________________

of _____________________________________________________________________________________________________(full address)

or failing him ______________________________________________________________________________________________________

of ____________________________________________________________________________________________________(full address)

another member of the Company to attend and vote for me / us and on my / our behalf at the First Annual General Meeting of

the Company to be held on the 29th day of April 2020 and at any adjournment thereof.

As witness my / our hand this __________________ day of ___________________ 2020.

Witness No. 1

Name ____________________________________

Address ____________________________________

____________________________________

____________________________________

CNIC No. ____________________________________ ___________________________________________________

Signature of Member(s)

Witness No. 2

Name ____________________________________ ___________________________________________________

Address ____________________________________ (Name in Block letters)

____________________________________ Folio No. ________________________________________

____________________________________

CNIC No. ____________________________________

Important:

1. A member entitled to attend a General Meeting is entitled to appoint a proxy to attend and vote instead of him / her. No person shall act

as a Proxy (except for a corporation) unless he / she is entitled to be present and vote in his / her own right.

2. Members are requested:

(a) to sign in the same style of signature as is registered with the Company.

(b) to write down their Folio Numbers at the place indicated above.

3. The instrument appointing a proxy, together with the Board of Directors' resolution / Power of Attorney (if any) under which it is signed

or a notarially certified copy thereof, should be deposited at the Registered Office not less than 48 hours before the time for holding the

meeting.

FORM OF PROXY

Form of Proxy