UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR | |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended | |
OR | |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR | |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
Date of event requiring this shell company report___________________
For the transition period from ___________________ to _______________________
Commission file number:
(Exact name of Registrant as specified in its charter) |
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(Jurisdiction of incorporation or organization) |
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West Sussex |
(Address of principal executive offices) |
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Rentokil Initial plc West Sussex Telephone: +44 E-mail: |
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) |
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
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*Not for , but only in connection with the registration of American Depositary Shares representing such ordinary shares pursuant to the requirements of the Securities and Exchange Commission.
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None |
(Title of Class) |
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None |
(Title of Class) |
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
The number of outstanding shares of each class of stock of Rentokil Initial plc as of December 31, 2023 was:
Title of Class |
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Ordinary shares of £0.01 each: |
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ◻
Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Accelerated filer ◻ |
| Non-accelerated filer ◻ | |
Emerging growth company ◻ |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).◻
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP | ◻ | ⌧ | Other ◻ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
◻ Item 17 ◻ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ◻ No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes ◻ No ◻
Pursuant to Rule 12b-23(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the information for the 2023 Form 20-F of Rentokil Initial plc (the “Company”) set out below is being incorporated by reference from the Company’s Annual Report 2023 included as exhibit 15.1 to this Form 20-F (the “Annual Report 2023”).
Presentation of Financial and Other Information
References below to major headings include all information under such major headings, including subheadings, unless such reference is a reference to a subheading, in which case such reference includes only the information contained under such subheading. To the extent that any information incorporated by reference into this Form 20-F itself incorporates information by reference (including by way of internal cross reference), such information shall not form part of this Form 20-F. All references in this Form 20-F to “us”, “we” or “the Company” are to Rentokil Initial plc. Unless the context otherwise requires, “Rentokil Initial” or “Group” refers to the Company and its consolidated entities. Other information contained within the Annual Report 2023 included as exhibit 15.1 to this Form 20-F, including graphs and tabular data, is not included in this Form 20-F unless specifically identified below. Photographs are also not included. None of the websites referred to in the Annual Report 2023, including where a link is provided, nor any information contained on such websites is incorporated by reference in this Form 20-F.
In addition to the information set out below, the information (including tabular data) set forth under the headings “Glossary” on page 248 and “Cautionary statement” on page 249, in each case of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
References herein to Rentokil Initial websites, including where a link is provided, are textual references only and information on or accessible through such websites does not form part of and is not incorporated into this Form 20-F. References to “audited” information (including graphs and tabular data) set forth under the heading “Corporate Governance—Directors’ Annual Remuneration Report-2023—Directors’ remuneration in the year to 31 December 2023” on pages 140 to 147 refer to procedures performed by the Company’s external auditor in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law and does not form part of the “Report of Independent Registered Public Accounting Firm” on page F-2 of this Form 20-F. For the avoidance of doubt, the “Independent Auditors’ Report to the members of Rentokil Initial plc” dated 7 March 2024 on pages 162 to 168 of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F does not form part of, and is not incorporated into, this Form 20-F.
Cautionary Note Regarding Forward-Looking Statements
In order, among other things, to utilise the ‘safe harbour’ provisions of the U.S. Private Securities Litigation Reform Act of 1995, we are providing the following cautionary statement:
This Form 20-F and the Annual Report 2023 contain statements that are, or may be, forward-looking regarding the Group’s financial position and results, business strategy, plans and objectives, including, among other things, statements about expected revenues, margins, earnings per share or other financial or other measures. These statements are often, but not always, made through the use of words or phrases such as “believe”, “anticipate”, “could”, “may”, “would”, “is likely to”, “should”, “intend”, “seek”, “aim”, “plan”, “potential”, “predict”, “will”, “expect”, “estimate”, “project”, “positioned”, “strategy”, “outlook”, “target” and similar expressions.
Although we believe that the forward-looking statements in this Form 20-F and the Annual Report 2023 are based on reasonable assumptions, such statements involve risk and uncertainty because they relate to future events and circumstances. There are accordingly a number of factors which might cause actual results and performance to differ materially from those expressed or implied by such statements, including, but not limited to, uncertainties related to the following:
| ● | our ability to integrate acquisitions successfully, or any unexpected costs or liabilities from our disposals; |
| ● | difficulties in integrating, streamlining and optimising our IT systems, processes and technologies; |
| ● | our ability to attract, retain and develop key personnel to lead our business; |
| ● | the availability of a suitably skilled and qualified labour force to maintain our business; |
| ● | cyber security breaches, attacks and other similar incidents, as well as disruptions or failures in our IT systems or data security procedures and those of our third-party service providers; |
| ● | inflationary pressures, such as increases in wages, fuel prices and other operating costs; |
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| ● | weakening general economic conditions, including changes in the global job market or decreased consumer confidence or spending levels, especially as they may affect demand from our customers; |
| ● | our ability to implement our business strategies successfully, including achieving our growth objectives; |
| ● | our ability to retain existing customers and attract new customers; |
| ● | the highly competitive nature of our industries; |
| ● | extraordinary events that impact our ability to service customers without interruption, including a loss of our third-party distributors; |
| ● | the impact of environmental, social and governance (“ESG”) matters, including those related to climate change and sustainability, on our business, reputation, results of operations, financial condition and/or prospects; |
| ● | supply chain issues, which may result in product shortages or other disruptions to our business; |
| ● | our ability to protect our intellectual property and other proprietary rights that are material to our business; |
| ● | our reliance on third parties, including third-party vendors for business process outsourcing initiatives, investment counterparties, and franchisees, and the risk of any termination or disruption of such relationships or counterparty default or litigation; |
| ● | any future impairment charges, asset revaluations or downgrades; |
| ● | failure to comply with the many laws and governmental regulations to which we are subject or the implementation of any new or revised laws or regulations that alter the environment in which we do business, as well as the costs to us of complying with any such changes; |
| ● | termite damage claims and lawsuits related thereto and associated impacts on the termite provision; |
| ● | our ability to comply with safety, health and environmental policies, laws and regulations, including laws pertaining to the use of pesticides; |
| ● | any actual or perceived failure to comply with stringent, complex and evolving laws, rules, regulations and standards in many jurisdictions, as well as contractual obligations, including data privacy and security; |
| ● | the identification of a material weakness in our internal control over financial reporting within the meaning of Section 404 of the Sarbanes-Oxley Act; |
| ● | changes in tax laws and any unanticipated tax liabilities; |
| ● | adverse credit and financial market events and conditions, which could, among other things, impede access to, or increase, the cost of financing; |
| ● | the restrictions and limitations within the agreements and instruments governing our indebtedness; |
| ● | a lowering or withdrawal of the ratings, outlook or watch assigned to our debt securities by rating agencies; |
| ● | an increase in interest rates and the resulting increase in the cost of servicing our debt; and |
| ● | exchange rate fluctuations and the impact on our results or the foreign currency value of our American Depositary Shares (“ADSs”) and any dividends. |
Further details on the principal risks that may affect the Group can be found in the “Risks and Uncertainties” section detailed on pages 87 to 93 and on page 78 (in relation to climate-related risks), in each case of the Company’s Annual Report 2023 included as exhibit 15.1 to this Form 20-F, as well as on pages F-52 to F-54 (in relation to financial risks) and under the heading Item 3.D “Risk Factors”, in each case of this Form 20-F.
Forward-looking statements speak only as of the date they are made and no representation or warranty, whether express or implied, is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Other than in accordance with the Company’s legal or regulatory obligations (including under the Listing Rules and the Disclosure Guidance and Transparency Rules), the Company does not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise. Information contained in this Form 20-F and the Annual Report 2023 relating to the Company or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance. Nothing in this Form 20-F and the Annual Report 2023 should be construed as a profit forecast.
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TABLE OF CONTENTS
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PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
A. | Reserved |
Reserved.
B. | Capitalization and Indebtedness |
Not applicable.
C. | Reason for the Offer and Use of Proceeds |
Not applicable.
D. | Risk Factors |
You should carefully consider the factors described below, in addition to the other information set forth in this Form 20‑F. Providing route-based services carries various inherent risks and uncertainties that may affect our business. In this section, we describe the risks and uncertainties that we consider material to our business in that they may have a significant effect on our business, reputation, results of operations, financial condition and/or prospects.
This Annual Report includes statements that may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We believe that the forward-looking statements about Rentokil Initial in this Form 20‑F, identified by words such as “believes”, “anticipates”, “could”, “may”, “would”, “is likely to”, “should”, “intends”, “seeks”, “aims”, “plans”, “potential”, “predicts”, “will”, “expects”, “estimates”, “projects”, “positioned”, “strategy”, “outlook”, and “target”, are based on reasonable assumptions. However, forward-looking statements involve inherent risks and uncertainties such as those summarised below. They relate to events that may occur in the future, that may be influenced by factors beyond our control and that may have actual outcomes materially different from our expectations. Therefore, other risks, unknown or not currently considered material, could have a material adverse effect on our financial condition or results of operations.
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Risks Relating to Business Strategies and Operations
If we are unsuccessful in integrating acquisitions or if our disposals result in unexpected costs or liabilities, our business could be materially and adversely affected.
We have a strategy that includes growth by acquisition to extend our geographic footprint and to improve our market share in existing locations. For example, we acquired 41 new businesses in 2023, and we may continue to pursue strategic transactions in the future, which could involve acquisitions or disposals of businesses or assets. These acquisitions need to be integrated quickly and efficiently to minimise potential impact on the operations of the acquired business and the existing business. There are a number of risks to the successful integration of acquired businesses, including the Terminix business. These risks include, but are not limited to, the possibility that management may be distracted from regular business concerns by the need to integrate operations and that unforeseen difficulties can arise in integrating operations, systems, processes, pay plans, brands and customer offerings as well as difficulties in retaining and assimilating employees and customers. In addition, even where a diligent review of the businesses and/or properties acquired in connection with such acquisitions is performed in accordance with industry norms, such reviews may be incomplete and not necessarily reveal all existing or potential problems, including actual or contingent liabilities, or permit a full assessment of the deficiencies associated with the businesses or properties. Any acquisition that we make may not provide us with the benefits that were anticipated when entering into such acquisition, or the benefits may not occur within the time periods we anticipated. The realisation of such benefits may be affected by a number of factors, many of which are beyond our control. If we fail to (i) successfully integrate acquisitions into our existing organisational structures and IT systems, (ii) deliver the revenue and profit targets, or (iii) deliver any expected synergy benefits, such as cost savings, the acquired business may not achieve the expected financial and operational benefits which could lead to potential adverse short-term or long-term effects on our business, reputation, results of operations, financial condition and/or prospects. Our business may be required to recognise impairment charges or be subject to asset revaluations or downgrades. We may also experience difficulties, costs or delays in migrating acquired businesses to our systems, processes and technologies.
In addition, we have sold a number of our businesses in the past and expect to continue to dispose of businesses from time to time if consistent with our strategy. Furthermore, under business sale contracts, we may provide warranties and indemnities to purchasers. Accordingly, we may make provisions in our consolidated financial statements for potential liabilities and costs relating to a disposed business. We may also make provisions in our consolidated financial statements for amounts to cover legal or regulatory claims which are known to be outstanding at the time of sale or which may subsequently become apparent. There can be no assurance that such provisions will be sufficient to cover potential liabilities and consequently disposals of our businesses may have a material adverse effect on our business, reputation, results of operations, financial condition and/or prospects.
We may experience difficulties integrating, streamlining and optimising our IT systems, processes and technologies.
We have invested in, and expect to continue to invest in, a wide range of new systems, processes and technologies intended to improve many aspects of our business. These systems, processes and technologies impact customers, suppliers, employees and others, including new systems that integrate, streamline and enhance legacy operating IT systems. These activities have required, and may continue to require, significant investment of human and financial resources. We may experience significant delays, increased costs and other difficulties as a consequence of significant disruption or deficiency in implementing such systems, processes and technologies, which could adversely affect our ability to process work orders, send invoices, track and collect payments, fulfil contractual obligations or otherwise operate our business. In addition, our efforts to centralise various business processes within our organisation in connection with this implementation may disrupt operations and negatively impact our business, reputation, results of operations, financial condition and/or prospects.
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We depend on key personnel to lead our business.
Our continued success will depend largely on our ability to attract, retain, and develop a high calibre of talent and on the efforts and abilities of our executive officers and certain other key colleagues. As we continue to grow our business, make acquisitions, expand our geographic scope, and offer new products and services, we need the organisational talent necessary to ensure effective succession for executive officer and key colleague roles in order to meet the growth, development and profitability goals of our business. Our operations could be materially and adversely affected if, for any reason, we were unable to attract, retain or develop such officers or key colleagues and successfully execute organisational change and management transitions at leadership levels, or if we have to incur significant costs to retain such individuals or to identify, hire and retain replacements for departing employees. No assurance can be given that we will be able to attract or retain employees to the same extent that we have been able to attract or retain employees in the past.
We depend on a suitably skilled and qualified labour force to maintain the business.
Our ability to maintain our customer service and execute our business strategy depends on our ability to attract and retain a suitably skilled and qualified labour force. There can be no assurance that we will be able to recruit, train and retain such a labour force in sufficient numbers or of sufficient quality, or that pressure to recruit will not lead to a significant increase in employee costs. In markets where overall employment rates are high, and/or our business is growing quickly, either organically or through acquisitions, we may have difficulties attracting, training and retaining operational personnel of suitable capability. In addition, changes in the global job market may cause, or continue to cause, difficulty in recruiting, training and retaining a suitably skilled and qualified labour force. As a result, we could experience difficulty in responding to customer calls in a timely fashion or delivering our services in a high-quality or timely manner, and could be forced to increase wages to attract, train and retain colleagues, which would result in higher operating costs and reduced profitability. Any of these factors may have a material adverse effect on our business, reputation, results of operations, financial condition and/or prospects.
Moreover, some of our colleagues are members of local trade unions and similar organisations. Industrial action in key operations could result in diminished customer service levels or higher costs and, if prolonged, could damage our reputation and ability to retain existing customers or acquire new customers. Although we believe that all of our operations have good relations with their colleagues and the trade unions that represent those colleagues (where applicable), there can be no assurance that work stoppages or other labour-related developments (including the introduction of new labour regulations in countries where we operate) will not adversely affect our business, reputation, results of operations, financial condition and/or prospects. In addition, potential competition from key colleagues who leave Rentokil Initial could impact our ability to maintain our market share in certain geographic areas.
Cyber security breaches, attacks and other similar incidents, as well as disruptions or failures in our IT systems or data security procedures and those of our third-party service providers, could expose us to liability, limit our ability to effectively monitor, operate and control operations and adversely impact our business, reputation, results of operations, financial condition and/or prospects.
Our business is dependent on effective IT systems and data security procedures. We and our third-party service providers may be subject to significant system or network disruptions from numerous causes, including cyber security breaches, attacks or other similar incidents, facility access issues, new system implementations, human error, fraud, theft, fire, power loss, telecommunications failure or a similar catastrophic event. Moreover, computer viruses, worms, malware, ransomware, phishing, spoofing, malicious or destructive code, social engineering, denial-of-service attacks, and other cyber attacks have become more prevalent and sophisticated in recent years. Because the techniques used by computer hackers and others to access or sabotage networks and computer systems constantly evolve and generally are not recognised until launched against a target, we and our third-party service providers may be unable to anticipate, detect, react to, counter or mitigate against all of these techniques or remediate any resulting incident. Cyber security risk has increased due to increased online and remote activity and we have in the past experienced, and may continue to experience, increases in the number and seriousness of cyber attacks, including distributed denial-of-service attacks and ransomware incidents. In 2023, our organisation encountered seven cyber security incidents, each effectively addressed through our established incident response protocol. Notably, only one incident resulted in an immaterial impact on our business, involving the transfer of immaterial funds to attacker-controlled bank accounts. All of these incidents were reported to the Board or Audit Committee, who have oversight of the risks from cyber security threats, by management, who are responsible for managing prevention, detection, mitigation and remediation of cyber security incidents. Although such attacks have been detected and mitigated before they were able to have a material impact on the business in the past, it is possible that future cyber attacks could avoid detection or prevention and have a material impact.
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Any IT system disruptions or breaches may lead to unauthorised release of data (including colleague, customer and supplier personal data that we hold) and inefficient business operations, including poor supply chain management, and have a negative impact on customer service, resulting in a loss of customers, which could have a material adverse effect on our business, reputation, results of operations, financial condition and/or prospects.
We may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate or remediate any cyber security vulnerabilities, breaches, attacks or other similar incidents. Any cyber security incident, attack or other similar incident, or our failure to make adequate or timely disclosures to the public, regulators, or law enforcement agencies following any such event, could harm our competitive position, result in violations of applicable data privacy or cyber security laws or regulations, result in a loss of customer confidence in the adequacy of threat mitigation and detection processes and procedures, cause disruption to business activities, divert management attention and other resources or otherwise adversely affect our internal operations and reputation, degrade financial results, cause us to incur significant costs to remedy the damages caused by the incident or defend legal claims, subject us to additional regulatory scrutiny and expose us to civil litigation, fines, damages or injunctions. With respect to cyber security-related legal claims and regulatory scrutiny, we also may incur additional costs related to the diverse set of laws, rules and regulations to which we are subject across multiple jurisdictions.
Inflationary pressures, such as increases in wages, fuel prices and other operating costs, could adversely impact our business, results of operations, financial condition and/or prospects.
In the year ended 31 December 2023, globally high inflation rates have increased our operating costs and expenses. Whilst we have, to date, been able to pass on such cost increases to customers in the form of increased prices, we may not in the future be able to pass these cost increases on fully, or in a timely manner, to customers. Our financial performance may therefore be adversely affected by sudden or material increases in the level of our operating costs and expenses, which can be triggered by inflationary pressures. For example, fuel prices are subject to market volatility, and our fleet has been negatively impacted by significant increases in fuel prices in the past and could be negatively impacted in the future. In addition, we continue to monitor the adverse impacts that the ongoing wars in Ukraine and Gaza and the associated sanctions against various Russian organisations, companies and individuals are having and may continue to have on the global economy in general and on our business operations, although we have no direct operations in Russia or Ukraine. Such events have increased fuel prices, and a further prolonged war may have further negative consequences such as increased inflation and transportation costs. Fuel price increases have also caused increases in the cost of chemicals and other materials used in our business. To the extent such costs increase further, we may be prevented, in whole or in part, from passing these cost increases on to our existing and prospective customers, which could have a material adverse impact on our results of operations, financial condition and/or prospects.
Weakening general economic conditions, including changes in the global job market or decreased consumer confidence or spending levels, especially as they may affect demand from our customers, may adversely impact our business, results of operations, financial condition and/or prospects.
Ongoing volatility in the global economic environment has led to, and may continue to lead to, economic challenges such as low gross domestic product growth in regional and national economies, high volatility in commodity prices and exchange rates and efforts made by governments to increase the minimum wage across markets, as well as wide variations in local market prices and cost inflation across the globe. This may be exacerbated by economic uncertainty caused by geopolitical events, political instability and civil unrest in some local markets, and catastrophic business events, including the continuation and/or broadening of the wars in Ukraine and Gaza. Further economic slowdown in the markets in which we operate may lead to a reduction in the level of demand from our customers for existing and new services. Low-growth economies with inherent cost inflation may make it difficult for us to maintain profitability if we have weak pricing power in those markets, in particular, in areas of hyperinflation. Furthermore, adverse economic conditions may lead to an increased number of customers not renewing contracts or seeking to reduce prices leading to a reduction in profit margins and cash flows or being unable to pay for existing or additional services leading to an increase in bad debts. Our pricing may be impacted negatively by an increased presence of multinational competitors in the markets in which we operate or an increased reliance on key customer accounts in markets impacted by adverse economic conditions. The entry of multinational competitors may also make it difficult for us to maintain profitability by increasing the cost of acquisitions. Any of these events could have a material adverse effect on our business, reputation, results of operations, financial condition and/or prospects.
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We may not successfully implement our business strategies, including achieving our growth objectives.
We may not be able to fully implement our business strategies or realise, in whole or in part within the expected time frames, the anticipated benefits of various growth plans or other initiatives. Our ability to implement our business strategy may be adversely affected by factors that we cannot foresee currently, such as unanticipated costs and expenses, pandemics and other global health crises, technological change, recession and economic slowdown, the level of interest rates, foreign exchange risks, failure to integrate acquisitions, a decline in the effectiveness of our marketing (including digital marketing) activities or disruptions in the supply chain. All of these factors may necessitate changes to our business strategy or adversely affect our business, reputation, results of operations, financial condition and/or prospects.
In addition, we will incur certain costs to achieve efficiency improvements, systems implementations and growth in our business, and we may not meet anticipated implementation timetables or stay within budgeted costs. As these efficiency improvements, system implementations and growth initiatives are implemented, we may not fully achieve expected cost savings and efficiency improvements, system implementations or growth rates, or these initiatives could adversely impact customer retention or our operations. Also, our business strategies may change in light of our ability to implement new business initiatives, competitive pressures, economic uncertainties or developments or other factors.
Our continued growth depends on our ability to retain existing customers and attract new customers.
Our ability to grow is dependent on our ability to retain existing customers and attract new customers. There can be no assurance that our strategy of using new technology and improved sales techniques to attract profitable new clients, up-selling and cross-selling to existing clients and focusing on retaining profitable business when renewing existing customer contracts will be successful. Moreover, failure to maintain consistently high levels of customer service, client management and sales capability, failure to adapt to local business and consumer needs and/or failure to win and retain profitable customers in the face of competition from competitors (including those with lower costs or which are willing to accept lower margins) may have a material adverse effect on our business, results of operations, financial condition and/or prospects. We must be sufficiently agile to develop and deliver products and services that meet local market needs. If we are not able to adapt to local business and consumer needs, our existing customers may choose not to renew contracts, reduce the use of our services across their operations or seek reductions in prices.
We must continue to develop products and services that meet the needs and expectations of our customer base, including to ensure the continued efficacy of our products in the target pest population. Furthermore, as technological developments disrupt the markets in which we operate and change service offerings across our industries, we may need to develop new products and services. In the future, products and services may interact with each other in new ways and enable new capabilities to be offered to consumers, such as systems that are networked and able to be monitored in real time. Our competitors may be earlier to embrace these new technological developments that are disruptive to the market or to develop more effective products, and a delay in our response may lead to adverse effects to our business, reputation, results of operations, financial condition and/or prospects.
Our industries are highly competitive.
We compete with a wide variety of competitors of varying sizes and face competition in many of the markets in which we operate. The growing presence of multinational competitors may increase the cost of acquisitions and/or drive down prices, impacting our profitability. Furthermore, the increased presence of facilities management companies in the markets in which we operate may also drive down prices and adversely impact the quality of our relationships with end customers. The principal methods of competition in our business include quality and speed of customer service, brand awareness and reputation, effective use of technology and systems, customer satisfaction, fairness of contract terms (including price and promotions), professional sales forces and referrals. We may be unable to compete successfully against current or future competitors, and the competitive pressures that we face may result in reduced market share, reduced pricing or an adverse impact on our reputation, business, results of operations, financial condition and/or prospects.
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Extraordinary events may significantly impact our business if we are unable to ensure business continuity due to a material incident.
The ability to service customers without interruption is essential to our operations. Contingency plans are required to continue or recover operations following a disruption or incident but may not be adequate to enable us to continue or recommence trading without a loss of business. Such incidents may include (a) a significant cyber attack or IT failure which impacts our ability to plan efficient routing, or ability to invoice, and is not recovered quickly, (b) fire, flood or climate event impacting our premises or transportation/supply chain network preventing goods from being available to enable our technicians to service our customers, (c) industrial action by colleagues, or (d) where third parties are engaged for services, the termination of their engagement or business disruption could materially impact the business. Inability to restore or replace critical capacity to an agreed level within an agreed timeframe would prolong the impact of such disruption or incident and could lead to, among other things, negative publicity and reputational damage and could severely affect our business, reputation, results of operations, financial condition and/or prospects.
We have independent, third-party distributors, the loss of which could have an adverse effect on our business, reputation, results of operations, financial condition and/or prospects. Government shutdowns can have a material adverse effect on operations or cash flows by disrupting or delaying new product launches, renewals of registrations for existing products and receipt of import or export licences for raw materials or products.
War (including acts of terrorism or hostilities), natural or man-made disasters (including earthquakes or pandemics), water shortages or severe weather conditions, in particular enhanced by climate change, affecting the food service, hospitality, travel and other industries can cause a downturn in the business of our customers or impact our supply chain, which in turn can have a material adverse effect on our business, results of operations, financial condition or prospects. Hurricanes or other severe weather events impacting the local markets could materially and adversely affect our ability to obtain raw materials at reasonable cost, or at all, and could adversely affect our business. The health and safety of our colleagues in local markets could be harmed by the detrimental effects of natural and man-made disasters, which could have a material adverse effect on our business, reputation, results of operations, financial condition and/or prospects.
ESG matters, including those related to climate change and sustainability, may have an adverse effect on our business, reputation, results of operations, financial condition and/or prospects.
Increased focus and activism related to ESG matters may hinder our access to capital, as investors may reconsider their capital investment as a result of their assessment of our ESG practices. Customers, consumers, investors and other stakeholders are increasingly focusing on ESG issues, including climate change, water use, deforestation, plastic waste, human and animal health and welfare, chemical usage and other concerns. Changing customer preferences are resulting in, and may continue to result in, increased demands regarding plastics and packaging materials, including single-use and non-recyclable plastic packaging, and other components of our products and their impact on human and animal health and environmental sustainability, a growing demand for natural, organic or non-toxic products and ingredients; or increased customer concerns or perceptions (whether accurate or inaccurate) regarding the effects of ingredients or substances present in certain products. Certain animal welfare advocacy groups may raise concerns regarding products such as glue boards or snap traps perceived to have animal cruelty issues, and secondary poisoning of predators. These demands, perceptions and preferences could cause us to incur additional costs or to make changes to our operations to comply with such demands and customer preferences, and a delay in our response (or the failure to respond effectively) may lead to adverse effects to our business, results of operations and financial condition, and recruitment and retention of the labour force that we need.
Concern over climate change or plastics and packaging materials, in particular, may result in new or increased legal and regulatory requirements to reduce or mitigate impacts to the environment. Increased regulatory requirements, including in relation to various aspects of ESG, such as disclosure requirements, may result in higher compliance costs or input costs of energy and raw materials, which may cause disruptions in the manufacture of our products, and these costs could have a material adverse effect on our results of operations and cash flows. Any failure to achieve our ESG goals or a perception (whether or not valid) of our failure to act responsibly with respect to ESG issues or to effectively respond to new, or changes in, legal or regulatory requirements concerning environmental or other ESG matters, or increased operating or manufacturing costs due to increased regulation, could adversely affect our business, reputation, results of operation, financial condition and/or prospects. In addition, we may also be adversely impacted as a result of conduct by contractors, customers or suppliers that fail to meet our or our stakeholders’ ESG standards.
9
Supply chain issues may result in product shortages or disruptions to our business.
We have a complex global network of suppliers that has expanded to meet increased customer demand and may, in the future, further evolve in response to market conditions. Although the majority of the products we use are generally available from multiple sources, and alternatives have been generally available in the event of disruption in the past, we could experience material disruptions in production and other supply chain issues on specific bespoke products (including as a result of recent global events impacting shipping), which could result in out-of-stock conditions, and our results of operations and relationships with customers could be adversely affected (a) if new or existing suppliers are unable to meet any standards that we set or that are set by government or industry regulations or customers, (b) if we are unable to contract with suppliers at the quantity, quality and price levels needed for our business, or (c) if any of our key suppliers becomes insolvent, ceases or significantly reduces its operations or experiences financial distress.
Our inability to fully or substantially meet customer demand due to supply chain issues could result in, among other things, unmet consumer demand leading to reduced preference for our products or services in the future, customers purchasing products and services from competitors as a result of such shortage of products, strained customer relationships, termination of customer contracts, additional competition and new entrants into the market, and loss of potential sales and revenue, which could adversely affect our business, reputation, results of operations, financial condition and/or prospects.
We may not be able to adequately protect our intellectual property and other proprietary rights that are material to our business.
Our ability to compete effectively depends in part on our ability to obtain, maintain, protect, defend and enforce our intellectual property and other proprietary rights, including the service marks, trademarks, trade names and other intellectual property rights we own or licence, particularly our brand names, including Rentokil, Initial, Ambius, Terminix, Copesan, Assured, McCloud, Gregory, Ehrlich, Presto-X, Western Exterminator, Florida Pest Control, Bug Out, Steritech, PestConnect, Lumnia, Signature, Eradico, Cannon, Ultraprotect, Calmic, Pestfree365, Entotherm, Medentex, Boecker, Radar and Rapid Pro. We have not sought to register or protect all of our intellectual property, including our trademarks, either in the UK, the U.S. or in every jurisdiction in which they are or may be used. Furthermore, because of the differences in foreign trademark, patent and other intellectual property laws, we may not receive the same protection in other countries as we would in the UK or the U.S.
If we are unable to protect our intellectual property and other proprietary rights, including brand names, it could cause a material adverse impact on our business, reputation, results of operations, financial condition and/or prospects. Litigation may be necessary to enforce our intellectual property rights and protect our proprietary information, or to defend against claims by third parties that our products, services or activities infringe on their intellectual property rights.
We rely on third parties, including third-party vendors for business process outsourcing initiatives, investment counterparties, and franchisees. Any termination or disruption of such relationships or counterparty default or litigation could have a material adverse effect on our business.
Our strategy to increase profitability, in part, by reducing our costs of operations, and to mitigate and manage our exposure to financial risk, includes the implementation of certain business process outsourcing initiatives and entry into arrangements with investment counterparties, including lenders, insurers and derivative counterparties. As such, we are exposed to counterparty risk. Any disruption, termination or substandard performance of these outsourced services, including possible breaches by third-party vendors of their agreements with us, or the failure of counterparties to discharge all or part of their obligations (including, for example, due to the deterioration of a counterparty’s actual or perceived creditworthiness) could adversely affect our reputation, customer and colleague relationships, results of operations and financial condition. Also, to the extent a third-party outsourcing provider or counterparty relationship is terminated, there is a risk of disputes or litigation and that we may not be able to enter into a similar agreement with an alternate provider in a timely manner or on terms that we consider favourable, and even if we find an alternate provider, or choose to insource such services or activities, there are significant risks associated with such transition.
In addition, to the extent we decide to terminate outsourcing services and insource such services, there is a risk that we may not have the capabilities to perform these services internally, resulting in a disruption to our business, which could adversely impact our business, reputation, results of operations, financial condition and/or prospects. We could incur costs, including personnel and equipment costs, to insource previously outsourced services like these, and these costs could adversely affect our results of operations and cash flows.
10
Third-party distributors, subcontractors, vendors and franchisees are independent third parties that we do not control, and who own, operate and oversee the daily operations of their businesses. If third party distributors, subcontractors, vendors and franchisees do not successfully operate their businesses in a manner consistent with required laws, standards and regulations, we could be subject to claims from regulators or legal claims for the actions or omissions of such third-party distributors, subcontractors, vendors and franchisees. In addition, our relationship with third-party distributors, subcontractors, vendors and franchisees could become strained (including resulting in litigation) and these strains in relationships or claims could have a material adverse impact on our business, reputation, results of operations, financial condition and/or prospects.
We may be required to recognise impairment charges or be subject to asset revaluations or downgrades.
We have significant amounts of goodwill and intangible assets, such as customer lists. In accordance with applicable accounting standards, goodwill and indefinite-lived intangible assets are not amortised and are subject to assessment for impairment by applying a fair-value based test annually, or more frequently if there are indicators of impairment, including:
| ● | observable indications that the asset’s value has declined significantly more than would be expected as a result of the passage of time or normal use; |
| ● | significant changes with an adverse effect on the entity that have taken place, or will take place in the near future, in the technological, market, economic or legal environment in which the entity operates, or in the market to which an asset is dedicated; |
| ● | market interest rates or other market rates of return on investments have increased, and those increases are likely to affect the discount rate used in calculating an asset’s value in use and decrease the asset’s recoverable amount materially; |
| ● | the carrying amount of the net assets of the entity is more than its market capitalisation; |
| ● | evidence that there is obsolescence or physical damage of the asset; |
| ● | significant changes with an adverse effect on the entity that have taken, or are expected to take place in the near future, in the extent to which, or manner in which, an asset is used or is expected to be used. These changes include the asset becoming idle, plans to discontinue or restructure the operation to which an asset belongs, plans to dispose of an asset before the previously expected date, and reassessing the useful life of an asset as finite rather than indefinite; and |
| ● | indication that the economic performance of an asset is, or will be, worse than expected. |
Based upon future economic and financial market conditions, our operating performance and other factors, including those listed above, we may incur impairment charges in the future, including in relation to the Terminix acquisition in respect of goodwill created and the value at which assets were recognised at completion. It is possible that such impairment, if required, could be material. Any future impairment charges that we are required to record could have a material adverse impact on our business, results of operations, financial condition and/or prospects.
Risks Relating to Legal and Compliance Matters
Government regulations and enforcement, and potential litigation, could have an adverse effect on our financial results.
As a global company, we are subject to many laws and governmental regulations across all of the countries in which we conduct business, including laws and regulations involving marketing, antitrust, anti-bribery, anti-fraud, anti-corruption, consumer protection, product liability, environmental, health and safety, employment laws, intellectual property, data privacy, compliance and other matters, as well as potential litigation, regulatory and administrative actions. If we are unable to comply with all applicable laws and regulations, it could negatively impact our business, results of operations, financial condition, reputation and/or prospects.
11
In addition, new or revised laws or regulations, or changes to the ways existing laws or regulations apply to our business, may alter the environment in which we do business, which could adversely impact our financial results. We may also face increased exposure to potential future claims or litigation given the more litigious nature of the U.S. market, including increased exposure to injunctive relief or damages granted by courts in respect of such claims. Regardless of the outcome of any litigation or claims, we may incur additional costs in defending against such claims. An unfavourable outcome or settlement in any litigation may have an adverse effect on our business, reputation, results of operations, financial condition and/or prospects. Additionally, any loss of Rentokil Initial plc’s status as a “foreign private issuer” would require us to comply with the reporting, disclosure, compliance and governance requirements that are applicable to U.S. domestic issuers and could result in significant additional legal, accounting and other expenses, as well as increased demands on management’s time.
While it is our policy and practice to comply with all legal and regulatory requirements applicable to our business, we cannot provide assurance that our internal control policies and procedures and ethics and compliance program will always protect us from acts committed by our colleagues or agents. A finding that we are in violation of, or out of compliance with, applicable laws or regulations could subject us to civil remedies, including fines, damages, injunctions or product recalls, or criminal or civil sanctions, any of which could adversely affect our business, reputation, results of operations, financial condition and/or prospects. Even if a claim is unsuccessful, is without merit or is not fully pursued, the negative publicity surrounding such assertions regarding our products, processes or business practices could adversely affect our reputation and brand image.
Further, new legislation or regulations may result in increased costs to us indirectly to the extent suppliers increase prices of goods and services because of increased compliance costs, excise taxes or the reduced availability of raw materials. The enactment of unduly onerous and restrictive regulation could have a material adverse effect on our business, results of operations, financial condition and/or prospects.
Termite damage claims and lawsuits related thereto could increase our legal expenses and may adversely impact our business, reputation, results of operations, financial condition and/or prospects.
Our business may become subject to a significant number of damage claims related to termite activity in homes/commercial premises, often accompanied by a termite damage warranty/guarantee. Currently, the legacy Terminix business is subject to a significant number of damage claims related to its termite control services and termite damage warranties/guarantees. Damage claims may include circumstances when a customer notifies us that they have experienced damage, and we reach an agreement to remediate that damage (a “Non-litigated Claim”), and circumstances when a customer directly initiates litigation or arbitration proceedings or when we do not reach an agreement with a customer to remediate the damage and that customer initiates litigation or arbitration proceedings (a “Litigated Claim”). Some plaintiffs bringing Litigated Claims may seek to demonstrate a pattern and practice of fraud in connection with Litigated Claims and may seek awards, in addition to repair costs, which include punitive damages and damages for mental anguish. We intend to defend these Litigated Claims vigorously, and we intend to take decisive actions to mitigate any increasing claims costs; however, we cannot give assurance that these mitigating actions will be effective in reducing claims or costs related thereto, and this could result in the costs of termite claims or litigation exceeding our accounting provision for termite claims, nor can we give assurance that lawsuits or other proceedings related to termite damage claims will not materially affect our business, reputation, results of operations, financial condition and/or prospects, even if any such lawsuits are found to be without merit.
Our business may also become subject to state regulator claims related to trade practices, including termite renewal pricing, inspection and treatment practices (a “Regulator Claim”). Terminix had entered into settlements in relation to such claims in the past and we intend to defend any future Regulator Claims. We also intend to take action to mitigate claims costs; however, we cannot give assurance that these mitigating actions will be effective in reducing claims or costs related thereto, nor can we give assurance that lawsuits or other proceedings related to trade practices will not materially affect our business, reputation, results of operations, financial condition and/or prospects.
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Compliance with, or violation of, health and safety and environmental policies, laws and regulations, including laws pertaining to the use of pesticides, could result in significant costs that adversely impact our business, reputation, results of operations, financial condition and/or prospects.
We have an obligation to ensure that colleagues, customers and other stakeholders remain safe, that the working environment is not detrimental to health and that we are aware of and minimise any adverse impact on the environment. In addition, the pest control, hygiene and textile industries are subject to various laws and regulations regarding safety, health and environmental (“SHE”) matters. Among other things, these laws regarding SHE regulate the emission or discharge of materials into the environment, the use, storage, treatment, disposal, transportation and management of hazardous substances and wastes, the impact of chemicals (including fumigant gases), as well as pesticide and biocide products, on people and the environment, and the protection of the health and safety of our colleagues and the public.
These laws also impose liability for the costs of investigating and remediating, and damages resulting from, present and past releases of hazardous substances, including releases at former activities at sites or by prior owners or operators of sites we have acquired or that we currently own or operate. These laws and regulations can result in costs associated with transporting and managing hazardous materials and waste disposal and plant site clean-up, fines, penalties, orders requiring corrective action or suspending or otherwise impacting our operations or other sanctions if we are found to be in violation of law, as well as modifications, disruptions or discontinuation of certain operations or types of operations including product recalls and reformulations. Changes in such laws and regulations, including among others, air, water, chemical and product regulations, could impact the sales of some of our products or services. In addition to an increase in costs of manufacturing and delivering products, a change in production regulations or product regulations could result in interruptions to our business and potentially cause economic or consequential losses should we be unable to meet the demands of our customers for products.
Products that we use containing pesticides generally must be registered with the relevant governmental agencies or authorities before they can be sold or applied. The failure to obtain, or the cancellation of, any such registration, or the withdrawal from the marketplace of such pesticides, could have an adverse effect on our business, the severity of which would depend on the products involved, whether other products could be substituted and whether competitors were similarly affected. The pesticides we use are manufactured by independent third parties and are evaluated by the relevant governmental authorities or agencies as part of our ongoing exposure risk assessment. Any of these authorities or agencies may decide that a pesticide we use will be limited or will not be re-registered for use in the relevant jurisdiction. We cannot predict the outcome or the severity of the effect of any particular authority’s or agency’s continuing evaluations. In addition, the use of certain pesticide products is regulated by various international, national, federal, state, provincial and local environmental and public health agencies and bodies. Some of our products or service models may also become subject to bans or restrictions due to animal cruelty concerns, such as permanent rodent baiting. Given our dispersed locations, distributed operations and numerous colleagues and franchise associates, we may be unable to prevent violations of these or other laws and regulations or misuse of products by colleagues or others from occurring. Even if we are able to comply with all such laws and regulations and obtain all necessary registrations and licences, the pesticides or other products we apply or use, or the manner in which we apply or use them, could be alleged to cause injury to the environment, to people or to animals, or such products could be banned in certain circumstances. The laws and regulations may also apply to third-party vendors who are hired to repair or remediate property and who may fail to comply with SHE laws and regulations and subject us to risk of legal exposure. The costs of compliance or the investigation and remediation of non-compliance, including combating reputational harm or defending civil or criminal proceedings, products liability, personal injury or other lawsuits, could have a material adverse impact on our business, reputation, results of operations, financial condition and/or prospects.
International, national, federal, state, provincial and local agencies and bodies regulate the disposal, handling and storage of waste, discharges from our facilities and the investigation and clean-up of contaminated sites. We could incur significant costs, including investigation and clean-up costs, fines, penalties and civil or criminal sanctions and claims by third parties for property damage and personal injury, as a result of violations of, or liabilities under, such laws and regulations enforced by these agencies and bodies. Liability under laws and regulations can be imposed on a joint and several basis and without regard to fault or the legality of the underlying conduct. In addition, potentially significant expenditures could be required to comply with SHE laws and regulations, including requirements or changes in expectations that may be adopted or imposed in the future.
13
A violation of SHE laws or regulations relating to our operations or a failure to comply with the instructions of relevant health and safety authorities, environmental agencies or internal policies could lead to, among other things, personal injury, substantial fines or penalties, including withdrawal of licences to operate, and reputational damage. Such violations could, therefore, have an adverse effect on our business, reputation, results of operations, financial condition and/or prospects.
We are required to comply with stringent, complex and evolving laws, rules, regulations and standards in many jurisdictions, as well as contractual obligations, relating to data privacy and security. Any actual or perceived failure to comply with these requirements could have a material adverse effect on our business.
We are required to comply with stringent, complex and evolving laws, rules, regulations and standards in many jurisdictions, as well as contractual obligations, relating to data privacy and security. Ensuring that our collection, use, transfer, storage and other processing of personal information complies with such requirements can increase operating costs, impact the development of new products or services, and reduce operational efficiency.
Internationally, virtually every jurisdiction in which we operate has established its own data privacy and security legal framework with which we must comply. The cost of compliance, and the potential for fines and penalties for non-compliance, with applicable data privacy and security laws and regulations may have a significant adverse effect on our business, reputation, results of operations, financial condition and/or prospects.
If we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations and could adversely affect our financial results. In addition, such procedures and controls, which we operate to comply with relevant data privacy and security requirements in the relevant jurisdictions, may not be effective in ensuring compliance or preventing unauthorised transfers of personal data.
While we strive to publish and prominently display privacy policies that are accurate, comprehensive and compliant with applicable laws, rules, regulations and industry standards, we cannot ensure that our privacy policies and other statements regarding our practices will be sufficient to protect us from claims, proceedings, liability or adverse publicity relating to data privacy and security. Although we endeavour to comply with our privacy policies, we may at times fail to do so or be alleged to have failed to do so. If our public statements about our use, collection, disclosure and other processing of personal information, whether made through our privacy policies, information provided on our website, press statements or otherwise, are alleged to be deceptive, unfair or misrepresentative of our actual practices, we may be subject to potential government or legal investigation or action.
Our compliance efforts are further complicated by the fact that data privacy and security laws, rules, regulations and standards around the world are evolving rapidly, may be subject to uncertain or inconsistent interpretations and enforcement, and may conflict among various jurisdictions. Any failure or perceived failure by us to comply with our privacy policies, or applicable data privacy and security laws, rules, regulations, standards or contractual obligations, or a security breach or deliberate action by colleagues or third parties that leads to theft or other unauthorised access to, or loss or unlawful destruction, use, modification, acquisition, disclosure, release or transfer of, personal information, including customer, colleague, supplier or our proprietary, sensitive or confidential data, may result in requirements to modify or cease certain operations or practices, the expenditure of substantial costs, time and other resources, proceedings or actions against us, legal liability, governmental investigations, enforcement actions, claims, fines, judgements, awards, penalties, sanctions and costly litigation (including class actions). Any of the foregoing could lead to significant reputational damage, distract management and technical personnel, increase our costs of doing business, adversely affect the demand for our products and services, and ultimately result in the imposition of liability, any of which could have a material adverse effect on our business, results of operations, financial condition and/or prospects.
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We have identified a material weakness in our internal control over financial reporting within the meaning of Section 404 of the Sarbanes-Oxley Act, which could, if not remediated, adversely affect our ability to report our financial results accurately or in a timely manner, which may adversely affect our business and reputation.
Following our U.S. listing on the NYSE and registration with the U.S. Securities and Exchange Commission (the “SEC”) in October 2022, we are required to comply with certain requirements under the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), including the maintenance of adequate internal control over financial reporting. Beginning with this Form 20‑F, we are required to evaluate the effectiveness of our internal control over financial reporting and our independent registered public accounting firm is required to audit the effectiveness of its internal control over financial reporting in compliance with Section 404 of the Sarbanes-Oxley Act. While we have designed an internal control over financial reporting framework for the purposes of the effectiveness evaluation described above, if such controls fail, we may be subject to sanctions or investigations by regulatory authorities, including the SEC and the NYSE.
It should be noted that, prior to 2022, we identified errors to our financial statements, which resulted in a restatement of the relevant periods. In our Annual Report on Form 20-F/A for the year ended 31 December 2022 filed with the SEC on 8 February 2024, we reported disclosure errors to our financial statements resulting in a revision of the relevant periods. The prior restatement and revision each resulted from material weaknesses in our internal control over financial reporting, including a lack of sufficient resources with the appropriate level of technical accounting knowledge, combined with incomplete policies and procedures related to the segregation of duties and control activities required for accurate and timely financial accounting, reporting, and disclosures, and a failure to design and maintain effective IT controls over user access, change management, database management and segregation of duties for information systems that are relevant to the preparation of our financial statements.
The Company has remediated the material weakness in respect of lack of sufficient resources with the appropriate level of technical accounting knowledge, combined with incomplete policies and procedures related to the segregation of duties and control activities required for accurate and timely financial accounting, reporting, and disclosures. In respect of the material weakness relating to a failure to design and maintain effective IT general controls over user access, change management, database management and segregation of duties for information systems that are relevant to the preparation of our financial statements, the Company’s management has designed and is in the process of implementing remediation measures. However, the material weakness will not be considered remediated until the applicable controls are designed and operate for a sufficient period of time and the Company’s management has concluded, through testing, that these controls are operating effectively. In addition, as we implement these remediation efforts, we may determine that additional steps may be necessary to remediate the material weakness, or we may identify other material weaknesses or control deficiencies. We cannot provide assurance that these remediation efforts will be successful, that we will not identify new material weaknesses or that our internal control over financial reporting will be effective in accomplishing all control objectives.
If material weaknesses in our internal control over financial reporting are not remediated in a timely manner, we could suffer material misstatements in our consolidated financial statements, fail to meet our reporting obligations or fail to prevent fraud, which may cause investors to lose confidence in our reported financial information, which in turn could have a material and adverse effect on the trading price of ordinary shares in the capital of Rentokil Initial plc, and subject us to potential delisting from the NYSE, regulatory investigations and civil or criminal sanctions. Failure to implement or maintain effective internal control systems required of public companies could also restrict our future access to the capital markets. Furthermore, we may need to incur additional costs and use additional management and other resources as our business and operations further expand or in an effort to remediate any significant control deficiencies that may be identified in the future.
For further details on our internal control over financial reporting, please see the information set forth under the heading Item 15 “Controls and Procedures” included herein.
15
Changes in tax laws and unanticipated tax liabilities could materially and adversely affect the taxes we pay and our profitability.
We operate across many different tax jurisdictions and are subject to changing tax laws, regulations and treaties in and between the jurisdictions in which we operate, as well as periodic tax audits which sometimes challenge the basis on which local tax has been calculated and/or withheld. Changes in tax regimes, or in the interpretation thereof, could result in a material impact on our cash tax liabilities and tax charges. For instance, we have a greater presence in the U.S. following the acquisition of Terminix, which means that changes to tax rules in the U.S. could have a more significant impact on our business. Such an impact could also arise from changes in the application of the existing tax rules that apply to us, including UK tax rules. In either case, this could result in a reduction in financial results depending upon the nature of the change. Further, we are subject to periodic tax audits across many different tax jurisdictions and successful challenges by local tax authorities may have an adverse impact on profitability and cash flow. Unanticipated non-compliance with relevant tax legislation and/or reporting requirements may result in material unprovided tax charges relating to prior years which could have a material adverse effect on our financial condition and/or prospects.
Risks Relating to Financial Markets
Adverse credit and financial market events and conditions could, among other things, impede access to, or increase, the cost of financing, which could have a material adverse impact on our business, results of operations, financial condition and/or prospects.
Disruptions in credit or financial markets could make it more difficult for us to obtain, or increase our cost of obtaining, financing for our operations or investments or to refinance our indebtedness, or cause lenders to depart from prior credit industry practice and not give technical or other waivers under applicable agreements governing such indebtedness to the extent we may seek them in the future, thereby causing us to be in default. There is no assurance that we will be able to refinance or extend the maturity of our indebtedness on favourable terms, or at all. Any inability to refinance our indebtedness on favourable terms could have a material adverse effect on our business, results of operations, financial condition and/or prospects.
The agreements and instruments governing our indebtedness contain restrictions and limitations that could impact our ability to operate our business.
As of 31 December 2023, we had aggregate outstanding indebtedness of approximately £3.1 billion. The agreements governing our revolving credit facility maturing October 2028 (the “RCF”), the $700 million term facility maturing October 2025 (the “Term Facility”), and the senior unsecured notes issued by Rentokil Initial plc (due November 2024, May 2026, October 2028 and June 2032) and Rentokil Initial Finance B.V. (due June 2027 and June 2030), in each case pursuant to our Euro Medium Term Note Programme (collectively, the “Notes”) contain undertakings that, collectively, among other things, restrict our ability to: (a) transfer or sell assets by way of a Class 1 transaction (as such term is defined in the Financial Conduct Authority (the “FCA”)’s Listing Rules), (b) create security over our assets in excess of a certain amount, (c) issue debt instruments at subsidiary level in excess of a certain amount, and (d) issue trade instruments in excess of a certain amount.
Our ability to comply with the undertakings and restrictions contained in each of the agreements governing the RCF, the Term Facility, the Notes and the instruments governing our other indebtedness may be affected by economic, financial and industry conditions beyond our control including credit or capital market disruptions. The breach of any of these covenants or restrictions could result in a default that would permit the applicable lenders or noteholders to declare all amounts outstanding thereunder to be due and payable, together with accrued and unpaid interest. In any such case, we may be unable to borrow under the RCF and/or any such other facility and may not be able to repay the amounts due under such facility or our other outstanding indebtedness. This could have materially adverse consequences to our business, reputation, results of operations, financial condition and/or prospects and could cause us to become bankrupt or insolvent.
16
A lowering or withdrawal of the ratings, outlook or watch assigned to our debt securities by rating agencies may increase our future borrowing costs and reduce our access to capital.
Our credit rating impacts the cost and availability of future borrowings and, accordingly, our cost of capital. Our credit rating reflects each credit rating organisation’s opinion of our financial and business strength, operating performance and ability to meet our debt obligations. Our public indebtedness has investment grade ratings, and any rating, outlook or watch assigned could be lowered or withdrawn entirely by a rating agency if, in that rating agency’s judgement, current or future circumstances change relating to the basis of the rating, outlook or watch, such as adverse changes to our business. Any future lowering of their ratings, outlook or watch likely would make it more difficult or more expensive for us to obtain debt financing. If our credit rating declines, we may not be able to sell additional debt securities, borrow money, refinance the transaction facilities (if drawn) or establish alternatives to the transaction facilities in the amounts or at the times or interest rates contemplated thereby (or at all), or upon more favourable terms and conditions that might be available if our current credit rating is maintained. The cost of certain of our existing indebtedness will also increase in the event that our credit rating becomes sub-investment grade.
An increase in interest rates would increase the cost of servicing our debt and could adversely impact our business, results of operations, financial condition and/or prospects.
The Term Facility bears interest at a floating rate. As a result, to the extent we have not hedged against rising interest rates, an increase in the applicable benchmark interest rates would increase the cost of servicing the debt in the future and could materially and adversely affect our results of operations, financial condition, liquidity and cash flows. In addition, if we refinance our indebtedness and interest rates increase between the time an existing financing arrangement was consummated and the time such financing arrangement is refinanced, the cost of servicing debt would increase, which could have a material adverse effect on our business, results of operations, financial condition and/or prospects.
Exchange rate fluctuations may adversely affect our results or the foreign currency value of our ADSs and any dividends.
The Rentokil Initial plc consolidated financial statements are expressed in pounds sterling and are subject to movements in exchange rates on the translation of the financial information of businesses whose operational currencies are other than sterling. We have continued to grow our operations in the U.S. in recent years, including through the acquisition of Terminix in 2022, and, accordingly, significant fluctuations in the U.S. dollar exchange rate could significantly affect our reported results. We also earn revenues and incur costs in a range of other currencies, including the euro, and significant fluctuations in these exchange rates could also impact our reported results significantly.
Additionally, our ordinary shares are quoted in pounds sterling on the LSE and our ADSs are quoted in U.S. dollars on the NYSE. Dividends to be paid to holders of our ADSs in respect of our ordinary shares, if any, will be paid in U.S. dollars in accordance with the deposit agreement among Rentokil Initial plc and the depositary and the holders from time to time of ADSs (the “Deposit Agreement”). Fluctuations in the exchange rate between the U.S. dollar and pounds sterling may also affect, among other matters, the value of our ADSs and of any dividends in respect thereof.
ITEM 4. INFORMATION ON THE COMPANY
A. | History and Development of the Company |
Rentokil Initial plc was incorporated on 15 March 2005. It is a public limited company domiciled in the UK. The Group has maintained a listing on the London Stock Exchange since 1969 (through Rentokil Initial 1927 plc), with the Company introduced as a new holding company in 2005. The Company is registered in England and Wales under the UK Companies Act 1985 with company registration number 05393279 and its registered office is at Compass House, Manor Royal, Crawley, West Sussex, RH10 9PY, UK (Tel: +44 (0)1293 858000). From March 2005 until June 2005, the Company was called Rentokil Initial 2005 plc. On 21 June 2005, the Company changed its name to Rentokil Initial plc.
In 1996, we acquired BET plc (British Electric Traction) and the “Initial” brand to become Rentokil Initial. In 2022, we acquired Terminix Global Holdings, Inc. (“Terminix”), the most recognised brand in U.S. termite and pest management services.
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Our purpose is to protect people, enhance lives and preserve our planet. We protect people from the dangers of pest-borne disease and the risks of poor hygiene. We enhance lives with services that protect the health and wellbeing of people and the reputation of our customers’ brands. We aim to preserve the planet by developing ever more sustainable solutions and ways of operating.
The information (including tabular data) set forth under the following headings of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference:
| ● | “Strategic Report—Our Strategic Priorities” on pages 16 to 19, excluding: |
| o | the caption “Organic Revenue Growth (at AER) in 2023” and the figure above such caption, the paragraph under the heading “Organic Revenue Growth” and the bullet starting “Continue to deploy product…”, each under the subheading “Drive Organic Revenue Growth in Pest Control” on page 16; |
| o | the caption “of annual pre-tax net P&L cost synergies by end of 2026” and the figure above such caption, the sentence under the heading “Achieved cost synergy targets” and the bullet ending “…by year end.” under the heading “Priorities for 2024”, each under the subheading “Manage the integration of Terminix into our North America business” on page 17; |
| o | the sentence beginning “Organic growth in core washrooms…” and the sentence beginning “Our medium-term target…”, each under the subheading “Build our Hygiene & Wellbeing business” on page 18; and |
| o | the caption “targeted spend on M&A in 2024” and the figure above such caption and the bullet beginning “Targeting spend on M&A…” under the heading “Priorities for 2024”, each under the subheading “Drive M&A” on page 18. |
| ● | “Strategic Report—Our Regional Review—Segmental reporting” on pages 34 to 37, excluding: |
| o | the caption “Organic Growth excl. Disinfection” and the figure thereunder, the caption “Organic Growth incl. Disinfection” and the figure thereunder, the sentence beginning “Regional Organic Revenue grew…”, the sentence beginning “Organic Revenue growth in Pest Control Services…”, the sentence beginning “The Pest Control category as a whole…”, the sentence beginning “Weaker Q3 2023 growth in North America…” and the reference to “Terminix synergies” and the accompanying figure in the sentence beginning “However, Terminix synergies delivered…”, each under the subheading “North America” on page 34; |
| o | the caption “Organic Growth excl. Disinfection” and the figure thereunder, the caption “Organic Growth incl. Disinfection” and the figure thereunder, and the parenthetical reference to “Organic” in the sentence beginning “Revenue grew by...”, each under the subheading “Europe (incl. LATAM)” on page 36; |
| o | the caption “Organic Growth excl. Disinfection” and the figure thereunder, the caption “Organic Growth incl. Disinfection” and the figure thereunder, and the parenthetical reference to “Organic” in the sentence beginning “Revenue for the region overall increased…”, each under the subheading “UK & Sub-Saharan Africa” on page 36; |
| o | the caption “Organic Growth excl. Disinfection” and the figure thereunder, the caption “Organic Growth incl. Disinfection” and the figure thereunder, and the reference to “Organic” and the accompanying figure in the sentence beginning “Revenue rose by…”, each under the subheading “Asia & MENAT” on page 37; and |
| o | the caption “Organic Growth excl. Disinfection” and the figure thereunder, the caption “Organic Growth incl. Disinfection” and the figure thereunder, and the sentence beginning “Organic Revenue grew...”, each under the subheading “Pacific” on page 37. |
| ● | “Strategic Report—Our Business Review—Pest Control” on pages 40 to 47, excluding: |
| o | the parenthetical reference to “Organic” in the sentence beginning “Revenue was up by…” and the reference to “Terminix integration synergies” and the accompanying figure in the sentence beginning “Adjusted Operating Profit was up…”, each under the subheading “Our performance in 2023” on page 41; |
18
| o | the bullet beginning “Organic Revenue Growth…” under the subheading “Global leadership driving growth” on page 42; |
| o | the reference to “gross synergies” and the accompanying figure in the bullet beginning “Deliver significant value creation…” and the sentence beginning “Post-integration, our ambition…”, each under the subheading “Our Terminix vision” on page 44; |
| o | the sentence beginning “We have completed the first phase…”, the sentence beginning “Overall, we have delivered…”, the sentence beginning “We have announced a further increase…” and the information and figures in the table titled “Integration: synergy delivery”, each under the subheading “Terminix integration process” on page 44; |
| o | the bullet ending “…net cost synergies target in 2024.”, the bullet beginning “Cost synergy target raised”, the caption “target of gross synergies increasing from”, the figures above and below such caption and the caption beginning “Ambition for…” and the accompanying figure under the subheading “Key deliverables in 2024” on page 45; |
| o | the bullet beginning “ambition for Organic Revenue Growth…” under the subheading “Phase Four, our final phase” on page 45; |
| o | the sentence beginning “In 2023, Organic Revenue Growth…” under the subheading “Organic growth in North America” on page 46; and |
| o | the sentence beginning “In 2024 we expect to generate…” under the subheading “THE RIGHT WAY 2 plan” on page 47. |
| ● | “Strategic Report—Our Business Review—Hygiene & Wellbeing” on pages 50 to 53, excluding: |
| o | the sentence beginning “Organic Revenue Growth was…”, the sentence beginning “In 2023, COVID-19 disinfection services…” and the sentence beginning “In 2023, Organic Revenue Growth in core washrooms…”, each under the subheading “Our performance in 2023” on page 51; |
| ● | “Strategic Report—Our Business Review—France Workwear” on page 56; |
| ● | “Strategic Report—Financial Review—Integration of Terminix” on pages 58 to 60, excluding: |
| o | the reference to “gross synergy target” and the accompanying figure in the caption beginning “Strong progress on the integration…”, the sentence beginning “We have completed the first phase of the integration…”, the sentence beginning “Overall, we have delivered pre-tax…”, the sentence beginning “We have announced a second increase in the target…”, the sentence ending “…are expected to be delivered in 2024.”, each under the subheading “Integration of Terminix” on page 58; |
| o | the sentence beginning “Post integration, our ambition…” under the subheading “Phase Four” on page 59; and |
| o | the information under the heading “Synergies and approximate phasing” on page 60; |
| ● | “Strategic Report—Financial Review—Continued strength of Bolt-on M&A” on page 60, excluding: |
| o | the information under the subheading “Interest (at AER)” on page 60; and |
| o | the information under the subheading “Tax” on page 60; |
| ● | “Other Information—Directors’ Report—Company constitution” on page 242. |
Please also refer to the information set forth under the headings “Financial Statements—Notes to the Consolidated Financial Statements—B1. Business combinations” on pages F-40 to F-43 and “Financial Statements—Notes to the Consolidated Financial Statements—B5. Capital commitments” on page F-51 of this Form.20-F.
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The SEC maintains a website at https://www.sec.gov which contains in electronic form each of the reports and other information that we have filed electronically with the SEC. Such information is also available on our website at https://www.rentokil-initial.com/investors. The information on our website is not incorporated by reference in this document.
B. | Business Overview |
The information (including graphs and tabular data) set forth under the following headings of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference:
| ● | “Strategic Report—Our Business at a Glance” on pages 4 to 5; |
| ● | “Strategic Report—Q&A with Andy Ransom, Chief Executive” on pages 6 to 9, excluding: |
| o | the sentence beginning “The Group has been able to sustain…” and the sentence beginning “We overachieved in our cost synergy targets...”, each under the heading “How would you summarise the past year for Rentokil Initial?” on page 6; |
| o | the sentence beginning “You previously guided…” on page 8; |
| o | the information and figures in the table titled “Our medium-term targets” on page 8; and |
| o | the reference to “organically” and the accompanying figure in the sentence beginning “Outside of North America…” on page 9; |
| ● | “Strategic Report—Reasons to Invest” on pages 10 to 11; |
| ● | “Strategic Report—Strategic Priority: Be an Employer of Choice” on pages 12 to 13; |
| ● | “Strategic Report—Our Business Model” on pages 14 to 15; |
| ● | “Strategic Report—Our Strategic Priorities” on pages 16 to 19, excluding: |
| o | the caption “Organic Revenue Growth (at AER) in 2023” and the figure above such caption, the paragraph under the heading “Organic Revenue Growth” and the bullet starting “Continue to deploy product…”, each under the subheading “Drive Organic Revenue Growth in Pest Control” on page 16; |
| o | the caption “of annual pre-tax net P&L cost synergies by end of 2026” and the figure above such caption, the sentence under the heading “Achieved cost synergy targets” and the bullet ending “…by year end.” under the heading “Priorities for 2024”, each under the subheading “Manage the integration of Terminix into our North America business” on page 17; |
| o | the sentence beginning “Organic growth in core washrooms…” and the sentence beginning “Our medium-term target…”, each under the subheading “Build our Hygiene & Wellbeing business” on page 18; and |
| o | the caption “targeted spend on M&A in 2024” and the figure above such caption and the bullet beginning “Targeting spend on M&A…” under the heading “Priorities for 2024”, each under the subheading “Drive M&A” on page 18; |
| ● | “Strategic Report—Strategic Priority: Manage a responsible business” on pages 20 to 21; |
| ● | “Strategic Report—Key Performance Indicators—Colleagues: Ensuring everyone goes home safe” on page 22; |
| ● | “Strategic Report—Key Performance Indicators—Colleagues: Employer of Choice” on page 22; |
| ● | “Strategic Report—Key Performance Indicators—Customers: Delivering outstanding customer service” on page 23; |
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| ● | “Strategic Report—Key Performance Indicators—Customers: Keeping promises to customers” on page 23; |
| ● | “Strategic Report—Key Performance Indicators—Customers: Retaining our customers” on page 24; |
| ● | “Strategic Report—Key Performance Indicators—Shareholders: Driving higher revenue” on page 24, excluding: |
| o | the reference to “Organic Revenue Growth” and the accompanying figure in the sentence beginning “Revenue increased…”, the sentence beginning “In North America…”, the sentence beginning “Organic Revenue was up…”, and the sentence beginning “Good broad-based…”, each under the subheading “Commentary on performance” on page 24; |
| ● | “Strategic Report—Key Performance Indicators—Shareholders: Achieving greater profitability” on page 25; |
| ● | “Strategic Report—Key Performance Indicators—Shareholders: Delivering sustainable Free Cash Flow” on page 25, excluding: |
| o | the reference to “synergies” and the accompanying figure and the reference to “M&A spend” and the accompanying figure, each under the subheading “Commentary on performance” on page 25; |
| ● | “Strategic Report—Strategic Priority: Create value through product and service innovations and digital applications” on pages 26 to 27; |
| ● | “Strategic Report—Market Trends and Opportunities” on pages 28 to 31, excluding: |
| o | the sentence beginning “This structural shift…” under the subheading “Hygiene and wellbeing market drivers” on page 29; |
| ● | “Strategic Report—Strategic Priority: Drive M&A” on pages 32 to 33; |
| ● | “Strategic Report—Our Regional Review—Segmental reporting” on pages 34 to 37, excluding: |
| o | the caption “Organic Growth excl. Disinfection” and the figure thereunder, the caption “Organic Growth incl. Disinfection” and the figure thereunder, the sentence beginning “Regional Organic Revenue grew…”, the sentence beginning “Organic Revenue growth in Pest Control Services…”, the sentence beginning “The Pest Control category as a whole…”, the sentence beginning “Weaker Q3 2023 growth in North America…” and the reference to “Terminix synergies” and the accompanying figure in the sentence beginning “However, Terminix synergies delivered…”, each under the subheading “North America” on page 34; |
| o | the caption “Organic Growth excl. Disinfection” and the figure thereunder, the caption “Organic Growth incl. Disinfection” and the figure thereunder, and the parenthetical reference to “Organic” in the sentence beginning “Revenue grew by...”, each under the subheading “Europe (incl. LATAM)” on page 36; |
| o | the caption “Organic Growth excl. Disinfection” and the figure thereunder, the caption “Organic Growth incl. Disinfection” and the figure thereunder, and the parenthetical reference to “Organic” in the sentence beginning “Revenue for the region overall increased…”, each under the subheading “UK & Sub-Saharan Africa” on page 36; |
| o | the caption “Organic Growth excl. Disinfection” and the figure thereunder, the caption “Organic Growth incl. Disinfection” and the figure thereunder and the reference to “Organic”, and the accompanying figure in the sentence beginning “Revenue rose by…”, each under the subheading “Asia & MENAT” on page 37; and |
| o | the caption “Organic Growth excl. Disinfection” and the figure thereunder, the caption “Organic Growth incl. Disinfection” and the figure thereunder, and the sentence beginning “Organic Revenue grew...”, each under the subheading “Pacific” on page 37; |
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| ● | “Strategic Report—Strategic Priority: Drive Organic Revenue Growth in Pest Control” on pages 38 to 39; |
| ● | “Strategic Report—Our Business Review—Pest Control” on pages 40 to 47, excluding: |
| o | the parenthetical reference to “Organic” in the sentence beginning “Revenue was up by…” and the reference to “Terminix integration synergies” and the accompanying figure in the sentence beginning “Adjusted Operating Profit was up…”, each under the subheading “Our performance in 2023” on page 41; |
| o | the bullet beginning “Organic Revenue Growth…” under the subheading “Global leadership driving growth” on page 42; |
| o | the reference to “gross synergies” and the accompanying figure in the bullet beginning “Deliver significant value creation…” and the sentence beginning “Post-integration, our ambition…”, each under the subheading “Our Terminix vision” on page 44; |
| o | the sentence beginning “We have completed the first phase…”, the sentence beginning “Overall, we have delivered…”, the sentence beginning “We have announced a further increase…” and the information and figures in the table titled “Integration: synergy delivery”, each under the subheading “Terminix integration process” on page 44; |
| o | the bullet ending “…net cost synergies target in 2024.”, the bullet beginning “Cost synergy target raised”, the caption “target of gross synergies increasing from”, the figures above and below such caption and the caption beginning “Ambition for…” and the accompanying figure under the subheading “Key deliverables in 2024” on page 45; |
| o | the bullet beginning “ambition for Organic Revenue Growth…” under the subheading “Phase Four, our final phase” on page 45; |
| o | the sentence beginning “In 2023, Organic Revenue Growth…” under the subheading “Organic growth in North America” on page 46; and |
| o | the sentence beginning “In 2024 we expect to generate…” under the subheading “THE RIGHT WAY 2 plan” on page 47; |
| ● | “Strategic Report—Strategic Priority: Managing the integration of Terminix into our North America business” on pages 48 to 49; |
| ● | “Strategic Report—Our Business Review—Hygiene & Wellbeing” on pages 50 to 53, excluding: |
| o | the sentence beginning “Organic Revenue Growth was…”, the sentence beginning “In 2023, COVID-19 disinfection services…”, and the sentence beginning “In 2023, Organic Revenue Growth in core washrooms…”, each under the subheading “Our performance in 2023” on page 51; |
| ● | “Strategic Report—Strategic Priority: Build our Hygiene & Wellbeing business” on pages 54 to 55; |
| ● | “Strategic Report—Our Business Review—France Workwear” on page 56; |
| ● | “Strategic Report—Responsible Business” on pages 68 to 74 and pages 76 to 82; |
| ● | “Strategic Report—Our Stakeholders” on pages 84 to 85; |
| ● | “Strategic Report—Risks and Uncertainties—How the business manages uncertainty and risks” on page 87; and |
| ● | “Cautionary statement” on page 249; |
Please also refer to the information set forth under the heading “Financial Statements—Notes to the Consolidated Financial Statements—A1. Revenue recognition and operating segments” on pages F-16 to F-21 of this Form 20-F.
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C. | Organizational Structure |
The information (including tabular data) set forth under the following headings of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference:
| ● | “Strategic Report—Our Business at a Glance—Our global regional operations” on page 4; |
| ● | “Strategic Report—Our Strategic Priorities—Manage the integration of Terminix into our North America business” on page 17, excluding: |
| o | the caption “of annual pre-tax net P&L cost synergies by end of 2026” and the figure above such caption, the sentence under the heading “Achieved cost synergy targets” and the bullet ending “…by year end.” under the heading “Priorities for 2024”, each under the subheading “Manage the integration of Terminix into our North America business” on page 17; |
| ● | “Strategic Report—Our Regional Review—Segmental reporting” on pages 34 to 37, excluding: |
| o | the caption “Organic Growth excl. Disinfection” and the figure thereunder, the caption “Organic Growth incl. Disinfection” and the figure thereunder, the sentence beginning “Regional Organic Revenue grew…”, the sentence beginning “Organic Revenue growth in Pest Control Services…”, the sentence beginning “The Pest Control category as a whole…”, the sentence beginning “Weaker Q3 2023 growth in North America…” and the reference to “Terminix synergies” and the accompanying figure in the sentence beginning “However, Terminix synergies delivered…”, each under the subheading “North America” on page 34; |
| o | the caption “Organic Growth excl. Disinfection” and the figure thereunder, the caption “Organic Growth incl. Disinfection” and the figure thereunder, and the parenthetical reference to “Organic” in the sentence beginning “Revenue grew by...”, each under the subheading “Europe (incl. LATAM)” on page 36; |
| o | the caption “Organic Growth excl. Disinfection” and the figure thereunder, the caption “Organic Growth incl. Disinfection” and the figure thereunder, and the parenthetical reference to “Organic” in the sentence beginning “Revenue for the region overall increased…”, each under the subheading “UK & Sub-Saharan Africa” on page 36; |
| o | the caption “Organic Growth excl. Disinfection” and the figure thereunder, the caption “Organic Growth incl. Disinfection” and the figure thereunder and the reference to “Organic”, and the accompanying figure in the sentence beginning “Revenue rose by…”, each under the subheading “Asia & MENAT” on page 37; and |
| o | the caption “Organic Growth excl. Disinfection” and the figure thereunder, the caption “Organic Growth incl. Disinfection” and the figure thereunder and the sentence beginning “Organic Revenue grew...”, each under the subheading “Pacific” on page 37; |
| ● | “Strategic Report—Our Business Review—Pest Control—Terminix integration” on pages 44 to 45, excluding: |
| o | the reference to “gross synergies” and the accompanying figure in the bullet beginning “Deliver significant value creation…” and the sentence beginning “Post-integration, our ambition…”, each under the subheading “Our Terminix vision” on page 44; |
| o | the sentence beginning “We have completed the first phase…”, the sentence beginning “Overall, we have delivered…”, the sentence beginning “We have announced a further increase…” and the information and figures in the table titled “Integration: synergy delivery”, each under the subheading “Terminix integration process” on page 44; |
| o | the bullet ending “…net cost synergies target in 2024.”, the bullet beginning “Cost synergy target raised”, the caption “target of gross synergies increasing from”, the figures above and below such caption and the caption beginning “Ambition for…” and the accompanying figure under the subheading “Key deliverables in 2024” on page 45; and |
23
| o | the bullet beginning “ambition for Organic Revenue Growth…” under the subheading “Phase Four, our final phase” on page 45; |
| ● | “Strategic Report—Our Business Review—Organic growth in North America” on pages 46 to 47, excluding: |
| o | the sentence beginning “In 2023, Organic Revenue Growth…” under the subheading “Organic growth in North America” on page 46; and |
| o | the sentence beginning “In 2024 we expect to generate…” under the subheading “The RIGHT WAY 2 plan” on page 47; |
| ● | “Strategic Report—Strategic Priority: Managing the integration of Terminix into our North America business” on pages 48 to 49; |
| ● | “Other Information—Directors’ Report—Company constitution” on page 242; and |
| ● | “Other Information—Directors’ Report—Branches” on page 244; |
Please also refer to the information set forth under the heading “Financial Statements—Related Undertakings” on pages F-69 to F-83 of this Form 20-F.
D. | Property, Plants and Equipment |
As of 31 December 2023, Rentokil Initial leases executive offices in Crawley, UK and operates 1,933 facilities in 77 countries. The number and location of Rentokil Initial’s owned or leased production, manufacturing, storage and office properties for continuing operations are as follows:
|
| Europe (incl. |
|
| Asia and |
| ||||
Latin | Middle East, | |||||||||
America | UK and | North Africa | ||||||||
North America | (LATAM)) | Sub-Saharan Africa | and Turkey (MENAT) | Pacific | ||||||
Total |
| 707 |
| 377 |
| 107 |
| 687 |
| 55 |
Please also refer to the information (including tabular data) set forth under the headings “Financial Statements—Notes to the Consolidated Financial Statements—B3. Property, plant and equipment” on pages F-48 to F-49, “Financial Statements—Notes to the Consolidated Financial Statements—B4. Leases” on pages F-49 to F-51 and “Financial Statements—Notes to the Consolidated Financial Statements—B5. Capital commitments” on page F-51, in each case of this Form 20-F.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
For a discussion of the years ended 31 December 2021 and 2022, including a year-to-year comparison between the years ended 31 December 2022 and 2021, refer to Part I, Item 5 “Operating and Financial Review and Prospects” in our Annual Report on Form 20-F/A for the year ended 31 December 2022 filed with the SEC on 8 February 2024.
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A. | Operating Results |
The information (including graphs and tabular data) set forth under the headings “Financial Statements—Management’s Discussion and Analysis of Financial Condition and Results of Operations—The impact of macroeconomic factors on the Group’s business” on page 227, “Financial Statements—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key indicators of performance and financial condition” on pages 227 to 228, “Financial Statements—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Certain components of results of operations” on page 229, “Financial Statements—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of operations” on pages 229 to 236, “Financial Statements—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-IFRS measures” on pages 236 to 240 and “Cautionary statement” on page 249, in each case of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
Please also see the information above under the heading “Cautionary Note Regarding Forward-Looking Statements”.
B. | Liquidity and Capital Resources |
The information (including graphs and tabular data) set forth under the headings “Financial Statements—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and capital resources” on page 241, “Financial Statements—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Cash flow activity” on page 241 and “Cautionary statement” on page 249, in each case of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
Please also see the information above under the heading “Cautionary Note Regarding Forward-Looking Statements”.
C. | Research and Development, Patents and Licenses |
Our major research and development facilities are based in the UK and the U.S., following the opening of the Rentokil Terminix North America Innovation Centre in March 2024.
The information set forth under the headings “Strategic Report—Our Strategic Priorities—Create value through product and service innovations and digital applications” on page 19, “Strategic Report—Strategic Priority: Create value through product and service innovations and digital applications—Creating value through best-in-class, differentiated innovation” on pages 26 to 27, “Strategic Report—Our Business Review—Pest Control—Our Pest Control strategy: key strategic themes—Differentiation through our innovation pipeline” on page 42 and “—Harnessing the digital opportunity” on page 43, in each case of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
Please also refer to the information set forth under the heading “Financial Statements—Notes to the Consolidated Financial Statements—B2. Intangible assets” on pages F-44 to F-47 of this Form 20-F.
D. | Trend Information |
The information (including graphs and tabular data) set forth under the headings “Strategic Report—Financial Review—Going Concern” on page 61 and “—Funding” on page 62, “Financial Statements—Management’s Discussion and Analysis of Financial Condition and Results of Operations—The impact of macroeconomic factors on the Group’s business” on page 227, “Financial Statements—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key indicators of performance and financial condition” on pages 227 to 228 and “Cautionary statement” on page 249, in each case of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
Please also see the information above under the heading “Cautionary Note Regarding Forward-Looking Statements”.
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E. | Critical Accounting Estimates |
The information (including tabular data) set forth under the headings “Corporate Governance—Audit Committee Report—Financial reporting” and “—Significant issues and judgements” on page 120 and “Financial Statements—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key indicators of performance and financial condition” on pages 227 to 228, in each case of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
Please also refer to the information set forth under the headings “Financial Statements—Notes to the Consolidated Financial Statements—Material accounting policies—Sources of estimation uncertainty and significant accounting judgements” on page F-13 and “—Retrospective adjustments to prior year comparatives” on page F-15, in each case of this Form 20-F.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. | Directors and Senior Management |
The information (including tabular data) set forth under the headings “Corporate Governance—Chairman’s Introduction to Governance—Board composition and effectiveness” on page 97, “Corporate Governance— Governance at a Glance” on page 98, “Corporate Governance—Board of Directors” on pages 99 to 101, “Corporate Governance—Corporate Governance Report—External commitments” on page 107, “Corporate Governance—Proposed 2024 Directors’ Remuneration Policy—Recruitment—Directors’ service agreements-Executive Directors” on page 159 and “Other Information—Directors’ Report—Re-election of Directors and service contracts” and “—Directors’ interests” on page 242, in each case of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
In addition to the Board of Directors, the Executive Leadership Team (“ELT”) supports the Chief Executive in managing the business, overseeing safety, performance, operational plans and actions, governance and risk management. The Board delegates the execution of the Company’s strategy and the day-to-day management of the business to the Chief Executive. The Chief Executive cascades authority to the ELT through a documented Group Authority Schedule, which the Board reviews annually. The information set forth under the heading “Corporate Governance—Executive Leadership Team” on pages 102 and 103 of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
B. | Compensation |
The information (including graphs and tabular data) set forth under the following headings of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference:
| ● | “Corporate Governance—Directors’ Remuneration Report” on pages 131 to 135; |
| ● | “Corporate Governance—Remuneration at a glance” on pages 136 and 137, excluding: |
| o | the caption “Organic Revenue Growth” and the figure below such caption under the subheading “Our performance” on page 136; |
| ● | “Corporate Governance—Directors’ Annual Remuneration Report-Introduction” on pages 138 and 139; |
| ● | “Corporate Governance—Directors’ Annual Remuneration Report-2023” on pages 140 to 149, excluding: |
| o | the two sentences each ending “…was organic.” in the row titled “Revenue” and the two sentences beginning “Delivery of...” in the row titled “M&A” on page 142; |
| ● | “Corporate Governance—Directors’ Annual Remuneration Report-Looking forward 2024” on pages 150 and 151; and |
| ● | “Corporate Governance—Proposed 2024 Directors’ Remuneration Policy” on pages 152 to 161. |
26
Please also refer to the information set forth under the headings “Financial Statements—Notes to the Consolidated Financial Statements—A9. Employee benefit expense” on pages F-30 to F-31, “Financial Statements—Notes to the Consolidated Financial Statements—A10. Retirement benefit obligations” on pages F-31 to F-34, “Financial Statements—Notes to the Consolidated Financial Statements—A11. Share-based payments” on pages F-34 to F-36, “Financial Statements—Notes to the Consolidated Financial Statements—D4. Related party transactions—Key management personnel” on page F-68 and “Financial Statements—Notes to the Consolidated Financial Statements—D5. Post balance sheet events” on page F-68, in each case of this Form 20-F.
C. | Board Practices |
The information (including graphs and tabular data) set forth under the following headings of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference:
| ● | “Corporate Governance—Chairman’s Introduction to Governance” on pages 96 to 97; |
| ● | “Corporate Governance—Governance at a Glance” on page 98; |
| ● | “Corporate Governance—Board of Directors” on pages 99 to 101; |
| ● | “Corporate Governance—Corporate Governance Report” on pages 104 to 116; |
| ● | “Corporate Governance—Audit Committee Report” on pages 117 to 124; |
| ● | “Corporate Governance—Nomination Committee Report” on pages 125 to 130; |
| ● | “Corporate Governance—Directors’ Remuneration Report” on pages 131 to 135; |
| ● | “Corporate Governance—Remuneration at a glance” on pages 136 and 137, excluding: |
| o | the caption “Organic Revenue Growth” and the figure below such caption under the subheading “Our performance” on page 136; |
| ● | “Corporate Governance—Directors’ Annual Remuneration Report-Introduction” on pages 138 and 139; |
| ● | “Corporate Governance—Directors’ Annual Remuneration Report-2023” on pages 140 to 149, excluding: |
| o | the two sentences each ending “…was organic.” in the row titled “Revenue” and the two sentences beginning “Delivery of...” in the row titled “M&A” on page 142; |
| ● | “Corporate Governance—Directors’ Annual Remuneration Report-Looking forward 2024” on pages 150 and 151; |
| ● | “Corporate Governance—Proposed 2024 Directors’ Remuneration Policy” on pages 152 to 161; and |
| ● | “Other Information—Directors’ Report—Re-election of Directors and service contracts” on page 242. |
Please also see the information above under the heading Item 6.A “Directors and Senior Management”.
27
D. | Employees |
The information set forth under the headings “Strategic Report—Our Strategic Priorities—Be an Employer of Choice” on page 16, “Strategic Report—Our Stakeholders—Committed to stakeholder engagement—Colleagues” on page 84 (including the graphical data on page 84), “Corporate Governance—Directors’ Remuneration Report—Response to cost-of-living challenges—Wider workforce engagement” on page 133, “Corporate Governance—Proposed 2024 Directors’ Remuneration Policy—Wider workforce engagement” on page 153 and “—Wider workforce remuneration policy” on page 155, in each case of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
Please also refer to the information set forth under the heading “Financial Statements—Notes to the Consolidated Financial Statements—A9. Employee benefit expense” (including the tabular data) on pages F-30 to F-31 of this Form 20-F.
The following table sets forth the number of Group employees as at 31 December 2023, 2022 and 2021.
Colleagues by region as at 31 December | 2023 |
| 2022 |
| 2021 | |
North America | 21,965 |
| 21,309 |
| 10,316 | |
Europe (incl. LATAM) | 12,959 |
| 11,451 |
| 9,386 | |
UK & Sub-Saharan Africa | 5,703 |
| 4,889 |
| 7,833 | |
Asia & MENAT | 19,609 |
| 18,457 |
| 16,216 | |
Pacific | 2,695 |
| 2,486 |
| 2,280 | |
Total | 62,931 |
| 58,592 |
| 46,031 |
E. | Share Ownership |
The information (including graphs and tabular data) set forth under the headings “Corporate Governance—Directors’ Remuneration Report—Key decisions in 2023—Shareholder experience” and “—Performance Share Plan (PSP) vesting” on page 134, “Corporate Governance—Directors’ Remuneration Report—Key decisions in 2023—PSP grants”, “—Use of discretion” and “—Strategic alignment of pay” on page 135, “Corporate Governance—Directors’ Annual Remuneration Report-2023—Performance Share Plan (PSP) and Deferred Bonus Plan (DBP) awards” on pages 143 to 145 and “Corporate Governance—Directors’ Annual Remuneration Report-2023—Directors’ shareholdings and share interests” on pages 146 to 147, in each case of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
Please also refer to the information set forth under the heading “Financial Statements—Notes to the Consolidated Financial Statements—A11. Share-based payments” on pages F-34 to F-36 of this Form 20-F.
Directors’ Share Interests
The interests of Directors and their connected persons in the ordinary share capital of the Company (including any interests held through ADSs) as at 25 March 2024 are set out below.
| Number of ordinary shares |
| Percentage of issued ordinary shares | |
Richard Solomons |
| 84,900 |
| * |
Andy Ransom(1) |
| 1,752,689 |
| * |
Stuart Ingall-Tombs |
| 195,408 |
| * |
David Frear(2) |
| 8,125 |
| * |
Sally Johnson(3) |
| 3,527 |
| * |
Sarosh Mistry |
| 1,850 |
| * |
John Pettigrew |
| 55,000 |
| * |
Julie Southern(4) |
| 9,891 |
| * |
Cathy Turner |
| 24,736 |
| * |
Linda Yueh |
| 1,590 |
| * |
* Less than 1%
28
| (1) | Andy Ransom has an interest in 3,985,291 vested PSP shares from the 2015, 2016, 2017, 2018, 2019 and 2020 awards, which he has not yet exercised. These figures are not included in his beneficial interest of Rentokil Initial ordinary shares figure as at 25 March 2024 above but are included in the share award table below. |
| (2) | David Frear was appointed to the Board on 12 October 2022. |
| (3) | Sally Johnson was appointed to the Board on 1 April 2023. |
| (4) | As Julie Southern stepped down from the Board on 10 May 2023, this table reflects her interest at 10 May 2023. |
ELT Members’ Share Interests
The table below sets out the number of Rentokil Initial ordinary shares held as at 25 March 2024 by each Executive Director. Rentokil Initial ordinary shares owned outright include those held by connected persons.
|
|
|
|
| Interest in PSP | Interest in PSP |
| ||||||||
and DBP | and DBP | ||||||||||||||
Ordinary | awards | awards | Interest in PSP | ||||||||||||
Value of | shares | available to | subject to | awards subject | |||||||||||
Shareholding | Number of | shareholding as | owned outright | exercise | holding | to performance | |||||||||
requirement as | ordinary shares | at 25 Mar | as a % of | as at | period as at | conditions as at | |||||||||
| a % of salary |
| owned outright |
| 2024(1) |
| salary |
| 25 Mar 2024 |
| 25 Mar 2024 |
| 25 Mar 2024 | ||
Andy Ransom |
| 300 | % | 1,752,689 |
| £ | 8,272,692 |
| 891 | % | 3,121,761 | 1,381,698 |
| 1,390,136 | |
Stuart Ingall-Tombs |
| 200 | % | 195,408 |
| £ | 922,326 |
| 163 | % | — | 425,236 |
| 619,952 | |
| (1) | The share price is based on the Company’s share price on 18 March 2024 of 472.0p. |
The interests of ELT members and their connected persons in the ordinary share capital of the Company (including any interests held through ADSs) as at 25 March 2024 are set out below.
| Number of ordinary shares |
| Percentage of issued ordinary shares | |
Gary Booker |
| — |
| * |
Rachel Canham |
| 1,571 |
| * |
Vanessa Evans |
| 16,524 |
| * |
Mark Gillespie |
| — |
| * |
Chris Hunt |
| 13,196 |
| * |
Alain Moffroid |
| 961,019 |
| * |
John Myers |
| 410,234 |
| * |
Brad Paulsen(1) |
| — |
| * |
Mark Purcell |
| 9,338 |
| * |
Andrew Stone |
| — |
| * |
Brian Webb |
| 11,124 |
| * |
Phill Wood |
| — |
| * |
* Less than 1%
(1)Brad Paulsen was appointed as CEO North America, and a member of the ELT,on 19 December 2023.
29
Total PSP and DBP Awards held by ELT Members
The table below sets out the number of PSP and DBP awards held as at 25 March 2024 by each Director.
|
|
|
|
|
|
| Ordinary |
|
|
|
|
| |||||||||||
shares | |||||||||||||||||||||||
Ordinary | Ordinary | available | Ordinary |
| |||||||||||||||||||
shares | shares | Dividend | for | Dividend | shares |
| |||||||||||||||||
Share price | awarded | lapsed | equivalent | exercise | equivalent | exercised |
| ||||||||||||||||
used to | during | during | ordinary | during | ordinary | during | Outstanding | ||||||||||||||||
determine | Scheme interest | 1 Jan 2022 | 1 Jan 2022 | shares | 1 Jan 2022 | shares at | 1 Jan 2022 | awards | Performance |
| |||||||||||||
Date of award | award | at 1 Jan 2023 | to 25 Mar 2024 | to 25 Mar 2024 | at vest | to 25 Mar 2024 | exercise | to 25 Mar 2024 | at 25 Mar 2024 | period end |
| ||||||||||||
2013 PSP(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Andy Ransom |
| 30/04/2013 |
| 96.0 | p | 513,403 |
| — |
| — |
| — |
| 513,403 |
| 43,414 |
| 556,817 | (5) | — |
| 29/04/2016 | |
Andy Ransom |
| 01/10/2013 |
| 109.0 | p | 388,853 |
| — |
| — |
| — |
| 388,853 |
| 26,132 |
| 414,985 | (5) | — |
| 29/04/2016 | |
2014 PSP(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Andy Ransom |
| 31/03/2014 |
| 123.4 | p | 912,792 |
| — |
| — |
| — |
| 912,792 |
| 73,723 |
| 986,515 | (6) | — |
| 30/03/2017 | |
2015 PSP(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Andy Ransom |
| 31/03/2015 |
| 135.5 | p | 883,906 |
| — |
| — |
| — |
| 883,906 |
| — |
| — |
| 883,906 |
| 30/03/2018 | |
2016 PSP(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Andy Ransom |
| 12/05/2016 |
| 159.4 | p | 869,324 |
| — |
| — |
| — |
| 869,324 |
| — |
| — |
| 869,324 |
| 10/03/2019 | |
2017 PSP(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Andy Ransom |
| 31/03/2017 |
| 246.4 | p | 562,676 |
| — |
| — |
| — |
| 562,676 |
| — |
| — |
| 562,676 |
| 30/03/2020 | |
2018 PSP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Andy Ransom |
| 29/03/2018 |
| 271.2 | p | 487,350 |
| — |
| — |
| — |
| 487,350 |
| — |
| — |
| 487,350 |
| 28/03/2021 | |
Andy Ransom |
| 14/05/2018 |
| 271.2 | p | 121,837 |
| — |
| — |
| — |
| 121,837 |
| — |
| — |
| 121,837 |
| 13/05/2021 | |
2019 PSP(2)(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Andy Ransom |
| 25/03/2019 |
| 346.6 | p | 547,805 |
| — |
| — |
| — |
| 547,805 |
| — |
| — |
| 547,805 |
| 24/03/2022 | |
2019 DBP(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Andy Ransom |
| 25/03/2019 |
| 346.6 | p | 72,505 |
| — |
| — |
| — |
| 72,505 |
| — |
| — |
| 72,505 |
| 24/03/2022 | |
2020 DBP(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Andy Ransom |
| 24/03/2020 |
| 358.6 | p | 119,243 |
| — |
| — |
| 4,920 |
| 124,163 |
| — |
| — |
| 124,163 |
| 23/03/2023 | |
2020 PSP(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Andy Ransom |
| 08/09/2020 |
| 530.2 | p | 412,580 |
| — |
| 146,260 |
| 9,691 |
| 276,011 |
| — |
| — |
| 276,011 |
| 07/09/2023 | |
Stuart Ingall-Tombs |
| 08/09/2020 |
| 530.2 | p | 188,608 |
| — |
| 66,862 |
| 4,430 |
| 126,176 |
| — |
| — |
| 126,176 |
| 07/09/2023 | |
2021 PSP(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Andy Ransom |
| 23/03/2021 |
| 494.4 | p | 442,455 |
| — |
| 227,014 |
| 9,368 |
| 236,382 |
| — |
| — |
| 236,382 |
| 23/03/2024 | |
Andy Ransom |
| 18/05/2021 |
| 468.5 | p | 140,074 |
| — |
| — |
| — |
| — |
| — |
| — |
| 140,074 |
| 18/05/2024 | |
Stuart Ingall-Tombs |
| 23/03/2021 |
| 494.4 | p | 202,265 |
| — |
| 103,778 |
| 4,282 |
| 108,060 |
| — |
| — |
| 108,060 |
| 23/03/2024 | |
2022 PSP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Andy Ransom |
| 04/03/2022 |
| 497.6 | p | 659,415 |
| — |
| — |
| — |
| — |
| — |
| — |
| 659,415 |
| 04/03/2025 | |
Stuart Ingall-Tombs |
| 04/03/2022 |
| 497.6 | p | 331,592 |
| — |
| — |
| — |
| — |
| — |
| — |
| 331,592 |
| 04/03/2025 | |
2022 DBP(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Andy Ransom |
| 22/03/2022 |
| 507.2 | p | 124,211 |
| — |
| — |
| — |
| — |
| — |
| — |
| 124,211 |
| 22/03/2025 | |
Stuart Ingall-Tombs |
| 22/03/2022 |
| 507.2 | p | 70,597 |
| — |
| — |
| — |
| — |
| — |
| — |
| 70,597 |
| 22/03/2025 | |
2023 DBP(5) | |||||||||||||||||||||||
Andy Ransom | 21/03/2023 | 561.0 | p | — | 114,078 | — | — | — | — | — | 114,078 | 21/03/2026 | |||||||||||
Stuart Ingall-Tombs | 21/03/2023 | 561.0 | p | — | 69,617 | — | — | — | — | — | 69,617 | 21/03/2026 | |||||||||||
2023 PSP | |||||||||||||||||||||||
Andy Ransom | 30/03/2023 | 572.2 | p | — | 590,647 | — | — | — | — | — | 590,647 | 30/03/2026 | |||||||||||
Stuart Ingall-Tombs | 30/03/2023 | 572.2 | p | — | 288,360 | — | — | — | — | — | 288,360 | 30/03/2026 | |||||||||||
2024 DBP | |||||||||||||||||||||||
Andy Ransom | 21/032024 | 471.5 | p | — | 83,211 | — | — | — | — | — | 83,211 | 21/03/2027 | |||||||||||
Stuart Ingall-Tombs | 21/03/2024 | 471.5 | p | — | 50,786 | — | — | — | — | — | 50,786 | 21/03/2027 |
(1)Rentokil Initial ordinary shares held by Andy Ransom under the 2015, 2016, 2017, 2018, 2019, 2020 and 2021 PSP awards are vested but unexercised and total 3,985,291. Stuart Ingall-Tombs holds 234,236 ordinary shares under the 2020 and 2021 PSP that are vested but unexercised.
(2)PSP awards are entitled to receive dividend equivalents in the form of ordinary shares based on dividend payments between the date of grant and vesting. These are included in the total ordinary shares at vest. The awards granted prior to 2021 are also entitled to receive dividend equivalents in the form of ordinary shares post vesting based on dividend payments between the date of vest and the date one month before exercise. These ordinary shares are applied at exercise.
(3)The 2020 PSP award partially vested at 64.55%.
(4)The 2021 PSP award partially vested at 48.69%.
(5)The DBP awards are subject to a three-year holding period, but are not subject to any performance or service conditions.
(6)Andy Ransom exercised his 2013 PSP awards on 22 March 2023. He exercised a total of 971,802 ordinary shares at an exercise price of 559.9p, giving a total value on exercise of £5,440,736, which was a gain of £4,453,858 compared to the grant price value of these awards.
30
(7)Andy Ransom exercised his 2014 PSP awards on 13 March 2024. He exercised a total of 986,515 ordinary shares at an exercise price of 489.1p, giving a total value on exercise of £4,824,749, which was a gain of £3,607,389 compared to the grant price value of these awards.
The table below sets out the number of PSP awards held as at 25 March 2024 by each ELT member.
|
| Ordinary shares |
| Ordinary shares |
| |||
available for | exercised | Outstanding | ||||||
Scheme interest | exercise 1 Jan 2023 | 1 Jan 2023 to | awards at | |||||
at 1 Jan 2023 | to 25 Mar 2024 | 25 Mar 2024 | 25 Mar 2024 | |||||
Gary Booker(1) |
| 467,370 |
| 96,869 |
| 75,828 |
| 327,862 |
Rachel Canham(2) |
| 298,094 |
| 5,951 |
| 5,951 |
| 292,143 |
Vanessa Evans(3) |
| 684,784 |
| 417,902 |
| 188,613 |
| 442,689 |
Mark Gillespie(4) |
| 379,162 |
| 191,511 |
| — |
| 349,235 |
Chris Hunt(5) |
| 463,280 |
| 253,705 |
| 8,113 |
| 415,168 |
Alain Moffroid(6) |
| 326,431 |
| 97,022 |
| — |
| 203,013 |
John Myers(7) |
| 516,551 |
| 127,961 |
| 127,961 |
| 303,093 |
Brad Paulsen(8) |
| — |
| — |
| — |
| 430,000 |
Mark Purcell(9) |
| 506,202 |
| 229,854 |
| — |
| 468,557 |
Andrew Stone(10) |
| 277,131 |
| 105,203 |
| 30,559 |
| 212,377 |
Brian Webb(11) |
| 301,309 |
| 115,114 |
| — |
| 266,111 |
Phill Wood(12) |
| 859,562 |
| 478,954 |
| 202,457 |
| 597,744 |
(1) The expiration date of the awards outstanding on 25 March 2024 by Gary Booker are as follows: (i) 71,931 on 25 March 2029, (ii) 52,508 on 8 September 2030, (iii) 44,879 on 23 March 2031, (iv) 83,633 on 4 March 2032 and (v) 74,911 on 30 March 2033.
(2) The expiration date of the awards outstanding on 25 March 2024 by Rachel Canham are as follows: (i) 223,330 on 6 September 2032 and (ii) 68,813 on 30 March 2033.
(3) The expiration date of the awards outstanding on 25 March 2024 by Vanessa Evans are as follows: (i) 105,244 on 29 March 2028, (ii) 90,263 on 25 March 2029, (iii) 50,713 on 8 September 2030, (iv) 43,345 on 23 March 2031, (v) 80,774 on 4 March 2032 and (vi) 72,350 on 30 March 2033.
(4) The expiration date of the awards outstanding on 25 March 2024 by Mark Gillespie are as follows: (i) 74,444 on 11 March 2026, (ii) 49,143 on 31 March 2027, (iii) 45,075 on 29 March 2028, (iv) 38,658 on 25 March 2029, (v) 20,048 on 8 September 2030, (vi) 22,849 on 23 March 2031, (vii) 51,112 on 4 March 2032 and (viii) 47,906 on 30 March 2033.
(5) The expiration date of the awards outstanding on 25 March 2024 by Chris Hunt are as follows: (i) 5,283 on 31 March 2025, (ii) 75,664 on 11 March 2026, (iii) 48,975 on 31 March 2027, (iv) 16,660 on 4 September 2027, (v) 71,511 on 29 March 2028, (vi) 40,256 on 25 March 2029, (vii) 32,174 on 8 September 2030, (viii) 27,499 on 23 March 2031, (ix) 51,245 on 4 March 2032 and (x) 45,901 on March 2033.
(6) The expiration date of the awards outstanding on 25 March 2024 by Alain Moffroid are as follows: (i) 44,801 on 23 March 2031, (ii) 84,626 on 4 March 2032 and (iii) 73,586 on 30 March 2033.
(7) The expiration date of the awards outstanding on 25 March 2024 by John Myers are as follows: (i) 189,337 on 3 March 2025 and (ii) 113,756 on 30 March 2026.
(8) The expiration date of the awards outstanding on 25 March 2024 by Brad Paulsen are as follows: (i) 260,000 on 22 April 2025 and (ii) 170,000 on 20 April 2026.
(9) The expiration date of the awards outstanding on 25 March 2024 by Mark Purcell are as follows: (i) 116 on 30 July 2023, (ii) 48,808 on 31 March 2024, (iii) 72,564 on 31 March 2025, (iv) 54,918 on 11 March 2026, (v) 40,086 on 31 March 2027, (vi) 36,404 on 29 March 2028, (vii) 57,265 on 25 March 2029, (viii) 30,281 on 8 September 2030, (ix) 25,882 on 23 March 2031, (x) 48,231 on 4 March 2032 and (xi) 54,002 on 30 March 2033.
31
(10) The expiration date of the awards outstanding on 25 March 2024 by Andrew Stone are as follows: (i) 20,349 on 11 March 2026, (ii) 26,983 on 31 March 2027, (iii) 27,389 on 29 March 2028, (iv) 21,999 on 25 March 2029, (v) 25,909 on 8 September 2030, (vi) 46,672 on 4 March 2032 and (vii) 43,076 on 30 March 2033.
(11)The expiration date of the awards outstanding on 25 March 2024 by Brian Webb are as follows: (i) 859 on 11 March 2026, (ii) 46,976 on 31 March 2027, (iii) 43,079 on 29 March 2028, (iv) 37,222 on 25 March 2029, (v) 28,313 on 8 September 2030, (vi) 24,200 on 23 March 2031, (vii) 45,069 on 4 March 2032 and (viii) 40,393 on 30 March 2033.
(12)The expiration date of the awards outstanding on 25 March 2023 by Phill Wood are as follows: (i) 125,974 on 31 March 2027, (ii) 112,158 on 29 March 2028, (iii) 96,192 on 25 March 2029, (iv) 54,045 on 8 September 2030, (v) 46,192 on 23 March 2031, (vi) 86,080 on 4 March 2032 and (vii) 77,103 on 30 March 2033.
F. | Disclosure of a registrant’s action to recover erroneously awarded compensation |
The Company revised its financial statements contained in the Company’s Annual Report on Form 20-F for the fiscal year ended 31 December 2022 filed with the SEC on 4 April 2023 (the “Original Financial Statements”), and such revised financial statements were filed as part of the Company’s Form 20-F/A on 8 February 2024 (the “Revised Financial Statements”).
As required by applicable SEC rules, the NYSE Listed Company Manual and the Company’s SEC Compensation Recoupment Policy (the “SEC Policy”), the Company’s Remuneration Committee considered whether the revision of the Original Financial Statements, which for the purposes of the SEC Policy is a “Financial Restatement”, resulted in any relevant incentive compensation exceeding the amount that would have otherwise been received by executives subject to the SEC Policy if it had been calculated based on the revision. The relevant incentive compensation was “received” for the purposes of the applicable rules and the SEC Policy in the fiscal period ending 31 December 2023, however, as the Company’s audited financial statements for the fiscal period ending 31 December 2023 had not been finalized as of the date of the Annual Report on Form 20-F/A for the year ended 31 December 2022 filed with the SEC on 8 February 2024 (the “2022 Form 20-F/A”), the Remuneration Committee determined the amount of compensation to be awarded in respect of such incentive compensation with consideration given to the Revised Financial Statements.
In addition, as explained in the explanatory note at the top of the 2022 Form 20-F/A, the revision was necessary in order to, among other things, remove references to certain non-IFRS measures from the Original Financial Statements in order to comply with relevant SEC rules, and the amendment did not modify, amend or update the reported IFRS financial statements or the non-IFRS measures upon which such incentive compensation is based. As such, incentive compensation outcomes were not affected. For these reasons, in respect of the revision, the Remuneration Committee concluded that there had not been, and will not be, any erroneously awarded compensation, and therefore no recovery of any compensation was or will be required.
The SEC Policy is included in this Form 20-F as Exhibit 97.1.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. | Major Shareholders |
The information (including graphs and tabular data) set forth under the headings “Other Information—Directors’ Report—Share capital” on pages 242 to 243 and “Other Information—Directors’ Report—Substantial shareholders” on page 243, in each case of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
As of 31 December 2023, the following persons had disclosed an interest in the issued ordinary share capital of the Company in accordance with the requirements of rules 5.1.2 or 5.1.5 of the UK Listing Authority’s Disclosure Guidance and Transparency Rules (“DTR 5”):
● | GIC Private Limited notified the Company on 3 November 2023 that its interest had increased to 75,807,848 ordinary shares (3.01% of issued share capital); |
● | The Capital Group Companies, Inc. notified the Company on 27 April 2023 that its interest had increased to 128,953,806 ordinary shares (5.12% of issued share capital); and |
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● | The Goldman Sachs Group, Inc. notified the Company on two occasions, the latter of which was on 31 October 2023, disclosing a holding of 63,099,871 ordinary shares (2.50% of issued share capital). |
As of 31 December 2022, the following persons had disclosed an interest in the issued ordinary share capital of the Company in accordance with the requirements of DTR 5:
● | Ameriprise Financial Inc. notified the Company on 18 October 2022 that its interest had decreased to 122,117,456 ordinary shares (4.87% of issued share capital); |
● | BlackRock, Inc. notified the Company on three occasions, the latter of which was on 14 October 2022, disclosing a holding of 219,658,668 ordinary shares (8.73% of issued share capital); |
● | Citigroup Global Markets Limited notified the Company on eight occasions, the latter of which was on 24 October 2022, disclosing a holding of 94,839,249 ordinary shares (3.76% of issued share capital); |
● | FMR LLC notified the Company on five occasions, the latter of which was on 18 October 2022, disclosing a holding of 108,487,628 ordinary shares (4.32% of issued share capital); and |
● | T. Rowe Price International Ltd notified the Company on 28 February 2022 that its interest had decreased to 91,554,981 ordinary shares (4.92% of issued share capital). |
We did not receive any notifications pursuant to DTR 5 during the year ended 31 December 2021. No other interests or changes to major shareholdings have been disclosed to the Company in accordance with DTR 5 between 31 December 2023 and 25 March 2024.
Information provided to the Company pursuant to DTR 5 is published on a Regulatory Information Service and on our website.
As of 31 December 2023, 10,029 record holders with registered addresses in the UK held 2,518,862,937 ordinary shares which represented 99.85% of the Company’s share capital. Some of these shares are held by nominees and so these numbers may not accurately represent the number of ordinary shares beneficially owned in the UK.
B. | Related Party Transactions |
The information set forth under the headings “Other Information—Directors’ Report—Related party transactions” on page 244 of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
Please also refer to the information set forth under the headings “Financial Statements—Notes to the Consolidated Financial Statements—B6. Investments in associated undertakings” on pages F-51 to F-52 and “Financial Statements—Notes to the Consolidated Financial Statements—D4. Related party transactions” on page F-68, in each case of this Form 20-F.
C. | Interests of Experts and Counsel |
Not applicable.
ITEM 8. FINANCIAL INFORMATION
A. | Consolidated Statements and Other Financial Information |
Please see the information below under the heading Item 18 “Financial Statements”. The information (including graphs and tabular data) set forth under the headings “Strategic Report—Our Business Model—Capital allocation model and returns—Shareholder value and dividend” on page 15, “Strategic Report—Financial Review—Dividend” on page 62, “Other Information—Directors’ Report—Dividend” on page 242 and “Other Information—Additional Shareholder Information—Dividends” on page 246, in each case of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
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Please also refer to the information set forth under the heading “Financial Statements—Notes to the Consolidated Financial Statements—D1. Dividends” on page F-67 of this Form 20-F.
Developments in Legal Proceedings
For information in respect of material legal proceedings in which we are currently involved, please refer to the information (including tabular data) set forth under the heading “Financial Statements—Notes to the Consolidated Financial Statements—D3. Contingent liabilities” on page F-68 of this Form 20-F.
B. | Significant Changes |
Please see the information set forth under the heading “Financial Statements—Notes to the Consolidated Financial Statements— D5. Post balance sheet events” on page F-68 of this Form 20-F.
Since the date of the annual consolidated financial statements included in this Form 20-F, no significant change has occurred.
ITEM 9. THE OFFER AND LISTING
A. | Offer and Listing Details |
The information (including tabular data) set forth under the headings “Other Information—Directors’ Report—Share capital” on pages 242 to 243, the information set forth in the introductory paragraph under the heading “Other Information—Additional Shareholder Information” on page 246 and “Other Information—Additional Shareholder Information—American Depositary Shares” on page 247, in each case of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
The corresponding trading symbol is “RTO” in each of our principal markets for trading in Rentokil Initial plc shares.
B. | Plan of Distribution |
Not applicable.
C. | Markets |
The information set forth in the introductory paragraph under the heading “Other Information—Directors’ Report—Share capital” on pages 242 to 243 and “Other Information—Additional Shareholder Information—American Depositary Shares” on page 247 in each case of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
D. | Selling Shareholders |
Not applicable.
E. | Dilution |
Not applicable.
F. | Expenses of the Issue |
Not applicable.
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ITEM 10. ADDITIONAL INFORMATION
A. | Share Capital |
Not applicable.
B. | Memorandum and Articles of Association |
The information set forth under the heading “Other Information—Directors’ Report—Articles of association”, “—Re-election of Directors and service contracts” and “—Directors’ powers” on page 242 and “Other Information—Directors’ Report—Share capital” on pages 242 to 243, in each case of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
C. | Material Contracts |
The following is a summary of each contract (not being a contract entered into in the ordinary course of business) that has been entered into by any member of the Group: (a) within the two years immediately preceding this Form 20-F which are, or may be, material to the Group, or (b) at any time which contain obligations or entitlements which is, or may be, material to the Group as at the date of this Form 20-F:
(i)Debt financing in connection with the Terminix acquisition
Overview
On 13 December 2021, Rentokil Initial plc obtained bridge facility commitments in an aggregate principal amount of $2,700 million from Barclays Bank plc. On 25 February 2022, such commitments were terminated and replaced with bridge and term facility commitments having an original aggregate principal amount of $2,700 million consisting of (i) “Facility A”, a bridge facility having an original aggregate principal amount of $2,000 million, which has since been terminated in full as described below, and (ii) “Facility B”, a term facility having an original aggregate principal amount of $700 million (collectively, the “Financing Commitments”) provided by a syndicate of banks. On 25 March 2022, an amendment letter was entered into in respect of the Financing Commitments in order to conform the duration of the Financing Commitments to the end date in the Agreement and Plan of Merger entered into between, among others, Terminix and the Company in respect of the acquisition of Terminix by the Company, as amended (the “Merger Agreement”). On 25 May 2022, an amendment letter was entered into in respect of the Financing Commitments in order to permit the Termination Date of Facility A to be extended to 1 April 2024. On 27 June 2022, Rentokil Initial plc and its subsidiary, Rentokil Initial Finance B.V., issued new notes, comprising (i) senior unsecured notes due 27 June 2027 in an aggregate principal amount of €850 million, (ii) senior unsecured notes due 27 June 2030 in an aggregate principal amount of €600 million, and (iii) senior unsecured notes due 27 June 2032 in an aggregate principal amount of £400 million, in each case pursuant to Rentokil Initial’s Euro Medium Term Note Programme (collectively, the “New Senior Notes”). Following the issuance of the New Senior Notes, on 30 June 2022, Rentokil Initial terminated the Financing Commitments in respect of Facility A. Part of the proceeds of the New Senior Notes have been converted to U.S. dollars using hedging instruments. The proceeds of Facility B and the New Senior Notes were used to pay the merger consideration, certain costs and expenses in connection therewith, for the refinancing of indebtedness of Terminix and its subsidiaries and for general corporate purposes.
Facility B
The Company is the borrower under Facility B. Facility B will mature on the third anniversary of the date of utilisation. Facility B contains standard conditions precedent including, among others, corporate authorisations and confirmations relating to the closing of the transactions.
The interest rate for loans borrowed pursuant to Facility B is a benchmark rate based on the secured overnight financing rate for U.S. dollars plus a margin determined pursuant to a ratings-based pricing grid that ranges between 0.50% per annum and 1.00% per annum. Certain customary commitment, arrangement and agency fees are payable in respect of the Financing Commitments.
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Facility B is (i) prepayable at the option of the Company without penalty or premium (other than customary breakage payments) upon customary terms, and (ii) required to be prepaid in certain customary circumstances, including in the case of illegality or upon change of control. Facility B does not amortise.
Facility B includes representations and warranties and undertakings that are customary for financings of this type. In particular, the Company is required to comply with customary information undertakings to deliver financial statements, compliance certificates, certain documents distributed to shareholders and information pertaining to certain litigation, defaults, changes in credit rating or relating to the transactions contemplated by the Merger Agreement. The Company is also required to comply with, and ensure that its subsidiaries comply with, general undertakings that restrict the ability of members of the Group, subject to certain enumerated exceptions, to grant security interests, incur indebtedness (in the case of certain members of the Group), make disposals or asset sales, make extensions of credit, become liable with respect to certain trade instruments, change the nature of its business or enter into certain fundamental transactions of amalgamation, merger or reconstruction. There are no financial performance maintenance covenants. Upon the occurrence of certain events of default, the Company’s obligations under Facility B may, subject to certain limitations during a customary “certain funds” period, be accelerated and the lending commitments terminated. Events of default include failure to pay, failure to comply with undertakings (after expiration of a grace period in the case of a failure capable of cure), inaccuracy of representations in a material respect (after expiration of a grace period in the case of misrepresentations capable of cure), cross-default to certain other financial indebtedness of the Company and its subsidiaries, insolvency events, repudiation by the Company and any event or series or events that has a “material adverse effect” on the ability of the Company to perform its obligations under the facilities or on the validity or enforceability of the documentation in respect thereof.
Facility B is provided by: Banco Santander S.A., London Branch; Bank of America Europe Designated Activity Company; Barclays Bank plc; BNP Paribas; BNP Paribas Fortis SA/NV; HSBC UK Bank plc; ING Bank N.V., London Branch; Mizuho Bank, Ltd; Skandinaviska Enskilda Banken AB (publ); Standard Chartered Bank; Bank of China Limited, London Branch; JPMorgan Chase Bank, N.A., London Branch; The Bank of Nova Scotia, London Branch; United Overseas Bank Limited, London Branch; Fifth Third Bank, National Association; and Wells Fargo Bank, N.A., London Branch.
New Senior Notes
The Company is the issuer of the senior unsecured notes due 27 June 2032 in an aggregate principal amount of £400 million (the “2032 Notes”), and is the guarantor of the senior unsecured notes due 27 June 2027 in an aggregate principal amount of €850 million (the “2027 Notes”), and the senior unsecured notes due 27 June 2030 in an aggregate principal amount of €600 million (the “2030 Notes”), each of which were issued by Rentokil Initial Finance B.V.
The interest rates for the 2027 Notes, the 2030 Notes and the 2032 Notes are 3.875% per annum, 4.375% per annum and 5.000% per annum, respectively. Each of the New Senior Notes have very similar terms, each containing a negative pledge given by the relevant issuer and the Company (as guarantor) that for so long as any of the New Senior Notes remain outstanding, neither the relevant issuer nor the Company (as guarantor) will, and the Company will procure that none of its subsidiaries will, create or permit to subsist any mortgage, lien, pledge or other charge (each a “Security Interest”) upon, or with respect to, any of its present or future business, undertaking, assets or revenues to secure any existing or future relevant indebtedness of any person or any guarantee or indemnity given in respect thereof, unless simultaneously with, or prior to, the creation of such Security Interest, the New Senior Notes, the guarantee and the trust deed relating to the New Senior Notes are secured equally and rateably by such Security Interests. This negative pledge shall not apply with regards to a Security Interest provided by or in respect of a company becoming a subsidiary of the Company after the issue date, or where such Security Interest exists at the time that company becomes a subsidiary of the Company (provided it was not created in contemplation of that company becoming such a subsidiary and the principal amount secured is not subsequently increased).
Each of the New Senior Notes may be repaid early in a number of circumstances and for a number of customary reasons, including (i) if the relevant issuer is obliged to pay additional amounts in respect of the relevant series of New Senior Notes pursuant to their terms as a result of a change in, or amendment to, or in the application or official interpretation of, UK tax law or regulation, (ii) if the relevant issuer or guarantor defaults on its obligations under the relevant series of New Senior Notes or in certain other circumstances described as ‘events of default’ in the terms and conditions of such series, (iii) if the relevant issuer chooses to exercise its right to redeem the relevant series of New Senior Notes, or (iv) if, during the life of the New Senior Notes, another company or person takes over, or otherwise assumes control of, the Company and such change of control had a negative impact on the credit ratings assigned to the New
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Senior Notes and the noteholder exercises its option to require the relevant issuer to redeem or repay early the relevant series of New Senior Notes.
The New Senior Notes were issued without financial covenants.
The proceeds of the New Senior Notes are available to be used by the Company for general corporate purposes.
D. | Exchange Controls |
Other than certain economic sanctions which may be in effect from time to time, there are no governmental laws, decrees or regulations in the UK restricting the import or export of capital or affecting the remittance of dividends, interest or other payments to non-resident holders of ordinary shares or ADSs.
Subject to the effect of any such economic sanctions which may be in effect from time to time, there are no limitations under English law or the Company’s Articles of Association on the right of non-resident or foreign owners to be the registered holders of, or to exercise voting rights in relation to, ordinary shares or ADSs.
E. | Taxation |
UK Taxation
The following summary contains a description of certain UK tax consequences of the acquisition, ownership and disposal of ordinary shares or ADSs in the Company. It is based on current UK tax law and the current published practice of HM Revenue and Customs (“HMRC”) (which may not be binding on HMRC) as at the date of this Form 20-F which are both subject to change at any time, possibly with retrospective effect. This summary applies to you only if:
| ● | you are an individual citizen or resident of the U.S. or a corporation created or organised in or under the laws of the U.S. or any of its political subdivisions (or are otherwise subject to US federal income tax on a net income basis in respect of your holding of ordinary shares or ADSs); |
| ● | you are the beneficial owner of ordinary shares or ADSs and hold them as a capital asset and not for the purposes of a trade; |
| ● | if you are an individual, you are not resident in the UK for UK tax purposes, and do not hold the ordinary shares or ADSs for the purposes of a trade, profession or vocation that you carry on in the UK through a branch or agency or, if you are a corporation, you are not resident in the UK for UK tax purposes and do not hold the ordinary shares or ADSs for the purposes of a trade carried on in the UK through a permanent establishment in the UK; and |
| ● | you are not domiciled in the UK for inheritance tax purposes. |
In practice, HMRC regard holders of ADSs as the beneficial owners of the ordinary shares represented by those ADSs, although case law has cast some doubt on this. The discussion below assumes that HMRC’s position is followed.
This summary does not constitute legal or tax advice and does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to invest in ordinary shares or ADSs. It does not address the tax treatment of investors that may be subject to special rules (such as rules applicable to charities, dealers in securities, trustees, broker dealers, market makers, insurance companies, collective investment schemes, pension schemes, or persons subject to UK tax on the remittance basis).
If you are in any doubt as to the tax consequences to you of the acquisition, ownership or disposal of ordinary shares or ADSs, you should consult your own tax advisers without delay.
UK Tax Consequences of Owning and Disposing of Ordinary Shares or ADSs in the Company
Taxation of dividends
The Company is not required under English law to withhold tax at source from any dividend payment it makes. A holder of the ordinary shares or ADSs that is not resident in the UK for UK tax purposes and does not carry on a trade, profession or vocation in the
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UK through a branch or agency (or in the case of a company a permanent establishment) to which the ordinary shares or ADSs are attributable will not generally be liable to pay UK tax on dividends paid by the Company.
Taxation of capital gains
A holder of ordinary shares or ADSs that is not resident in the UK for UK tax purposes and does not carry on a trade, profession or vocation in the UK through a branch or agency (or in the case of a company a permanent establishment) to which the ordinary shares or ADSs are attributable will not generally be liable for UK taxation on capital gains or eligible for relief for allowable losses, realised or accrued on the sale or other disposal of ordinary shares or ADSs. A holder of ordinary shares or ADSs who is an individual who has been resident for tax purposes in the UK but who ceases to be so resident or becomes regarded as resident outside the UK for the purposes of any double tax treaty (“Treaty Non-resident”) and continues to not be resident in the UK, or continues to be Treaty Non-resident, for a period of five years or less and who disposes of their ordinary shares or ADSs during that period may also be liable on their return to the UK to UK tax on capital gains, subject to any available exemption or relief, even though they are not resident in the UK, or are Treaty Non-resident, at the time of the disposal.
Inheritance tax
Subject to certain provisions relating to trusts or settlements, an ordinary share or ADS held by an individual holder who is domiciled in the United States for the purposes of the convention between the United States and the United Kingdom relating to estate and gift taxes (the “Convention”) and who is neither domiciled in the UK nor (where certain conditions are met) a UK national (as defined in the Convention), will generally not be subject to UK inheritance tax on the individual’s death (whether held on the date of death or gifted during the individual’s lifetime) provided that any applicable U.S. federal gift or estate tax liability is paid, except where the ordinary share or ADS is part of the business property of a UK permanent establishment or pertains to a UK fixed base of an individual who performs independent personal services. If no relief is given under the Convention, inheritance tax may be charged on death and also on the amount by which the value of an individual’s estate is reduced as a result of any transfer made by way of gift or other gratuitous or undervalue transfer, in general within seven years of death, and in certain other circumstances. In a case where an ordinary share or ADS is subject both to UK inheritance tax and to U.S. federal gift or estate tax, the Convention generally provides for double taxation to be relieved by means of credit relief based on priority rules set forth in the Convention.
Stamp duty and stamp duty reserve tax
The following statements are intended as a general and non-exhaustive guide to the current UK stamp duty and stamp duty reserve tax (“SDRT”) position and apply whether or not the holder of ordinary shares or ADSs is resident in the United States, the United Kingdom or elsewhere. It should be noted that certain categories of person, including market makers, brokers, dealers, persons connected with clearance services and depositary receipt systems and other specified market intermediaries, may not be liable to stamp duty or SDRT or may be liable at a higher rate or may, although not primarily liable for tax, be required to notify and account for it under the Stamp Duty Reserve Tax Regulations 1986.
Special rules apply where ordinary shares are issued or transferred to, or to a nominee or agent for, either a person whose business is or includes issuing depositary receipts or a person providing a clearance service. UK stamp duty or UK SDRT may be charged at a rate of 1.5%, with subsequent transfers within the clearance service or transfers of depositary receipts then being free from SDRT or stamp duty. Following certain EU litigation, HMRC accepted that it would no longer seek to apply the 1.5% SDRT charge when new shares are issued to a clearance service or depositary receipt system (or transferred into a clearance service or depositary receipt system, where such transfer is integral to the raising of capital by the company concerned) on the basis that the charge was not compatible with EU law. Following the UK’s departure from the EU, such pre-existing EU law rights, recognised in litigation, were preserved as a domestic law matter following the end of the implementation period on 31 December 2020 pursuant to provisions of the UK European Union (Withdrawal) Act 2018. In addition, however, on 29 June 2023, the UK Retained EU Law (Revocation and Reform) Act was enacted, which had the effect that such pre-existing EU law rights, recognised in litigation, would by default (that is, absent the exercise of a regulation-making power to restate or reproduce such rights in domestic law) cease to be recognised after 31 December 2023.
The Finance Act 2024, enacted on 22 February 2024, makes provision to ensure it continues to be the case, notwithstanding the effect of the Retained EU Law (Revocation and Reform) Act 2023, that stamp duty or SDRT of 1.5% is not payable in relation to (i) issues of shares into depositary receipt systems and clearance services, and (ii) transfers of shares into a clearance service or depositary receipt system, where such transfer is integral to the raising of new capital by the company concerned. The Finance Act 2024 also
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includes an additional exemption for ‘qualifying listing arrangements’ where shares are transferred (without a change in beneficial ownership) in connection with the listing of such shares on a recognised stock exchange. These measures have had effect in relation to issues and transfers of shares made on or after 1 January 2024. In view of the continuing uncertainty, specific professional advice should be sought before incurring a 1.5% stamp duty or stamp duty reserve tax charge in any circumstance.
Paperless transfers of ordinary shares, such as those occurring within CREST, are generally liable to SDRT, rather than UK stamp duty, at the rate of 0.5% of the amount or value of the consideration. CREST is obliged to collect SDRT on relevant transactions settled within the system. The charge is generally borne by the purchaser. Under the CREST system, no UK stamp duty or SDRT should arise on a transfer of ordinary shares into the system unless such a transfer is made (or deemed to be made) for a consideration in money or money’s worth, in which case a liability to SDRT (usually at a rate of 0.5%) will arise.
UK stamp duty at the rate of 0.5% (rounded up to the next multiple of £5) of the amount or value of the consideration given is generally payable on a physical instrument transferring ordinary shares. A charge to SDRT will also arise on an unconditional agreement to transfer ordinary shares (at the rate of 0.5% of the amount or value of the consideration payable). However, if within six years of the date of the agreement becoming unconditional an instrument of transfer is executed pursuant to the agreement, and UK stamp duty is paid on that instrument, any SDRT already paid should be refunded (generally, but not necessarily, with interest) provided that a claim for repayment is made, and any outstanding liability to SDRT should be cancelled. An exemption from UK stamp duty is available on an instrument transferring ordinary shares where the amount or value of the consideration is £1,000 or less, and it is certified on the instrument that the transaction effected by the instrument does not form part of a larger transaction or series of transactions for which the aggregate consideration exceeds £1,000. The liability to pay UK stamp duty or SDRT is generally satisfied by the purchaser or transferee.
Transfers of ordinary shares to a connected company of a shareholder (or its nominee) may be subject to stamp duty and/or SDRT based on the market value of the ordinary shares at the time of the transfer, if that is higher than the amount or value of the consideration actually paid for the ordinary shares, subject to any relief which may be available for intragroup transfers.
No UK stamp duty or SDRT will generally be payable on the acquisition or transfer of ADSs, provided that the ADS, and any separate instrument or written agreement of transfer, remain at all times outside the UK and that the instrument or written agreement of transfer is not executed in the UK.
United States Federal Income Tax Considerations
The following discussion is a general summary based on present law of certain material U.S. federal income tax considerations relating to the ownership and disposition of ordinary shares or ADSs by a U.S. holder (as defined below). This summary addresses only the U.S. federal income tax considerations for U.S. holders that hold ordinary shares or ADSs as capital assets (generally, property held for investment) and use the U.S. dollar as their functional currency. This summary is for general information purposes only and does not address all U.S. federal income tax considerations that may be relevant to a particular U.S. holder; it is not a substitute for tax advice. In addition, it does not describe all of the U.S. federal income tax considerations that may be relevant to a U.S. holder of ordinary shares or ADSs in light of such U.S. holder’s particular circumstances, nor does it address tax considerations applicable to a holder of ordinary shares or ADSs that may be subject to special rules under the U.S. federal income tax laws, including, banks or other financial institutions, insurance companies, brokers, dealers or traders in securities, currencies, commodities, or notional principal contracts, traders in securities that elect to mark-to-market, tax-exempt entities or organisations, pension funds, “individual retirement accounts”, “Roth IRAs” or other deferred accounts, real estate investment trusts, mutual funds, regulated investment companies, partnerships (including entities or arrangements classified as partnerships for U.S. federal income tax purposes) and other pass-through entities (including S-corporations) and their partners or shareholders, governmental agencies or instrumentalities, certain former citizens or long-term residents of the United States, “controlled foreign corporations”, “passive foreign investment companies”, “personal holding companies”, persons liable for the alternative minimum tax, persons required to accelerate the recognition of any item of gross income as a result of such income being recognised on an “applicable financial statement”, persons that received the ordinary shares or ADSs through the exercise of employee stock options or otherwise as compensation for the performance of services or through a tax-qualified retirement plan, persons that hold ordinary shares of ADSs as part of a hedge, straddle, conversion, constructive sale or other integrated or risk reduction financial transaction, persons that hold their ordinary shares or ADSs in connection with a permanent establishment or fixed base outside the United States or persons that own directly, indirectly, or through attribution 10% or more of the voting power or value of our ordinary shares and ADSs. This summary does not address U.S. federal taxes other than the income tax (such as the Medicare surtax on net investment income, the estate, gift, or alternative minimum tax), any election to apply Section 1400Z-2 of the
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U.S. Internal Revenue Code of 1986, as amended (the “Code”) to gains recognised with respect to ordinary shares or ADSs, or any U.S. state, local, or non-U.S. tax considerations of the ownership and disposition of ordinary shares or ADSs. This discussion assumes that Rentokil Initial will not be treated as a U.S. corporation for U.S. federal income tax purposes and has not otherwise been nor will be subject to Section 7874 of the Code.
For the purposes of this summary, a “U.S. holder” is a beneficial owner of ordinary shares or ADSs that is (or is treated as), for U.S. federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation, or any other entity treated as a corporation for U.S. federal income tax purposes, created or organised in or under the laws of the United States, any state thereof, or the District of Columbia, (iii) an estate, the income of which is subject to U.S. federal income taxation regardless of its source, or a trust, if a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of the substantial decisions of such trust.
If a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds ordinary shares or ADSs, the U.S. federal income tax consequences relating to an investment in those ordinary shares or ADSs will depend in part upon the status of the partner and the activities of the partnership. A partnership that holds ADSs should consult its tax advisor regarding the U.S. federal income tax considerations for it and for its partners of owning and disposing of ordinary shares or ADSs in its and their particular circumstances.
In general, a U.S. holder that owns ADSs will be treated as the beneficial owner of the underlying ordinary shares represented by those ADSs for U.S. federal income tax purposes. Accordingly, no gain or loss will generally be recognised if a U.S. holder exchanges ADSs for the underlying ordinary shares represented by those ADSs.
This summary does not consider your particular circumstances. Persons owning ordinary shares or ADSs or considering an investment in ordinary shares or ADSs should consult their own tax advisors as to the particular tax consequences applicable to them relating to the ownership and disposition of ordinary shares or ADSs, including the applicability of U.S. federal, state and local tax laws and non-U.S. tax laws.
Distributions
Subject to the discussion under “—Passive Foreign Investment Company Considerations” below, the gross amount of distributions paid with respect to our ordinary shares or ADSs including UK tax withheld therefrom, if any (other than pro rata distribution of our ordinary shares or rights to acquire our ordinary shares), generally will be included in a U.S. holder’s gross income as foreign source ordinary dividend income when actually or constructively received to the extent such distribution is paid out of our current and accumulated earnings and profits as determined under U.S. federal income tax principles. Distributions in excess of our current and accumulated earnings and profits will be treated as a non-taxable return of capital and will be applied against and reduce, the U.S. holder’s adjusted tax basis in ordinary shares or ADSs (but not below zero) and distributions in excess of earnings and profits and a U.S. holder’s adjusted tax basis will generally be taxable to the U.S. holder as either long-term or short-term capital gain depending upon whether the U.S. holder has held the ordinary shares or ADSs for more than one year as of the time such distribution is received. However, since we do not calculate our earnings and profits under U.S. federal income tax principles, it is expected that any distribution will be reported as a dividend, even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain.
Our dividends will not be eligible for the dividends-received deduction generally allowed to U.S. corporations. Dividends paid to non-corporate U.S. holders that satisfy a minimum holding period (during which they are not protected from the risk of loss) and certain other requirements may qualify for the preferential tax rates applicable to qualified dividend income, provided that we are a “qualified foreign corporation” and we are not a PFIC as to the non-corporate U.S. holder in the taxable year of the dividend or the preceding taxable year. A qualified foreign corporation includes a non-U.S. corporation that is eligible for the benefits of a comprehensive income tax treaty with the United States. A non-U.S. corporation also will be considered to be a qualified foreign corporation with respect to any dividend it pays on shares which are readily tradable on an established securities market in the U.S. Our ADSs are listed on the NYSE, which is an established securities market in the U.S., and we expect our ADSs to be readily tradable on the NYSE. However, there can be no assurance that the ADSs will be considered readily tradable on an established securities market in the U.S. in any taxable year. U.S. holders should consult their own tax advisors regarding the application of these rules given their particular circumstances.
If dividends are subject to UK withholding tax, a U.S. holder may be entitled, subject to generally applicable limitations, to claim a U.S. foreign tax credit for UK withholding tax imposed at the appropriate rate. U.S. holders who do not elect to claim a credit for any
40
foreign income taxes paid or accrued during the taxable year may instead claim a deduction of such taxes. The rules relating to the foreign tax credit are complex. Each U.S. holder should consult its own tax advisors regarding the foreign tax credit rules.
In general, the amount of a distribution paid to a U.S. holder in a foreign currency will be the dollar value of the foreign currency calculated by reference to the applicable exchange rate on the day the U.S. holder receives the distribution, regardless of whether the foreign currency is converted into USD at that time. Any foreign currency gain or loss a U.S. holder realises on a subsequent conversion of foreign currency into USD will be U.S. source ordinary income or loss. If dividends received in a foreign currency are converted into USD on the day they are received, a U.S. holder should not be required to recognise foreign currency gain or loss in respect of the dividend.
Sale, Exchange or Other Taxable Disposition of Ordinary Shares or ADSs
Subject to the discussion under “—Passive Foreign Investment Company Considerations” below, a U.S. holder will generally recognise capital gain or loss on the sale, exchange, or other taxable disposition of ordinary shares or ADSs in an amount equal to the difference between the amount realised from such sale or exchange and the U.S. holder’s adjusted basis in the ordinary shares or ADSs, each amount determined in USD. A U.S. holder’s adjusted tax basis in an ordinary share or ADS generally will be equal to the USD cost of such ordinary share or ADS. Any such capital gain or loss generally will be long-term capital gain or loss if the U.S. holder’s holding period for such ordinary share or ADS exceeds one year as of the date of sale or other disposition. Long-term capital gain realised by a non-corporate U.S. holder is generally eligible for preferential reduced tax rates. The deductibility of capital losses for U.S. federal income tax purposes is subject to certain limitations. Any such gain or loss that a U.S. holder recognises generally will be treated as U.S. source income or loss for foreign tax credit limitation purposes.
Passive Foreign Investment Company Considerations
In general, a non-U.S. corporation will be classified as a passive foreign investment company, or PFIC, for any taxable year in which, after applying certain look-through rules with respect to certain dividends, rents, interest or royalties received from its affiliates and taking into account its proportionate share of the income and assets of its 25% or more owned subsidiaries, either: (i) at least 75% of its gross income is “passive income”, or (ii) at least 50% of the average quarterly value of its total gross assets is attributable to cash in excess of working capital requirements or assets that produce “passive income” or are held for the production of “passive income”. Passive income for this purpose generally includes dividends, interest, royalties, rents, gains from commodities and securities transactions, the excess of gains over losses from the disposition of assets which produce passive income. While we are treated as a publicly traded company for these purposes, the value of our assets, including goodwill and other intangibles, will be based on their fair market value, which will depend on the market value of our ordinary shares and ADSs, which are subject to change.
Based on our historic and anticipated operations, the composition of our income and the projected composition and estimated fair market values of our assets, we do not believe that we were a PFIC for our most recent taxable year and do not expect to be classified as a PFIC for the current taxable year or for the foreseeable future. However, our possible status as a PFIC is a factual determination made annually after the close of each taxable year and, therefore, may be subject to change. Accordingly, there can be no assurance that we will not be a PFIC for any year in which a U.S. holder holds ordinary shares or ADSs. The Company does not intend to provide any annual assessments of its PFIC status.
If we were to be classified as a PFIC for any taxable year during which a U.S. holder owns ordinary shares or ADSs, gain recognised on a sale or other disposition (including certain pledges) of such U.S. holder’s ordinary shares or ADSs would be allocated rateably over such U.S. holder’s holding period. Amounts allocated to the taxable year of the sale or disposition and to any year before we became a PFIC would be taxed as ordinary income and the amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an interest charge will be imposed on the resulting tax liability for each such year. In addition, to the extent that distributions received by a U.S. holder on its ordinary shares or ADSs in any taxable year exceed 125% of the average of the annual distributions on such holder’s ordinary shares or ADSs received during the preceding three taxable years (or, if shorter, the U.S. holder’s holding period), such excess distributions will be subject to taxation in the same manner. Furthermore, dividends that are not excess distributions would not be eligible for the preferential tax rate applicable to qualified dividend income received by individuals and certain other non-corporate persons.
If the Company is a PFIC for any taxable year during which you own ordinary shares or ADSs, the Company will generally continue to be treated as a PFIC with respect to you for all succeeding years during which you own the ordinary shares or ADSs, even if the
41
Company ceases to meet the threshold requirements for PFIC status. Certain elections may be available that will result in alternative treatments (such as mark-to-market treatment) of the ordinary shares. U.S. holders should consult their own tax advisors concerning the Company’s possible PFIC status and the consequences to them if the Company were a PFIC for any taxable year, including whether any of these elections will be available, and, if so, what the consequences of the alternative treatments will be in your particular circumstances.
Backup Withholding and Information Reporting
U.S. holders generally will be subject to information reporting requirements with respect to dividends on ordinary shares or ADSs and on the proceeds from the sale, exchange, or disposition of the ordinary shares or ADSs that are paid within the United States or through U.S.-related financial intermediaries, unless the U.S. holder is a corporation or other “exempt recipient”. In addition, U.S. holders may be subject to backup withholding on such payments, unless the U.S. holder provides a correct taxpayer identification number and a duly executed IRS Form W-9 or otherwise establishes an exemption. Backup withholding is not an additional tax, and the amount of any backup withholding will be allowed as a credit against a U.S. holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that the required information is timely furnished to the IRS.
Foreign Asset Reporting
Certain U.S. holders who are individuals and certain entities controlled by individuals may be required to report information relating to an interest in ordinary shares or ADSs, subject to certain exceptions (including an exception for shares held in accounts maintained by U.S. financial institutions) by filing IRS Form 8938 (Statement of Specified Foreign Financial Assets) with their federal income tax return. Investors who fail to report required information could become subject to substantial penalties. U.S. holders are urged to consult their tax advisors regarding their information reporting obligations, if any, with respect to their ownership and disposition of the ordinary shares or ADSs.
THE DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PROSPECTIVE INVESTOR. EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES TO IT OF AN INVESTMENT IN ORDINARY SHARES OR ADSS IN LIGHT OF THE INVESTOR’S OWN CIRCUMSTANCES.
F. | Dividends and Paying Agents |
Not applicable.
G. | Statement by Experts |
Not applicable.
H. | Documents on Display |
The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including the Company, at https://www.sec.gov. The address of the SEC’s website is provided solely for information purposes and is not intended to be an active link.
We also make our periodic reports, as well as other information filed with or furnished to the SEC, available through our website, at https://www.rentokil-initial.com/investors, as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. The information on our website is not incorporated by reference in this document.
I. | Subsidiary Information |
Not applicable.
J. | Annual Report to Security Holders |
Not applicable.
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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information (including graphs and tabular data) set forth under the heading “Strategic Report—Risks and Uncertainties—Principal risks—Financial” on page 90 of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
Please also refer to the information set forth under the heading “Financial Statements—Notes to the Consolidated Financial Statements—C1. Financial risk management” on pages F-52 and F-54 of this Form 20-F.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A. | Debt Securities |
Not applicable.
B. | Warrants and Rights |
Not applicable.
C. | Other Securities |
Not applicable.
D. | American Depositary Shares |
Fees and Charges Payable by ADR Holders
The Company’s ADSs are evidenced by American Depositary Receipts (“ADRs”). The Company’s ADR program is administered by The Bank of New York Mellon (“BNY Mellon” or the “Depositary”) as the depositary. Contact details for the Depositary are available under the heading “Other Information—Additional Shareholder Information—American Depositary Shares” on page 247 of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
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The holder of an ADR may have to pay the following fees and charges to BNY Mellon in connection with ownership of the ADR:
Category |
| Depositary actions |
| Associated fee or charge |
(a) Depositing or substituting the underlying shares | Issuances upon deposits of shares (excluding issuances as a result of stock distributions or the exercise of rights) | Up to $5.00 per 100 ADSs (or portion thereof) issued | ||
|
|
| ||
(b) Receiving or distributing dividends | Distributions of stock dividends or other free stock distributions, cash dividends or other cash distributions (i.e., sale of rights and other entitlements), distributions of securities other than ADSs or rights to purchase additional ADSs | Up to $0.05 per ADS (or portion thereof) | ||
|
|
| ||
(c) Selling or exercising rights | The exercise of rights to purchase additional ADSs | Up to $5.00 per 100 ADSs (or portion thereof) | ||
|
|
| ||
(d) Withdrawing, cancelling or reducing an underlying security | Surrendering ADSs for cancellation and withdrawal of deposited property | Up to $5.00 per 100 ADSs (or portion thereof) surrendered or cancelled (as the case may be) | ||
|
|
| ||
(e) Transferring, splitting or grouping receipts |
| Not applicable. | ||
|
|
| ||
(f) General depositary services, particularly those charged on an annual basis | Depositary services fee | Up to $0.05 per ADS (or portion thereof) per calendar year. | ||
|
|
| ||
(g) Fees and expenses of the depositary | Fees and expenses incurred by the Depositary or the Depositary’s agents on behalf of holders, including in connection with: ● taxes (including applicable interest and penalties) and other governmental charges; ● registration of shares or other deposited securities on the share register of the Company or Foreign Registrar and applicable to transfers of shares or other deposited securities to or from the name of the Depositary, the Custodian or any nominees upon the making of deposits and withdrawals, respectively; ● cable and facsimile transmission fees and expenses; ● expenses and charges incurred by the Depositary in the conversion of foreign currency into U.S. dollars; and ● the charges payable by the Depositary, the Custodian, or any nominee in connection with the servicing of deposited property (as defined in the Deposit Agreement). | As incurred by the Depositary. |
Fees and Payments Made by BNY Mellon to Us
The Depositary reimburses the Company for certain expenses it incurs in relation to the ADR programme. The Depositary also pays the standard out-of-pocket maintenance costs for the ADSs, which consist of the expenses for the mailing of annual and interim financial reports, printing and distributing dividend cheques, the electronic filing of U.S. federal tax information, mailing required tax forms, stationery, postage, facsimiles and telephone calls. It also reimburses the Company for certain investor relationship programmes or special investor relations promotional activities. There are limits on the amount of expenses for which the Depositary will reimburse the Company, but the amount of reimbursement is not necessarily tied to the amount of fees the Depositary collects from investors. Under the contractual arrangements with the Depositary, the Company has received or is due to receive approximately $6,450,000 in the year ended 31 December 2023 arising out of fees charged in respect of dividends paid during the year and the cancellation or issuance of ADSs.
44
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not applicable.
ITEM 15. CONTROLS AND PROCEDURES
A. | Disclosure Controls and Procedures |
The Group maintains disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, that are designed to ensure that information required to be disclosed in reports the Group files or submits under the Exchange Act is recorded, processed, summarised and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.
In designing and evaluating our disclosure controls and procedures, our management recognises that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Group have been detected.
Our management, with the participation of our Chief Executive and Chief Financial Officer, has evaluated the effectiveness of the Group’s disclosure controls and procedures pursuant to Rule 13a-15(b) of the Exchange Act as of the end of the period covered by this Annual Report on Form 20-F. Based on such evaluation, our Chief Executive and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of 31 December 2023 due to a material weakness in our internal control over financial reporting described below.
B. | Management’s Annual Report on Internal Control over Financial Reporting |
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.
Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework set forth in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on such assessment, our management has concluded that, at 31 December 2023, our internal control over financial reporting was not effective due to a material weakness in internal control over financial reporting described below. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
45
As disclosed in our Annual Report on Form 20-F for the fiscal year ended 31 December 2022 filed with the SEC on 4 April 2023 and as amended by the 2022 Form 20-F/A (together, the “2022 Annual Report”), management identified a material weakness in our internal control over financial reporting relating to the failure to design and maintain effective IT general controls over user access, change management, database management and segregation of duties for information systems that are relevant to the preparation of our financial statements. These IT deficiencies could impact the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or detected. Management has determined that this material weakness still exists as of 31 December 2023.
The effectiveness of the Company’s internal control over financial reporting has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report on the Company’s internal control over financial reporting as of 31 December 2023, which is included herein.
C. | Attestation Report of Independent Registered Public Accounting Firm |
The effectiveness of the Company’s internal control over financial reporting as of 31 December 2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report dated 27 March 2024, which is included under the heading “Financial Statements—Report of Independent Registered Public Accounting Firm” on page F-2 of this Form 20-F.
D. | Changes in Internal Control over Financial Reporting |
Remediation of previously identified material weaknesses in Internal Control over Financial Reporting
As disclosed in the 2022 Annual Report, management also identified and disclosed a material weakness in our internal control over financial reporting relating to a lack of sufficient resources with the appropriate level of technical accounting knowledge, particularly for non-routine transactions, combined with incomplete policies and procedures related to the segregation of duties and control activities required for accurate and timely financial accounting, reporting, and disclosures in accordance with the financial reporting requirements set forth by the SEC.
Management, in consultation with the Audit Committee, took steps to remediate the material weakness by successfully implementing a plan to strengthen our internal control over financial reporting, which included: (i) adding resources with appropriate level of technical accounting knowledge responsible for the execution and oversight of accounting and reporting; (ii) designing and implementing enhancements to internal control over financial reporting, including implementation of policies and procedures to enhance segregation of duties and formalise control activities; and, (iii) engaging third parties to advise us on complex and technical areas of accounting and in strengthening the design and operating effectiveness of internal controls over financial reporting. Management has determined, through testing, that this control was designed and has operated effectively for a sufficient period of time and concluded that this material weakness has been remediated as of 31 December 2023.
Status of remediation plan
We are in the process of implementing certain remediation measures to address the remaining material weakness and to improve our internal control over financial reporting, including: (i) hiring IT personnel with an appropriate level of knowledge and technical experience to design and maintain IT general controls; (ii) refining and enforcing policies and procedures in relation to the design and operation of IT general controls; (iii) continuing to implement the IT general controls framework; and (iv) where necessary, identifying, implementing, and documenting IT general controls. We continue to evaluate the appropriate controls to design and maintain effective IT general controls supporting financial systems relevant to our financial reporting processes.
46
However, the material weakness will not be considered remediated until the applicable controls are designed and operate for a sufficient period of time and the Company’s management has concluded, through testing, that these controls are operating effectively. In addition, as we implement these remediation efforts, we may determine that additional steps may be necessary to remediate the material weakness, or we may identify other material weaknesses or control deficiencies. We cannot provide assurance that these remediation efforts will be successful, that we will not identify new material weaknesses or that our internal control over financial reporting will be effective in accomplishing all control objectives.
Other than as described above, no material changes have been made that affected our internal control over financial reporting.
ITEM 16. RESERVED
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
The information set forth under the heading “Corporate Governance—Audit Committee Report—Membership and attendance” on page 118 of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
ITEM 16B. CODE OF ETHICS
Our principal executives, including the Chief Executive Officer, the Chief Financial Officer and all other members of the ELT are subject to the Rentokil Initial Code of Conduct. In 2023, we harmonised the Rentokil Initial Code of Conduct and the Terminix Code of Conduct so that one single code of conduct applies to all colleagues. No waivers or exceptions to the Codes of Conduct were granted in 2023.
The information set forth under the headings “Strategic Report—Responsible Business—Governance Sustainability Statement” on page 82, “Corporate Governance—Corporate Governance Report—Policies and practices” on page 116 and “Corporate Governance—Audit Committee Report—Governance and compliance” on pages 122 to 123 of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth the aggregate fees for professional services rendered by PricewaterhouseCoopers LLP (PCAOB ID
Year ended | ||||
December 31, | ||||
| 2023 |
| 2022 | |
(£ million) | ||||
Audit fees(1) |
| 8 |
| 7 |
Audit-related fees(2) |
| 3 |
| 2 |
Tax fees |
| — |
| — |
All other fees(3) |
| — |
| 3 |
Total |
| 11 |
| 12 |
(1) | Audit fees consist of fees payable to the Company’s auditor for the audit of the parent company accounts, consolidated accounts, and accounts of Group subsidiaries. |
(2) | Audit-related fees in 2023 consist of fees payable to the Company’s auditor relating to reporting on internal financial controls. Included in 2022 is an amount of £2m paid to the Company’s auditor in respect of the 2021 PCAOB Group audit required for the purposes of the U.S. registration. |
(3) | Other fees include accounting specialist fees payable to the Company’s auditor in respect of the Terminix acquisition. |
Please also refer to the information set forth under the heading “Financial Statements—Notes to the Consolidated Financial Statements—A8. Auditors’ remuneration” on page F-30 of this Form 20-F.
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U.S. law and regulations permit the Audit Committee pre-approval requirement to be waived with respect to engagements for non-audit services aggregating to no more than 5% of the total amount of fees paid by us to our principal accountants, if such engagements were not recognised by us at the time of engagement and were promptly brought to the attention of the Audit Committee or a designated member thereof and approved prior to the completion of the audit. In 2023, no fees paid by us to our principal accountant for non-audit services in each category were subject to such a waiver.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
|
|
|
| (d) Maximum | ||||
Number (or | ||||||||
Approximate Dollar | ||||||||
(c) Total Number of | Value) of Shares (or | |||||||
Shares (or Units) | Units) that May Yet | |||||||
(a) Total number of | (b) Average Price | Purchased as Part of | Be Purchased Under | |||||
Shares (or Units) | Paid per Share (or | Publicly Announced | the Plans or | |||||
Period | Purchased | Unit) | Plans or Programs | Programs | ||||
(£) | (£ billion) | |||||||
Month #1 (Jan 1 - Jan 31) |
| 0 |
| N/A |
| 0 |
| 0 |
Month #2 (Feb 1 - Feb 28) |
| 0 |
| N/A |
| 0 |
| 0 |
Month #3 (Mar 1 - Mar 31) |
| 0 |
| N/A |
| 0 |
| 0 |
Month #4 (Apr 1 - Apr 30) |
| 0 |
| N/A |
| 0 |
| 0 |
Month #5 (May 1 - May 31) |
| 0 |
| N/A |
| 0 |
| 0 |
Month #6 (Jun 1 - Jun 30) |
| 0 |
| N/A |
| 0 |
| 0 |
Month #7 (Jul 1 - Jul 31) |
| 0 |
| N/A |
| 0 |
| 0 |
Month #8 (Aug 1 - Aug 31) |
| 0 |
| N/A |
| 0 |
| 0 |
Month #9 (Sep 1 - Sep 30) |
| 0 |
| N/A |
| 0 |
| 0 |
Month #10 (Oct 1 - Oct 31) |
| 0 |
| N/A |
| 0 |
| 0 |
Month #11 (Nov 1 - Nov 30) |
| 0 |
| N/A |
| 0 |
| 0 |
Month #12 (Dec 1 - Dec 31) |
| 0 |
| N/A |
| 0 |
| 0 |
Total |
| 0 |
| N/A |
| 0 |
| 0 |
At the 2023 Annual General Meeting, the Company’s shareholders authorised the Company to repurchase up to 252,000,000 of its own shares and such authority will be valid until the 2024 Annual General Meeting. No purchases of its shares were made by the Company during the year ended 31 December 2023. Authority to make repurchases of the Company’s own shares is normally renewed annually and approval will be sought from shareholders at the 2024 Annual General Meeting to renew such authority for a further year.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 16G. CORPORATE GOVERNANCE
The Company is a public limited company incorporated in England and Wales, admitted to the premium segment of the Official List of the FCA and to trading on the main market of the London Stock Exchange. As a result, it follows the UK Corporate Governance Code (the “UK Code”) in respect of its corporate governance practices. The 2018 edition of the UK Code came into effect for reporting periods beginning on or after 1 January 2019 and was effective to the Company for the year ended 31 December 2023. The Companies Act 2006 (the “UK Act”) and the Listing Rules of the UK FCA (the “FCA Rules”) impose certain requirements that also influence our corporate governance practices. Furthermore, as a result of the listing of the Company’s ADSs on the NYSE and the Company’s registration under the Exchange Act, we follow the applicable U.S. federal securities laws and regulations, as well as the rules of the NYSE, in particular the corporate governance standards under Section 303A of the NYSE Listed Company Manual. We comply with these standards to the extent such provisions are applicable to us as a foreign private issuer.
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We are required to disclose any significant ways in which the Company’s corporate governance practices differ from those followed by U.S. companies under the NYSE listing standards under Section 303A of the NYSE Listed Company Manual. In preparation for the Company’s compliance obligations under the Sarbanes-Oxley Act, amongst other things, we have reviewed the corporate governance practices required to be followed by U.S. domestic companies under the NYSE listing standards and our corporate governance practices are generally consistent with those standards.
The below summaries of our corporate governance practices include disclosures regarding the significant ways in which they differ from those followed by U.S. domestic companies under the NYSE listing standards.
(i) | Director Independence |
Pursuant to our corporate governance framework and procedures, the independence of all Directors is considered upon their appointment and is subsequently reviewed as part of the individual Director performance evaluation process to ensure all non-executive Board members retain the necessary independence of judgement. The Board has determined that all our Non-Executive Directors are independent and have retained their independence of character and judgement. In coming to this conclusion, the Board has taken into account any indicators of potential non-independence as set out in the UK Code, as well as the independence requirements outlined in the NYSE’s listing standards.
(ii) | Committees of the Board |
We have a number of board committees that are broadly comparable in purpose and composition to those required by NYSE’s listing standards for U.S. domestic companies. For instance, the Company has a Nomination Committee (rather than a nominating and corporate governance committee) and a Remuneration Committee (rather than a compensation committee). The Company also has an Audit Committee, which the NYSE’s listing standards require for both U.S. domestic companies and foreign private issuers.
Under U.S. securities laws and the NYSE’s listing standards, we are required to have an audit committee that satisfies the requirements of Rule 10A-3 under the Exchange Act and Section 303A.06 of the NYSE Listed Company Manual, which incorporate the rules concerning audit committees implemented by the SEC under the Sarbanes-Oxley Act. Our Audit Committee complies with these requirements. Our Audit Committee does not have direct responsibility for the appointment, reappointment or removal of the external auditors. Instead, our Audit Committee follows the UK Code by making recommendations to the Board on these matters for the Board to put forward for shareholder approval at a general meeting of the Company.
One of the NYSE’s additional requirements for the audit committee states that at least one member of the audit committee is to have ‘accounting or related financial management expertise’. The Board has determined that Sally Johnson, Chair of the Audit Committee, possesses such expertise and also possesses the financial and audit committee experiences set forth in both the UK Code and SEC rules. Sally Johnson has also been designated as an audit committee financial expert as defined in Item 16.A of Form 20-F. The Board has also determined that each member of the Audit Committee meets the financial literacy requirements applicable under NYSE listing standards.
Our Nomination Committee does not develop and recommend to the Board a set of corporate governance guidelines applicable to the Company. Instead, our management oversees the development of corporate governance guidelines for recommendation to and approval by the full Board.
(iii) | Shareholder Approval of Equity Compensation Plans |
The NYSE listing standards applicable to U.S. domestic companies require that shareholders must be given the opportunity to vote on all equity-compensation plans and material revisions to those plans. The Company complies with UK requirements, which are similar to the NYSE requirement. The Board, however, does not explicitly take into consideration the NYSE’s detailed definition of what are considered ‘material revisions’.
49
(iv) | Code of Conduct and Ethics |
The NYSE listing standards require U.S. domestic companies to adopt and disclose a code of business conduct and ethics for all directors, officers and employees and promptly disclose any waivers of the code for directors or executive officers. Our Directors, management, and employees of the Group and all Group companies are bound by a code of conduct. Please also see the information above under the heading Item 16B “Code of Ethics”.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J. INSIDER TRADING POLICIES
The Board has adopted a Group wide dealing policy governing the purchase, sale, and other dispositions of the Company’s securities by Directors, senior management and employees of the Company and its subsidiaries, that is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and any applicable listing standards (the “Group Wide Dealing Policy”). In addition, Directors and certain employees of the Company and its subsidiaries are bound by a dealing code that governs the treatment of inside information and material non-public information (the “Dealing Code”).
The Company’s Group Wide Dealing Policy and Dealing Code are included in this Form 20-F as Exhibits 11.1 and 11.2, respectively.
The information set forth under the heading “Corporate Governance—Corporate Governance Report—Policies and practices” on page 116 of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
ITEM 16K. CYBER SECURITY
The information set forth under the headings “Strategic Report—Responsible Business—Digital services—Digital security” on page 71, “Strategic Report—Risks and Uncertainties—Failure to ensure business continuity in a case of material incident” on page 91, “Corporate Governance—Corporate Governance Report—Cyber security” on page 116 and “Corporate Governance—Audit Committee Report—Risk management and internal control—Risk and internal controls” on pages 123 to 124, in each case of the Annual Report 2023 included as exhibit 15.1 to this Form 20-F is incorporated by reference.
Please also see the information above under Item 3 “Key Information—Risk Factors—Cyber security breaches, attacks and other similar incidents, as well as disruptions or failures in our IT systems or data security procedures and those of our third-party service providers, could expose us to liability, limit our ability to effectively monitor, operate and control operations and adversely impact our business, reputation, results of operations, financial condition and/or prospects” as well as “—Extraordinary events may significantly impact our business if we are unable to ensure business continuity due to a material incident”.
PART III
ITEM 17. FINANCIAL STATEMENTS
The Company has responded to Item 18 in lieu of this item.
ITEM 18. FINANCIAL STATEMENTS
Please refer to the information (including tabular data) set forth under the heading “Consolidated Financial Statements” on pages F-1 to F-83 of this Form 20-F.
In accordance with Rule 405(a)(3) under Regulation S-T, this information (including tabular data) is reproduced under Item 8 herein tagged with Inline XBRL formatting.
50
ITEM 19. EXHIBITS(1)
1.1 |
| |
2.1 |
| |
2.2 | ||
4.1 |
| |
4.2 | ||
4.3 | ||
4.4 | ||
4.5 | ||
4.6 | ||
4.7 | ||
8.1 |
| |
11.1 | Rentokil Initial plc Group Wide Dealing Policy dated January 2024. | |
11.2 | ||
12.1 |
| |
12.2 |
|
51
13.1 |
| |
15.1 |
| |
15.2 |
| Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm. |
97.1 | Rentokil Initial plc SEC Compensation Recoupment Policy dated 27 September 2023. | |
101.INS | XBRL Instance Document. | |
101.SCH | XBRL Taxonomy Extension Schema. | |
101.CAL | XBRL Taxonomy Extension Scheme Calculation Linkbase. | |
101.DEF | XBRL Taxonomy Extension Scheme Definition Linkbase. | |
101.LAB | XBRL Taxonomy Extension Scheme Label Linkbase. | |
101.PRE | XBRL Taxonomy Extension Scheme Presentation Linkbase. | |
104.Cover | Interactive Data File (formatted as Inline XBRL and included in Exhibit 101) |
(1) | Exhibits other than those listed above are omitted when in the opinion of the registrant they are either not applicable or not material. Other Exhibits previously filed have been omitted when in the opinion of the registrant such Exhibits are no longer material. |
(2) | Certain of the information included within Exhibit 15.1, which is provided pursuant to Rule 12b-23(a) of the Securities Exchange Act of 1934, as amended, is incorporated by reference in this Form 20-F, as specified elsewhere in this Form 20-F. With the exception of the items and pages so specified, the Annual Report 2023 is not deemed to be filed as part of this annual report on Form 20-F. |
52
SIGNATURE
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| Rentokil Initial plc | ||
By: | /s/ Stuart Ingall-Tombs | ||
|
| Name: | Stuart Ingall-Tombs |
|
| Title: | Chief Financial Officer |
San Francisco, United States
27 March 2024
53
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm - PricewaterhouseCoopers LLP | F-2 | |
Consolidated Statement of Profit or Loss and Other Comprehensive Income | F-5 | |
F-6 | ||
F-7 | ||
F-9 | ||
F-10 | ||
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Rentokil Initial plc
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheet of Rentokil Initial plc and its subsidiaries (the “Group”) as of 31 December 2023 and 2022, and the related consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated cash flow statement for each of the three years in the period ended 31 December 2023, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Group's internal control over financial reporting as of 31 December 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Group as of 31 December 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended 31 December 2023 in conformity with (i) International Financial Reporting Standards as issued by the International Accounting Standards Board , and (ii) UK-adopted International Accounting Standards. Also in our opinion, the Group did not maintain, in all material respects, effective internal control over financial reporting as of 31 December 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because a material weakness in internal control over financial reporting existed as of that date related to the failure to design and maintain effective IT general controls over user access, change management, database management and segregation of duties for information systems that are relevant to the preparation of the financial statements.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness referred to above is described in the accompanying Management's Annual Report on Internal Control over Financial Reporting appearing under Item 15B. We considered this material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and our opinion regarding the effectiveness of the Group’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.
Basis for Opinions
The Group’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in management's report referred to above. Our responsibility is to express opinions on the Group’s consolidated financial statements and on the Group's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
F-2
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Impairment assessment of goodwill
As described in the material accounting policies and Note B2 to the consolidated financial statements, the Group recorded £5,016 million of goodwill at 31 December 2023. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. For the purpose of impairment testing, goodwill is allocated to cash-generating units (CGUs) identified according to country of operation and reportable business unit. The recoverable amount of a CGU is determined based on the higher of value-in-use calculations using cash flow projections and fair value less costs to sell. Management’s value-in-use model uses the following assumptions about the future: revenue growth rate, operating profit margin, discount rate and long-term growth rates (LTGR). The cash flow projections in year one are based on financial budgets approved by management, which are prepared as part of the Group’s normal planning process. Cash flows for years two to five use management’s expectation of revenue growth and operating profit margin, based on past experience and expectations regarding future performance and profitability for each CGU. Cash flows beyond the five-year period are extrapolated using estimated LTGR.
The principal considerations for our determination that performing procedures relating to the impairment assessment of goodwill is a critical audit matter are: (i) the judgements by management when developing the recoverable amount of the CGUs; (ii) a high degree of auditor judgement, subjectivity, complexity and effort in performing procedures and evaluating management’s assumptions related to revenue growth rate, operating profit margin, discount rate and LTGR ; and (iii) the audit effort involved the use of professionals with specialised skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others, (i) testing management’s process for developing the recoverable amount of the CGUs; (ii) evaluating the appropriateness of the recoverable amount calculation; (iii) testing the completeness and accuracy of underlying data used in the calculation; and (iv) evaluating the reasonableness of the assumptions used by management relating to revenue growth rate, operating profit margin, discount rate and LTGR. Evaluating management’s assumptions involved evaluating whether the assumptions were reasonable considering (i) the current and past performance of the CGU; (ii) the consistency with external market and industry data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialised skill and knowledge were used to assist in the evaluation of management’s recoverable amount calculation and the LTGR and discount rate assumptions.
F-3
Valuation of termite damage claims provision
As described in the material accounting policies and Note A6 to the consolidated financial statements, the Group holds provisions for termite damage claims covered by contractual warranties. With the acquisition of Terminix in October 2022, the Group assumed a liability for termite damage claims, based on termite customers existing at the acquisition date, for which a provision has been estimated. The cash outflow arises when a termite infestation occurs, resulting in damage to a property under a termite contract, that is subsequently remediated by the Group. Termite damage claims provisions are subject to significant assumptions and estimation uncertainty. The assumptions included in valuing termite provisions are based on an estimate of the volume and value of future claims (based on historical and forecast information), customer churn rates and discount rates. The provision amounted to £260m at 31 December 2023.
The principal considerations for our determination that performing procedures relating to the valuation of termite damage claims provision is a critical audit matter are: (i) significant judgement by management in valuing the provision; (ii) a high degree of auditor judgement, subjectivity, complexity and effort in performing procedures to evaluate management’s significant assumptions related to the volume and value of future claims, customer churn rates and discount rates; and (iii) the audit effort involved the use of professionals with specialised skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others, (i) testing management’s process for valuing the provision; (ii) evaluating the appropriateness of the valuation methodology; (iii) testing the completeness and accuracy of data used by management; and (iv) evaluating the reasonableness of significant assumptions related to the volume and value of future claims, customer churn rates and discount rates. Evaluating management’s assumptions related to the volume and value of future claims and customer churn rates involved evaluating whether the assumptions were reasonable considering (i) the historical trend; (ii) consistency with third party data; (iii) consistency of assumptions used in the current year versus the prior year; and (iv) whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialised skill and knowledge were used to assist in evaluating the appropriateness of the methodology used and evaluating the reasonableness of the discount rate assumption.
/s/
27 March 2024
We have served as the Group’s auditor since 2021.
F-4
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 December
2023 | 2022 | 2021 | |||||||
Notes |
| £m |
| £m |
| £m | |||
Revenue |
| A1 |
| |
| |
| | |
Operating expenses |
| A7 |
| ( |
| ( |
| ( | |
Net impairment losses on financial assets | ( | ( | — | ||||||
Operating profit |
| A1 |
| |
| |
| | |
Finance income |
| C9 |
| |
| |
| | |
Finance cost |
| C8 |
| ( |
| ( |
| ( | |
Share of profit from associates net of tax |
| B6 |
| |
| |
| | |
Profit before income tax |
| |
| |
| | |||
Income tax expense1 |
| A12 |
| ( |
| ( |
| ( | |
Profit for the year |
| |
| |
| | |||
Profit for the year attributable to: | |||||||||
Equity holders of the Company | | | | ||||||
Non-controlling interests |
| — |
| — |
| — | |||
Other comprehensive income: |
|
|
|
|
|
| |||
Items that are not reclassified subsequently to the income statement: |
|
|
|
| |||||
Remeasurement of net defined benefit liability |
| A10 |
| — |
| |
| | |
Items that may be reclassified subsequently to the income statement: |
|
|
|
|
|
| |||
Net exchange adjustments offset in reserves |
| ( |
| ( |
| ( | |||
Net gain/(loss) on net investment hedge |
| |
| ( |
| | |||
Cost of hedging |
| |
| ( |
| ( | |||
Effective portion of changes in fair value of cash flow hedge |
| |
| ( |
| | |||
Tax related to items taken to other comprehensive income | A14 | | | | |||||
Other comprehensive income for the year |
| ( |
| ( |
| | |||
Total comprehensive income for the year |
| |
| ( |
| | |||
Total comprehensive income for the year attributable to: |
|
|
|
| |||||
Equity holders of the Company |
| |
| ( |
| | |||
Non-controlling interests |
| — |
| — |
| — | |||
|
|
| |||||||
Earnings per share attributable to the Company’s equity holders: |
|
|
|
| |||||
Basic |
| A2 |
| | p | | p | | p |
Diluted |
| A2 |
| | p | | p | | p |
All profit is from continuing operations.
1.
F-5
Consolidated Balance Sheet
At 31 December
Retrospectively | ||||||
adjusted | ||||||
2023 | 20221 | |||||
Notes |
| £m |
| £m | ||
Assets | ||||||
Non-current assets |
|
|
|
|
|
|
Intangible assets1 |
| B2 |
| |
| |
Property, plant and equipment |
| B3 |
| |
| |
Right-of-use assets1 |
| B4 |
| |
| |
Investments in associated undertakings1 |
| B6 |
| |
| |
Other investments |
| C4 |
| |
| |
Deferred tax assets |
| A14 |
| |
| |
Contract costs1 |
| A1 |
| |
| |
Retirement benefit assets |
| A10 |
| |
| |
Trade and other receivables |
| A3 |
| |
| |
Derivative financial instruments |
| C6 |
| |
| |
| |
| | |||
Current assets |
|
|
|
|
|
|
Other investments |
| C4 |
| |
| |
Inventories |
| A4 |
| |
| |
Trade and other receivables1 |
| A3 |
| |
| |
Current tax assets |
|
|
| |
| |
Derivative financial instruments |
| C6 |
| |
| — |
Cash and cash equivalents |
| C3 |
| |
| |
| |
| | |||
Liabilities |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Trade and other payables1 |
| A5 |
| ( |
| ( |
Current tax liabilities |
|
|
| ( |
| ( |
Provisions for liabilities and charges |
| A6 |
| ( |
| ( |
Bank and other short-term borrowings1 |
| C2 |
| ( |
| ( |
Lease liabilities |
| B4 |
| ( |
| ( |
Derivative financial instruments |
| C6 |
| ( |
| — |
| ( |
| ( | |||
Net current assets |
|
|
|
| ||
Non-current liabilities |
|
|
|
| ||
Other payables1 |
| A5 |
| ( |
| ( |
Bank and other long-term borrowings |
| C2 |
| ( |
| ( |
Lease liabilities1 |
| B4 |
| ( |
| ( |
Deferred tax liabilities1 |
| A14 |
| ( |
| ( |
Retirement benefit obligations |
| A10 |
| ( |
| ( |
Provisions for liabilities and charges1 |
| A6 |
| ( |
| ( |
Derivative financial instruments |
| C6 |
| ( |
| ( |
| ( |
| ( | |||
Net assets |
|
|
| |
| |
Equity |
|
|
|
|
|
|
Capital and reserves attributable to the Company’s equity holders |
|
|
|
|
|
|
Share capital |
| D2 |
| |
| |
Share premium |
|
|
| |
| |
Other reserves |
|
|
| |
| |
Retained earnings |
|
|
| |
| |
| |
| | |||
Non-controlling interests |
|
|
| ( |
| ( |
Total equity |
| |
| |
1. |
The Financial Statements on pages F-5 to F-83 were approved by the Board of Directors and were signed on its behalf by Andy Ransom and Stuart Ingall-Tombs on 7 March 2024.
|
| |
Andy Ransom |
| Stuart Ingall-Tombs |
Chief Executive | Chief Financial Officer |
F-6
Consolidated Statement of Changes in Equity
For the year ended 31 December
| Attributable to equity holders of the Company |
| Non- |
|
| |||||||||
Share | Share | Other | Retained | controlling | Total | |||||||||
capital | premium | reserves | earnings | interests | equity | |||||||||
Notes | £m | £m |
| £m |
| £m |
| £m |
| £m | ||||
At 1 January 2021 |
| |
| |
| ( |
| |
| |
| | ||
Profit for the year |
| — |
| — |
| — |
| |
| — |
| | ||
Other comprehensive income: |
|
|
|
|
|
| ||||||||
Net exchange adjustments offset in reserves |
| — |
| — |
| ( |
| — |
| — |
| ( | ||
Net gain on net investment hedge |
| — |
| — |
| |
| — |
| — |
| | ||
Net gain on cash flow hedge1 |
| — |
| — |
| |
| — |
| — |
| | ||
Cost of hedging |
| — |
| — |
| ( |
| — |
| — |
| ( | ||
Remeasurement of net defined benefit liability |
| — |
| — |
| — |
| |
| — |
| | ||
Transfer between reserves |
| — |
| — |
| ( |
| |
| — |
| — | ||
Tax related to items taken directly to other comprehensive income |
| — |
| — |
| — |
| |
| — |
| | ||
Total comprehensive income for the year |
| — |
| — |
| ( |
| |
| — |
| | ||
Transactions with owners: |
|
|
|
|
|
| ||||||||
Shares issued in the year |
| |
| — |
| — |
| ( |
| — |
| — | ||
Acquisition of non-controlling interests |
| — |
| — |
| — |
| ( |
| ( |
| ( | ||
Dividends paid to equity shareholders | D1 | — |
| — |
| — |
| ( |
| — |
| ( | ||
Cost of equity-settled share-based payment plans |
| — |
| — |
| — |
| |
| — |
| | ||
Tax related to items taken directly to equity |
| — |
| — |
| — |
| |
| — |
| | ||
Movement in the carrying value of put options |
| — |
| — |
| — |
| ( |
| — |
| ( | ||
At 31 December 2021 |
| |
| |
| ( |
| |
| ( |
| | ||
Profit for the year |
| — |
| — |
| — |
| |
| — |
| | ||
Other comprehensive income: |
|
|
|
|
|
| ||||||||
Net exchange adjustments offset in reserves | — | — | ( | — | — | ( | ||||||||
Net loss on net investment hedge |
| — |
| — |
| ( |
| — |
| — |
| ( | ||
Net loss on cash flow hedge1 |
| — |
| — |
| ( |
| — |
| — |
| ( | ||
Cost of hedging |
| — |
| — |
| ( |
| — |
| — |
| ( | ||
Remeasurement of net defined benefit liability |
| — |
| — |
| — |
| |
| — |
| | ||
Tax related to items taken directly to other comprehensive income |
| — |
| — |
| — |
| |
| — |
| | ||
Total comprehensive income for the year |
| — |
| — |
| ( |
| |
| — |
| ( | ||
Transactions with owners: |
|
|
|
|
|
| ||||||||
Shares issued in the year |
| |
| — | — |
| — |
| — |
| | |||
Merger relief on acquisition of Terminix Global Holdings, Inc. |
| — |
| — |
| |
| — |
| — |
| | ||
Gain on stock options | — | | — | — | — | | ||||||||
Cost of issuing new shares |
| — |
| — |
| ( |
| — |
| — |
| ( | ||
Dividends paid to equity shareholders | D1 | — |
| — |
| — |
| ( |
| — |
| ( | ||
Cost of equity-settled share-based payment plans |
| — |
| — |
| — |
| |
| — |
| | ||
Tax related to items taken directly to equity | — | — | — | ( | — | ( | ||||||||
Movement in the carrying value of put options |
| — |
| — |
| — |
| ( |
| — |
| ( | ||
At 31 December 2022 |
| |
| |
| |
| |
| ( |
| | ||
Adjustment on initial application of IFRS 17 | — | — | — | ( | — | ( | ||||||||
Adjusted balance as at 1 January 2023 | | | | | ( | | ||||||||
Profit for the year | — | — | — | | — | | ||||||||
Other comprehensive income: | ||||||||||||||
Net exchange adjustments offset in reserves | — | — | ( | — | — | ( | ||||||||
Net gain on net investment hedge | — | — | | — | — | | ||||||||
Net gain on cash flow hedge1 | — | — | | — | — | | ||||||||
Cost of hedging | — | — | | — | — | | ||||||||
Tax related to items taken directly to other comprehensive income | — | — | — | | — | | ||||||||
Total comprehensive income for the year | — | — | ( | | — | | ||||||||
Transactions with owners: | ||||||||||||||
Gain on stock options | — | | — | — | — | | ||||||||
Dividends paid to equity shareholders | D1 | — | — | — | ( | — | ( | |||||||
Cost of equity-settled share-based payment plans | — | — | — | | — | | ||||||||
Movement in the carrying value of put options | — | — | — | | — | | ||||||||
At 31 December 2023 |
| |
| |
| |
| |
| ( |
| | ||
1. |
Shares of £
F-7
Consolidated Statement of Changes in Equity
For the year ended 31 December continued
Analysis of other reserves
| Capital |
| Merger |
|
| Cash flow |
|
|
|
|
|
| ||
reduction | relief | Legal | hedge | Translation | Cost of | |||||||||
reserve | reserve | reserve | reserve | reserve | hedging | Total | ||||||||
£m |
| £m |
| £m |
| £m |
| £m |
| £m |
| £m | ||
At 1 January 2021 |
| ( |
| — | |
| ( |
| ( |
| ( |
| ( | |
Net exchange adjustments offset in reserves |
| — |
| — | — |
| — |
| ( |
| — |
| ( | |
Net gain on net investment hedge |
| — |
| — | — |
| — |
| |
| — |
| | |
Net gain on cash flow hedge1 |
| — |
| — | — |
| |
| — |
| — |
| | |
Transfer between reserves |
| — |
| — | ( |
| — |
| — |
| — |
| ( | |
Cost of hedging |
| — |
| — | — |
| — |
| — |
| ( |
| ( | |
Total other comprehensive income for the year |
| — |
| — | ( |
| |
| ( |
| ( |
| ( | |
At 31 December 2021 |
| ( |
| — | — |
| |
| ( |
| ( |
| ( | |
Net exchange adjustments offset in reserves |
| — |
| — | — |
| — |
| ( |
| — | ( | ||
Net loss on net investment hedge |
| — |
| — | — |
| — |
| ( |
| — |
| ( | |
Net loss on cash flow hedge1 |
| — |
| — | — |
| ( |
| — |
| — |
| ( | |
Cost of hedging |
| — |
| — | — |
| — |
| — |
| ( |
| ( | |
Total other comprehensive income for the year | — | — | — | ( | ( | ( | ( | |||||||
Transactions with owners: | ||||||||||||||
Merger relief on acquisition of Terminix Global Holdings, Inc. | — | | — | — | — | — | | |||||||
Cost of issuing new shares |
| — |
| ( | — |
| — |
| — |
| — |
| ( | |
At 31 December 2022 |
| ( |
| | — |
| |
| ( |
| ( |
| | |
Net exchange adjustments offset in reserves | — | — | — | — | ( | — | ( | |||||||
Net loss on net investment hedge | — | — | — | — | | — | | |||||||
Net gain on cash flow hedge1 | — | — | — | | — | — | | |||||||
Cost of hedging | — | — | — | — | — | | | |||||||
Total other comprehensive income for the year | — | — | — | | ( | | ( | |||||||
At 31 December 2023 |
| ( |
| | — |
| |
| ( |
| |
| |
1. |
The capital reduction reserve arose in 2005 as a result of the scheme of arrangement of Rentokil Initial 1927 plc, under section 425 of the Companies Act 1985, to introduce a new holding company, Rentokil Initial plc, and the subsequent reduction in capital approved by the High Court whereby the nominal value of each ordinary share was reduced from 100p to 1p.
The legal reserve represents amounts set aside in compliance with local laws in certain countries in which the Group operates. An assessment of this reserve was completed during 2021 and determined that these amounts are no longer required to be set aside. Accordingly, the balance of £
The excess of the fair value of shares issued to fund the acquisition of Terminix over their par value gave rise to a new reserve called a Merger Relief Reserve. Under section 612 of the Companies Act 2006, merger relief is available if certain circumstances are met when a business is acquired by issuing shares to replace already issued shares. This reserve is unrealised (and therefore not distributable), but it may become realised at a later date, for example on disposal of the investment to which it relates or on impairment of that investment (which may occur after payment of a dividend by the investment).
F-8
Consolidated Cash Flow Statement
For the year ended 31 December
2023 | 2022 | 2021 | ||||||
Notes |
| £m |
| £m |
| £m | ||
Cash flows from operating activities1 |
| |||||||
Operating profit | | | | |||||
Adjustments for: | ||||||||
– Depreciation and impairment of property, plant and equipment | | | | |||||
– Depreciation and impairment of leased assets | | | | |||||
– Amortisation and impairment of intangible assets (excluding computer software) | | | | |||||
– Amortisation and impairment of computer software | | | | |||||
– Other non-cash items | | | | |||||
Changes in working capital (excluding the effects of acquisitions and exchange differences on consolidation): | ||||||||
– Inventories | ( | ( | ( | |||||
– Contract costs | ( | ( | ( | |||||
– Trade and other receivables | ( | | | |||||
– Trade and other payables and provisions | ( | | ( | |||||
Interest received | |
| | | ||||
Interest paid2 | ( |
| ( | ( | ||||
Income tax paid |
| A13 | ( |
| ( | ( | ||
Net cash flows from operating activities | |
| | | ||||
Cash flows from investing activities |
|
|
| |||||
Purchase of property, plant and equipment | ( |
| ( | ( | ||||
Purchase of intangible assets | ( |
| ( | ( | ||||
Proceeds from sale of property, plant and equipment | |
| | | ||||
Acquisition of companies and businesses, net of cash acquired |
| B1 | ( |
| ( | ( | ||
Disposal of companies and businesses |
| — | | — | ||||
Disposal of investment in associate | B6 | |
| — | — | |||
Dividends received from associates |
| B6 | |
| | | ||
Net change to cash flow from investment in term deposits | — |
| | | ||||
Net cash flows from investing activities | ( |
| ( | ( | ||||
Cash flows from financing activities |
|
|
| |||||
Dividends paid to equity shareholders |
| D1 | ( |
| ( | ( | ||
Acquisition of shares from non-controlling interest | — |
| — | ( | ||||
Capital element of lease payments | ( |
| ( | ( | ||||
Cost of issuing new shares | — | ( | — | |||||
Cash (outflow)/inflow on settlement of debt-related foreign exchange forward contracts | ( |
| | ( | ||||
Proceeds from new debt | — |
| | | ||||
Debt repayments | — |
| ( | ( | ||||
Net cash flows from financing activities | ( |
| | ( | ||||
Net (decrease)/increase in cash and cash equivalents | ( |
| | ( | ||||
Cash and cash equivalents at beginning of year | |
| | | ||||
Exchange losses on cash and cash equivalents | ( |
| ( | ( | ||||
Cash and cash equivalents at end of the financial year | C3 | |
| | |
1. | Cash flows from operating activities has been revised in 2023 to show a reconciliation from operating profit to net cash flows from operating activities – part of this reconciliation was previously shown in a separate table in the notes to the financial statements. |
2. |
F-9
Material accounting policies
Basis of preparation
The Consolidated Financial Statements have been prepared in accordance with UK-adopted International Accounting Standards (IAS) and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. The Consolidated Financial Statements also comply fully with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB). The Consolidated Financial Statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and liabilities (including derivative instruments). Certain financial and equity instruments have been measured at fair value.
Climate change
The Group has engaged in a detailed review of expected climate change impacts on the business and its assets and liabilities, to establish any adjustments required and what disclosure is necessary in the Consolidated Financial Statements for 2023 under a 1.5-2.0°C pathway.
This process has been completed to ensure material accuracy of the financial reporting, and that disclosure of relevant information complies with the requirements of IAS 1.
The process has involved a detailed review of material revenue segments, all balance sheet line items and each element of the Group target to reach net zero by 2040, to identify if any of these items is expected to be materially impacted in a negative or positive way by weather, legislative, societal, or revenue/cost changes. The conclusions of this process have been reviewed and agreed by the Audit Committee and Board on 27 February 2024.
Overall the conclusion of the review was that, while there will undoubtedly be impacts on the Group, the highly disaggregated nature of the operations significantly reduces the risk profile of the Group to impacts from weather-related changes. The changes necessary to achieve net zero will not have a materially adverse impact on the cash flows of the Group and indeed, warmer climates may present. Societal and legislative impacts are not felt to have a material impact on any one segment such that we need to break out reporting in a different way to previous years. Judgements are not felt to be significant, though clearly understanding of climate change is developing with time. The area with the most judgement is goodwill impairment testing and a description is given in Note B2 of the incremental processes undertaken to give extra comfort on the valuations. Management review has concluded that this is the only area that has judgement and potential for material impact, though we conclude that none are necessary, and that no further disclosures are needed beyond this note.
Going concern
The Directors have prepared Board-approved cash flow forecasts that demonstrate that the Group has sufficient liquidity to meet its obligations as they fall due for the period of at least 12 months from the date of approval of these Consolidated Financial Statements.
Additionally, the Directors have assessed severe but plausible downside scenarios. The downside scenarios include i) a revenue decline of
The Directors have therefore concluded that the Group will have sufficient liquidity to continue to meet its liabilities as they fall due for this period and therefore have prepared the Consolidated Financial Statements on a going concern basis.
F-10
Consolidation
(a)Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it (i) has power over the entity; (ii) is exposed or has rights to variable returns from its involvement with the entity; and (iii) has the ability to affect those returns through its power over the entity. The Group reassesses whether or not it controls a subsidiary if facts and circumstances indicate that there are changes to one or more of these three elements of control.
The financial statements of subsidiaries are included in the Consolidated Financial Statements from the date that control commences until the date that control ceases. Inter-company transactions, balances, and gains and losses on transactions between Group companies are eliminated on consolidation. When less than 100% of the issued share capital of a subsidiary is acquired, and the acquisition includes an option to purchase the remaining share capital of the subsidiary, the anticipated acquisition method is applied where judged appropriate to do so. The judgement is based on the risks and rewards associated with the option to purchase, meaning that no non-controlling interest is recognised. A liability is carried on the balance sheet equal to the fair value of the option to purchase. This is revised to the fair value at each reporting date with differences being recorded in equity.
Where the Group ceases to have control of a subsidiary, the assets and liabilities are derecognised along with any related non-controlling interest and other components of equity. Any resulting gain or loss is recognised in the income statement. Any interest retained in the former subsidiary is measured at fair value when control ceases. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests, which may cause the non-controlling interests to have a deficit balance. Consideration in excess of net identifiable assets acquired in respect of non-controlling interests in existing subsidiary undertakings is taken directly to equity.
(b)Associates
Associates are those entities in which the Group has significant influence over the financial and operating policies, but not control. Significant influence is usually presumed to exist when the Group holds between 20% and 50% of the voting power of another entity.
Associates are accounted for using the equity method and are initially recognised at cost. The Group’s investment includes goodwill identified on acquisition, net of any accumulated impairment losses. The Consolidated Financial Statements include the Group’s share of the total comprehensive income and equity movements of equity accounted investees, from the date that significant influence commences until the date that significant influence ceases. When the Group’s share of losses exceeds its interest in an equity accounted investee, the carrying amount is reduced to nil and recognition of further losses is discontinued, except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of an investee.
Gains and losses on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates.
Foreign currency translation
(a)Functional and presentation currency
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 functional currency of Rentokil Initial plc.
F-11
(b)Group companies
The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings and other currency instruments designated as hedges of such investments or deemed to be quasi-equity, are taken to other comprehensive income. When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale.
(c)Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions, or from the translation of monetary assets and liabilities denominated in foreign currencies at reporting period end exchange rates, are recognised under the appropriate heading in the income statement; except when deferred in equity as qualifying net investment hedges or where certain intra-group loans are determined to be quasi-equity (normally not expected to be repaid).
(d)Financial reporting in hyperinflationary economies
During 2023, Ghana, a country in which the Group has operated for many years, was designated as hyperinflationary. The Group also has operations in Argentina, Lebanon, and Turkey, which remain hyperinflationary in 2023.
The IAS 29 rules are applied as follows:
| (i) | adjustment of the income statement at the end of the reporting period using the change in general price index; |
| (ii) | adjustment of historical cost non-monetary assets and liabilities for the change in purchasing power caused by inflation from the date of initial recognition to the balance sheet date; and |
| (iii) | adjustment of the income statement to reflect the impact of inflation and exchange rate movement on holding monetary assets and liabilities in local currency. |
Consumer Price Indices have been used for the relevant hyperinflationary adjustments. The indices used for these adjustments are as follows:
Country |
| Index at 1 January 2023 |
| Index at 31 December 2023 |
Argentina |
| | | |
Ghana | | | ||
Lebanon |
| |
| |
Turkey |
| |
| |
Financial instruments
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the relevant instrument, and derecognised when it ceases to be a party to such provisions.
F-12
Financial assets
The Group classifies its financial assets depending on the purpose for which the financial assets were acquired. At initial recognition the Group carries out a solely payment of principal and interest (SPPI) test and a business model test to establish the classification and measurement of its financial assets. Financial assets are classified in the following categories:
(a)Amortised cost
Financial assets under this classification are non-derivative financial assets held to collect the contractual cash flows until maturity and the cash flows are SPPI. Assets measured at amortised cost include trade and other receivables, cash and cash equivalents (excluding money market funds which are classified as fair value through profit and loss), and other investments.
(b)Fair value through other comprehensive income
These are non-derivative financial assets which can be for sale with cash flows that are SPPI. These assets are measured at fair value and changes to market values are recognised in other comprehensive income. The Group has no assets classified under this category.
(c)Fair value through profit or loss
Financial assets under this classification are assets that cannot be classified in any of the other categories. These assets are measured at fair value and changes to market values are recognised in profit and loss.
Financial liabilities
All financial liabilities are stated at amortised cost using the effective interest rate method except for derivatives, which are classified as held for trading (except where they qualify for hedge accounting) and are held at fair value.
Financial liabilities held at amortised cost include trade payables, deferred consideration, and borrowings.
Sources of estimation uncertainty and significant accounting judgements
The use of estimates, assumptions and judgements in the application of the Group’s accounting policies is explained below, with major sources of estimation uncertainty and significant judgements separately identified.
Assumptions and estimation uncertainties
The Group makes estimates and assumptions concerning the future. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates and revisions to estimates are recognised prospectively. Sensitivities to the estimates and assumptions are provided, where relevant, in the notes to the Consolidated Financial Statements.
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 listed below (please refer to the relevant notes for further detail):
F-13
(a) Termite damage claim provisions
With the acquisition of Terminix in October 2022, the Group assumed a liability for termite damage claims, based on termite customers existing at the acquisition date, for which a provision has been estimated. The cash outflow arises when a termite infestation occurs, resulting in damage to a property under a termite contract, that is subsequently remediated by the Group. The assumptions used to estimate the historical termite damage claim provisions are based on an assessment of the volume and value of future claims (based on historical information), customer churn rate, and discount rates. Starting from the acquisition date, an additional provision is recognised for all new termite customers upon commencement of their contract, based on the estimated average claim cost per customer over the lifetime of the contract. The trend of volume and value of claims will be monitored and reviewed over time and as such the value of the provisions are also likely to change. Sensitivity analysis is provided in Note A6.
Significant accounting judgements
Judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the Consolidated Financial Statements are discussed below:
(a) Useful economic life of brands
The Terminix US brand, acquired in October 2022, has been assessed as having an indefinite useful life. Prior to this acquisition all brands were considered by management to have finite useful lives. Indefinite-lived assets do not get amortised and therefore if management had judged that the Terminix brand had a finite life then there would be a significant amortisation expense recognised annually in the income statement. At acquisition, the Terminix brand was valued at £
Other accounting estimates
The Consolidated Financial Statements include other areas of accounting estimates that do not meet the definition of significant accounting estimates or accounting judgements under IAS 1. The recognition and measurement of certain material assets and liabilities are based on assumptions and/or are subject to longer-term uncertainties as follows:
(a) Impairment of goodwill and other assets
The annual review for potential impairment of goodwill and other indefinite-lived intangible assets is primarily based on a value-in-use model. This model uses discounted cash flows to assess whether the goodwill carrying value can be supported or whether impairment is required. The model uses the following assumptions about the future:
| ● | Revenue growth rate |
| ● | Operating profit margin |
| ● | Discount rate |
| ● | Long-term growth rate (inflation) |
If the actual outcome is different to the estimated performance, or there is an unfavourable movement in the timing or amount of any of the assumptions used, this could lead to a material adjustment to the carrying amount of the asset within the next financial year. Note B2 explains the impairment review process undertaken in the year.
F-14
(b) Self-insurance provisions
The Group self-insurance provision increased significantly through the acquisition of Terminix in October 2022. Self-insurance provisions are valued annually by external actuaries. Although the carrying value of the provision is significant, it is not expected that there would be any change to assumptions that would cause a significant adjustment to the carrying value in the next financial year and any impact would be expected to crystallise over the long term. Self-insurance provisions are disclosed in Note A6.
(c) Provisions for uncertain tax positions
The Group holds significant provisions for uncertain tax positions on the basis of amounts expected to be paid to the tax authorities. The Group’s current tax liabilities reflect management’s best estimate of the future amounts of corporation tax that will be settled. However the actual outcome could be significantly different to the estimate made, as the ultimate tax liability cannot be known until a resolution has been reached with the relevant tax authority, or the issue becomes time - barred. Note A13 discusses in detail why the provisions are taken and explains the estimation uncertainty.
Standards, amendments and interpretations to published standards that are mandatorily effective for the current year
Except as described below, the accounting policies applied in these Consolidated Financial Statements are the same as those applied in the Group’s Consolidated Financial Statements for the year ended 31 December 2022.
The Group has adopted the following new standards and amendments to standards, including any consequential amendments to other standards, with effect from 1 January 2023:
| ● | introduction of IFRS 17 Insurance contracts (for non-issuers); |
| ● | amendments to IAS 8 Definition of accounting estimates; |
| ● | amendments to IAS 1 Disclosure of accounting policies; and |
| ● | amendments to IAS 12 Deferred tax. |
The application of these amendments has had no material impact on the disclosures of the amounts recognised in the Group’s Consolidated Financial Statements. Consequently, no adjustment has been made to the comparative financial information at 31 December 2022.
Certain new accounting standards, amendments to accounting standards and interpretations have been published that are not mandatory for 31 December 2023 reporting periods and have not been early adopted by the Group. These standards, amendments or interpretations are not expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions.
Retrospective adjustments to prior year comparatives
In accordance with the requirements of IFRS 3 Business Combinations, 2022 comparative information has been retrospectively adjusted to show the effect of measurement period adjustments arising on the Terminix acquisition during 2023. Further details can be found in note B1 on page F-40.
F-15
A. Operating
A1. Revenue recognition and operating segments
Revenue recognition
Revenue represents the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Group expects to be entitled. All revenue is considered revenue from contracts with customers as defined by IFRS 15, including job work and sales of goods. Under IFRS 15, revenue is recognised when a customer obtains control of goods or services in line with identifiable performance obligations. In the majority of cases the Group considers that the contracts it enters into are contracts for bundled services which are accounted for as a single performance obligation. Accordingly the majority of revenue across the Group is recognised on an output basis evenly over the course of the contract because the customer simultaneously receives and consumes the benefits provided by the Group’s performance as it performs. Job work is short-term contract revenue whereby the period of service is typically less than
The transaction price reported for all contracts is the price agreed in the contract and there are no material elements of variable consideration, financing component or non-cash consideration. The Group applies the practical expedient in paragraph 121 of IFRS 15 and does not disclose information about remaining performance obligations because the Group has a right to consideration from customers in an amount that corresponds directly with the value to the customer of the performance obligations completed to date.
Disaggregation of revenue into region, category and major type of revenue stream is shown below under segment reporting.
Performance obligations
Revenue recognised over time — contract service revenue
These are mainly full-service contracts, inclusive of equipment, maintenance and consumables as required. The inclusive service is treated as a single performance obligation.
| ● | Pest Control: the Group offers a range of services with the most common being general pest maintenance contracts. Under this type of contract the Group promises to provide a pest control service for the duration of the contract. In order to fulfil this promise, equipment is supplied (such as bait boxes) and a technician maintains and monitors the equipment at a set number of visits per year, plus any additional call-outs as required; so there is a stand-ready element to the service as well as an ongoing service. The Group considers that this type of contract is a bundled service as the goods and services are not distinct in the context of the contract; equipment is not supplied without the service. |
The Group offers certain termite contracts across a limited number of countries (including North America) where there is a single performance obligation. In these contracts revenue is recognised as the performance obligation is satisfied, which is generally over a short time period of a few days. These contracts include assurance warranties that last for a period of
F-16
| ● | Hygiene & Wellbeing: the Group offers a similar type of service to Pest Control, providing washroom equipment, consumables, and a technician to service the washroom. This type of contract will include a set number of visits. Dispensers are replenished by the technician. Management considers that the supply of goods and services are not distinct in the context of the contract. Dispensers and other equipment would not be supplied without providing the full service; the equipment is controlled by the Group and ownership does not transfer to the customer. Also included are contracts relating to interior landscaping, specifically the supply and maintenance of interior plants. Maintenance is only offered for plants that were supplied by the Group and therefore the services are not distinct in the context of the contract. The assets are positioned and situated by our technicians and the customer is not permitted to relocate them. At the end of the contract, any assets on the customer’s site are recovered. |
| ● | France Workwear: the main type of contract is for supply and laundering of garments for commercial organisations. Supply and laundry are not offered separately, therefore management considers the services not to be distinct in the context of the contract. The service is treated as a bundle and a single performance obligation. Any equipment remains under ownership and control of the Group. |
Revenue recognised at a point in time — job work
These services are short-term in nature and only an immaterial amount would straddle an accounting period end. There is usually only one performance obligation, with revenue recognised at the point of completion of the work.
| ● | Pest Control: an example of this type of revenue in the Pest Control category is bird-proofing which is a one-off installation that, depending on the size of the site, may take between a few days and several weeks to complete. There is a single performance obligation (to install bird-proofing) and the customer is billed, and revenue recognised, at the end of the job. |
| ● | Hygiene & Wellbeing: this type of revenue is generated, for example, by our Specialist Hygiene team which performs specialist cleaning services such as graffiti removal, deep cleaning of kitchens and washrooms, trauma cleaning, flood or fire damage cleaning, and specialist deep cleaning services. These are usually short-term jobs (less than ) and usually there is a single performance obligation with revenue recognised on completion of the job. |
Revenue recognised at a point in time — sale of goods
Sale of products and consumables relates mainly to the pest distribution businesses, which sell pest control products to retailers and the pest control industry. In the Hygiene & Wellbeing business there are some sales of consumables to customers. In all cases, revenue is recognised at the point in time that ownership transfers to the customer.
The Group does not consider that any judgements were made that would have a significant impact on the amount or timing of revenue recognised. Those contracts in the business where revenue is recognised over time are repetitive and are based on short cycles that repeat many times per year. Therefore, if revenue had been considered to be recognised at a point in time rather than over time, the in-year impact would be immaterial.
The Group makes a charge against revenue for credit notes not yet issued at the balance sheet date.
Contract costs
Contract costs are mainly incremental costs of obtaining contracts (primarily sales commissions directly related to contracts obtained), and to a lesser extent costs to fulfil contracts which are not within the scope of other standards (mainly incremental costs of putting resources in place to fulfil contracts).
It is anticipated that these costs are recoverable over the life of the contract to which they relate. Accordingly, the Group capitalises them as contract costs and amortises them over the expected life of the contracts. Management takes a portfolio approach to recognising contract costs, and the expected length of contracts across the Group and associated amortisation periods are between and
F-17
The contract costs recognised in the balance sheet at the period end amounted to £
Applying the practical expedient in paragraph 94 of IFRS 15, the Group recognises the incremental costs of obtaining contracts as an expense when incurred if the amortisation period of the assets that the Group otherwise would have recognised is one year or less.
Contract assets and accrued income
Contract assets relate to the Group’s right to consideration for performance obligations satisfied, but where further performance obligations need to be satisfied before the customer can be invoiced. Accrued income is recognised where all performance obligations have been satisfied but the customer has yet to be invoiced. A receivable is recognised when all rights to consideration become unconditional, which usually occurs when the Group issues an invoice to the customer. All opening balances have been invoiced during the year.
Contract liabilities
Contract liabilities relate to advance consideration received from customers where the performance obligations have yet to be satisfied. All opening balances have subsequently been satisfied in the year. In most business categories where revenue is recognised over time, customers are invoiced in advance or simultaneously with performance obligations being satisfied.
Segment reporting
Segmental information has been presented in accordance with IFRS 8 Operating Segments on page F-16. The Group’s operating segments are regions and this reflects the internal management reporting structures and the way information is reviewed by the chief operating decision maker (the Chief Executive). Each region is headed by a Regional Managing Director who reports directly to the Chief Executive and is a member of the Group’s Executive Leadership Team responsible for the review of Group performance. The businesses within each operating segment operate in a number of different countries and sell services across
The LATAM region is combined with Europe in the Group’s segment reporting. It is the Group’s smallest region and not considered reportable under the quantitative thresholds in IFRS 8. It is combined with Europe as they are similar with respect to economic characteristics, the nature of services provided, the type of customers, methods used to provide services, and language and cultural similarities.
Disaggregated revenue under IFRS 15 is the same as the segmental analysis below. Restructuring costs, one-off and adjusting items, amortisation and impairment of intangible assets (excluding computer software), and central and regional costs are presented at a Group level as they are not targeted or managed at reportable segment level. The basis of presentation is consistent with the information reviewed by internal management.
F-18
Revenue and Profit
Operating | Operating | Operating | |||||||||||
Revenue | Revenue1 | Revenue1 | profit | profit1 | profit1 | ||||||||
2023 | 2022 | 2021 | 2023 | 2022 | 2021 | ||||||||
| £m |
| £m |
| £m |
| £m |
| £m |
| £m | ||
North America2 | |||||||||||||
Pest Control | | | | | | | |||||||
Hygiene & Wellbeing |
| | | | | | | ||||||
| | | | | | | |||||||
Europe (incl. LATAM) |
| ||||||||||||
Pest Control |
| | | | | | | ||||||
Hygiene & Wellbeing |
| | | | | | | ||||||
France Workwear |
| | | | | | | ||||||
| | | | | | | |||||||
UK & Sub-Saharan Africa |
| ||||||||||||
Pest Control1 | | | | | | | |||||||
Hygiene & Wellbeing |
| | | | | | | ||||||
| | | | | | | |||||||
Asia & MENAT | |||||||||||||
Pest Control | | | | | | | |||||||
Hygiene & Wellbeing |
| | | | | | | ||||||
| | | | | | ||||||||
Pacific | |||||||||||||
Pest Control |
| | | | | | | ||||||
Hygiene & Wellbeing |
| | | | | | | ||||||
| | | | | | | |||||||
Central and regional overheads1 |
| | | | ( | ( | ( | ||||||
Restructuring costs |
| — | — | — | ( | ( | ( | ||||||
Revenue and Adjusted Operating Profit |
| | | | | | | ||||||
One-off and adjusting items | ( | ( | ( | ||||||||||
Amortisation and impairment of intangible assets3 | ( | ( | ( | ||||||||||
Operating Profit | | | |
| 1. | Central and regional overheads revenue relates to the wholesale of metalwork and consumables, including hygiene and pest control products. It is managed centrally rather than in any region. During 2023, internal management reporting structures changed and revenue and profit have been represented for 2022 and 2021 under the new structure. As a result of this change, revenue of £ |
| 2. | During 2023 there were impairment losses recognised in North America related to ROU assets of £ |
| 3. | Excluding computer software which is included in our segment operating profit measure. |
F-19
Revenue and operating profit relate to the main groups of business segment and activity: Pest Control, Hygiene & Wellbeing and France Workwear. Central and regional overheads represent corporate expenses that are not directly attributable to any reportable segment. Business segment revenue and operating profit are shown in the table below:
|
|
|
| Operating |
| Operating |
| Operating | ||||
Revenue | Revenue1 | Revenue1 | profit | profit1 | profit1 | |||||||
2023 | 2022 | 2021 | 2023 | 2022 | 2021 | |||||||
£m | £m | £m | £m | £m | £m | |||||||
Pest Control1 |
| |
| |
| |
| |
| |
| |
Hygiene & Wellbeing |
| |
| |
| |
| |
| |
| |
France Workwear |
| |
| |
| |
| |
| |
| |
Total business segments |
| |
| |
| |
| |
| |
| |
Central and regional overheads1 |
| |
| |
| |
| ( |
| ( |
| ( |
Restructuring costs |
| — |
| — |
| — |
| ( |
| ( |
| ( |
Revenue and Adjusted Operating Profit |
| |
| |
| |
| |
| |
| |
One-off and adjusting items |
|
|
|
|
|
|
| ( |
| ( |
| ( |
Amortisation and impairment of intangible assets2 |
|
|
|
|
|
|
| ( |
| ( |
| ( |
Operating Profit |
|
|
|
|
|
|
| |
| |
| |
| 1. | Central and regional overheads revenue relates to the wholesale of metalwork and consumables, including hygiene and pest control products. It is managed centrally rather than in any region. During 2023, internal management reporting structures changed and revenue and profit have been represented for 2022 and 2021 under the new structure. As a result of this change, revenue of £ |
| 2. | Excluding computer software which is included in our segment operating profit measure. |
Revenue from external customers attributed to the UK amounted to £
The Group is not reliant on turnover from transactions with any single customer and does not receive 10% or more of its turnover from transactions with any single customer.
Segment assets and liabilities are not provided because they are not reported to, or reviewed by, our chief operating decision-maker.
F-20
Revenue and non-current assets for the country of domicile (UK), the United States, France, Australia, India, and Spain (being the largest countries outside the UK), and for all other countries are:
Non-current | Non-current | Non-current | ||||||||||
Revenue | assets1 | Revenue | assets1 | Revenue | assets1 | |||||||
2023 | 2023 | 2022 | 2022 | 2021 | 2021 | |||||||
£m | £m | £m | £m | £m | £m | |||||||
UK |
| |
| |
| |
| |
| |
| |
USA |
| |
| |
| |
| |
| |
| |
France |
| |
| |
| |
| |
| |
| |
Australia |
| |
| |
| |
| |
| |
| |
India |
| |
| |
| |
| |
| |
| |
Spain |
| |
| |
| |
| |
| |
| |
Other countries |
| |
| |
| |
| |
| |
| |
Total | | | | | | |
| 1. | Non-current assets include intangible assets, property, plant and equipment, right-of-use assets, contract cost assets, and non-current other receivables. |
| 2. | Non-current assets have been retrospectively adjusted in 2022, in accordance with IFRS 3, to reflect measurement period adjustments made relating to the Terminix acquisition amounting to £ |
Analysis of revenue by type
Revenue | Revenue | Revenue | ||||
2023 | 2022 | 2021 | ||||
| £m |
| £m |
| £m | |
Recognised over time |
|
|
|
| ||
Contract service revenue |
| | | | ||
Recognised at a point in time |
| |||||
Job work |
| | | | ||
Sales of goods |
| | | | ||
Total |
| | | |
Other segment items included in the consolidated income statement are as follows:
| Amortisation and |
| Amortisation and |
| Amortisation and | |
impairment of | impairment of | impairment of | ||||
intangibles1 | intangibles1 | intangibles1 | ||||
2023 | 2022 | 2021 | ||||
£m | £m | £m | ||||
North America |
| |
| |
| |
Europe (incl. LATAM) |
| |
| |
| |
UK & Sub-Saharan Africa |
| |
| — |
| |
Asia & MENAT |
| |
| |
| |
Pacific |
| |
| |
| |
Central and regional |
| |
| |
| |
Total |
| |
| |
| |
Tax effect |
| ( |
| ( |
| ( |
Total after tax effect |
| |
| |
| |
1. | Excluding computer software. |
F-21
A2. Earnings per share
Basic earnings per share is calculated by dividing the profit after tax attributable to equity holders of the Company by the weighted average number of shares in issue during the year, excluding those held in the Rentokil Initial Employee Share Trust (see note at the bottom of the Consolidated Statement of Changes in Equity) which are treated as cancelled, and including share options for which all conditions have been met.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to include all potential dilutive ordinary shares. The Group’s potentially dilutive ordinary shares relate to the contingent issuable shares under the Group’s long-term incentive plans (LTIPs) to the extent that the performance conditions have been met at the end of the period. These share options are issued for
For the calculation of diluted earnings per share,
Details of the calculation of earnings per share are set out below:
2023 | 2022 | 2021 |
| ||||
£m | £m | £m |
| ||||
Profit attributable to equity holders of the Company |
| |
| |
| | |
Weighted average number of ordinary shares in issue (million) |
| |
| |
| | |
Adjustment for potentially dilutive shares (million) |
| |
| |
| | |
Weighted average number of ordinary shares for diluted earnings per share (million) |
| |
| |
| | |
Basic earnings per share |
| | p | | p | | p |
Diluted earnings per share |
| | p | | p | | p |
A3. Trade and other receivables
The Group’s trade receivables are recognised at the transaction price less provision for impairment. They are generally due for settlement within 30 days and are all classified as current. The amount of the provision for impairment is recognised in the income statement and movements on provisions for impaired trade receivables are recognised within operating expenses in the income statement. Amounts are generally charged to the provision for impairment of trade receivables when there is no expectation of recovering additional cash.
Expected credit loss (ECL) calculations are performed and are used to calculate the provision for impairment of trade receivables. ECL calculations are a probability - weighted estimate of credit losses and are performed at country level. The Group applies the simplified method of applying lifetime ECLs to trade receivables using an allowance matrix to measure the ECLs of trade receivables from its customers, which comprise customer portfolios across several countries. Credit risk factors that are considered as part of ECL calculations may include, but are not limited to: payment history, customer size, customer type (national/residential/commercial/government), age of debt, industry strength, economy, environmental factors such as climate change, and product or service provided.
Loss allowances are also calculated on other financial assets, although the amounts are generally not significant and the asset is recognised net of the allowance.
F-22
There is limited concentration of credit risk with respect to trade receivables due to the Group’s customer base being large and diverse. The amount of credit risk with respect to customers is represented by the carrying amount on the balance sheet. The Group policy is that credit facilities for new customers are approved by designated managers at regional level. Credit limits are set with reference to trading history and reports from credit rating agencies where they are available. Where this is not feasible the Group may request payment in advance of work being carried out, or settlement by credit card on completion of the work. There are
Retrospectively | ||||
adjusted | ||||
2023 | 20221 | |||
£m |
| £m | ||
Trade receivables |
| |
| |
Less: provision for impairment of trade receivables |
| ( |
| ( |
Trade receivables – net |
| |
| |
Other receivables2 |
| |
| |
Prepayments |
| |
| |
Accrued income1 |
| |
| |
Contract assets | | — | ||
Total |
| |
| |
Analysed as follows: |
|
|
| |
Non-current |
| |
| |
Current |
| |
| |
Total |
| |
| |
1. | Accrued income has been retrospectively adjusted in 2022 by a decrease of £ |
2. | Other receivables are stated net of loss allowance of £ |
All of the Group’s provision for impairment relates to trade receivables. Analysis of the Group’s provision for impairment of trade receivables is as follows:
| 2023 |
| 2022 | |
£m | £m | |||
At 1 January |
| |
| |
Exchange differences |
| ( |
| — |
Additional provision |
| |
| |
Receivables written off as uncollectable |
| ( |
| ( |
Unused amounts reversed |
| ( |
| ( |
Acquisition of companies and businesses | | | ||
At 31 December |
| |
| |
F-23
The ageing of trade receivables and provision for impairment is as follows:
| Trade |
| Provision for |
| Trade |
| Provision for | |
receivables | impairment | receivables | impairment | |||||
2023 | 2023 | 2022 | 2022 | |||||
£m | £m | £m | £m | |||||
Not due |
| |
| ( |
| |
| ( |
Overdue by less than 1 month |
| |
| ( |
| |
| ( |
Overdue by between 1 and 3 months |
| |
| ( |
| |
| ( |
Overdue by between 3 and 6 months |
| |
| ( |
| |
| ( |
Overdue by between 6 and 12 months |
| |
| ( |
| |
| ( |
Overdue by more than 12 months |
| |
| ( |
| |
| ( |
At 31 December |
| |
| ( |
| |
| ( |
The carrying amounts of the Group’s trade receivables are denominated in the following currencies:
2023 | 2022 | |||
£m | £m | |||
Pound sterling |
| |
| |
Euro |
| |
| |
US dollar |
| |
| |
Other currencies |
| |
| |
Carrying value |
| |
| |
Fair value is considered to be equal to carrying value for all trade and other receivables.
A4. Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average cost method. The cost of finished goods and work in progress comprises design costs, raw materials, direct labour, other direct costs, and related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling price less applicable variable selling expenses.
| 2023 |
| 2022 | |
£m | £m | |||
Raw materials |
| |
| |
Work in progress |
| |
| |
Finished goods |
| |
| |
| |
| |
An inventory impairment charge of £
F-24
A5. Trade and other payables
|
| Retrospectively | ||
adjusted | ||||
2023 | 20221 | |||
£m | £m | |||
Trade payables |
| |
| |
Social security and other taxes |
| |
| |
Other payables1 |
| |
| |
Accruals1 |
| |
| |
Contract liabilities2 |
| |
| |
Deferred consideration |
| |
| |
Contingent consideration3 |
| |
| |
Total1 |
| |
| |
Analysed as follows: |
|
| ||
Other payables1 |
| |
| |
Deferred consideration |
| — |
| |
Contingent consideration3 |
| |
| |
Total non-current portion1 |
| |
| |
Current portion1 |
| |
| |
Total1 |
| |
| |
1. | Accruals and non-current other payables have been retrospectively adjusted in 2022 by an increase of £ |
2. | Contract liabilities represents customer invoices where performance obligations have not yet been satisfied. All opening balances have subsequently been satisfied in the year. In most business categories our customers are invoiced in advance or simultaneously with performance obligations being satisfied. |
3. | Contingent consideration includes put option liability of £ |
Other than the put options, there are no liabilities in the table above that bear interest or are discounted, and therefore the cash flows are equal to the carrying value of the liabilities. Cash is due to flow between and
Put options are held following the acquisition of PCI in 2017, where the seller may require the Group to purchase the remaining shares of the business in stages over a fixed term between 2023 and 2027. The put options are accounted for as an anticipated acquisition of the remaining shares and no non-controlling interest is recognised. The Group recognised a put option liability for the anticipated acquisition of these shares in contingent consideration, and any movements in the carrying value are recognised through equity. During the year, the seller exercised the first put option, selling
Given the volume of acquisitions and the variety of inputs to the valuation of contingent consideration (depending on each transaction), there is not considered to be any change in input that would have a material impact on the contingent consideration liability.
F-25
The currency split of trade and other payables is as follows:
Retrospectively | ||||
adjusted | ||||
| 2023 |
| 20221 | |
£m | £m | |||
Pound sterling |
| |
| |
Euro |
| |
| |
US dollar1 |
| |
| |
Other currencies |
| |
| |
Carrying value1 |
| |
| |
1. | Accruals and non-current other payables have been retrospectively adjusted in 2022 by an increase of £ |
The ageing of trade payables is as follows:
| 2023 |
| 2022 | |
£m | £m | |||
Less than one year |
| |
| |
Between one and five years |
| — |
| — |
More than five years |
| — |
| — |
Total |
| |
| |
Maturity analysis for lease liabilities is included in Note B4, and other financial liabilities in Note C6.
F-26
A6. Provisions for liabilities and charges
The Group has provisions for termite damage claims, self-insurance, environmental, and other. Provisions are recognised when the Group has a present obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount is capable of being reliably estimated. If such an obligation is not capable of being reliably estimated it is classified as a contingent liability (Note D3).
Future cash flows relating to these obligations are discounted when the effect is material. The effect of discounting environmental provisions and other provisions is not considered to be material due to the low level of expected future cash flows. Termite damage claim provisions and self-insurance provisions are discounted, and the majority of these provisions are held in the US. The discount rate used is based on US government bond rates, and was
Termite | ||||||||||
| damage | Self- |
|
|
| |||||
claims1 | insurance | Environmental1 | Other | Total1 | ||||||
£m |
| £m | £m | £m | £m | |||||
At 1 January 2022 | — | | | | | |||||
Exchange differences1 |
| ( | ( |
| — |
| — |
| ( | |
Additional provisions |
| | |
| — |
| |
| | |
Used during the year |
| ( | ( |
| ( |
| ( |
| ( | |
Unused amounts reversed |
| — | ( |
| — |
| ( |
| ( | |
Acquisition of companies and businesses1 |
| | |
| |
| |
| | |
Unwinding of discount on provisions | | | — | — | | |||||
At 31 December 20221 (retrospectively adjusted) |
| | |
| |
| |
| | |
At 1 January 2023 |
| | |
| |
| |
| | |
Exchange differences |
| ( | ( |
| ( |
| |
| ( | |
Additional provisions |
| | |
| |
| |
| | |
Used during the year |
| ( | ( |
| ( |
| ( |
| ( | |
Unused amounts reversed |
| — | ( |
| — |
| ( |
| ( | |
Acquisition of companies and businesses |
| — | — |
| — |
| |
| | |
Unwinding of discount on provisions |
| | |
| — |
| — |
| | |
At 31 December 2023 |
| | |
| |
| |
| |
Retrospectively | ||||
adjusted | ||||
| Total |
| 2022 | |
2023 | Total1 | |||
£m | £m | |||
Analysed as follows: |
|
|
|
|
Non-current |
| |
| |
Current |
| |
| |
Total |
| |
| |
| 1. | Termite damage claim provisions and environmental provisions have been retrospectively adjusted in 2022 by an increase of £ |
F-27
Termite damage claims
The Group holds provisions for termite damage claims covered by contractual warranties. Termite damage claim provisions are subject to significant assumptions and estimation uncertainty. The assumptions included in valuing termite provisions are based on an estimate of the volume and value of future claims (based on historical and forecast information), customer churn rates and discount rates. These provisions are expected to be substantially utilised within the next
The sensitivity of the liability balance to changes in the inputs is illustrated as follows:
| ● | Discount rate – The exposure to termite damage claims is largely based within the United States, therefore measurement is based on a seven - year US bond risk-free rate. During 2023, interest rates (and therefore discount rates) have moved up and are at their highest level in over a decade. Rates could move in either direction and management has modelled that an increase/decrease of |
| ● | Claim value – Claim value forecasts have been based on the latest available historical settled Terminix claims. Claims values are dependent on a range of inputs including labour cost, materials costs (e.g. timber), whether a claim becomes litigated or not, and specific circumstances including contributory factors at the premises. Management has determined the historical time period for each material category of claim, between |
| ● | Claim rate – Management has estimated claim rates based on statistical historical incurred claims. Data has been captured and analysed by a third - party agency, to establish incidence curves that can be used to estimate likely future cash outflows. Changes in rates of claim are largely outside the Group’s control and may depend on litigation trends within the US, and other external factors such as how often customers move property and how well they maintain those properties. This causes estimation uncertainty that could lead to material changes in provision measurement. Management has modelled that an increase/decrease of |
| ● | Customer churn rate – If customers choose not to renew their contracts each year, then the assurance warranty falls away. As such there is sensitivity to the assumption on how many customers will churn out of the portfolio of customers each year. Data has been captured and analysed by a third - party agency, to establish incidence curves for customer churn, and forward looking assumptions have been made based on these curves. Changes in churn rates are subject to macroeconomic factors and to the performance of the Group. A |
Self-insurance
The Group purchases external insurance from a portfolio of international insurers for its key insurable risks, mainly employee-related risks. Self-insured deductibles within these insurance policies have changed over time due to external market conditions and scale of operations. These provisions represent obligations for open claims and are estimated based on actuarial/management’s assessment at the balance sheet date. The Group expects to continue self-insuring the same level of risks and estimates that all pending claims should settle within the next
F-28
Self-insurance provisions are also subject to estimation uncertainty based on volume and value of expected future claims and discount rate assumptions; however it is not expected that there would be any change to assumptions that would cause a significant adjustment to the carrying value in the next financial year.
The amount of expected reimbursement from third - party insurers is £
Environmental
The Group owns, or formerly owned, a number of properties in Europe and the US where environmental contamination is being managed. These issues tend to be complex to determine and resolve and may be material, although it is often not possible to accurately predict future costs of management or remediation reliably. Provisions are held where liability is probable and costs can be reliably estimated. Contingent liabilities exist where the conditions for recognising a provision under IAS 37 have not been met. The Group monitors such properties to determine whether further provisions are necessary. The provisions that have been recognised are expected to be substantially utilised within the next
Other
Other provisions principally comprise amounts required to cover obligations arising and costs relating to disposed businesses and restructuring costs. Other provisions also includes costs relating to onerous contracts and property dilapidations settlements. Existing provisions are expected to be substantially utilised within the next
A7. Operating expenses by nature
Operating expenses from continuing operations include the following items:
2023 | 2022 | 2021 | ||||||
Notes | £m | £m | £m | |||||
Employee costs |
| A9 |
| |
| |
| |
Direct materials and services |
| |
| |
| | ||
Vehicle costs |
| |
| |
| | ||
Property costs |
| |
| |
| | ||
Depreciation and impairment of property, plant and equipment1 |
| B3 |
| |
| |
| |
Amortisation and impairment of intangible assets |
| B2 |
| |
| |
| |
One-off and adjusting items1 |
| A1 |
| |
| |
| |
Other operating expenses2 |
| |
| |
| | ||
Total operating expenses |
| |
| |
| |
1.One - off and adjusting items includes £
F-29
A8. Auditors’ remuneration
| 2023 |
| 2022 |
| 2021 | |
£m | £m | £m | ||||
Fees payable to the Company’s auditors for the audit of the Parent Company and Group accounts |
| |
| |
| |
Audit of accounts of subsidiaries of the Group |
| |
| |
| |
Audit-related assurance services1 |
| |
| |
| — |
Total audit and audit-related assurance services | | | | |||
Non-audit services2 | — | | — | |||
Total |
| |
| |
| |
1. | Included in 2023 is an amount of £ |
2. | 2022 balance relates to accounting specialist fees in respect of the Terminix acquisition. |
A9. Employee benefit expense
Profit-sharing and bonus plans
The Group recognises a liability and an expense for bonuses and profit-sharing, based on calculations of achievements of financial performance targets and the best estimate of the obligation to employees related to personal performance criteria being achieved. A liability is recognised where a contractual obligation exists or where past practice indicates that there is a constructive obligation to make such payments in the future.
Holiday pay
Paid holidays are regarded as an employee benefit and as such are charged to the income statement as the benefits are earned. An accrual is made at the balance sheet date to reflect the fair value of holidays earned but not yet taken.
Termination benefits
Termination benefits are payable when an employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the balance sheet date are discounted to present value where the effect of discounting is material.
| 2023 |
| 2022 |
| 2021 | |
£m | £m | £m | ||||
Wages and salaries1 |
| |
| |
| |
Social security costs |
| |
| |
| |
Share-based payments |
| |
| |
| |
Pension costs: |
|
|
| |||
– defined contribution plans |
| |
| |
| |
– defined benefit plans |
| |
| |
| |
| |
| |
| |
1.Including £
F-30
Monthly average number of people employed by the Group during the year:
| 2023 |
| 2022 |
| 2021 | |
Number | Number | Number | ||||
Processing and service delivery |
| |
| |
| |
Sales and marketing |
| |
| |
| |
Administration and overheads |
| |
| |
| |
| |
| |
| |
Emoluments of the Directors of Rentokil Initial plc are detailed below.
| Highest- |
| ||
paid | Other | |||
Director | Directors | |||
£000 | £000 | |||
2021 | ||||
Aggregate emoluments excluding share options |
| |
| |
Aggregate gains made by Directors on exercise of share options |
| |
| |
Aggregate amount receivable under long-term incentive schemes |
| |
| |
| |
| | |
2022 | ||||
Aggregate emoluments excluding share options | |
| | |
Aggregate gains made by Directors on exercise of share options | — |
| | |
Aggregate amount receivable under long-term incentive schemes | |
| | |
|
| | ||
2023 | ||||
Aggregate emoluments excluding share options | |
| | |
Aggregate gains made by Directors on exercise of share options | |
| — | |
Aggregate amount receivable under long-term incentive schemes | |
| | |
|
| |
| 2023 |
| 2022 |
| 2021 | |
Number | Number | Number | ||||
Number of Directors accruing retirement benefits |
|
|
|
|
|
|
– defined contribution schemes |
| — |
| — |
| |
Number of Directors exercising share options1 |
| |
| |
| |
Number of Directors receiving shares as part of long-term incentive schemes |
| |
| |
| |
1. | The highest-paid Director exercised |
A10. Retirement benefit obligations
Apart from contributions to legally required social security state schemes, the Group operates a number of pension schemes around the world covering many of its employees.
Defined contribution pension plans
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity.
The Group pays contributions to publicly or privately administered pension plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as an employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
F-31
Defined benefit pension plans
A defined benefit pension plan is a plan that defines the amount of future pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as years of service, compensation and age.
The asset or liability recognised in the balance sheet in respect of defined benefit pension plans is the fair value of plan assets, less the present value of the defined benefit obligation at the balance sheet date. The Group determines the net interest on the net defined benefit asset for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit asset. 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 outflows using interest rates of high-quality corporate bonds that have a credit rating of at least AA, are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability. The Group will recognise a pension surplus as an asset where there is an unconditional right to a refund or where the Group has a right to reduce future pension contributions, taking into account the adverse effect of any minimum funding requirements.
Current and past service costs, to the extent they have vested, and curtailments are recognised as charges or credits against operating profit in the income statement. Interest income on the net defined benefit asset is recognised in finance income. Remeasurement gains and losses arising from experience adjustments, return on plan assets, and changes in actuarial assumptions are charged or credited to the Consolidated Statement of Comprehensive Income.
The largest retirement benefit obligation in the Group is the Rentokil Initial Irish Pension Scheme (which is in a surplus position).
A number of smaller defined benefit and defined contribution schemes operate elsewhere, which are also funded through payments to trustee-administered funds or insurance companies.
Defined benefit schemes are reappraised annually by independent actuaries based upon actuarial assumptions. Judgement is required in determining these actuarial assumptions, but this is not considered by management to be a significant accounting judgement as defined under IAS 1.
The assumptions used for the Rentokil Initial Irish Pension Scheme are shown below:
| 31 December |
| 31 December |
| |
2023 | 2022 | ||||
Weighted average % |
|
|
| ||
Discount rate |
| | % | | % |
Future salary increases |
| n/a | n/a | ||
Future pension increases |
| | % | | % |
Inflation |
| | % | | % |
Risks
The scheme exposes the Company to a number of risks, the most significant of which are:
Asset volatility – Scheme liabilities are calculated using a discount rate set with reference to corporate bond yields; if assets underperform this yield, this will create a reduction in the current surplus position. The scheme holds a small proportion of growth assets (equities) which, though expected to outperform corporate bonds in the long term, create volatility and risk in the short term. The allocation to growth assets is monitored to ensure it remains appropriate given the long-term scheme objectives.
Changes in bond yields – A decrease in corporate bond yields will increase the value placed on the scheme’s liabilities for accounting purposes, although this will be partially offset by an increase in the value of the scheme’s bond holdings.
Inflation risk – A decrease in corporate bond yields will increase the value placed on the scheme’s liabilities for accounting purposes, although this will be partially offset by an increase in the value of the scheme’s bond holdings.
F-32
Life expectancy – The majority of the scheme’s obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the liabilities.
For the Rentokil Initial Irish Pension Scheme the expected duration is
Pension benefits
The movement in the net defined benefit obligation for all Group pension schemes over the accounting period is as follows:
|
| Fair |
|
|
| Fair |
| |||||
Present | value of | Present | value of | |||||||||
value of | plan | value of | plan | |||||||||
obligation | assets | Total | obligation | assets | Total | |||||||
2023 | 2023 | 2023 | 2022 | 2022 | 2022 | |||||||
£m | £m | £m | £m | £m | £m | |||||||
At 1 January |
| ( |
| |
| ( |
| ( |
| |
| ( |
Current service costs1 |
| ( |
| — |
| ( |
| ( |
| — |
| ( |
Past service costs1 |
| — |
| — |
| — |
| ( |
| — |
| ( |
Settlement gain |
| — |
| — |
| — |
| |
| — |
| |
Transfer of RIPS annuity policies (buy-out) | — | — | — | | ( | — | ||||||
Administration expenses1 |
| — |
| — |
| — |
| |
| ( |
| — |
Interest on defined benefit obligation/asset1 |
| ( |
| |
| ( |
| ( |
| |
| — |
Exchange difference |
| |
| ( |
| |
| ( |
| |
| ( |
Total pension income/(expense) |
| ( |
| — |
| ( |
| |
| ( |
| — |
Remeasurements: |
|
|
|
|
|
|
|
|
|
|
|
|
– Remeasurement gain/(loss) on scheme assets |
| — |
| — |
| — |
| — |
| ( |
| ( |
– Remeasurement gain/(loss) on obligation2 |
| — |
| — |
| — |
| |
| — |
| |
Contributions: |
|
|
|
|
|
|
|
|
|
| ||
– Employers |
| ( |
| |
| |
| ( |
| — |
| ( |
– Benefit payments |
| |
| ( |
| |
| |
| ( |
| |
– Refund of surplus |
| — |
| — |
| — |
| — |
| ( |
| ( |
At 31 December |
| ( |
| |
| ( |
| ( |
| |
| ( |
Retirement benefit obligation schemes3 |
| ( |
| |
| ( |
| ( |
| |
| ( |
Retirement benefit asset schemes4 |
| ( |
| |
| |
| ( |
| |
| |
1. | Service costs and administration expenses are charged to operating expenses, and interest cost and return on plan assets to finance cost and finance income. |
2. | The actuarial movement on the UK scheme comprises remeasurement gain arising from changes in demographic assumptions of £ |
3. | Benefit plans in an obligation position include plans situated in Thailand, the UK, Martinique, Trinidad and Tobago, Norway, South Africa, Germany, Austria, France, Italy, South Korea, Philippines, India, Sri Lanka, Hong Kong, and Saudi Arabia. |
4. | Benefit plans in an asset position include plans situated in Australia, Barbados, and Ireland. |
Of the £
Total contributions payable to defined benefit pension schemes in 2024 are expected to be less than £
F-33
The fair value of plan assets at the balance sheet date is analysed as follows:
| 2023 |
| 2022 | |
£m | £m | |||
Equity instruments |
| |
| |
Debt instruments – unquoted |
| |
| |
Property |
| |
| — |
Other |
| |
| |
Total plan assets |
| |
| |
Where available the fair values of assets are quoted prices (e.g. listed equity, sovereign debt and corporate bonds). In other cases the market value as provided by the fund managers has been used in accordance with IFRS 13 Fair Value Measurement:
| ● | unquoted debt instruments (level 2); |
| ● | interest and inflation rate hedging instruments (level 2); and |
| ● | pooled investment funds (level 3). |
Other significant assets are valued based on observable market inputs. Other assets primarily consist of cash.
The cumulative actuarial gain recognised in the Consolidated Statement of Comprehensive Income was £
A11. Share-based payments
Share-based compensation
The Group operates
Performance Share Plan and Restricted Share Plan
The Company has operated a share-based incentive for senior managers worldwide since 2006, initially through a Performance Share Plan, and then in 2023 a Restricted Share Plan was introduced. The main features of the schemes are as follows:
| ● | For Performance Share Plan awards made in 2021, 2022, and 2023, |
| ● | For Restricted Share Plan awards made in 2023, there are no performance conditions attached. |
| ● | The value of dividends paid during the vesting period is paid on the number of shares that ultimately vest in the form of additional shares. For awards that are nil-cost options made prior to May 2021, this is the value of dividends between grant and exercise. |
F-34
The total charge for the year relating to equity-settled share-based payment plans was £
A summary of the number of shares in active Performance Share Plans is shown below:
Share options outstanding | Share options exercisable | |||||||||||||||||||||
Shares | ||||||||||||||||||||||
Scheme | Shares | Shares | Shares | outstanding | Shares | Shares | Shares | Shares | Shares | |||||||||||||
Year | interest at | awarded | lapsed | vested | at | exercisable at | vested | exercised | lapsed | exercisable at | ||||||||||||
of | Vesting | 1 January | during | during | during | 31 December | 1 January | during | during | during | 31 December | |||||||||||
grant |
| year |
| 2023 |
| 2023 |
| 2023 |
| 2023 |
| 2023 |
| 2023 |
| 2023 |
| 2023 |
| 2023 |
| 2023 |
2013 | 2016 | — | | — | ( | — | | | ( | ( | | |||||||||||
2014 | 2017 | — | | — | ( | — | | | ( | — | | |||||||||||
2015 | 2018 | — | | — | ( | — | | | ( | ( | | |||||||||||
2016 | 2019 | — | | — | ( | — | | | ( | ( | | |||||||||||
2017 | 2020 | — | | — | ( | — | | | ( | ( | | |||||||||||
2018 | 2021 | | | — | ( | — | | | ( | ( | | |||||||||||
2019 | 2022 | | | ( | ( | — | | | ( | ( | | |||||||||||
2020 | 2023 | | | ( | ( | — | — | | ( | — | | |||||||||||
2021 |
| 2024 |
| |
| — |
| ( |
| — |
| |
| — |
| — |
| — |
| — |
| — |
2022 | 2025 | | | ( | ( | | — | | — | — | | |||||||||||
2023 |
| 2026 |
| — |
| |
| ( |
| ( |
| |
| — |
| |
| ( |
| — |
| — |
Share options outstanding | Share options exercisable | |||||||||||||||||||||
Shares | ||||||||||||||||||||||
Scheme | Shares | Shares | Shares | outstanding | Shares | Shares | Shares | Shares | Shares | |||||||||||||
Year | interest at | awarded | lapsed | vested | at | exercisable at | vested | exercised | lapsed | exercisable at | ||||||||||||
of | Vesting | 1 January | during | during | during | 31 December | 1 January | during | during | during | 31 December | |||||||||||
grant |
| year |
| 2022 |
| 2022 |
| 2022 |
| 2022 |
| 2022 |
| 2022 |
| 2022 |
| 2022 |
| 2022 |
| 2022 |
2012 |
| 2015 |
| — |
| — |
| — |
| — |
| — |
| |
| — |
| ( |
| ( |
| — |
2013 |
| 2016 |
| — |
| |
| — |
| ( |
| — |
| |
| |
| ( |
| — |
| |
2014 |
| 2017 |
| — |
| |
| — |
| ( |
| — |
| |
| |
| ( |
| ( |
| |
2015 |
| 2018 |
| — |
| |
| — |
| ( |
| — |
| |
| |
| ( |
| — |
| |
2016 |
| 2019 |
| — |
| |
| — |
| ( |
| — |
| |
| |
| ( |
| ( |
| |
2017 |
| 2020 |
| — |
| |
| — |
| ( |
| — |
| |
| |
| ( |
| ( |
| |
2018 |
| 2021 |
| |
| |
| ( |
| ( |
| |
| |
| |
| ( |
| ( |
| |
2019 |
| 2022 |
| |
| |
| ( |
| ( |
| |
| — |
| |
| ( |
| ( |
| |
2020 |
| 2023 |
| |
| — |
| ( |
| — |
| |
| — |
| — |
| — |
| — |
| — |
2021 | 2024 |
| |
| — |
| ( |
| — |
| |
| — |
| — |
| — |
| — |
| — | |
2022 |
| 2025 |
| — |
| |
| ( |
| — |
| |
| — |
| — |
| — |
| — |
| — |
A summary of the number of shares in active Restricted Share plans is shown below:
Share options outstanding | Share options exercisable | |||||||||||||||||||||
Scheme | Shares | Shares | Shares | Shares | Shares | Shares | Shares | Shares | Shares | |||||||||||||
interest at | awarded | lapsed | vested | outstanding at | exercisable at | vested | exercised | lapsed | exercisable at | |||||||||||||
Year of | Vesting | 1 January | during | during | during | 31 December | 1 January | during | during | during | 31 December | |||||||||||
grant | year | 2023 | 2023 | 2023 | 2023 |
| 2023 | 2023 | 2023 | 2023 | 2023 | 2023 | ||||||||||
2023 |
| 2026 |
| — |
| |
| ( |
| ( |
| |
| — |
| |
| ( |
| — |
| — |
The fair value of the 2023 awards made under the Performance Share Plan is charged to the income statement over the vesting period, based on values derived from a Monte Carlo model prepared by external remuneration consultants. This is a closed-form solution which takes account of the correlation between share price performance and the likelihood of a TSR performance condition being met. For the shares awarded in March 2023, the significant inputs into the model were a share price of
F-35
The fair value of awards granted during 2023 was £
A12. Income tax expense
The income tax expense for the period comprises both current and deferred tax. Current tax expense represents the amount payable on this year’s taxable profits and any adjustment relating to prior years. Taxable profits differ from accounting profits as some items of income or expenditure are not taxable or deductible, or may be taxable or deductible in a different accounting period. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group’s subsidiaries and associates operate and generate taxable income.
Deferred tax is an accounting adjustment to provide for tax that is expected to arise in the future due to differences between accounting and tax bases. Deferred tax is determined using tax rates that are expected to apply when the timing difference reverses based on tax rates which are enacted or substantively enacted at the balance sheet date. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or equity. In this case, the tax is also recognised in other comprehensive income or equity as appropriate.
Analysis of charge in the year:
| 2023 |
| 2022 |
| 2021 | |
£m |
| £m |
| £m | ||
Current tax expense |
| |
| |
| |
Adjustment in respect of previous periods |
| ( |
| |
| ( |
Total current tax |
| |
| |
| |
Deferred tax expense/(credit) |
| |
| ( |
| |
Deferred tax adjustment in respect of previous periods |
| ( |
| ( |
| ( |
Total deferred tax |
| |
| ( |
| |
Total income tax expense |
| |
| |
| |
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated companies as follows:
| 2023 |
| 2022 |
| 2021 | |
£m | £m | £m | ||||
Profit before tax |
| |
| |
| |
Tax calculated at domestic tax rates applicable to profits in the respective countries |
| |
| |
| |
Adjustment in respect of previous periods |
| ( |
| ( |
| ( |
Expenses not deductible for tax purposes – one-off and adjusting items |
| |
| |
| |
Expenses not deductible for tax purposes – other |
| |
| |
| |
Income not subject to tax |
| ( |
| ( |
| ( |
Impairment of goodwill |
| — |
| |
| — |
Goodwill deductions and revaluation of intangible assets |
| — |
| — |
| ( |
Deferred tax recognised on losses |
| ( |
| ( |
| ( |
Deferred tax impact of change in tax rates |
| — |
| ( |
| ( |
Provisions utilised for which no deferred tax assets were recognised |
| — |
| ( |
| ( |
Local business taxes |
| |
| |
| |
US BEAT liability |
| |
| — |
| |
Tax credits |
| ( |
| — |
| — |
Other |
| ( |
| — |
| |
Total tax expense |
| |
| |
| |
F-36
The Group’s effective tax rate (ETR) for 2023 on reported profit before tax was
On 20 June 2023, Finance (No.2) Act 2023 was substantively enacted in the UK, introducing a global minimum effective tax rate of 15%. The legislation implements a domestic top-up tax and a multinational top-up tax, effective for accounting periods starting on or after 31 December 2023. The legislation will be effective for the Group’s financial year beginning 1 January 2024.
The Group is in scope of the substantively enacted legislation and has performed an assessment of the Group’s potential exposure to Pillar 2 income taxes, mainly focusing on the transitional country-by-country reporting safe harbours which apply until 2026. Various jurisdictions the Group operates in have also brought in legislation or are bringing in legislation to implement Pillar 2 and domestic top-up taxes. Given these local rules and the UK rules are based on the same Organisation for Economic Co-operation and Development (OECD) Pillar 2 model rules, we have assumed that any variations between the local country domestic top-up tax calculation and the UK multinational top-up tax calculation for that country will be immaterial. As such, the Group’s assessment has focused on the application of the UK multinational top-up tax to the Group.
The assessment of the potential exposure to Pillar 2 income taxes has been undertaken both on the 2022 tax filings, country-by-country report and financial statements, and on the 2023 financial data included in these Consolidated Financial Statements. Based on the assessment, the majority of the jurisdictions in which the Group operates would meet the conditions for the transitional safe harbour provisions and would not require full Pillar 2 calculations, nor would a top-up tax charge be levied. The Pillar 2 effective tax rates in most of the jurisdictions in which the Group operates are above
Given the complexity of the Pillar 2 rules, the OECD and UK government are expected to continue issuing additional guidance regarding the implementation of Pillar 2 throughout 2024. Various other jurisdictions the Group operates in are also expected to bring in Pillar 2 rules and issue new or amended guidance throughout 2024. The Group will continue to monitor these updates as the Pillar 2 legislation and guidance evolve.
On 23 May 2023, the International Accounting Standards Board issued amendments to IAS 12 Income Taxes, introducing a mandatory temporary exception to the requirements of IAS 12 under which a company does not recognise or disclose information about deferred tax assets and liabilities related to the Pillar 2 rules. The Group applied the temporary exception at 31 December 2023.
A tax credit of £
A13. Current tax liabilities
Tax liabilities are classified as current liabilities unless there is a right to defer the payment of the liability for at least one year after the balance sheet date. As at 31 December 2023, all the Group’s tax liabilities have been classified as current as there is no legally enforceable right to defer payment for more than 12 months.
Current tax assets and liabilities are offset only when there is a legally enforceable right to set off the asset and liability, and there is an intention to either settle on a net basis or to realise the asset and settle the liability simultaneously.
Where required by accounting standards, management establishes provisions for uncertain tax positions on the basis of amounts expected to be paid to the tax authorities. The Group’s current tax liabilities reflect management’s best estimate of the future amounts of corporation tax that will be settled.
F-37
The Group is subject to income taxes in numerous jurisdictions. There are various uncertainties relating to the determination of its tax liabilities where the ultimate tax liability cannot be known until a resolution has been reached with the relevant tax authority, or the issue becomes time-barred. Issues can take many years to resolve and therefore assumptions on the likely outcome have to be made by management. Each country and tax risk is considered separately when deciding whether it is appropriate to set up an uncertain tax provision. If risks are considered to be linked, the Group will consider the tax treatment in aggregate where appropriate.
This assessment of uncertain tax positions is based on management’s interpretation of relevant tax rules and decided cases, external advice obtained, the statute of limitations and the status of the negotiations, and past experience with tax authorities. In evaluating whether a provision is needed it is assumed that tax authorities have full knowledge of the facts and circumstances applicable to each issue.
Tax provisions can be built up over a number of years, but in the year of resolution there could be adjustments to these provisions which could have a material positive or negative impact on the tax charge for a particular year. The settlement of a significant issue could also have a material impact on the amount of cash tax payable in any one year. Judgement is required in determining the worldwide provision for income taxes, particularly in relation to the pricing of intra-group goods and services as well as debt financing.
The majority of the tax provisions relate to transfer pricing exposures where the Group faces a number of risks in jurisdictions around the world, and is subject to audits by tax authorities in the territories in which it operates. These tax audits have an uncertain outcome and can take several years to resolve, which in some cases may be dependent on litigation. The actual outcome could vary from management’s estimates, but these are updated at each reporting period in the light of the latest available information.
Total uncertain tax provisions (including interest thereon) amounted to £
The cash tax paid for the year was £
A14. Deferred income tax
Deferred income tax is provided on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Consolidated Financial Statements. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities in transactions other than a business combination that at the time of the transactions affects neither the accounting nor taxable profit or loss; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred income 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 related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax balances are not discounted.
Deferred tax assets and liabilities are offset against each other when the timing differences relate to income taxes levied by the same tax authority on an entity or different entities which are part of a tax consolidation and there would be the intention to settle on a net basis.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. The amount of deferred tax assets recognised at each balance sheet date is adjusted to reflect changes in management’s assessment of future taxable profits. In recognising the deferred tax asset in respect of losses, management has estimated the quantum of future taxable profits, applying a risk weighting to future profits to reflect the uncertainties.
F-38
The movement on the deferred income tax account is as follows:
|
| Retrospectively | ||
adjusted | ||||
2023 | 20221 | |||
£m | £m | |||
At 1 January |
| ( |
| ( |
Exchange differences |
| |
| |
Acquisition of companies and businesses1 |
| ( |
| ( |
(Charged)/credited to the income statement |
| ( |
| |
Credited to other comprehensive income | | | ||
Credited/(charged) to equity |
| |
| ( |
At 31 December1 |
| ( |
| ( |
Deferred taxation has been presented on the balance sheet as follows: |
|
|
|
|
Deferred tax asset within non-current assets |
| |
| |
Deferred tax liability within non-current liabilities1 |
| ( |
| ( |
| ( |
| ( |
| 1. | Deferred tax liabilities have been retrospectively adjusted in 2022 by an increase of £ |
The major components of deferred tax assets and liabilities at the year end and their changes during the year (without taking into consideration the offsetting of balances within the same tax jurisdiction) are as follows:
| Customer |
| Accelerated |
|
|
|
|
|
| |||||||
lists/ | tax | IFRS 15 | Tax | Share-based | ||||||||||||
intangibles1 | depreciation | Provisions | Contracts | losses | payments | Other2 | Total1 | |||||||||
£m | £m | £m | £m | £m | £m | £m | £m | |||||||||
At 1 January 2022 | ( |
| ( |
| |
| ( |
| |
| |
| ( |
| ( | |
Exchange differences |
| | — | ( | | — | — | | | |||||||
Recognised in income statement |
| | | | ( | | | | | |||||||
Recognised in other comprehensive income |
| — | — | — | — | | — | | | |||||||
Recognised in equity |
| — | — | — | — | — | ( | — | ( | |||||||
Acquired in business combinations1 |
| ( | ( | | ( | | — | — | ( | |||||||
At 31 December 2022 (retrospectively adjusted) |
| ( | ( | | ( | | | — | ( | |||||||
At 1 January 2023 |
| ( |
| ( |
| |
| ( |
| |
| |
| — |
| ( |
Exchange differences | | | ( | | — | — | | | ||||||||
Recognised in income statement | | ( | ( | ( | | ( | | ( | ||||||||
Recognised in other comprehensive income |
| — | — | — | — | | — | ( | | |||||||
Recognised in equity |
| — | — | — | — | — | | — | | |||||||
Acquired in business combinations |
| ( | — | — | — | — | — | — | ( | |||||||
At 31 December 2023 |
| ( | ( | | ( | | | | ( |
| 1. | Deferred tax liabilities have been retrospectively adjusted in 2022 by an increase of £ |
| 2. | Included within other deferred tax assets/liabilities are retirement benefits and unremitted earnings from subsidiaries. |
F-39
A deferred tax asset of £
In addition, the Group has UK capital losses carried forward of £
Dividends received from subsidiaries are largely exempt from UK taxation but may be subject to dividend withholding or other taxes levied by the overseas tax jurisdictions in which the subsidiaries operate. A deferred tax liability of £
B. Investing
B1. Business combinations
All business combinations are accounted for using the purchase method (acquisition accounting) in accordance with IFRS 3 Business Combinations. The cost of a business combination is the aggregate of the fair values at the date of exchange of assets given, liabilities incurred or assumed, and equity instruments issued by the Group. The cost of a business combination is allocated at the acquisition date by recognising the acquiree’s identifiable assets, liabilities, and contingent liabilities that satisfy the recognition criteria at their fair values. Any excess of the purchase price over the fair value of the identifiable assets and liabilities is recognised as goodwill. The acquisition date is the date on which the acquirer effectively obtains control of the acquiree.
An intangible asset is recognised if it meets the definition under IAS 38 Intangible Assets. The intangible assets arising on acquisition are goodwill, customer lists, and brands. Goodwill represents the synergies, workforce, and other benefits expected as a result of combining the respective businesses. Customer lists and brands are recognised at their fair value at the date of acquisition using an income-based approach, which involves the use of assumptions including customer termination rates, profit margins, contributory asset charges, and discount rates.
At the date of acquisition, deferred and contingent consideration represents its fair value, with subsequent changes after the measurement period being recognised in the Consolidated Statement of Profit or Loss. Costs directly attributable to business combinations are charged to the income statement as incurred and presented as one-off and adjusting items.
Disclosures required by IFRS 3 Business Combinations are provided separately for those individual acquisitions that are considered to be material, and in aggregate for individually immaterial acquisitions. An acquisition would generally be considered individually material if the impact on the Group’s revenue and Adjusted Operating Profit measures (on an annualised basis) is greater than
F-40
During the year, measurement period adjustments have been made in relation to the Terminix acquisition. These have been reflected as a retrospective adjustment of 2022 comparatives in accordance with IFRS 3 as follows:
|
| Measurement |
|
| ||
period | Retrospectively | |||||
As reported | adjustment | adjusted | ||||
£m | £m | £m | ||||
Non-current assets |
|
|
|
|
|
|
– Intangible assets |
| |
| — |
| |
– Property, plant and equipment1 |
| |
| ( |
| |
– Other non-current assets |
| |
| |
| |
Current assets |
| |
| ( |
| |
Current liabilities |
| ( |
| ( |
| ( |
Non-current liabilities |
| ( |
| ( |
| ( |
Net assets acquired |
| |
| |
| |
Goodwill |
| |
| ( |
| |
| 1. | Includes ROU assets. |
During the year the Group purchased
Goodwill on all acquisitions represents the synergies and other benefits expected to be realised from integrating acquired businesses into the Group, such as improved route density, expansion in use of best-in-class digital tools, and back office synergies. Details of goodwill and the fair value of net assets acquired in the year are as follows:
Retrospectively | ||||||||
adjusted | ||||||||
|
| Terminix | Individually | Retrospectively | ||||
Global | immaterial | adjusted | ||||||
Total | Holdings, Inc.1 | acquisitions | Total1 | |||||
2023 | 2022 | 2022 | 2022 | |||||
£m | £m | £m | £m | |||||
Purchase consideration |
|
|
|
|
| |||
– Cash paid |
| |
| | | | ||
– Deferred and contingent consideration |
| |
| — | | | ||
– Equity interests | — | | — | | ||||
Total purchase consideration |
| |
| | | | ||
Fair value of net assets acquired1 |
| ( |
| ( | ( | ( | ||
Goodwill from current-year acquisitions1 |
| |
| | | | ||
Goodwill expected to be deductible for tax purposes | | — | | |
1. | Goodwill (decrease £ |
F-41
Deferred consideration of £
The fair values7 of assets and liabilities arising from acquisitions in the year are as follows:
Retrospectively | ||||||||
|
| adjusted | Individually | Retrospectively | ||||
Terminix Global | immaterial | adjusted | ||||||
Total | Holdings, Inc.1 | acquisitions | Total1 | |||||
2023 | 2022 | 2022 | 2022 | |||||
£m | £m | £m | £m | |||||
Non-current assets |
|
|
|
| ||||
– Intangible assets2 |
| |
| | | | ||
– Property, plant and equipment3 |
| |
| | | | ||
– Other non-current assets |
| — |
| | — | | ||
Current assets4 |
| |
| | | | ||
Current liabilities5 |
| ( |
| ( | ( | ( | ||
Non-current liabilities6 |
| ( |
| ( | ( | ( | ||
Net assets acquired |
| |
| | | |
1. | Contract costs (increase £ |
2. | Includes £ |
3. | Includes £ |
4. | Includes cash acquired of £ |
5. | Includes trade and other payables of £ |
6. | Includes £ |
7. | The fair values of assets and liabilities from acquisitions in the current year will be finalised in the 2024 Financial Statements. These fair values are provisional as the acquisition accounting has not yet been finalised, primarily due to the proximity of many acquisitions to the year end. |
F-42
The cash outflow from current and past acquisitions is as follows:
| Individually |
| ||||||
Terminix Global | immaterial | |||||||
Total | Holdings, Inc. | acquisitions | Total | |||||
2023 | 2022 | 2022 |
| 2022 | ||||
£m | £m | £m | £m | |||||
Total purchase consideration |
| | | |
| | ||
Equity interests | — | ( | — | ( | ||||
Consideration payable in future periods |
| ( | — | ( |
| ( | ||
Purchase consideration paid in cash |
| | | |
| | ||
Cash and cash equivalents in acquired companies and businesses |
| ( | ( | ( |
| ( | ||
Cash outflow on current period acquisitions |
| | | |
| | ||
Deferred and contingent consideration paid |
| | — | |
| | ||
Cash outflow on current and past acquisitions |
| | | |
| |
From the dates of acquisition to 31 December 2023, new acquisitions contributed £
If the acquisitions had occurred on 1 January 2023, the revenue and operating profit of the combined Group would have amounted to £
F-43
B2. Intangible assets
Intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses, where applicable.
A breakdown of intangible assets is as shown below:
Customer | Indefinite-lived | Other | Product | Computer | ||||||||||
Goodwill1 | lists | brands | intangibles | development | software | Total1 | ||||||||
| £m |
| £m |
| £m |
| £m |
| £m |
| £m |
| £m | |
Cost | ||||||||||||||
At 1 January 2022 |
| |
| |
| — |
| |
| |
| |
| |
Exchange differences |
| ( |
| ( |
| ( |
| |
| ( |
| |
| ( |
Additions |
| — |
| — |
| — |
| — |
| |
| |
| |
Disposals/retirements |
| — |
| ( |
| — |
| ( |
| — |
| ( |
| ( |
Acquisition of companies and businesses1 |
| |
| |
| |
| |
| — |
| |
| |
Hyperinflationary adjustment |
| |
| |
| — |
| |
| — |
| — |
| |
Disposal of companies and businesses | ( |
| — |
| — |
| — |
| — |
| — |
| ( | |
At 31 December 2022 (retrospectively adjusted) |
| |
| |
| |
| |
| |
| |
| |
At 1 January 2023 |
| |
| |
| |
| |
| |
| |
| |
Exchange differences |
| ( |
| ( |
| ( |
| ( |
| — |
| ( |
| ( |
Additions |
| — |
| — |
| — |
| — |
| |
| |
| |
Disposals/retirements |
| ( |
| ( |
| — |
| ( |
| — |
| ( |
| ( |
Acquisition of companies and businesses |
| |
| |
| — |
| |
| — |
| — |
| |
Hyperinflationary adjustment |
| |
| |
| — |
| |
| — |
| — |
| |
At 31 December 2023 |
| |
| |
| |
| |
| |
| |
| |
Accumulated amortisation and impairment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2022 |
| ( |
| ( |
| — |
| ( |
| ( |
| ( |
| ( |
Exchange differences |
| |
| ( |
| — |
| ( |
| — |
| ( |
| ( |
Disposals/retirements |
| — |
| |
| — |
| |
| — |
| |
| |
Hyperinflationary adjustment |
| — | ( | — | — | — | — | ( | ||||||
Impairment charge |
| ( |
| — |
| — |
| — |
| — |
| — |
| ( |
Amortisation charge |
| — |
| ( |
| — |
| ( |
| ( |
| ( |
| ( |
At 31 December 2022 |
| ( |
| ( |
| — |
| ( |
| ( |
| ( |
| ( |
At 1 January 2023 |
| ( |
| ( |
| — |
| ( |
| ( |
| ( |
| ( |
Exchange differences |
| |
| |
| — |
| |
| — |
| |
| |
Disposals/retirements |
| |
| |
| — |
| |
| — |
| |
| |
Hyperinflationary adjustment | ( | ( | — | — | — | — | ( | |||||||
Impairment charge |
| ( |
| ( |
| — |
| — |
| — |
| — |
| ( |
Amortisation charge |
| — |
| ( |
| — |
| ( |
| ( |
| ( |
| ( |
At 31 December 2023 |
| ( |
| ( |
| — |
| ( |
| ( |
| ( |
| ( |
Net book value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2022 |
| |
| |
| — |
| |
| |
| |
| |
At 31 December 2022 (retrospectively adjusted) |
| |
| |
| |
| |
| |
| |
| |
At 31 December 2023 |
| |
| |
| |
| |
| |
| |
| |
1. | Goodwill has been retrospectively adjusted by a decrease of £ |
F-44
The main categories of intangible assets are as follows:
Intangible assets - finite useful lives
Intangible assets with finite useful lives are initially measured at either cost or fair value and amortised on a straight-line basis over their useful economic lives, which are reviewed on an annual basis. These assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may exceed its recoverable amount. The fair value attributable to intangible assets acquired through a business combination is determined by discounting the expected future cash flows to be generated from that asset at the risk-adjusted weighted average cost of capital for the Group. The residual values of intangible assets are assumed to be £
The estimated useful economic lives of intangible assets are as follows:
Customer lists: |
| |
Other intangibles: | ||
Product development: | ||
Computer software: |
The following are the main categories of intangible assets with finite useful lives:
(a) Customer lists
Customer lists are acquired as part of business combinations. No value is attributed to internally generated customer lists.
(b) Other intangibles
Other intangibles consists of brands with finite useful lives and intellectual property. Brands are acquired as part of business combinations. No value is attributed to internally generated brands as expenditure incurred to develop, maintain and renew brands internally is recognised as an expense in the period incurred. Intellectual property costs are incurred in acquiring and maintaining patents and licences. These are recognised only if the cost can be measured reliably, and they are expected to generate economic benefits beyond one year, in excess of their cost.
(c) Product development
Costs incurred in the design and testing of new or improved products are recognised as intangible assets only if the cost can be measured reliably, and it is probable that the project will be a success considering its commercial and technological feasibility. Capitalised product development expenditure is measured at cost less accumulated amortisation.
Other development expenditure and all research expenditure are recognised as an expense as incurred and amount to £
Development costs recognised as an expense are never reclassified as an asset in a subsequent period. Development costs that have been capitalised are amortised from the date the product is made available.
(d) Computer software
Costs that are directly associated with the production of identifiable and unique software products that are controlled by the Group (including employee costs and external software development costs) are recognised as intangible assets, if they are expected to generate economic benefits beyond one year in excess of their cost. Purchased computer software is initially recognised based on the costs incurred to acquire and bring it into use.
Costs associated with maintaining computer software are recognised as an expense in the period in which they are incurred.
F-45
Intangible assets - indefinite useful lives
(a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired business at the date of acquisition. It is recognised as an intangible asset. Goodwill arising on the acquisition of an associate is included in investments in associates.
(b) Brands with indefinite useful lives
Brands with indefinite useful lives are acquired as part of business combinations. No value is attributed to internally generated brands as expenditure incurred to develop, maintain and renew brands internally is recognised as an expense in the period incurred.
The Terminix US and Terminix International brands are considered to have indefinite useful lives due to their long history in the US (being founded in 1927), and having a strong brand equity in the US for much of its history and now internationally. The Group plans to continue to support and invest in the Terminix brand; it controls all the associated assets that support the underlying business, and therefore it is considered that there is no foreseeable limit on the period over which these brands will continue to generate net cash inflows.
Goodwill and brands with indefinite useful lives are tested annually for impairment and carried at cost less accumulated impairment losses. For the purpose of impairment testing, goodwill is allocated to cash-generating units (CGUs) identified according to country of operation and reportable business unit. The way in which CGUs are identified has not changed from prior periods. Newly acquired entities might be a single CGU until such time that they can be integrated. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
The recoverable amount of a CGU is determined based on the higher of value-in-use calculations using cash flow projections, and fair value less costs to sell. The cash flow projections in year one are based on financial budgets approved by management, which are prepared as part of the Group’s normal planning process. Cash flows for years two to five use management’s expectation of revenue growth and operating profit margin, based on past experience and expectations regarding future performance and profitability for each CGU. Cash flows beyond the five-year period are extrapolated using estimated long-term growth rates (LTGR).
Cash flow projections included in the impairment review models include management’s view of the impact of climate change, including costs related to the effects of climate change, as well as the future costs of the Group’s commitment to reach net zero by 2040 and costs of compliance with current legal requirements. The potential increased costs, to meet these commitments less any benefits that may occur, are not expected to be material and therefore have resulted in no impairments during 2023.
A breakdown of goodwill by region is shown below:
|
| Retrospectively | ||
adjusted | ||||
2023 | 20221 | |||
£m | £m | |||
North America1 |
| |
| |
Europe (incl. LATAM) |
| |
| |
UK & Sub-Saharan Africa |
| |
| |
Asia & MENAT |
| |
| |
Pacific |
| |
| |
Total |
| |
| |
1. | Includes £ |
F-46
2. | North America has been retrospectively adjusted in 2022, in accordance with IFRS 3, to reflect measurement period adjustments made relating to the Terminix acquisition. |
Impairment tests for goodwill and brands with indefinite useful lives
For the India and Argentina CGUs, a fair value less costs to sell approach has been taken to support the carrying value of goodwill and brands with indefinite useful lives. During the year the Group recognised total impairments of £
The US Terminix CGU includes goodwill of £
The key assumptions used by individual CGUs for value-in-use calculations were:
| 2023 long-term |
| 2023 pre-tax |
| 2022 long-term |
| 2022 pre-tax |
| |
growth rate1 | discount rate | growth rate1 | discount rate |
| |||||
North America2 |
| % | % | % | % | ||||
Europe (incl. LATAM) |
| % | % | % | % | ||||
UK & Sub-Saharan Africa |
| % | % | % | % | ||||
Asia & MENAT |
| % | % | % | % | ||||
Pacific |
| % | % | % | % |
1. | Source: imf.org. |
2. | Key assumptions used by the US Terminix and US Pest Control CGUs were a long-term growth rate of |
The growth rates used by individual CGUs are based on the LTGR predicted for the relevant sector and country in which a business operates. They do not exceed the long-term average growth rate for that industry or country. The pre-tax discount rates are internally calculated weighted average cost of capital for each category and country. The pre-tax discount rates are based on current prices therefore future cash flow projections include inflation linked measures.
F-47
B3. Property, plant and equipment
Property, plant and equipment is stated at historic cost less depreciation with the exception of freehold land and assets under construction which are not depreciated. Historic cost includes expenditure that is directly attributable to the acquisition of the items.
A breakdown of property, plant and equipment is shown below:
|
| Service |
|
| Vehicles |
| ||||
Land and | contract | Other plant | and office | |||||||
buildings | equipment | and equipment | equipment | Total | ||||||
£m | £m | £m | £m | £m | ||||||
Cost |
|
|
|
|
|
|
|
|
|
|
At 1 January 2022 |
| |
| |
| |
| |
| |
Exchange differences |
| |
| |
| |
| |
| |
Additions |
| |
| |
| |
| |
| |
Disposals |
| ( |
| ( |
| ( |
| ( |
| ( |
Acquisition of companies and businesses |
| |
| |
| |
| |
| |
Reclassification from IFRS 16 ROU assets1 |
| — |
| — |
| — |
| |
| |
At 31 December 2022 |
| |
| |
| |
| |
| |
At 1 January 2023 |
| |
| |
| |
| |
| |
Exchange differences |
| ( |
| ( |
| ( |
| ( |
| ( |
Additions |
| |
| |
| |
| |
| |
Disposals |
| ( |
| ( |
| ( |
| ( |
| ( |
Acquisition of companies and businesses |
| — |
| |
| |
| |
| |
Hyperinflationary adjustment | | — | — | | | |||||
Reclassification from IFRS 16 ROU assets1 |
| — |
| — |
| — |
| |
| |
At 31 December 2023 |
| |
| |
| |
| |
| |
Accumulated depreciation and impairment |
|
|
|
|
|
|
|
|
|
|
At 1 January 2022 |
| ( |
| ( |
| ( |
| ( |
| ( |
Exchange differences |
| ( |
| ( |
| ( |
| ( |
| ( |
Disposals |
| |
| |
| |
| |
| |
Impairment charge |
| ( |
| — |
| — |
| — |
| ( |
Depreciation charge |
| ( |
| ( |
| ( |
| ( |
| ( |
At 31 December 2022 |
| ( |
| ( |
| ( |
| ( |
| ( |
At 1 January 2023 |
| ( |
| ( |
| ( |
| ( |
| ( |
Exchange differences |
| |
| |
| |
| |
| |
Disposals |
| |
| |
| |
| |
| |
Hyperinflationary adjustment | ( | — | — | ( | ( | |||||
Depreciation charge |
| ( |
| ( |
| ( |
| ( |
| ( |
At 31 December 2023 |
| ( |
| ( |
| ( |
| ( |
| ( |
Net book value |
|
|
|
|
|
|
|
|
|
|
At 1 January 2022 |
| |
| |
| |
| |
| |
At 31 December 2022 |
| |
| |
| |
| |
| |
At 31 December 2023 |
| |
| |
| |
| |
| |
1. | Certain leased assets become owned assets at the end of their lease period and are therefore reclassified from ROU assets (Note B4). |
F-48
Depreciation of assets is calculated using the straight-line method to allocate the difference between their cost and their residual values over their estimated useful lives, as follows:
Freehold buildings: |
| |
Leasehold improvements: | Shorter of the lease term or estimated useful life | |
Vehicles: | ||
Plant and equipment (including service contract equipment): | ||
Office equipment, furniture and fittings: |
Residual values and useful lives of assets are reviewed annually and amended as necessary. Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the fixed asset may exceed its recoverable amount. There were
When assets are sold, the gain or loss between sale proceeds and net book value is recognised in the income statement.
The category of service contract equipment represents the pool of assets used by the Group in delivering contracted services to customers. Land and buildings comprise mainly offices and warehouses.
B4. Leases
The Group leases land and buildings, vehicles, and other equipment. The lease durations vary from lease to lease according to the asset leased and local practices. Some of the Group’s leases have extension and termination options attached to them. Lease extension options and lease termination options are only included in the calculation of the lease liability if there is reasonable certainty that they will be exercised. Judgement is required to determine the level of certainty.
The value of leases to which the Group is committed but have not yet commenced is not material.
A breakdown of the right-of-use (ROU) assets is shown below:
| Land and |
|
|
| Other |
|
| |
buildings | Vehicles1 | equipment | Total | |||||
£m | £m | £m | £m | |||||
Net book value |
|
|
|
|
|
|
|
|
At 1 January 2022 |
| |
| |
| |
| |
Exchange differences |
| — |
| |
| — |
| |
Additions |
| |
| |
| — |
| |
Acquisition of companies and businesses1 |
| |
| |
| — |
| |
Impairment charge3 |
| ( |
| — |
| — |
| ( |
Depreciation charge |
| ( |
| ( |
| ( |
| ( |
Reclassification to property, plant and equipment2 |
| — |
| ( |
| — |
| ( |
At 31 December 2022 (retrospectively adjusted) |
| |
| |
| |
| |
At 1 January 2023 |
| |
| |
| |
| |
Exchange differences |
| ( |
| ( |
| — |
| ( |
Additions |
| |
| |
| |
| |
Disposals |
| ( |
| ( |
| — |
| ( |
Acquisition of companies and businesses |
| |
| — |
| — |
| |
Depreciation charge |
| ( |
| ( |
| ( |
| ( |
Reclassification to property, plant and equipment2 |
| — |
| ( |
| — |
| ( |
At 31 December 2023 |
| |
| |
| |
| |
1. | Right-of-use assets have been retrospectively adjusted by a decrease of £ |
F-49
2. | Certain leased assets become owned assets at the end of their lease period and are therefore reclassified to property, plant and equipment (Note B3). |
Analysis of the Group’s lease liabilities is shown below:
Retrospectively | ||||
adjusted | ||||
| 2023 |
| 20221 | |
£m | £m | |||
At 1 January |
| |
| |
Exchange differences |
| ( |
| ( |
Lease payments |
| ( |
| ( |
Interest |
| |
| |
Additions |
| |
| |
Acquisition of companies and businesses |
| |
| |
At 31 December |
| |
| |
Analysed as follows: | ||||
Non-current |
| |
| |
Current |
| |
| |
Total |
| |
| |
| 1. | Lease liabilities have been retrospectively adjusted by a decrease of £ |
Lease liabilities analysed by currency:
|
| Retrospectively | ||
adjusted | ||||
2023 | 20221 | |||
| £m |
| £m | |
Pound sterling |
| |
| |
Euro |
| |
| |
US dollar |
| |
| |
Other currencies |
| |
| |
At 31 December |
| |
| |
| 1. | Lease liabilities have been retrospectively adjusted by a decrease of £ |
Lease liabilities are payable as follows:
|
| Retrospectively | ||
adjusted | ||||
2023 | 20221 | |||
£m | £m | |||
Less than one year |
| |
| |
Between one and five years |
| |
| |
More than five years |
| |
| |
Future minimum payments |
| |
| |
Effect of discounting |
| ( |
| ( |
Carrying value |
| |
| |
| 1. | Lease liabilities have been retrospectively adjusted by a decrease of £ |
F-50
Other lease costs not already described are set out below:
| 2023 |
| 2022 | |
£m | £m | |||
Expenses relating to short-term leases |
| |
| |
Expenses relating to leases of low-value assets |
| |
| |
Expenses relating to variable lease payments |
| |
| — |
At 31 December |
| |
| |
The Group has no material arrangements where it acts as a lessor.
B5. Capital commitments
Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:
| 2023 |
| 2022 | |
£m | £m | |||
Property, plant and equipment |
| |
| |
Intangible assets |
| |
| |
Total |
| |
| |
B6. Investments in associated undertakings
Retrospectively | ||||
adjusted | ||||
| 2023 |
| 20221 | |
£m | £m | |||
Interest in Nippon Calmic Limited |
| |
| |
Interest in individually immaterial associated undertakings1 |
| |
| |
At 31 December1 |
| |
| |
| 1. | Investments in associated undertakings have been retrospectively adjusted by an increase of £ |
Nippon Calmic Limited
Nippon Calmic Limited is an associated undertaking in Japan which provides hygiene services, in which the Group has a
| 2023 |
| 2022 | |
£m | £m | |||
At 1 January | | | ||
Exchange differences |
| ( |
| ( |
Share of profit1 |
| |
| |
Dividends received |
| ( |
| ( |
At 31 December |
| |
| |
1. | Share of profit is net of tax of £ |
F-51
| Assets |
| Liabilities |
| Revenue |
| Profit |
| Assets |
| Liabilities |
| Revenue |
| Profit | |
2023 | 2023 | 2023 | 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||
£m | £m | £m | £m | £m | £m | £m | £m | |||||||||
Nippon Calmic Ltd ( |
| | ( | | |
| |
| ( |
| |
| |
Individually immaterial associates
In addition to the interest in associates disclosed above, the Group also has interests in a number of individually immaterial associates that are accounted for using the equity method.
Retrospectively | ||||
adjusted | ||||
| 2023 |
| 20221 | |
£m | £m | |||
At 1 January | | | ||
Exchange differences |
| ( |
| ( |
Acquisitions1 |
| — |
| |
Disposals | ( | — | ||
Share of profit |
| |
| |
At 31 December1 |
| |
| |
| 1. | Investments in associated undertakings have been retrospectively adjusted by an increase of £ |
£
C. Financing
C1. Financial risk management
The Group’s central treasury function manages cash, borrows on behalf of the Group, and provides finance to Group companies in their local currencies. Treasury activity is governed by a Treasury Committee which is chaired by the Chief Financial Officer.
The main financial risks faced by the Group are set out below.
(a) Liquidity risk
The Group is committed to ensuring it has sufficient liquidity to meet its business needs, and appropriate reserves to cover operational underperformance or dislocation in the financial markets. It is the Group’s policy to have headroom of unrestricted cash and available committed facilities of at least £
The RCF and other Group debt facilities have no financial covenants and the Group is compliant with other terms, conditions, and undertakings of its debt facilities.
The Group targets an investment grade credit rating for debt issuance of BBB over the medium term. The Group was rated BBB by both S&P Global (S&P) and Fitch Ratings (Fitch). In line with ratings criteria, debt maturities are covered at least
F-52
The Group has one debt maturity of €
The following bonds: €400m due November 2024, €500m due May 2026, and €600m due October 2028; issued under the Group’s Euro Medium-Term Notes (EMTN) Programme, contain a coupon step-up which increases the coupon payable by
(b) Credit risk
The Group has no significant concentration of credit risk. Sales are typically low-value, high-volume, spreading the risk across a large number of customers and geographies. Policies are in place to ensure that credit sales are only made to customers with an appropriate credit history. The Group operates in some territories where there is increased exposure to trade credit risks, and in those territories the Group puts in place appropriate measures to manage its credit risk exposure.
In order to protect the liquid assets and funding relationships of the Group, management aims to maintain banking relationships with counterparties that carry a long-term credit rating of at least A-, or equivalent rating with one of the major credit rating agencies. In countries where no banks are rated A- or above, balances are monitored monthly and kept to a minimum. In addition, funds held with all counterparties are subject to limits. All exposures are monitored and reported to the Treasury Committee each month. The Group also monitors the creditworthiness of its lenders to ensure that commitments under its facilities are available as needed.
At 31 December 2023 the Group had a total of £
(c) Market risk
Foreign exchange risk
The Group’s worldwide operations generate profits and cash flows in foreign currencies. Sales and purchases are typically denominated in the currency of the country in which they are transacted, and the Group’s cross-border procurement is considered insignificant. Sterling-denominated profits from UK operations are exceeded by sterling-denominated Group central costs. This means that approximately
The Group’s primary exposure to foreign exchange risk is in relation to the translation of assets and liabilities, and the Group aims to hold debt in currencies in proportion to its forecast foreign currency profits and cash flows. Foreign exchange derivatives are used to manage foreign currency exposures in excess of £
The most significant foreign currency groups are US dollars and euros, which make up
At 31 December 2023 the Group’s net debt was approximately
F-53
The Group calculates a hypothetical foreign exchange impact on the income statement and foreign currency translation of net investments in foreign subsidiaries for a
Interest rate risk
The Group seeks to manage interest rate risk to ensure reasonable certainty of its interest charge while allowing an element of risk exposure consistent with the variability of its cash flows. Interest rate risk is managed by the use of fixed interest debt and interest rate derivatives, which are approved in advance by the Treasury Committee. The Group policy is to fix a minimum of
A hypothetical
A hypothetical
A hypothetical
The Group had outstanding bond debt issues at 31 December 2023 with a fair market value of £
(d) Capital risk
The Group is committed to maintaining a debt/equity structure that allows continued access to a broad range of financing sources and sufficient flexibility to pursue commercial opportunities as they present themselves, without onerous financing terms and conditions. The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor, and market confidence, and to support the Group’s strategy. The Group uses S&P’s and Fitch's ratings methodologies for a BBB issuer to manage its capital risk. In the event that a ratings downgrade is likely, net debt could be managed by reducing or suspending dividends, M&A spend, and capital expenditure. The Group would also consider raising additional equity to protect its BBB rating.
(e) Treasury risk
The Group’s treasury activities are governed by a treasury policy, which is reviewed and approved by the Board on an annual basis. The treasury policy covers all activities associated with managing the above risks. The policy requires that financial instruments are only utilised to manage known financial exposures, and speculative derivative contracts are not entered into. The treasury policy requires that treasury must approve opening and closing of all bank accounts, and that funds transfers and other payments are only made in accordance with bank mandates.
To ensure an appropriate control environment exists in the treasury function, duties are segregated between front and back office teams. In addition, a number of controls are in place to protect against potential cyber security and other risks.
F-54
C2. Net debt
Net debt is used to assess the Group’s financial capacity. Net debt is not a measure defined by IFRS. Management defines net debt as the total of bank and other borrowings, lease liabilities, other investments, fair value of debt-related derivatives, and cash and cash equivalents (as presented in the Consolidated Balance Sheet). Closing net debt comprises:
Retrospectively | ||||||
adjusted | ||||||
2023 | 20221 | |||||
| Notes |
| £m |
| £m | |
Current | ||||||
Cash and cash equivalents in the Consolidated Balance Sheet |
| C3 |
| |
| |
Other investments2 |
| C4 |
| |
| |
Fair value of debt-related derivatives |
| ( |
| — | ||
Bank and other short-term borrowings1,3 |
| ( |
| ( | ||
Lease liabilities1 |
| B4 |
| ( |
| ( |
Non-current | ||||||
Fair value of debt-related derivatives |
| |
| ( | ||
Bank and other long-term borrowings4 |
| ( |
| ( | ||
Lease liabilities |
| B4 |
| ( |
| ( |
Total net debt1 |
| ( |
| ( |
| 1. | Bank and other short - term borrowings (decrease £ |
| 2. | Net debt excludes other investments which are non - cash, such as the investment in unlisted shares. |
| 3. | Bank and other short-term borrowings consists of £ |
| 4. | Bank and other long-term borrowings consists of £ |
F-55
The currency split and cash flows of bank, other borrowings, and debt-related derivatives are as follows:
Retrospectively | ||||
adjusted | ||||
| 2023 |
| 20221 | |
£m | £m | |||
Pound sterling |
| |
| |
Euro |
| |
| |
US dollar1 |
| |
| |
Other currencies |
| |
| |
Carrying value1 |
| |
| |
Effect of discounting | | | ||
Undiscounted value1 |
| |
| |
Analysis of undiscounted cash flows of bank and other borrowings: |
|
| ||
Less than one year | | | ||
Between one and five years1 |
| |
| |
More than five years |
| |
| |
Future minimum payments1 |
| |
| |
| 1. | Bank and other short - term borrowings (decrease £ |
Reconciliation of net change in cash and cash equivalents to net debt:
Non-cash | Non-cash | |||||||||||
(fair value | (foreign | |||||||||||
changes, | exchange, | |||||||||||
Opening | Cash | accruals and | additions | Closing | ||||||||
2023 | flows | acquisitions) | and other) | 2023 | ||||||||
| Notes |
| £m |
| £m |
| £m |
| £m |
| £m | |
Bank and other short-term borrowings | ( | | ( | ( | ( | |||||||
Bank and other long-term borrowings |
| ( |
| — |
| — |
| |
| ( | ||
Lease liabilities |
| B4 |
| ( |
| |
| ( |
| ( |
| ( |
Other investments |
| |
| — |
| — |
| — |
| | ||
Fair value of debt-related derivatives |
| ( |
| |
| ( |
| |
| | ||
Gross debt |
| ( |
| |
| ( |
| |
| ( | ||
Cash and cash equivalents in the Consolidated Balance Sheet |
| |
| ( |
| — |
| ( |
| | ||
Net debt |
| ( |
| |
| ( |
| |
| ( |
F-56
Non-cash | Non-cash | |||||||||||
(fair value | (foreign | |||||||||||
changes, | exchange, | |||||||||||
Opening | Cash | accruals and | additions | Closing | ||||||||
2022 | flows | acquisitions)1 | and other)1 | 20221 | ||||||||
| Notes |
| £m |
| £m |
| £m |
| £m |
| £m | |
Bank and other short-term borrowings1 | ( | ( | ( | ( | ( | |||||||
Bank and other long-term borrowings |
| ( |
| ( |
| — |
| ( |
| ( | ||
Lease liabilities1 |
| B4 |
| ( |
| |
| ( |
| ( |
| ( |
Other investments |
|
|
| |
| — |
| — |
| — |
| |
Fair value of debt-related derivatives |
|
|
| ( |
| ( |
| |
| ( |
| ( |
Gross debt1 (retrospectively adjusted) |
|
|
| ( |
| ( |
| ( |
| ( |
| ( |
Cash and cash equivalents in the Consolidated Balance Sheet |
|
|
| |
| |
| — |
| ( |
| |
Net debt1 (retrospectively adjusted) |
|
|
| ( |
| ( |
| ( |
| ( |
| ( |
| 1. | Bank and other short - term borrowings (decrease £ |
The foreign exchange gain on debt and derivatives amounted to £
The total cash outflow in borrowings of £
The derivatives cash outflow of £
The cash outflow of £
Fair value is equal to carrying value for all elements of net debt, with the exception of bond debt which has a carrying value of £
F-57
The Group operates notional pooling arrangements whereby cash balances and overdrafts held within the same bank have a legal right of offset. Derivative financial instruments held with the same bank and have a legal right to offset are shown net. The following table shows the effect of offsetting in the balance sheet due to financial instruments subject to enforceable netting arrangements:
Amount | ||||||||||||
Gross | subject to | |||||||||||
amounts set | Net amounts | master | ||||||||||
Gross | off in the | presented in the | netting | |||||||||
amount | balance sheet | balance sheet | arrangement | Net amount | ||||||||
2023 | 2023 | 2023 | 2023 | 2023 | ||||||||
| Notes |
| £m |
| £m |
| £m |
| £m |
| £m | |
Financial assets | ||||||||||||
Cash and cash equivalents |
|
| |
| — |
| |
| ( |
| | |
Trade and other receivables |
|
| |
| — |
| |
| — |
| | |
Other financial assets |
|
| |
| — |
| |
| — |
| | |
Derivative financial instruments |
|
| |
| — |
| |
| ( |
| | |
Total |
|
| |
| — |
| |
| ( |
| | |
Financial liabilities |
|
|
|
|
|
|
| |||||
Trade and other payables |
|
| ( |
| — |
| ( |
| — |
| ( | |
Borrowings |
|
| ( |
| — |
| ( |
| |
| ( | |
Lease liabilities |
|
| ( |
| — |
| ( |
| — |
| ( | |
Derivative financial instruments |
|
| ( |
| — |
| ( |
| |
| ( | |
Total |
|
| ( |
| — |
| ( |
| |
| ( |
Gross | Amount | |||||||||||
amounts set | subject to | |||||||||||
off in the | Net amounts | master | ||||||||||
Gross | balance | presented in the | netting | |||||||||
amount | sheet | balance sheet | arrangement | Net amount | ||||||||
20221 | 2022 | 20221 | 20221 | 20221 | ||||||||
| Notes |
| £m |
| £m |
| £m |
| £m |
| £m | |
Financial assets | ||||||||||||
Cash and cash equivalents |
| C3 |
| |
| — |
| |
| ( |
| |
Trade and other receivables1 |
| A3 |
| |
| — |
| |
| — |
| |
Other financial assets |
| C4 |
| |
| — |
| |
| — |
| |
Derivative financial instruments |
| C6 |
| |
| — |
| |
| ( |
| — |
Total (retrospectively adjusted) |
|
| |
| — |
| |
| ( |
| | |
Financial liabilities |
|
|
|
|
|
|
| |||||
Trade and other payables1 |
| A5 |
| ( |
| — |
| ( |
| — |
| ( |
Borrowings1 |
| C2 |
| ( |
| — |
| ( |
| |
| ( |
Lease liabilities1 |
| B4 |
| ( |
| — |
| ( |
| — |
| ( |
Derivative financial instruments |
| C6 |
| ( |
| — |
| ( |
| |
| ( |
Total (retrospectively adjusted) |
|
| ( |
| — |
| ( |
| |
| ( |
1. | Trade and other receivables (decrease £ |
C3. Cash and cash equivalents
Cash and cash equivalents include cash in hand, short-term bank deposits and other short-term highly liquid investments with original maturities of three months or less (and subject to insignificant changes in value). In the cash flow statement, cash and cash equivalents are shown net of bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.
F-58
Cash at bank and in hand includes £
Cash at bank and in hand also includes £
Fair value is equal to carrying value for all cash and cash equivalents.
Gross amounts | Gross amounts | |||
2023 | 2022 | |||
| £m |
| £m | |
Cash at bank and in hand | | | ||
Money market funds | | | ||
Short-term bank deposits | | | ||
Cash and cash equivalents in the Consolidated Balance Sheet | | | ||
Bank overdraft | ( | ( | ||
Cash and cash equivalents in the Consolidated Cash Flow Statement | |
| |
As far as it is practical to do so, cash balances are held centrally and are used first to repay borrowings under the Group’s banking facilities before being placed on deposit.
C4. Other investments
Other investments held at year end mainly comprised investments in unlisted shares in a joint venture based in the Cayman Islands, and term deposits maturing in more than three months from the date that the deposit was placed. The weighted average effective interest rate earned is
Financial assets are denominated in the following currencies:
| 2023 |
| 2022 | |
| £m |
| £m | |
Pound sterling | | | ||
Other |
| |
| |
| |
| | |
Analysed as follows: |
|
|
|
|
Current portion |
| |
| |
Non-current portion |
| |
| |
| |
| |
C5. Derivative financial instruments
Accounting for derivative financial instruments and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value at the balance sheet date. 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 the transaction the Group documents the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge 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 effective in offsetting changes in fair values of hedged items.
F-59
Certain financial instruments are not designated or do not qualify for hedge accounting. Typically the Group will not designate financial instruments for hedge accounting where a perfect or near-perfect offset is expected between the change in value of assets and liabilities. Changes in the fair value of any derivative instruments in this category are immediately recognised in the income statement. Where financial instruments are designated for hedge accounting they are designated as either fair value hedge, net investment hedge, or cash flow hedge. When designating cross-currency swaps, the cost of hedging has been excluded from the relationship and any movement in the fair value related to the cost of hedging is deferred in equity and amortised over the life of the hedged item.
(a) Fair value hedge
These instruments are used to hedge exposure to changes in the fair value of recognised assets or liabilities. Changes in the fair value of derivatives that are designated and qualify as fair value hedges 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. There were no fair value hedges as at the year end date.
(b) Net investment hedge
These instruments are used to hedge exposure on translation of net investments in foreign operations. Any gain or loss on the hedging instrument related to the effective portion of the hedge is recognised in other comprehensive income; the gain or loss related to the ineffective portion is recognised immediately in the income statement. In the event of disposal of a foreign operation, the gains and losses accumulated in other comprehensive income are recycled through the income statement. All currencies are directly hedged, therefore the hedge ratio is considered to be
The Group expects that the values of the hedged item and hedging instrument will move in opposite directions in response to movements in the same hedged risk. Where there are sufficient levels of denominated net assets, the critical terms are deemed to match.
The following net investment hedges were in place at 31 December 2023:
US dollar net investment hedge relationship: $
Euro net investment hedge relationship: €
Australian dollar (AUD) net investment hedge relationship: AUD
Japanese yen (JPY) net investment hedge relationship: JPY
F-60
During the year there was
For the year ended 31 December 2023, the amount in comprehensive income related to net investment hedge accounting was a gain of £
The effect of the foreign currency-related hedging instruments on the Group’s financial position and performance is shown in the table below:
2023 | ||||||||||||||||||
Weighted | ||||||||||||||||||
Carrying | Change in | average | ||||||||||||||||
amount | fair value of | Change in | foreign | |||||||||||||||
at year | Notional | outstanding | fair value of | exchange | ||||||||||||||
end date | amount | Hedge | instrument | hedged item | Ineffectiveness | rate for the | ||||||||||||
Hedging instruments |
| Currency |
| £m |
| £m |
| Maturity date |
| ratio |
| £m |
| £m |
| £m |
| year |
Cross-currency swaps | USD | | ( | November 2024 – October 2028 | | | — | | ||||||||||
Cross-currency swaps | JPY | | ( | November 2024 | | | — | | ||||||||||
Bonds |
| EUR |
| ( |
| ( |
| June 2027 – June 2030 |
|
| |
| |
| — |
| | |
Term loan |
| USD |
| ( |
| ( |
| October 2025 |
|
| |
| |
| — |
| | |
2022 | ||||||||||||||||||
Weighted | ||||||||||||||||||
Carrying | Change in | average | ||||||||||||||||
amount | fair value of | Change in | foreign | |||||||||||||||
at year | Notional | outstanding | fair value of | exchange | ||||||||||||||
end date | amount | Hedge | instrument | hedged item | Ineffectiveness | rate for the | ||||||||||||
Hedging instruments |
| Currency |
| £m |
| £m |
| Maturity date |
| ratio |
| £m |
| £m |
| £m |
| year |
Cross-currency swaps | USD | ( | ( | November 2024 – October 2028 | ( | ( | ( | |||||||||||
Cross-currency swaps |
| JPY |
| — |
| ( |
| November 2024 |
|
| — |
| — |
| — |
| ||
Bonds |
| EUR |
| ( |
| ( |
| June 2027 – June 2030 |
|
| ( |
| ( |
| — |
| ||
Term loan |
| USD |
| ( |
| ( |
| October 2025 |
|
| |
| |
| — |
| ||
Overdraft |
| AUD |
| ( |
| ( |
| n/a |
|
| — |
| — |
| — |
| ||
The amount in net investment hedge reserves related to continuing hedges is a gain of £
The change in fair value of the outstanding hedging instrument differs from the amount recognised in OCI during the year due to the impact of currency basis (excluded from the hedge relationship) and the foreign exchange impact of realised interest on the hedging instrument (not reflected in the fair value change).
(c) Cash flow hedge
These instruments are used to hedge a highly probable forecast transaction, or a change in the cash flows of a recognised asset or liability. The portion of the gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in other comprehensive income. Any ineffective portion is immediately recognised in the income statement. The gains or losses that are recognised in comprehensive income are transferred to the income statement in the same period in which the hedged cash flows affect the income statement. In the event that the hedged item occurs or is no longer expected to occur, accumulated gains or losses held in the cash flow hedge reserve are immediately recognised in the income statement. In the event that the hedged item is expected to occur but no longer meets the requirements of hedge accounting, accumulated gains or losses remain in other comprehensive income and are only recognised in the income statement when the forecast transaction occurs or is no longer expected to occur. All cash flow hedge relationships are hedges of a foreign currency risk and all currencies were directly hedged, therefore the hedge ratio is considered to be 1:
F-61
Cash flow hedge accounting has been applied to derivatives (marked as ‘cash flow hedge’ in the table on page F-63 in accordance with IFRS 9. Where no hedge accounting has been applied, related derivatives have been marked as ‘non-hedge’.
The hedged item, a euro bond, creates an exposure to pay interest annually and the principal at maturity. By receiving the same amount at the same dates through a cross-currency swap, this exposure is eliminated. Since the critical terms of the derivative and the hedged debt match (i.e. matching currencies, payment dates and interest rate on the leg of the swap offsetting the bond), the change in value of the derivative, excluding any basis risk, will be considered to completely offset the changes in the hedged cash flow.
Any ineffectiveness on the cash flow hedge is taken directly to finance costs. During the year there was a gain of £
Cash flow hedge accounting has been applied to €
Cash flow hedge accounting has been applied to $
The effect of the foreign currency related hedging instruments on the Group’s financial position and performance is shown in the table below:
2023 | ||||||||||||||||||
|
|
|
|
|
|
|
|
| Weighted | |||||||||
Carrying | Change in | Change in | average | |||||||||||||||
amount | fair value of | fair value of | foreign | |||||||||||||||
at year | Notional | outstanding | hedged | exchange | ||||||||||||||
end date | amount | instrument | item | Ineffectiveness | rate for the | |||||||||||||
Hedging instruments | Currency | £m | £m | Maturity date | Hedge ratio | £m | £m | £m | year | |||||||||
Cross-currency swaps | EUR | | | November 2024 – October 2028 | ( | ( | — | |||||||||||
Interest rate swaps | USD | | | September 2024 | | — | | — | ||||||||||
2022 | ||||||||||||||||||
|
|
|
|
|
|
|
|
| Weighted | |||||||||
Carrying | Change in | Change in | average | |||||||||||||||
amount | fair value of | fair value of | foreign | |||||||||||||||
at year | Notional | outstanding | hedged | exchange | ||||||||||||||
end date | amount | instrument | item | Ineffectiveness | rate for the | |||||||||||||
Hedging instruments | Currency | £m | £m | Maturity date | Hedge ratio | £m | £m | £m | year | |||||||||
Cross-currency swaps | EUR | | | November 2024 – October 2028 | | | ( | |||||||||||
The amount in cash flow hedge reserves related to continuing hedges is a gain of £
The change in fair value of the outstanding hedging instrument differs from the amount recognised in OCI during the year due to the impact of currency basis (excluded from the hedge relationship) and the spot retranslation element of the fair value movement (which offsets the hedged item in the profit or loss).
C6. Fair value estimation
All financial instruments held at fair value are classified by reference to the source of inputs used to derive the fair value. The following hierarchy is used:
Level 1 — unadjusted quoted prices in active markets for identical assets or liabilities;
F-62
Level 2 — inputs other than quoted prices that are observable for the asset or liability, either directly as prices or indirectly through modelling based on prices; and
Level 3 — inputs for the asset or liability that are not based on observable market data.
Financial instrument |
| Hierarchy level |
| Valuation method |
Financial assets traded in active markets | 1 | Current bid price | ||
Financial liabilities traded in active markets | 1 | Current ask price | ||
Listed bonds | 1 | Quoted market prices | ||
Money market funds | 1 | Quoted market prices | ||
Interest rate/currency swaps | 2 | Discounted cash flow based on market swap rates | ||
Forward foreign exchange contracts | 2 | Forward exchange market rates | ||
Borrowings not traded in active markets (term loans and uncommitted facilities) | 2 | Nominal value | ||
Money market deposits | 2 | Nominal value | ||
Trade payables and receivables | 2 | Nominal value less estimated credit adjustments | ||
Contingent consideration (including put option liability) | 3 | Discounted cash flow using weighted average cost of capital |
Fair value | Fair value | Fair value | Fair value | |||||
assets | liabilities | assets | liabilities | |||||
2023 | 2023 | 2022 | 2022 | |||||
| £m |
| £m |
| £m |
| £m | |
Interest rate swaps (level 2): |
| |||||||
– non-hedge |
| — |
| ( |
| — |
| — |
– net investment hedge |
| |
| ( |
| |
| ( |
– cash flow hedge |
| |
| ( |
| |
| ( |
Foreign exchange swaps (level 2): |
|
|
| |||||
– non-hedge |
| |
| — |
| — |
| — |
| |
| ( |
| |
| ( | |
Analysed as follows: |
|
| ||||||
Current portion |
| |
| ( |
| — |
| — |
Non-current portion |
| |
| ( |
| |
| ( |
Derivative financial instruments |
| |
| ( |
| |
| ( |
Contingent consideration (including put option liability) (level 3) |
| — |
| ( |
| — |
| ( |
Analysed as follows: |
|
| ||||||
Current portion |
| — |
| ( |
| — |
| ( |
Non-current portion |
| — |
| ( |
| — |
| ( |
Other payables |
| — |
| ( |
| — |
| ( |
Certain interest rate swaps have been bifurcated to manage different foreign exchange risks. The interest rate swaps are shown on the balance sheet as net derivative assets £
The effective nominal value of foreign exchange swaps is £
F-63
Given the volume of acquisitions and the variety of inputs to the valuation of contingent consideration (depending on each transaction), there are not considered to be any changes in input that would have a material impact on the contingent consideration liability.
| Contingent |
| Contingent | |
consideration | consideration | |||
2023 | 2022 | |||
£m | £m | |||
At 1 January |
| |
| |
Exchange differences |
| ( |
| ( |
Acquisitions |
| |
| |
Payments |
| ( |
| ( |
Revaluation of put option through equity |
| ( |
| |
At 31 December |
| |
| |
Fair value is equal to carrying value for all other trade and other payables.
F-64
The table below analyses the Group’s undiscounted cash flows on borrowings and derivative financial instruments that will be settled on a gross basis, into relevant maturity groupings based on the remaining period to the contractual maturity date at the balance sheet date.
| Less than |
| Between |
| More than |
| ||
1 year | 1 and 5 years | 5 years | Total | |||||
£m | £m | £m | £m | |||||
At 31 December 2023 | ||||||||
Non-derivative financial instruments | ||||||||
Borrowings | ( | ( | ( | ( | ||||
( | ( | ( | ( | |||||
Derivative financial instruments | ||||||||
Cross-currency interest rate swaps: | ||||||||
– outflow |
| ( |
| ( |
| — |
| ( |
– inflow |
| |
| |
| — |
| |
Interest rate swaps: |
| |||||||
– outflow |
| ( |
| — |
| — |
| ( |
– inflow |
| |
| — |
| — |
| |
Foreign exchange swaps: |
| |||||||
– outflow |
| ( |
| — |
| — |
| ( |
– inflow |
| |
| — |
| — |
| |
| ( |
| ( |
| — |
| ( | |
Net outflow | ( |
| ( |
| ( |
| ( | |
At 31 December 2022 |
| |||||||
Non-derivative financial instruments | ||||||||
Borrowings | ( | ( | ( | ( | ||||
( | ( | ( | ( | |||||
Derivative financial instruments | ||||||||
Cross-currency interest rate swaps: |
| |||||||
– outflow |
| ( |
| ( |
| ( |
| ( |
– inflow |
| |
| |
| |
| |
Interest rate swaps: |
| |||||||
– outflow |
| ( |
| ( |
| — |
| ( |
– inflow |
| |
| |
| — |
| |
Foreign exchange swaps: |
| |||||||
– outflow |
| ( |
| — |
| — |
| ( |
– inflow |
| |
| — |
| — |
| |
| ( |
| ( |
| ( |
| ( | |
Net outflow | ( |
| ( |
| ( |
| ( |
F-65
C7. Analysis of bank and bond debt
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are classified as current liabilities unless the Group has a continuing right to defer settlement of the liability for at least 12 months after the balance sheet date.
The Group’s bank debt facilities comprise:
| Facility |
| Drawn at |
|
| Interest rate |
| Facility |
| Drawn at |
|
| Interest rate | |||
amount | year end | Headroom | at year end | amount | year end | Headroom | at year end | |||||||||
2023 | 2023 | 2023 | 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||
£m | £m | £m | % | £m | £m | £m | % | |||||||||
Non-current | ||||||||||||||||
$ | — | | | — | | |||||||||||
$ | — | | | — | | |
The RCF was undrawn throughout 2022 and 2023. There are no financial covenants on the RCF or any other debt facility.
Medium-term notes and bond debt comprises:
| Bond interest |
| Effective hedged |
| Bond interest |
| Effective hedged |
| |
coupon | interest rate | coupon | interest rate |
| |||||
2023 | 2023 | 2022 | 2022 | ||||||
Current |
|
| |||||||
€ | Fixed | Fixed |
| Fixed | % | Fixed | % | ||
Non-current | |||||||||
€ | Fixed | Fixed |
| Fixed | % | Fixed | % | ||
€ | Fixed | Fixed | Fixed | % | Fixed | % | |||
€ | Fixed | Fixed |
| Fixed | % | Fixed | % | ||
€ | Fixed | Fixed | Fixed | % | Fixed | % | |||
£ | Fixed | Fixed | Fixed | % | Fixed | % | |||
Average cost of bond debt at year-end rates |
|
| | % |
The effective hedged interest rate reflects the interest rate payable after the impact of interest due from cross-currency swaps. The Group’s hedging strategy is to hold foreign currency debt in proportion to foreign currency profit and cash flows, which are mainly in euro and US dollar. As a result, the Group has swapped a portion of the bonds it has issued into US dollars, thus increasing the effective hedged interest rate.
The Group considers the fair value of other current liabilities to be equal to the carrying value.
C8. Finance cost
|
| 2023 |
| 2022 |
| 2021 | ||
Note | £m | £m | £m | |||||
Hedged interest payable on medium-term notes issued1 |
|
| |
| |
| | |
Interest payable on bank loans and overdrafts1 |
|
| |
| |
| | |
Interest payable on RCF1 |
|
| |
| |
| | |
Interest payable on foreign exchange swaps2 |
|
| |
| |
| | |
Interest payable on leases |
| B4 |
| |
| |
| |
Amortisation of discount on provisions |
|
| |
| |
| — | |
Fair value loss on hedge ineffectiveness |
|
| — |
| |
| — | |
Total finance cost |
|
| |
| |
| |
1. | Interest expense on financial liabilities held at amortised cost. |
F-66
2. | Interest payable on foreign exchange swaps including coupon interest payable for the year was £ |
C9. Finance income
|
| 2023 |
| 2022 |
| 2021 | ||
Note | £m | £m | £m | |||||
Bank interest received |
|
| |
| |
| | |
Fair value gain on hedge ineffectiveness | | | — | |||||
Foreign exchange gain on translation of foreign assets/liabilities |
|
| |
| — |
| — | |
Hyperinflation accounting adjustment |
|
| |
| |
| | |
Total finance income |
|
| |
| |
| |
D. Other
D1. Dividends
Dividend distribution to the Company’s shareholders is recognised as a liability in the Consolidated Financial Statements in the period in which the dividends are approved by the Company’s shareholders. Interim dividends are recognised when paid.
2023 | 2022 | 2021 | ||||
| £m |
| £m |
| £m | |
2020 final dividend paid – |
| — |
| — |
| |
2021 interim dividend paid – |
| — |
| — |
| |
2021 final dividend paid – |
| — |
| |
| — |
2022 interim dividend paid – | — | | — | |||
2022 final dividend paid – | | — | — | |||
2023 interim dividend paid – | | — | — | |||
| |
| |
| |
An interim dividend of
The aggregate amount of the proposed dividend to be paid out of retained earnings at 31 December 2023, but not recognised as a liability at year end, is £
D2. Share capital
The Company’s share capital is made up of the shares that have been issued to its members, whether on, or subsequent to, its incorporation. At the year end the Company’s issued share capital consisted of ordinary shares of
The Company does not have a limited amount of authorised capital and does not hold any shares in treasury.
During the year,
2023 | 2022 | |||
| £m |
| £m | |
Issued and fully paid | ||||
At 31 December – |
| |
| |
F-67
D3. Contingent liabilities
The Group has contingent liabilities relating to guarantees in respect of leasehold properties, pensions, third parties, tax, and litigation. The Group also has contingent liabilities for the management or remediation of environmental issues. These issues tend to be complex to determine and resolve and may be material, although it is often not possible to accurately predict future costs reliably. The possibility of any significant outflows in respect of these items is considered to be remote.
D4. Related party transactions
Subsidiaries
All transactions between Group subsidiaries were transacted at arm’s length during the ordinary course of business and have been eliminated on consolidation, along with any outstanding balances, and accordingly are not disclosed in this note.
Key management personnel
The Group’s strategy and policy are managed by the Executive Leadership Team. Their compensation is shown below:
2023 | 2022 | 2021 | ||||
| £m |
| £m |
| £m | |
Salaries and other short-term employee benefits | | | | |||
Post-employment benefits |
| |
| — |
| |
Share-based payments |
| |
| |
| |
| |
| |
| |
Joint ventures and associate entities
Nippon Calmic Limited (
There are no significant transactions between associate entities and other Group companies.
D5. Post balance sheet events
There have been no significant post balance sheet events affecting the Group since 31 December 2023.
F-68
Related Undertakings
Subsidiaries and other associated undertakings at 31 December 2023
Subsidiaries:
| % held by |
| |||
Group |
| ||||
Company name |
| Share class | companies |
| |
Argentina |
|
|
|
| |
Calle 70 No. 2720, Necochea city, Province of Buenos Aires, Argentina | |||||
Ecotec Interocéanica S.A. |
| Ordinary |
| | % |
Australia |
|
|
|
| |
Level 3/153 Flinders Street, Adelaide SA 5000, Australia | |||||
Allstate Holdings (SA) Pty Ltd1 | Ordinary | | % | ||
Allstate Pest Control Pty Ltd1 | Ordinary | | % | ||
Allstate Services Pty Ltd1 | Ordinary | | % | ||
Unit A1, 3-29 Birnie Ave, Lidcombe Business Park, Lidcombe NSW 2141, Australia | |||||
Cannon Hygiene Australia Pty Limited |
| Ordinary |
| | % |
Green Fingers Plant Hire Pty Limited |
| Ordinary |
| | % |
Knock Out Pest Control Pty Limited |
| Ordinary |
| | % |
Pest Away Australia Pty Limited |
| Ordinary |
| | % |
Rentokil Australia Pty Limited |
| Ordinary |
| | % |
Rentokil Initial Asia Pacific Pty Limited |
| Ordinary |
| | % |
Rentokil Initial Pty Limited |
| Ordinary |
| | % |
Rentokil Initial Track Spray Pty Ltd1 | Ordinary | | % | ||
Rentokil Pest Control (QLD) Pty Limited |
| Ordinary |
| | % |
Rentokil Pest Holdings Pty Limited |
| Ordinary |
| | % |
Rentokil Pty Limited |
| Ordinary |
| | % |
Austria |
|
|
|
| |
Brown-Boveri-Straße 8/2/8, 2351, Wiener Neudorf, Austria | |||||
Rentokil Initial GmbH |
| Ordinary |
| | % |
Bahamas |
|
|
|
| |
5th Terrace Centreville, P.O. Box N-1388, Nassau, New Providence, Bahamas | |||||
Rentokil Initial (Bahamas) Limited |
| Ordinary |
| | % |
Tropical Exterminators (Holdings) Limited |
| Common |
| | % |
Tropical Exterminators Limited |
| Common |
| | % |
Barbados |
|
|
|
| |
One Welches, Welches St. Thomas, Barbados | |||||
Rentokil Initial (Barbados) Limited |
| Ordinary |
| | % |
Belgium |
|
|
|
| |
Brandekensweg 2, Schelle, 2627, Belgium | |||||
Ambius N.V. |
| Ordinary |
| | % |
Initial Belux N.V. |
| Ordinary |
| | % |
Rentokil N.V. |
| Ordinary |
| | % |
Brazil |
|
|
|
| |
Rua Maria Braga Lima Dias, Alto Cajueiros, Macaé, Rio de Janeiro, 120, Brazil | |||||
Ativa Controle Ambiental Ltda | Ordinary | | % | ||
Avenida Afonso Pena, nº 808, Santos, 11020-004, Brazil | |||||
Ecotec Brasil Tratamentos Fitossanitários Ltda | Ordinary | | % | ||
Rua Professor José Vieira de Mendonça, 770, Sala 308, Belo Horizonte, Estado de Minas Gerais, Brazil | |||||
Ecovec Comercio E Licenciamento De Tecnologias Ltda | Ordinary | | % | ||
Rua Torrinha 171, Bairro Parque da Figueira, Campinas, CEP 13040-310, Brazil | |||||
Impacto Controle de Pragas Ltda.1 | Ordinary | | % | ||
Rua Francisco Gonçalo, 16, Loja A, Bairro Pires Façanha, Eusébio, Ceará, CEP 61775-070 | |||||
Protecta Manejo Integrado de Pragas Ltda1 | Ordinary | | % | ||
Avenida Ceci, 348, Fundos, Centro Empresarial Tambore, CEP 06460-120, Barueri - SP, Brazil | |||||
Rentokil Initial Do Brasil Ltda | Ordinary | | % | ||
Rua Carlos de Laet, 3.443, Boqueirão, Curitiba, Paraná, 81650-040, Brazil | |||||
União Sul Controle de Pragas Ltda ME |
| Ordinary |
| | % |
F-69
| % held by |
| |||
Group |
| ||||
Company name |
| Share class | companies |
| |
Brunei Darussalam |
|
|
|
| |
Unit D1 & D1-1 Block D, Bangunan Hj Lajim & Anak-anak, Kampong Kiarong, Gadong B, Brunei Muara, BE1318, Brunei Darussalam | |||||
Rentokil Initial (B) Sdn Bhd |
| Non-redeemable preference shares |
| | % |
Ordinary | | % | |||
Unit D3, Bangunan Hj Lajim & Anak-anak, Kampong Kiarong, Gadong B, Brunei Muara, BE1318, Brunei Darussalam | |||||
Rentokil Initial South East Asia Sdn Bhd1 | Ordinary | | % | ||
Canada |
|
|
|
| |
1222 Lesperance Road, Tecumseh ON N8N 1X5, Canada |
|
|
|
| |
Copesan Services Canada Inc. |
| Interest |
| | % |
Suite 900, 1959 Upper Water Street, Halifax NS B3J 2X2, Canada | |||||
Rentokil Canada Corporation | Common Class A | | % | ||
Common Class B | | % | |||
243-945 av. Newton, Québec G1P4M3, Canada |
|
|
|
| |
Terminix Canada Ltd. |
| Common |
| | % |
Chile |
|
|
|
| |
Av. Víctor Uribe No 2080 Quilicura Santiago, Chile |
|
|
|
| |
Comercializadora de Insumos y Servicios | Social Rights Mauco Limitada | | % | ||
Ingeclean S.A |
| Ordinary |
| | % |
Rentokil Initial Chile SpA | Ordinary | | % | ||
El Trapiche No.1322, Galpón No 4, Codominio Pacific, Coquimbo, Chile | |||||
Control De Plagas Hidalgo Y Rodriguez Limitada | Ordinary | | % | ||
Av. El Bosque PC 12 Lo Boza dpto, B05 Pudahuel, Santiago, Chile | |||||
Desan SPA | Ordinary | | % | ||
Av. El Salto, Santiago, 4001, Chile | |||||
Ingeniería en Sanitización S.A | Ordinary | | % | ||
San Martin, Los Ángeles, N° 399, Chile |
|
|
|
| |
Plaguisur Limitada |
| Ordinary |
| | % |
Av. Pdte Ibañez 352, Puerto Montt, Chile | |||||
Sociedad Comercial 7 Plagas Limitada1 | Ordinary |
| | % | |
People's Republic of China | |||||
East 2nd Floor, No. 460 Wenyi West Road, Xihu District, China | |||||
Hangzhou Research Institute of Profume Fumigation Co. Ltd. | Ordinary |
| | % | |
Room 103, Building 2, Yuzhongxili#42, Beijing, China | |||||
Rentokil Initial (China) Ltd | Ordinary |
| | % | |
Colombia |
|
|
|
| |
Cr 42A 80B 07, Barranquilla, Colombia |
|
|
|
| |
Colplagas S.A.S |
| Ordinary |
| | % |
Calle 162# 20-08, Bogota, Colombia |
|
|
|
| |
Continental De Fumigaciones S.A.S. |
| Ordinary |
| | % |
Cr 20 No 162-11, Colombia |
|
|
|
| |
Fumigaciones Young S.A.S. |
| Ordinary |
| | % |
Calle 15 Sur, No 48-130 Medellin, Antioquia, Colombia |
|
|
|
| |
Fumigax S.A.S. |
| Ordinary |
| | % |
Carrera 19B No 164A-81, Bogota, Colombia |
|
|
|
| |
Rentokil Initial Colombia S.A.S. |
| Common |
| | % |
F-70
| % held by |
| |||
Group |
| ||||
Company name |
| Share class | companies |
| |
Costa Rica |
|
|
|
| |
San Jose-Escazu San Rafael, Terraforte Building Second Floor, Cordero, Cordero Abogados, Costa Rica | |||||
Decolim Limitada |
| Common |
| | % |
Avenida 18, calles 17 y 19, edificio 47, Barrio Luján, San José, Costa Rica |
|
|
|
| |
Fumigadora Control Tecnico De Plagas S.A. |
| Common |
| | % |
Curaçao |
|
|
|
| |
Parke Komersial Korsou, A 24 Veeris, Curacao | |||||
Chuchubi Pest Control N.V. |
| Common |
| | % |
Czech Republic |
|
|
|
| |
Praha 2, Vyšehradská 1349/2, Prague, PSČ 12800, Czech Republic |
|
|
|
| |
Rentokil Initial s.r.o. |
| Ordinary |
| | % |
Denmark |
|
|
|
| |
Paul Bergsoes Vej 22, 2600 Glostrup, Denmark |
|
|
|
| |
Rentokil Initial A/S |
| Ordinary |
| | % |
Dominican Republic |
|
|
|
| |
1125 Berkshire Blvd, Suite 150, Reading PA 19610, United States |
|
|
|
| |
Oliver Exterminating Dominicana Corp. |
| Common |
| | % |
El Salvador |
|
|
|
| |
Avenida Calzada Guarda Barranco Urbanizacion, Lomas de Altamira, #14 Pasaje Clarineros, San Salvador, Central America, El Salvador | |||||
SAGRIP, S.A. DE C.V. |
| Ordinary |
| | % |
Estonia |
|
|
|
| |
Turi Str. 3/1, 11313, Tallinn, Estonia |
|
|
|
| |
Rentokil OÜ |
| Ordinary |
| | % |
Eswatini |
|
|
|
| |
Umkhiwa House Lot 195, Karl Grant Street, Mbabane, Eswatini |
|
|
|
| |
RI Swaziland (Pty) Ltd |
| Ordinary |
| | % |
Fiji |
|
|
|
| |
Lot 5, Kaua Road, Suva, Fiji |
|
|
|
| |
Rentokil Initial Pte Limited |
| Ordinary |
| | % |
Finland |
|
|
|
| |
Tikkurilantie 10 Vantaa, Finland, 01380, Finland |
|
|
|
| |
Rentokil Initial Oy |
| Ordinary |
| | % |
France |
|
|
|
| |
ZA Bertoire II 14, avenue René Dumont, 13410, LAMBESC, France |
|
|
|
| |
ABAIPRO |
| Ordinary |
| | % |
209 rue de la Belle Etoile, 95700, Roissy-en-France, France |
|
|
|
| |
Ambius SAS |
| Ordinary |
| | % |
6, rue Livio, 67100, Strasbourg, France |
| ||||
CAWE FTB Group SAS |
| Ordinary |
| | % |
145, rue de Billancourt, 92100, Boulogne Billancourt, France |
|
|
|
| |
Initial Hygiene Services SAS |
| Ordinary |
| | % |
Initial SAS |
| Ordinary |
| | % |
Rentokil Initial Holdings (France) SA |
| Ordinary |
| | % |
SCI Gravigny |
| Ordinary |
| | % |
SCI Vargan |
| Ordinary |
| | % |
39-53 boulevard Ornano Immeuble Pleyad 3, 93200, Saint-Denis, France | |||||
Rentokil Initial Environmental Services SAS |
| Ordinary |
| | % |
Rentokil Initial SAS |
| Ordinary |
| | % |
ZAC des Epineaux 7, avenue Louis Blériot 95740 FRÉPILLON, France |
|
|
|
| |
Technivap SAS |
| Ordinary |
| | % |
F-71
| % held by |
| |||
Group |
| ||||
Company name |
| Share class | companies |
| |
French Guiana |
|
|
|
| |
PAE de Degrad des cannes, Remire-Montjoly, 97354, French Guiana |
|
|
|
| |
Rentokil Initial Guyane SARL |
| Ordinary |
| | % |
Germany |
|
|
|
| |
Amselweg 20, 87480, Weitnau, Germany |
|
|
|
| |
G.S.D. Gesellschaft für Schädlingsbekämpfung u. Desinfektion mbH |
| Ordinary |
| | % |
Piderits Bleiche 11, 33689, Bielefeld, Germany |
| ||||
Medentex GmbH |
| Ordinary |
| | % |
Rentokil Dental GmbH |
| Ordinary |
| | % |
Wittener Str. 56, 44789 Bochum, Germany |
| ||||
Preventa Schadlingsbekampfung GmbH |
| Ordinary |
| | % |
Heuesch 1, 49808 Lingen (Ems), Germany |
| ||||
Rentokil Holdings GmbH |
| Ordinary |
| | % |
Rentokil Initial Beteiligungs GmbH |
| Ordinary |
| | % |
Rentokil Initial GmbH & Co. KG |
| Ordinary |
| | % |
Seemann Schädlingsbekämpfung und Holzschutz GmbH & Co.KG |
| Ordinary |
| | % |
An der Ziegelei, 47 27383, Scheeßel-Westerholz, Germany | |||||
S & A Service und Anwendungstechnik GmbH |
| Ordinary |
| | % |
Ghana |
|
|
|
| |
43 Cashew Road, Okpoi Gonno, Park Street, Accra, P. O. BOX 8747, Ghana |
|
|
|
| |
Rentokil Initial Ghana Limited |
| Ordinary |
| | % |
Greece | |||||
7 Aristotelous Street, Tavros, Athens, 177 78, Greece | |||||
Rentokil Initial Hellas EPE | Ordinary | | % | ||
Guadeloupe |
|
|
|
| |
7 Allee des Papillons, Dothemare, Abymes, 97139, Guadeloupe |
|
|
|
| |
Pole Hygiene et Recyclage Group SAS1 |
| Ordinary |
| | % |
6 Allee des Papillons, Dothemare, Abymes, 97139, Guadeloupe |
|
|
|
| |
Rentokil Initial Guadeloupe Sarl |
| Ordinary |
| | % |
131 ZA de Calbassier, Basse-Terre, 97100, Guadeloupe | |||||
SOS Guadeloupe Traitement Sarl | Ordinary |
| | % | |
Guatemala |
|
|
|
| |
9 Av. 39-97, Zona 8, Ciudad Guatemala, Guatemala |
|
|
|
| |
Servicios Agricolas Profesionales Sociedad Anonima |
| Ordinary |
| | % |
Guernsey |
|
|
|
| |
P O Box 155, Mill Court, La Charroterie, St Peter Port, GY1 4ET, Guernsey |
|
|
|
| |
Felcourt Insurance Company Limited |
| Ordinary |
| | % |
Guyana |
|
|
|
| |
Lot 8, Charles and Drysdale Streets, Charlestown, Georgetown, Guyana |
|
|
|
| |
Rentokil Initial Guyana Limited |
| Ordinary |
| | % |
Honduras |
|
|
|
| |
Colonia Palmira, Avenida Republica de Argentina, N 2017, Tegucigalpa Honduras, 11101, Honduras | |||||
Compania de Servicios e Inversiones SVM Honduras, S. de R.L. |
| Ordinary |
| | % |
Compania de Servicios SVM Olympus, S. de R.L. |
| Ordinary |
| | % |
Compania de Servicios SVM Progressive, S. de R.L. |
| Ordinary |
| | % |
Compania de Servicios SVM Technicians, S. de R.L. |
| Ordinary |
| | % |
Compania de Servicios SVM Vanguard, S. de R.L. |
| Ordinary |
| | % |
San Pedro Sula, Departamento de Cortes, San Pedro Sula, Honduras |
|
|
|
| |
Sagrip Honduras S.A. |
| Nominative |
| | % |
Hong Kong |
|
|
|
| |
23/F, Westin Centre, 26 Hung to Road, Kwun Tong, Kowloon, Hong Kong |
|
|
|
| |
Rentokil Hong Kong Investment Limited |
| Ordinary |
| | % |
Rentokil Initial Hong Kong Limited |
| Ordinary |
| | % |
F-72
| % held by |
| |||
Group |
| ||||
Company name |
| Share class | companies |
| |
India |
|
|
|
| |
2nd Floor, Narayani, Ambabai Temple Compound, Aarey Road, Goregaon West, Mumbai, Maharashtra, 400 104, India | |||||
Corporate Millennium Hygiene Solutions Private Limited |
| Ordinary |
| | % |
Rentokil Initial Hygiene India Private Limited |
| Ordinary |
| | % |
Villa No.3, Crescent Villa, Candolim, Goa, 403515, India |
|
|
|
| |
PCI Pest Control Private Limited |
| Ordinary |
| | %4 |
Indonesia |
|
|
|
| |
South Quarter Tower B, Lantai 21, Unit E,F,G,H. JI. R.A., Kartini Kav. 8, RT. 010/RW. 004 Kel., Cilandak Barat, Kec Cilandak, Jakarta, Selatan, Indonesia | |||||
PT. Calmic Indonesia |
| Common A |
| | % |
Common B | | % | |||
PT. Rentokil Indonesia |
| Common A |
| | % |
Common B | | % | |||
Gedung JDC Lt.6, Jl. Gatot Subroto Kav. 53 Petamburan, Tanah Abang, Jakarta Pusat, Indonesia |
|
|
|
| |
PT Wesen Indonesia |
| Ordinary |
| | % |
Republic of Ireland | |||||
Hazel House, Millennium Park, Naas, County Kildare, Ireland | |||||
Cannon Hygiene International Limited | Ordinary |
| | % | |
Initial Medical Services (Ireland) Limited | Ordinary |
| | % | |
Rentokil Initial Holdings (Ireland) Limited | Ordinary |
| | % | |
Rentokil Initial Limited | Ordinary |
| | % | |
15 Oxford Lane, Dublin 6, Ranelagh, Dublin, D06 W5K2, Ireland | |||||
Pest Pulse Limited | €0.0075 | | % | ||
Ordinary A | |||||
€0.0075 | | % | |||
Ordinary | |||||
€0.01 | | % | |||
Ordinary | |||||
Opposite Rosary Place, Castleredmond, Midleton, Co. Cork, Midleton, Ireland | |||||
Ronaldon Limited | Ordinary |
| | % | |
Israel |
|
|
|
| |
13 Hadid 7313500, Israel |
|
|
|
| |
Eitan Amichai Pest Management IPM Ltd |
| Ordinary |
| | % |
Yarokologi Ltd. |
| Ordinary |
| | % |
Italy |
|
|
|
| |
Via Laurentina km. 26,500, 157 a/c, 00071, Pomezia, Italy |
|
|
|
| |
Rentokil Initial Italia SpA |
| Ordinary |
| | % |
Jamaica |
|
|
|
| |
39-41 Second Street, Newport West, Kingston 13, Jamaica |
|
|
|
| |
Rentokil Initial (Jamaica) Limited |
| Ordinary |
| | % |
Jordan |
|
|
|
| |
Amman, Jabal AlHussien, Al Lud Str. 37 – 1st floor, Jordan |
|
|
|
| |
Arena Public Health Co. |
| Ordinary |
| | % |
Kenya |
|
|
|
| |
Unit 5 Sameer Industrial Park, Roac C, Off Enterprise Road Industrial Area, Nairobi, Kenya |
|
|
|
| |
Rentokil Initial Kenya Limited |
| Ordinary |
| | % |
Republic of Korea | |||||
2nd Floor, Korea Disaster Relief Association, 371-19 Sinsu-Dong, Mapo-Gu, Seoul, Korea, 121-856, Republic of Korea | |||||
Rentokil Initial Korea Ltd | Common | | % | ||
Lebanon |
|
|
|
| |
Boecker Building, Plot no. 3309, Ain El Remmaneh, Beirut, Lebanon | |||||
Boecker International SAL (Offshore) |
| Ordinary |
| | % |
Adonis Building, Bechara el Khoury, Beirut, Lebanon | |||||
Boecker Public Health s.a.l | Ordinary |
| | % | |
Boecker Building, Plot no. 3309, Ain El Remmaneh, Beirut, Lebanon | |||||
Boecker World (Holding) s.a.l. | Ordinary | | % | ||
Libya |
|
|
|
| |
Janzour, Tripoli, Libya |
|
|
|
| |
Rentokil Delta Libya for Environmental Protection JSCO |
| Ordinary |
| | % |
Lithuania |
|
|
|
| |
Drobės g. 62, LT-45181, Kaunas, Lithuania |
|
|
|
| |
Dezinfa, UAB |
| Ordinary |
| | % |
F-73
| % held by |
| |||
Group |
| ||||
Company name |
| Share class | companies |
| |
Luxembourg |
|
|
|
| |
Rue de la Chapelle 47, 4967, Clemency, Luxembourg |
|
|
|
| |
R-Control Desinfections SA |
| Ordinary |
| | % |
Rentokil Luxembourg Sarl |
| Ordinary |
| | % |
6 Rue Eugène Ruppert, L-2453, Luxembourg |
|
|
|
| |
SVM Finance Luxembourg 1 S.a.r.l. |
| Ordinary |
| | % |
6 Rue Eugène Ruppert, L-2453, Luxembourg | |||||
SVM Finance Luxembourg 2 S.a.r.l. |
| Ordinary |
| | % |
Malawi |
|
|
|
| |
Plot No. LE 377, Patridge Avenue, Limbe, P O BOX 5135, Malawi |
|
|
|
| |
Rentokil Initial Limited |
| Ordinary |
| | % |
Malaysia |
|
|
|
| |
Level 8 Symphony House Pusat Dagangan Dana 1, Jalan PJU 1A/46, Petaling Jaya, 47301 Selangor Darul, Selangor, Malaysia | |||||
Rentokil Initial (M) Sdn Bhd |
| Ordinary |
| | % |
UFTC Sdn Bhd |
| Ordinary |
| | % |
Maldives |
|
|
|
| |
No. 6-A, Faamudheyrige Building, Orchid Magu, Repu, Malé, Maldives |
|
|
|
| |
Rentokil Initial Maldives (Pvt) Ltd |
| Preferential Shares |
| | % |
Martinique |
|
|
|
| |
Soudon, Le Lamentin, 97232, Martinique |
|
|
|
| |
Rentokil Initial Martinique Sarl |
| Ordinary |
| | % |
Mexico |
|
|
|
| |
Calle Sauce 29, Col. Santa Maria La Ribera, Delegación Cuauhtemoc, CDMX , 06400, Mexico | |||||
Control Vifer, S.A. de C.V. |
| Ordinary A |
| | % |
Ordinary B | | % | |||
Servicios de Plagas Terminix, S.A. de C.V. |
| Ordinary A |
| | % |
Ordinary B | | % | |||
Terminix International S.A. de C.V. |
| Ordinary A |
| | % |
Ordinary B | | % | |||
Juan Álvarez #482, Colonia Centro, Monterrey, N.L., 64000, Mexico | |||||
Balance Urbano Control de Plagas S.A. de CV | Ordinary |
| | % | |
Calle 29, No. 210 Col. Garcia Gineres, Merida, Yucatán, 97070, Mexico |
|
|
|
| |
Personal Profesional de Pesticidas S.A. de C.V. |
| Ordinary |
| | % |
Mozambique |
|
|
|
| |
Avenida da Namaacha, kilometro 6, Residencial Mutateia, Cidade da Matola, Mozambique |
|
|
|
| |
Rentokil Initial Mozambique Limitada |
| Ordinary |
| | % |
Netherlands |
|
|
|
| |
Impact 6, 6921 RZ, Duiven, Netherlands |
|
|
|
| |
Ambius B.V. |
| Ordinary |
| | % |
Oude Middenweg 77, 2491 AC, Den Haag, Netherlands |
|
|
|
| |
B.V. Rentokil Funding | Ordinary A |
| | % | |
BET (Properties) B.V. |
| Ordinary |
| | % |
BET Finance B.V. |
| Ordinary |
| | % |
Holland Reconditionering B.V. | Ordinary |
| | % | |
Rentokil Initial Finance B.V. |
| Ordinary |
| | % |
Rentokil Initial International B.V. |
| Ordinary |
| | % |
Rentokil Initial Overseas (Holdings) B.V. |
| Ordinary |
| | % |
Ravenswade 54-S, 3439, Nieuwegein, LD, Netherlands |
|
|
|
| |
Rentokil Initial B.V. |
| Ordinary |
| | % |
F-74
| % held by |
| |||
Group |
| ||||
Company name |
| Share class | companies |
| |
New Zealand |
|
|
|
| |
Level 1, 89 Carbine Road, Mount Wellington, Auckland, 1060, New Zealand |
|
|
|
| |
Rentokil Initial Limited |
| Ordinary |
| | % |
Norway |
|
|
|
| |
Sanitetsveien 17, Skjetten, Lillestrøm, 2013, Norway |
|
|
|
| |
Rentokil Forsikring AS | Ordinary | | % | ||
Rentokil Initial Norge AS | Ordinary | | % | ||
Skadedyrbutikken AS |
| Ordinary |
| | % |
Pakistan |
|
|
|
| |
S-2 Commercial, 2nd Floor, Lalik Jan Chowk, Phase II, Lahore, Cantonment, Punjab, Pakistan |
|
|
|
| |
C-Shine Sustainable Solutions (Private) Limited |
| Ordinary |
| | % |
Peru |
|
|
|
| |
Calle 23 Mza, Z-1 Lote 9, Villa El Salvador, Peru |
|
|
|
| |
Ingeclean Peru S.A.C | Ordinary | | % | ||
Philippines |
|
|
|
| |
No 73 Elisco Road, Bo, Kalawaan, Pasig City, 1600, Philippines |
|
|
|
| |
Rentokil Initial (Philippines) Inc |
| Ordinary |
| | % |
Poland |
|
|
|
| |
Ul. Jana Pawla Woronicza, Nr 31, Lok. 78, 02-640, Warszawa, Poland |
|
|
|
| |
Rentokil Polska Sp. z o.o. |
| Ordinary |
| | % |
Ul. Dąbrowskiego 44, 50-457, Wrocław, Poland |
|
|
|
| |
Vaco sp. z o.o |
| Ordinary |
| | % |
Portugal |
|
|
|
| |
EN 115, Km 78,67, 2664-502, São Julião do Tojal, Portugal |
|
|
|
| |
Rentokil Initial Portugal – Servicos de Proteccao Ambiental, Lda. |
| Ordinary |
| | % |
Puerto Rico |
|
|
|
| |
1125 Berkshire Blvd, Suite 150, Reading PA 19610, United States |
|
|
|
| |
Rentokil of Puerto Rico, Inc. |
| Common |
| | % |
Saudi Arabia |
|
|
|
| |
King Abdul Aziz Road, Suliemaniyah, Riyadh, 12243, Saudi Arabia | |||||
BET Trading LLC | Ordinary |
| | % | |
4477 King Abdul Aziz Road, Suleimaniya, Unit 2 Riyadh KSA, Saudi Arabia | |||||
Boecker Public Health Saudia Company Limited |
| Ordinary |
| | % |
PO Box 30164, Office No: 401, 4th Floor, Al Tamimi Building, Al Khobar North, Al Khobar, 31952, Saudi Arabia | |||||
Rentokil Saudi Arabia Limited O.P.C |
| Ordinary |
| | % |
F-75
| % held by |
| |||
Group |
| ||||
Company name |
| Share class | companies |
| |
Singapore |
|
|
|
| |
16 Jalan Mesin, Singapore, 368815, Singapore |
|
|
|
| |
Rentokil Initial Asia Pacific Management Pte Ltd |
| Ordinary |
| | % |
Rentokil Initial Singapore Private Limited |
| Ordinary |
| | % |
Slovakia |
|
|
|
| |
Kopcianska 10, Bratislava, 851 01, Slovakia |
|
|
|
| |
Rentokil Initial s.r.o. |
| Ordinary |
| | % |
South Africa |
|
|
|
| |
Unit D12 Connaught Park, Riley Road, Beaconvale, Parow, 7000, South Africa |
|
|
|
| |
Cannon Hygiene (SA) Proprietary Limited |
| Ordinary |
| | % |
2 Stigant Road, Claremont, Cape Town, 7708, South Africa | |||||
Newshelf 1232 (Pty) Ltd | Preference | | % | ||
Rentokil Initial (Proprietary) Limited | Ordinary | | % | ||
Rentokil Initial Dikapi JV (Pty) Limited | Ordinary | | % | ||
Spain |
|
|
|
| |
C/ Monasterio de Nájera 1, 50002, Zaragoza, Spain | |||||
Desinfecciones Bionext, S.L.1 | Ordinary |
| | % | |
C/ Mar Mediiterráneo 1, 28830 San Fernando de Henares, Madrid, Spain | |||||
Initial Gaviota S.A.U |
| Ordinary |
| | % |
Rentokil Initial Espana SA |
| Ordinary A |
| | % |
| Ordinary B |
| | % | |
| Ordinary C |
| | % | |
Polígono Industrial “Pla de Vallonga”, Calle Meteorito, 59 – Alicante, Spain |
|
|
|
| |
Lokimica S.A |
| Ordinary |
| | % |
Calle de la Nena Casas, 71, 08017, Barcelona, Spain |
|
|
|
| |
Servicios Depec S.L. |
| Ordinary |
| | % |
C/ Palanca 34 Local Calle, 28045, Madrid, Spain | |||||
Tecnologia y Desarrollo Medioambiental, S.L.1 | Ordinary |
| | % | |
Sri Lanka |
|
|
|
| |
No. 307, Negombo Road, Peliyagoda, Sri Lanka |
|
|
|
| |
Rentokil Initial Ceylon (Private) Limited |
| Ordinary |
| | % |
F-76
| % held by |
| |||
Group |
| ||||
Company name |
| Share class | companies |
| |
Sweden |
|
|
|
| |
Avestagatan 61, SE 163 53 Spanga, Sweden |
|
|
|
| |
Ambius AB |
| Ordinary |
| | % |
Rent a Plant Interessenter AB |
| Ordinary |
| | % |
Rentokil AB |
| Ordinary |
| | % |
Sweden Recycling AB |
| Ordinary |
| | % |
c/o Nomor AB, Tusbystråket 1B, 191 61, Sollentuna, Sweden | |||||
Nomor AB |
| Ordinary |
| | % |
Nomor Försăkring AB |
| Ordinary |
| | % |
Nomor Holding AB |
| Ordinary |
| | % |
Terminix Nomor AB |
| Ordinary |
| | % |
Switzerland |
|
|
|
| |
Hauptstrasse 3, 4625 Oberbuchsiten, Oberbuchsiten, Switzerland |
|
|
|
| |
Rentokil Schweiz AG |
| Ordinary |
| | % |
Taiwan |
|
|
|
| |
14F-1, No. 26, Ln. 61, Sec. 1,, Guangfu Rd., Sanchong Dist., New Taipei City, Taiwan (Province of China) |
|
|
|
| |
Initial Hygiene Co Ltd |
| Ordinary |
| | % |
Rentokil Co., Limited |
| Ordinary |
| | % |
Tanzania |
|
|
|
| |
1st Floor, Opal Place, 77 Haile Selassie Road, Masaki, P.O. Box 21184, Dar es Salaam, Tanzania |
|
|
|
| |
Initial Hygiene (T) Limited |
| Ordinary |
| | % |
Thailand |
|
|
|
| |
160 Vibhavadi Rangsit Road, Khwaeng Ratchadapisek, Khat Dindaeng, Thailand, 10400, Thailand |
|
|
|
| |
Cannon Pest Management Co. Ltd |
| Ordinary |
| | % |
Rentokil Initial (Thailand) Ltd |
| Ordinary |
| | % |
Trinidad and Tobago |
|
|
|
| |
Field no. 82, KK-LL, Aranguez South, Trinidad and Tobago |
|
|
|
| |
Rentokil Initial (Trinidad) Limited |
| Ordinary |
| | % |
Tunisia |
|
|
|
| |
Technopole Textile, SAHLINE, NEOTEX, MONASTIR, Sahline, 5012, Tunisia |
|
|
|
| |
CAP Tunis |
| Ordinary |
| | % |
Turkey |
|
|
|
| |
1201/1 sok. No:2 Kat:3 D:301-302 Su Plaza, Yenişehir, Konak, Izmir, Turkey |
|
|
|
| |
Rentokil Initial Çevre Sağlığı Sistemleri Ticaret ve Sanayi A.Ş |
| Ordinary |
| | % |
Uganda |
|
|
|
| |
Plot No 2012, Kalinabiri Road, Ntinda, Kampala, Uganda |
|
|
|
| |
Rentokil Initial Uganda Limited |
| Ordinary |
| | % |
United Arab Emirates |
|
|
|
| |
Office number 1403, PO Box 41999, TECOM, Al Barsha Heights, Dubai, United Arab Emirates |
|
|
|
| |
Boecker Food Safety L.L.C. |
| Ordinary |
| | % |
Al Shafar Tower 1, 14th floor, office No. 1401, TECOM, Al Barsha Heights, Dubai, United Arab Emirates | |||||
Boecker Pest Control L.L.C. |
| Ordinary |
| | % |
Boecker Public Health Pest Control | Ordinary |
| | % | |
Equipment Trading L.L.C. | |||||
Rentokil Initial Pest Control LLC | Ordinary |
| | % | |
Office 5, M26, Mussafah, Abu Dhabi, United Arab Emirates | |||||
National Pest Control LLC | Ordinary |
| | % | |
7122 228/M AL, Shop #G4, Al Manakh, Sharjah, United Arab Emirates | |||||
National Pest Control Per Person Company LLC | Ordinary |
| | % |
F-77
| % held by |
| |||
Group |
| ||||
Company name |
| Share class | companies |
| |
United Arab Emirates (continued) |
|
|
|
| |
Al Suhyeen, Rolla, Office 205, Sharjah, United Arab Emirates | |||||
Specialist Int. Pest Control LLC |
| Ordinary |
| | % |
United Kingdom |
|
|
|
| |
Compass House, Manor Royal, Crawley, West Sussex, RH10 9PY, UK |
|
|
|
| |
AW Limited |
| Ordinary |
| | % |
B.E.T. Building Services Limited |
| Ordinary |
| | % |
BET (No.18) Limited |
| Ordinary |
| | % |
| Deferred |
| | % | |
BET Environmental Services Ltd |
| Ordinary |
| | % |
BET Pension Trust Limited |
| Ordinary |
| | % |
BPS Offshore Services Limited2 |
| Ordinary |
| | % |
Broadcast Relay Service (Overseas) Limited2 |
| Ordinary |
| | % |
Castlefield House Limited |
| Ordinary |
| | % |
Chard Services Limited |
| Ordinary |
| | % |
CHL Legacy Limited2 |
| Ordinary |
| | % |
Contemporary Plant Designs Limited1,2 | Ordinary | | % | ||
Dudley Industries Limited |
| Ordinary |
| | % |
Enigma Laundries Limited |
| Ordinary |
| | % |
Enigma Services Group Limited |
| Ordinary |
| | % |
Enviro-Fresh Limited |
| Ordinary |
| | % |
Environmental Contract Services Limited2 |
| Ordinary |
| | % |
Euroguard Technical Services Limited |
| Ordinary |
| | % |
Grayston Central Services Limited |
| Ordinary |
| | % |
Hometrust Limited |
| Ordinary |
| | % |
Initial Limited |
| Ordinary |
| | % |
Initial Medical Services Limited |
| Ordinary |
| | % |
Interior Contracts (UK) Limited1,2 | Ordinary | | % | ||
Kent Tropical Interiors Limited1,2 | Ordinary A | | % | ||
Ordinary B | | % | |||
Manor Planting Ltd1,2 | Ordinary | | % | ||
Nature At Work Limited1,2 | Ordinary | | % | ||
Newman's Plants Limited1,2 | Ordinary A | | % | ||
Ordinary B | | % | |||
Ordinary C | | % | |||
Opel Transport & Trading Company Limited |
| Ordinary |
| | % |
Paul Lomax Limited1,2 |
| Ordinary A |
| | % |
Ordinary B | | % | |||
Ordinary C | | % | |||
Peter Cox Limited | Ordinary A | | % | ||
Plant Nominees Limited |
| Ordinary |
| | % |
Prime Projects International Limited1,2 | Ordinary | | % | ||
Prokill (UK) Ltd |
| Ordinary A |
| | % |
Prokill Limited |
| Ordinary A |
| | % |
| Ordinary B |
| | % | |
| Ordinary C |
| | % | |
| Ordinary D |
| | % | |
Rapid Washrooms Limited |
| Ordinary A |
| | % |
| Ordinary B |
| | % | |
| Ordinary C |
| | % | |
F-78
| % held by |
| |||
Group |
| ||||
Company name |
| Share class | companies |
| |
United Kingdom (continued) |
|
|
|
| |
Rentokil Dormant (No. 6) Ltd |
| Ordinary |
| | % |
Rentokil Initial (1896) Limited |
| Ordinary |
| | % |
Rentokil Initial (1993) Limited2 |
| Ordinary |
| | % |
Rentokil Initial 1927 plc |
| Ordinary |
| | % |
Rentokil Initial Americas Limited2 |
| Ordinary |
| | % |
Rentokil Initial Asia Pacific Limited2 |
| Ordinary |
| | % |
Rentokil Initial Brazil Limited2 |
| Ordinary |
| | % |
Rentokil Initial Finance Limited2 |
| Ordinary |
| | % |
Rentokil Initial Holdings Limited2 |
| Ordinary |
| | % |
Rentokil Initial Investments South Africa2 |
| Ordinary |
| | % |
Rentokil Initial Pension Trustee Limited |
| Ordinary |
| | % |
Rentokil Initial Services Limited |
| Ordinary |
| | % |
Rentokil Initial UK Ltd |
| Ordinary |
| | % |
Rentokil Insurance Limited |
| Ordinary |
| | % |
Rentokil Limited2 |
| Ordinary |
| | % |
Rentokil Overseas Holdings Limited2 |
| Ordinary |
| | % |
F-79
| % held by |
| |||
Group |
| ||||
Company name |
| Share class | companies |
| |
United Kingdom (continued) |
|
|
|
| |
Rentokil Property Care Limited |
| Ordinary |
| | % |
Rentokil Property Holdings Limited2 |
| Ordinary |
| | % |
RI Dormant No.18 Limited |
| Ordinary |
| | % |
RI Dormant No.20 Limited |
| Ordinary |
| | % |
Saaman Limited1,2 | Ordinary | | % | ||
Stephens & Carter Limited5 | Ordinary | | % | ||
Stratton House Leasing Limited2 |
| Ordinary |
| | % |
SVM International Services Limited |
| Ordinary |
| | % |
Target Express Holdings Limited |
| Ordinary |
| | % |
Target Express Limited |
| Ordinary |
| | % |
Target Express Parcels Limited |
| Ordinary |
| | % |
TEB Cleaning Services Limited |
| Ordinary |
| | % |
The Palfreymans Limited1 | Ordinary A | | % | ||
Ordinary B | | % | |||
Ordinary C | | % | |||
Ordinary D | | % | |||
Ordinary E | | % | |||
Tropical Ambience Limited1,2 | Ordinary | | % | ||
Tropical Innovation Limited1,2 | Ordinary | | % | ||
Urban Planters Franchise Limited1,2 | Ordinary | | % | ||
Harper Macleod, The Ca’D’Oro, 45 Gordon Street, Glasgow, G1 3PE, UK | |||||
Duct Clean Services Ltd1,2 | Ordinary | | % | ||
Industrial Clothing Services Limited |
| Ordinary |
| | % |
Pest Protection Services (Scotland) Limited |
| Ordinary A |
| | % |
RI Dormant No.12 Limited |
| Ordinary |
| | % |
Wise Property Care Ltd. |
| Ordinary |
| | % |
F-80
| % held by |
| |||
Group |
| ||||
Company name |
| Share class | companies |
| |
United States | |||||
Corporation Service Company, 251 Little Falls Drive, Wilmington DE 19808, United States | |||||
Anza, LLC | Ordinary |
| | % | |
Corporation Trust Center, 1209 Orange Street, Wilmington DE 19801, United States | |||||
CDRSVM Holding, LLC | Common |
| | % | |
CDRSVM Investment Holding, LLC | Common |
| | % | |
Creative Plantings Inc | Ordinary |
| | % | |
Initial Contract Services LLC | Interest |
| | % | |
Ramac (US) LLC | Interest |
| | % | |
Rentokil Initial US Holdings, Inc. | Common |
| | % | |
Secure Monthly Affordable Credit Corporation | Common |
| | % | |
Secure Monthly Affordable Credit Limited Partnership | Ordinary |
| | % | |
SVM Honduran Service and Investments Company, LLC | Interest | | % | ||
SVM Olympus Service Company, LLC | Interest | | % | ||
SVM Progressive Service Company, LLC | Interest | | % | ||
SVM Technicians Service Company, LLC | Interest | | % | ||
SVM Vanguard Service Company, LLC | Interest | | % | ||
Terminix Consumer Services, LLC | Interest | | % | ||
Terminix Holdings, LLC | Ordinary | | % | ||
Terminix International Holdings, Inc | Interest | | % | ||
Terminix Management Corporation | Interest | | % | ||
Terminix Receivables Company LLC | Interest | | % | ||
The Terminix Company, LLC | Interest | | % | ||
The Terminix Foundation | Interest | | % | ||
TMX Holdco, Inc. | Common | | % | ||
United Transport America LLC | Interest | | % | ||
Virginia Properties Inc | Ordinary | | % | ||
W.B. McCloud & Co., Inc. | Interest | | % | ||
2540, Lawrenceville Hwy, Lawrenceville, GA 30044, United States |
|
|
| ||
Asiatic Holdings LLC |
| Ordinary |
| | % |
Steritech-Canada, Inc. |
| Common |
| | % |
1000 Labarre Road, Metairie, LA 70001, United States | |||||
Mississippi Mosquito Control, LLC | Interest |
| | % | |
Mosquito Control of Lafourche, LLC | Interest |
| | % | |
Mosquito Control Services of Florida, LLC | Interest |
| | % | |
Mosquito Control Services of Georgia, LLC | Interest |
| | % | |
Mosquito Control Services, LLC | Interest |
| | % | |
Rittiner Group, LLC | Interest |
| | % | |
St. Charles Mosquito Control, LLC | Interest |
| | % | |
St. John Mosquito Control, LLC | Interest |
| | % | |
Terrebonne Mosquito Control, LLC | Interest |
| | % | |
PO Box 4510 Ten Free Street, Portland ME 04112, United States | |||||
Asiatic Investments, Inc. | Ordinary | | % | ||
2288 150th Street Halstad MN 56548, United States | |||||
Airborne Vector Control LLC | Common | | % | ||
1125 Berkshire Blvd, Suite 150, Reading PA 19610, United States | |||||
Advanced Pest Management Co, LLC | Common | | % | ||
Cygnet Enterprises Northwest, Inc | Common | | % | ||
Cygnet Enterprises West, Inc | Common | | % | ||
Cygnet Enterprises, Inc | Common | | % | ||
Medentex LLC | Common | | % | ||
Rentokil Initial Environmental Services LLC | Interest | | % | ||
Rentokil North America, Inc. | Ordinary | | % | ||
Solitude Lake Management, LLC | Common | | % | ||
Vector Disease Acquisition, LLC | Common | | % | ||
Common | | % | |||
Series A |
F-81
Common | | % | |||
Series B | |||||
Vector Disease Control International, LLC | Common | | % | ||
1313 Miller Road, Greenville SC 29607, United States | |||||
Gregory Pest Control, LLC | Ordinary | | % | ||
150 Peabody Place, Memphis TN 38103-3720, United States | |||||
Copesan Services, Inc. | Interest | | % | ||
The Terminix International Company Limited Partnership | Ordinary | | % | ||
860 Ridge Lake Blvd., Memphis TN 38120, United States |
|
|
|
| |
Terminix Gift, LLC |
| Interest |
| | % |
463 Mountain View Drive, Suite 301, 3rd Floor, Colchester VT 05446, United States |
|
|
|
| |
Steward Insurance Company |
| Common |
| | % |
Uruguay |
|
|
|
| |
Tomás Giribaldi, apto 3, 2270, Uruguay | |||||
Amalur Uruguay Sociedad Anónima1 | Ordinary |
| | % | |
Chana, 2033, Departmento de Montevideo, Uruguay | |||||
La Sanitaria S.A. | Ordinary |
| | % | |
La Paz, 1227, Departamento de Montevideo, Uruguay |
|
|
|
| |
Livelux S.A. |
| Ordinary |
| | % |
Vietnam |
|
|
|
| |
68 Hong Ha, Ward 2, Tan Binh District, Ho Chi Minh City, Vietnam |
|
|
|
| |
Rentokil Initial (Vietnam) Company Limited |
| Ordinary |
| | % |
Virgin Islands, US | |||||
Merchants Financial Center, 4608 Tutu Park Mall, Suite 202, St Thomas, Virgin Islands, 00802-1816, Virgin Islands, US | |||||
Terminix International USVI, LLC |
| Interest |
| | % |
F-82
Associated undertakings:
| % held by |
| |||
Group |
| ||||
Company name |
| Share class | companies |
| |
People’s Republic of China |
|
|
|
| |
B3, Xunmei Industrial Zone, Fengze District, Quanzhou City, Fujian Province, China |
|
|
|
| |
Fujian Xunke Pest Control Company Limited |
| Ordinary |
| | % |
Room 1005, Unit1, Building1, No.1 Huangjin Road, Dongguan City, Guangdong Province, China | |||||
Guangdong New Hope City Pest Control Company Limited | Ordinary | | % | ||
No.14 Wenguangtingjiao Road, Chaoyang District, Shantou City, China |
|
|
|
| |
Guangdong Vircon Pest Management Company Limited |
| Ordinary A |
| | % |
Room (2-1), Unit19, Xindian Xingzuo, Haishu district, Ningbo City, Zhejiang Province, China |
|
|
|
| |
Ningbo Yuying Vector Control Company Limited |
| Ordinary |
| | % |
Egypt |
|
|
|
| |
Third floor, Jupiter Building, B3, Majara Compound, Sheikh Zayed, Giza, Egypt |
|
|
|
| |
ServicePros S.A.E.3 |
| Ordinary |
| | % |
France |
|
|
|
| |
41 Avenue de La Porte de Villiers, 92200, Neuilly-Sur-Seine, France |
|
|
|
| |
SCI Pierre Brossolette |
| Ordinary |
| | % |
Japan |
|
|
|
| |
Kyoritsu Seiyaku Building, 1-5-10 Kudan Minami, Chiyoda-Ku, Tokyo, Japan |
|
|
|
| |
Nippon Calmic Ltd |
| Ordinary |
| | % |
Nigeria |
|
|
|
| |
Old Ojo Road, Off Badagry Expressway, Agboju, Lagos, 359/361, Nigeria |
|
|
|
| |
Boecker Public Health Services Ltd |
| Ordinary |
| | % |
Norway |
|
|
|
| |
Veverivegen 10, 2848 Skreia, Norway |
|
|
|
| |
Skadedyrkontrollen Øst AS |
| Ordinary |
| | % |
Qatar |
|
|
|
| |
16 A Al Mana Business Tower, Doha, Qatar |
|
|
|
| |
Boecker Public Safety Services – Qatar W.L.L. |
| Ordinary |
| | % |
United Kingdom |
|
|
|
| |
Compass House, Manor Royal, Crawley, West Sussex, RH10 9PY |
|
|
|
| |
Hometrust Kitchens Limited |
| Ordinary |
| | % |
Torchsound Properties Limited |
| Ordinary |
| | % |
Note: The percentage of shares held by Group companies remains unchanged in 2023 for all companies unless otherwise stated.
| 1. | Acquired or incorporated by the Group in 2023. |
| 2. | As permitted by section 479A of the Companies Act 2006, the Company intends to take advantage of the audit exemption in relation to the individual accounts of these companies. |
| 3. | This entity is non-operational and the Group does not carry out business in this jurisdiction. |
| 4. | 2022: |
| 5. | Temporary restoration; company was dissolved in 2010. |
F-83