REG - Rentokil Initial PLC - Half Yearly Report <Origin Href="QuoteRef">RTO.L</Origin> - Part 2
29/10/2014 09:15
- Part 2: For the preceding part double click ID:nRSA9643Na
7.47p (2.62p) (2.45p)
- Continuing and discontinued operations 6 10.33p (0.63p) 2.06p
Diluted earnings per share
- Continuing operations 6 2.85p 1.99p 4.50p
- Discontinued operations 6 7.45p (2.62p) (2.45p)
- Continuing and discontinued operations 6 10.30p (0.63p) 2.06p
Basic adjusted earnings per share3
- Continuing operations 6 3.26p 3.04p 7.36p
Diluted adjusted earnings per share3
- Continuing operations 6 3.25p 3.03p 7.33p
3.03p
7.33p
1 excluding computer software
2 taxation includes £11.9m (HY 2013: £9.1m, FY 2013: £32.5m) in respect of overseas taxation
3 earnings per share before the after tax effects of amortisation and impairment of intangibles (excluding computer
software), reorganisation costs and one-off items and net interest credit on pensions
*restated for the sale of the Initial Facilities business. Please refer to note 5 for further details
Condensed consolidated statement of comprehensive income
6 months to 30 June 6 months to 30 June Year to 31 December
2014 2013 2013
£m £m £m
Profit/(loss) for the period (including discontinued operations) 187.8 (10.5) 38.7
Other comprehensive income:
Items that are not reclassified subsequently to profit or loss:
Remeasurement of net defined benefit asset/liability 21.5 (17.4) (75.6)
Tax related to remeasurement of net defined benefit asset/liability (4.3) 4.0 18.6
Items that may be reclassified subsequently to profit or loss:
Net exchange adjustments offset in reserves 8.1 (8.9) (33.1)
Revaluation of available-for-sale investments - (0.4) (0.5)
Available-for-sale investments reclassified to the income statement - - (1.5)
Effective portion of changes in fair value of cash flow hedge 0.6 0.8 1.2
Cumulative exchange recycled to income statement on disposal of foreign operations 0.6 - -
Total other comprehensive income / (expense) 26.5 (21.9) (90.9)
Total comprehensive income / (expense) 214.3 (32.4) (52.2)
Attributable to:
Equity holders of the company 214.2 (32.9) (52.7)
Non-controlling interests 0.1 0.5 0.5
214.3 (32.4) (52.2)
Condensed consolidated balance sheet
At 30 June 2014 At 30 June 2013 At 31 December 2013
Notes £m £m £m
Assets
Non-current assets
Intangible assets 410.1 458.2 425.0
Property, plant and equipment 517.4 553.1 537.1
Investment property 4.3 4.4 4.4
Investments in associated undertakings 15.2 15.8 13.0
Other investments 0.1 0.1 0.2
Deferred tax assets 6.7 8.2 9.2
Retirement benefit assets 9 94.4 124.6 70.6
Other receivables 7.7 22.5 8.2
Derivative financial instruments 4.3 - 0.2
1,060.2 1,186.9 1,067.9
Current assets
Other investments 50.6 2.1 292.0
Inventories 64.0 63.9 63.8
Trade and other receivables 333.1 450.8 417.4
Current tax assets 5.7 4.8 5.7
Derivative financial instruments 2.2 5.9 3.4
Cash and cash equivalents 117.3 122.9 143.8
572.9 650.4 926.1
Liabilities
Current liabilities
Trade and other payables (384.4) (481.9) (492.8)
Current tax liabilities (66.9) (61.5) (66.5)
Provisions for other liabilities and charges (23.8) (33.4) (30.0)
Bank and other short-term borrowings 8 (32.5) (492.2) (444.2)
Derivative financial instruments (3.2) (9.6) (7.8)
(510.8) (1,078.6) (1,041.3)
Net current assets / liabilities 62.1 (428.2) (115.2)
Non-current liabilities
Other payables (14.7) (16.3) (13.0)
Bank and other long-term borrowings 8 (999.7) (754.9) (1,022.5)
Deferred tax liabilities (63.7) (81.9) (62.7)
Retirement benefit obligations 9 (23.1) (25.4) (23.6)
Provisions for other liabilities and charges (66.5) (66.6) (62.9)
Derivative financial instruments (0.6) - -
(1,168.3) (945.1) (1,184.7)
Net liabilities (46.0) (186.4) (232.0)
Equity
Capital and reserves attributable to the company's equity holders
Called up share capital 18.2 18.1 18.2
Share premium account 6.8 6.8 6.8
Other reserves (1,781.5) (1,765.1) (1,790.2)
Retained profits 1,710.3 1,548.5 1,533.1
(46.2) (191.7) (232.1)
Non-controlling interests 0.2 5.3 0.1
Total equity (46.0) (186.4) (232.0)
(232.0)
Condensed consolidated statement of changes in equity
Called up share capital Share premium account Other reserves Restated Retained earnings Noncontrolling interests Total equity
£m £m £m £m £m £m
At 1 January 2013 18.1 6.8 (1,757.0) 1,598.2 6.7 (127.2)
(Loss)/profit for the period - - - (11.4) 0.9 (10.5)
Other comprehensive income:
Net exchange adjustments offset in reserves - - (8.5) - (0.4) (8.9)
Remeasurement of net defined benefit asset/liability - - - (17.4) - (17.4)
Revaluation of available-for-sale investments - - (0.4) - - (0.4)
Movement on cash flow hedge reserve - - 0.8 - - 0.8
Tax related to remeasurement of net defined benefit asset/liability - - - 4.0 - 4.0
Total comprehensive income/(expense) for the period - - (8.1) (24.8) 0.5 (32.4)
Transactions with owners:
Dividends paid to equity shareholders - - - (25.9) - (25.9)
Cost of share options and long-term incentive plan - - - 1.0 - 1.0
Transactions with non-controlling interests:
Dividends paid to non-controlling interests - - - - (1.9) (1.9)
At 30 June 2013 18.1 6.8 (1,765.1) 1,548.5 5.3 (186.4)
At 1 January 2013 18.1 6.8 (1,757.0) 1,598.2 6.7 (127.2)
Profit for the year - - - 37.5 1.2 38.7
Other comprehensive income:
Net exchange adjustments offset in reserves - - (32.4) - (0.7) (33.1)
Remeasurement of net defined benefit asset/liability - - - (75.6) - (75.6)
Revaluation of available-for-sale investments - - (0.5) - - (0.5)
Effective portion of changes in fair value of cash flow hedge - - (1.5) - - (1.5)
Recycling of cash flow hedge reserve on settlement - - 1.2 - - 1.2
Tax related to remeasurement of net defined benefit asset/liability - - - 18.6 - 18.6
Total comprehensive income/(expense) for the year - - (33.2) (19.5) 0.5 (52.2)
Transactions with owners:
Issue of ordinary shares 0.1 - - (0.1) - -
Dividends paid to equity shareholders - - - (38.6) - (38.6)
Cost of share options and long-term incentive plan - - - 2.0 - 2.0
Transactions with non-controlling interests:
Acquisition of non-controlling interests - - - (8.9) (3.7) (12.6)
Dividends paid to non-controlling interests - - - - (3.4) (3.4)
At 31 December 2013 18.2 6.8 (1,790.2) 1,533.1 0.1 (232.0)
At 1 January 2014 18.2 6.8 (1,790.2) 1,533.1 0.1 (232.0)
Profit for the period - - - 187.7 0.1 187.8
Other comprehensive income:
Net exchange adjustments offset in reserves - - 8.1 - - 8.1
Remeasurement of net defined benefit asset/liability - - - 21.5 - 21.5
Revaluation of available-for-sale investments - - - - - -
Effective portion of changes in fair value of cash flow hedge - - 0.6 - - 0.6
Cumulative exchange recycled to income statement on disposal of foreign operations - - - 0.6 - 0.6
Tax related to remeasurement of net defined benefit asset/liability - - - (4.3) - (4.3)
Total comprehensive income for the period - - 8.7 205.5 0.1 214.3
Transactions with owners:
Dividends paid to equity shareholders - - - (29.2) - (29.2)
Cost of share options and long-term incentive plan - - - 0.9 - 0.9
At 30 June 2014 18.2 6.8 (1,781.5) 1,710.3 0.2 (46.0)
-
-
-
(29.2)
-
(29.2)
Cost of share options and long-term incentive plan
-
-
-
0.9
-
0.9
At 30 June 2014
18.2
6.8
(1,781.5)
1,710.3
0.2
(46.0)
Treasury shares of £11.1m (HY 2013: £11.1m, FY 2013: £11.1m) have been netted against retained earnings. Treasury shares
represent 6.0m (HY 2013: 6.1m, FY 2013: 6.0m) shares held by the Rentokil Initial Employee Share Trust. The market value of
these shares at 30 June 2014 was £6.7m (HY 2013: £5.4m, FY 2013: £6.9m). Dividend income from, and voting rights on, the
shares held by the Trust have been waived.
Condensed consolidated statement of changes in equity (continued)
Analysis of other reserves Capital reduction reserve Legal Cash flow hedge reserve Trans-lation reserve Available-for-sale Total
£m £m £m £m £m £m
At 1 January 2013 (1,722.7) 10.4 (1.1) (45.6) 2.0 (1,757.0)
Net exchange adjustments offset in reserves - - - (8.5) - (8.5)
Revaluation of available-for-sale investments - - - - (0.4) (0.4)
Effective portion of changes in fair value of cash flow hedge - - 0.8 - - 0.8
Total comprehensive income/(expense) for the period - - 0.8 (8.5) (0.4) (8.1)
At 30 June 2013 (1,722.7) 10.4 (0.3) (54.1) 1.6 (1,765.1)
At 1 January 2013 (1,722.7) 10.4 (1.1) (45.6) 2.0 (1,757.0)
Net exchange adjustments offset in reserves - - - (32.4) - (32.4)
Revaluation of available-for-sale investments - - - - (0.5) (0.5)
Available-for-sale investments reclassified to the income statement - - - - (1.5) (1.5)
Effective portion of changes in fair value of cash flow hedge - - 1.2 - - 1.2
Total comprehensive income/(expense) for the year - - 1.2 (32.4) (2.0) (33.2)
At 31 December 2013 (1,722.7) 10.4 0.1 (78.0) - (1,790.2)
At 1 January 2014 (1,722.7) 10.4 0.1 (78.0) - (1,790.2)
Net exchange adjustments offset in reserves - - - 8.1 - 8.1
Revaluation of available-for-sale investments - - - - - -
Effective portion of changes in fair value of cash flow hedge - - 0.6 - - 0.6
Total comprehensive income/(expense) for the period - - 0.6 8.1 - 8.7
At 30 June 2014 (1,722.7) 10.4 0.7 (69.9) - (1,781.5)
Effective portion of changes in fair value of cash flow hedge
-
-
0.6
-
-
0.6
Total comprehensive income/(expense) for the period
-
-
0.6
8.1
-
8.7
At 30 June 2014
(1,722.7)
10.4
0.7
(69.9)
-
(1,781.5)
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.
Condensed consolidated cash flow statement
6 months to 30 June 6 months to 30 June Year to 31 December
2014 2013 2013
Notes £m £m £m
Profit / (loss) for the period 187.8 (10.5) 38.7
Adjustments for:
- (Profit) / loss on sale of discontinued operations excluding costs of disposal 5 (146.0) 24.1 26.1
- Discontinued operations tax 5 0.5 (2.8) (2.7)
- Tax 14.8 12.0 31.4
- Share of profit from associates (2.2) (3.1) (4.3)
- One-off items - financing - - (1.5)
- Net interest credit from pensions (1.3) (2.9) (5.5)
- Interest income (4.4) (7.2) (10.9)
- Interest expense 29.3 35.3 70.9
Operating profit (continuing and discontinued activities) 78.5 44.9 142.2
Reversal of non-cash items:
- Depreciation and impairment of tangible assets 87.0 96.3 188.3
- Depreciation and impairment of investment properties - 3.5 3.5
- Amortisation and impairment of intangible assets1 10.1 11.7 26.9
- Amortisation of computer software 5.9 7.3 17.0
- LTIP charges 0.9 1.0 2.0
- Other non-cash items - (0.2) 0.7
- (Profit)/ loss on sale of property, plant and equipment (0.2) 0.8 3.4
- Loss on disposal / retirement of intangible assets - - 1.9
- Profit/loss on disposal of companies and businesses (not included within discontinued operations) (3.1) - 1.2
Changes in working capital (excluding the effects of acquisitions and exchange differences on consolidation):
- Inventories (4.2) (8.1) (11.5)
- Trade and other receivables (38.7) (17.4) (0.6)
- Trade and other payables and provisions (20.2) (46.8) (26.0)
Cash generated from operating activities before special pension contribution 116.0 93.0 349.0
Special pension contribution - (12.5) (13.6)
Cash generated from operating activities 116.0 80.5 335.4
Interest received 5.3 6.9 10.6
Interest paid (39.3) (36.7) (60.9)
Income tax paid (12.4) (17.6) (37.2)
Net cash generated from operating activities 69.6 33.1 247.9
Cash flows from investing activities
Purchase of property, plant and equipment (PPE) (92.2) (98.9) (201.1)
Purchase of intangible fixed assets (5.6) (14.0) (27.6)
Proceeds from sale of PPE 3.1 1.9 6.3
Acquisition of companies and businesses, net of cash acquired 12 (41.7) (4.8) (12.0)
Disposal of companies and businesses 253.1 0.9 2.0
Disposal of restricted cash (16.3) - -
Disposal of available-for-sale investments - 1.3 1.2
Dividends received from associates - - 1.9
Net cash flows from investing activities 100.4 (113.6) (229.3)
Cash flows from financing activities
Dividends paid to equity shareholders (29.2) (25.9) (38.6)
Dividends paid to non controlling interests - (1.9) (3.4)
Interest element of finance lease payments (0.4) (0.5) (0.9)
Capital element of finance lease payments (4.0) (3.6) (8.1)
Cash inflow on settlement of debt related foreign exchange forward contracts (5.4) 10.1 5.7
Proceeds from issue of debt 2.6 - 290.4
Investment in term deposits 241.5 (2.1) (292.1)
Net loan repayments (400.1) - (50.0)
Net cash flows from financing activities (195.0) (23.9) (97.0)
Net (decrease) in cash and cash equivalents (25.0) (104.4) (78.4)
Cash and cash equivalents at beginning of year 143.4 218.9 218.9
Exchange (losses)/gains on cash and cash equivalents (4.7) 5.2 2.9
Cash and cash equivalents at end of the financial period 113.7 119.7 143.4
(4.7)
5.2
2.9
Cash and cash equivalents at end of the financial period
113.7
119.7
143.4
1 excluding computer software
Notes to the condensed financial statements
1. General information
The Company is a limited liability company incorporated and domiciled in the UK with a listing on the London Stock
Exchange.
The address of its registered office is Rentokil Initial plc, Riverbank, Meadows Business Park, Blackwater.
The condensed consolidated half-yearly financial information for the half-year to 30 June 2014 was approved for issue on 31
July 2014.
On pages 27 to 28 of the Annual Report 2013 we set out the group's approach to risk management and define the principal
risks that are most relevant to the group as (a) achieving profitable growth and cash flows in the face of a weakening of
the economies in which we operate, particularly Europe, and (b) managing the number, scope, complexity and interdependency
of many initiatives necessary to deliver improved capabilities of our people, excellence across the group's operations and
outstanding service to our customers. These risks are further disaggregated and mapped against the group's strategic
thrusts and include a number of "assurance risks" which relate to activities that the group must undertake in order to meet
legal, fiscal and governance obligations.
In our view the principal risks remain unchanged from those indicated in the Annual Report 2013 and actions continue to be
taken to substantially mitigate the impact of such risks, should they materialise.
These interim financial results do not comprise statutory accounts within the meaning of Section 435 of the Companies Act
2006, and should be read in conjunction with the Annual Report 2013. The comparative figures for the year ended 31 December
2013 are not the group's statutory accounts for that financial year. Those accounts have been reported upon by the group's
auditors and delivered to the registrar of companies. The report of the auditors was unqualified, did not include a
reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did
not contain statements under section 498(2) or (3) of the Companies Act 2006.
2. Basis of preparation
These condensed interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as
adopted by the EU.
The annual financial statements of the group are prepared in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the EU. As required by the Disclosure and Transparency Rules of the Financial Conduct Authority, the
condensed interim financial statements have been prepared applying the accounting policies and presentation that were
applied in the preparation of the Company's published consolidated financial statements for the year ended 31 December 2013
except for the changes described in note 3.
3. Accounting policies
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December
2013, as described in those financial statements.
The preparation of the condensed interim financial information for the half-year ended 30 June 2014 requires management to
make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and disclosure
of contingent liabilities at the date of the statement. If in the future such estimates and assumptions, which are based on
management's best judgement at the date of the statement, deviate from the actual circumstances, the original estimates and
assumptions will be modified as appropriate in the year in which the circumstances change.
Significant seasonal or cyclical variations in the group's total revenues are not experienced during the financial year.
3. Accounting policies (continued)
Changes in accounting policies
The Group has adopted the following standards with effect from 1 January 2014.
- Investment Entities (Amendments to IFRS 10, IFRS 12, IAS 27 and IAS 28);
- Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32;
- Recoverable amount disclosures for non-financial assets -Amendments to IAS 36; and
- Continuing hedge accounting after derivative novations - Amendments to IAS 39.
These standards have had no impact on the financial position or performance of the Group. Consequently, no adjustment has
been made to the comparative financial information as at 31 December 2013 or 30 June 2013.
All other accounting policies adopted in the preparation of the condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31
December 2013.
The Group has not early adopted any standard, interpretation or amendment that was issued but is not yet effective.
As described on page 22 of the Annual Report 2013, in 2014 the group has changed parts of the way it manages its
businesses, with a resulting change to the segmental analysis under IFRS 8 - Operating Segments. The East and West regions
have been replaced by regional clusters. The new structure is reflected in the segmental analysis in note 4.
The group sold the Initial Facilities business on 18 March 2014 so this business is now reclassified from continuing to
discontinued operations in the income statement for 2014 and the comparative income statements for 2013 have been restated
as shown in the following tables.
Condensed consolidated income statement
For the six months ended 30 June 2013 As previously reported Adjustment for discontinued operations As restated
£m £m £m
Revenue 1,166.3 (272.0) 894.3
Operating expenses (1,092.3) 268.1 (824.2)
Operating profit 74.0 (3.9) 70.1
Analysed as:
Operating profit before amortisation and impairment of intangibles, reorganisation costs and one-off items 112.6 (11.9) 100.7
Reorganisation costs (25.4) 6.3 (19.1)
One-off items - operating (1.5) 0.1 (1.4)
Amortisation and impairment of intangible assets (11.7) 1.6 (10.1)
Operating profit 74.0 (3.9) 70.1
Interest payable and similar charges (35.3) 0.1 (35.2)
Interest receivable 7.2 - 7.2
Net interest credit from pensions 2.9 - 2.9
Share of profit from associates (net of tax) 3.1 - 3.1
Profit before income tax 51.9 (3.8) 48.1
Income tax expense (12.0) 1.0 (11.0)
Profit for the period from continuing operations 39.9 (2.8) 37.1
For the year ended 31 December 2013 As previously reported Adjustment for discontinued operations As restated
£m £m £m
Revenue 2,327.1 (535.7) 1,791.4
Operating expenses (2,155.8) 524.9 (1,630.9)
Operating profit 171.3 (10.8) 160.5
Analysed as:
Operating profit before amortisation and impairment of intangibles, reorganisation costs and one-off items 261.9 (25.8) 236.1
Reorganisation costs (51.7) 4.3 (47.4)
One-off items - operating (12.0) 7.4 (4.6)
Amortisation and impairment of intangible assets (26.9) 3.3 (23.6)
Operating profit 171.3 (10.8) 160.5
Interest payable and similar charges (70.9) 0.4 (70.5)
Interest receivable 10.9 - 10.9
Net interest credit from pensions 5.5
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