REG - Rentokil Initial PLC - Annual Financial Report <Origin Href="QuoteRef">RTO.L</Origin> - Part 2
05/04/2017 10:45
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Group General Counsel and Head of Internal Audit.• Mandatory training on Code of Conduct, competition, anti-bribery and corruption, IT security and privacy.• All
major business transactions or internal reorganisations are subject to a rigorous internal and external review.• A dedicated and experienced central tax department is
involved in all tax audits.• Group tax policy reviewed and approved by the Board.• Tax planning is aligned with the Company's business activities and artificial
transactions to avoid tax are not undertaken.
Maintaining margins during periods of weak economic growth The global economic environment is volatile, with many economies in Europe experiencing low GDP growth and the impact of Brexit adding to economic uncertainty. There is high volatility in global commodity prices and exchange rates and wide variations in local market price and cost inflation across the globe. In Workwear there is also increasing demand from customers for more frequent product changes while maintaining competitive pricing. In the face of these economic pressures, our customers may choose not to renew contracts, or may look for reductions in prices or to delay payments, which may have a negative impact on our ability to increase margins and cash flow. In our Protect & Enhance markets, many of which have low or negative inflation, it remains difficult to maintain or improve margins due to weak pricing power. Further, failure to collect debts from customers who are facing economic headwinds could have an adverse impact on cash flow. • Regular review of our capital allocation model to ensure that resources are directed to countries and businesses that have the most attractive returns and future
prospects.• In 2016 the Group announced the proposed transfer of Rentokil Initial's Workwear and Hygiene businesses in Benelux, Sweden and CEE into a new JV with
Haniel, which will mitigate margin risk in these markets through improved product mix and economies of scale.• Supply strategy reviewed and adapted to ensure more
urgent delivery of innovation while maintaining or improving service levels. (KPI: State of Service, On Time in Full for Workwear.)• Regular monitoring of market
pricing trends (where available) and individual customer profitability to ensure that margin erosion is minimised; sales incentives increasingly prioritise margin and
customer profitability.• Continuing focus on cost, with regular reviews of cost base and productivity programmes. (KPI: Gross Margin.)• Group Procurement function
with executive authority to deliver economies of scale in IT, fleet, energy and logistics. (KPI: Annual cost savings.)• Group HR approval required for any significant
changes to employee benefits, pensions, etc.• Establishment of a European Supply Chain for Workwear and Hygiene.• Investment in new, more efficient plant where cost
effective.• Roll-out of automated tools to monitor customer profitability.• Regular monitoring of debtor days outstanding with action taken against customers with
overdue debts. (KPI: Days Sales Outstanding.)
Statement of Directors' responsibilities
The Annual Report 2016 contains the following statements regarding
responsibility for the financial statements and is repeated here solely for
the purpose of complying with DTR 6.3.5. Responsibility is for the full
Annual Report 2016 and not the extracted information presented in this
announcement or the preliminary results announcement.
The Directors are responsible for preparing the Annual Report and the Group
and Parent Company financial statements in accordance with applicable law and
regulations. Company law requires the Directors to prepare Group and Parent
Company financial statements for each financial year. Under that law they are
required to prepare the Group financial statements in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European
Union (EU) and applicable law and have elected to prepare the Parent Company
financial statements in accordance with UK Accounting Standards including FRS
101 Reduced Disclosure Framework.
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and Parent Company and of their profit or loss for that
period. In preparing each of the Group and Parent Company financial
statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and estimates that are reasonable and prudent;
· for the Group financial statements, state whether they have been
prepared in accordance with IFRS as adopted by the EU;
· for the Parent Company financial statements, state whether applicable
UK Accounting Standards have been followed, subject to any material departures
disclosed and explained in the Parent Company financial statements; and
· prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Group and the Parent Company will
continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Parent Company's transactions and disclose
with reasonable accuracy at any time the financial position of the Parent
Company and enable them to ensure that its financial statements comply with
the Companies Act 2006. They have general responsibility for taking such steps
as are reasonably open to them to safeguard the assets of the Group and to
prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic Report, Directors' Report, Directors' Remuneration
Report and Corporate Governance Statement that complies with that law and
those regulations. The Directors are responsible for the maintenance and
integrity of the corporate and financial information included on the Company's
website. Legislation in the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Each of the Directors, whose names and functions are set out on pages 48 and
49, confirms that, to the best of their knowledge:
· the Financial Statements, prepared in accordance with the applicable
set of accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and the
undertakings included in the consolidation taken as a whole;
· the Strategic Report and Directors' Report include a fair review of the
development and performance of the business and the position of the Company
and the undertakings included in the consolidation taken as a whole, together
with a description of the principal risks and uncertainties that they face;
and
· the Annual Report and Financial Statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary for
shareholders to assess the Group's position and performance, business model
and strategy.
This information is provided by RNS
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