REG - Rentokil Initial PLC - Half Yearly Report <Origin Href="QuoteRef">RTO.L</Origin> - Part 2
28/07/2016 07:06
- Part 2: For the preceding part double click ID:nRSb4495Fa
Such measures include adjusted operating profit, adjusted profit
before income tax and adjusted earnings per share
3 excluding computer software
* 2015 comparative results have been restated due to restructuring costs
now being reported within APBITA.
Consolidated balance sheet
At 30 June2016 At 31 December2015
Notes £m £m
Assets
Non-current assets
Intangible assets 935.0 818.3
Property, plant and equipment 553.5 477.1
Investments in associated undertakings 26.7 17.7
Other investments 0.1 0.1
Deferred tax assets 1.0 2.0
Retirement benefit assets 9 337.4 237.0
Other receivables 9.7 8.5
Derivative financial instruments 8 - 1.4
1,863.4 1,562.1
Current assets
Other investments 4.9 99.3
Inventories 68.8 55.7
Trade and other receivables 383.3 329.8
Current tax assets 12.5 10.5
Derivative financial instruments 8 6.7 0.8
Cash and cash equivalents 116.9 102.6
593.1 598.7
Liabilities
Current liabilities
Trade and other payables (472.1) (404.4)
Current tax liabilities (77.1) (73.3)
Provisions for other liabilities and charges (23.5) (20.6)
Bank and other short-term borrowings 7 (172.7) (332.6)
Derivative financial instruments 8 (43.3) (21.7)
(788.7) (852.6)
Net current liabilities (195.6) (253.9)
Non-current liabilities
Other payables (17.7) (15.4)
Bank and other long-term borrowings 7 (1,086.2) (865.4)
Deferred tax liabilities (141.0) (112.8)
Retirement benefit obligations (26.6) (24.1)
Provisions for other liabilities and charges (60.1) (60.8)
Derivative financial instruments 8 (18.7) (17.6)
(1,350.3) (1,096.1)
Net assets 317.5 212.1
Equity
Capital and reserves attributable to the company's equity holders
Called up share capital 18.3 18.2
Share premium account 6.8 6.8
Other reserves (1,770.3) (1,768.8)
Retained profits 2,062.5 1,956.1
317.3 212.3
Non-controlling interests 0.2 (0.2)
Total equity 317.5 212.1
0.2
(0.2)
Total equity
317.5
212.1
Consolidated statement of changes in equity
Called up share capital Share premium account Other reserves Retained earnings Noncontrolling interests Total equity
£m £m £m £m £m £m
At 1 January 2015 18.2 6.8 (1,772.0) 1,847.2 (0.2) 100.0
Profit for the period - - - 55.5 0.3 55.8
Other comprehensive income:
Net exchange adjustments offset in reserves - - 11.6 - - 11.6
Remeasurement of net defined benefit asset/liability - - - 8.0 - 8.0
Effective portion of changes in fair value of cash flow hedge - - 0.1 - - 0.1
Tax related to remeasurement of net defined benefit asset/liability - - - (1.7) - (1.7)
Total comprehensive income for the period - - 11.7 61.8 0.3 73.8
Transactions with owners:
Dividends paid to equity shareholders - - - (33.1) - (33.1)
Cost of share options and long-term incentive plan - - - 0.9 - 0.9
At 30 June 2015 18.2 6.8 (1,760.3) 1,876.8 0.1 141.6
At 1 January 2016 18.2 6.8 (1,768.8) 1,956.1 (0.2) 212.1
Profit for the period - - - 64.9 0.2 65.1
Other comprehensive income:
Issue of ordinary shares 0.1 - - - - 0.1
Amounts received from minority interests - - - - 0.2 0.2
Net exchange adjustments offset in reserves - - (0.7) - - (0.7)
Remeasurement of net defined benefit asset/liability - - 95.9 - 95.9
Effective portion of changes in fair value of cash flow hedge - - (0.8) - - (0.8)
Tax related to remeasurement of net defined benefit asset/liability - - (19.2) - (19.2)
Total comprehensive income for the period 0.1 - (1.5) 141.6 0.4 140.6
Transactions with owners:
Dividends paid to equity shareholders - - - (37.5) - (37.5)
Cost of share options and long-term incentive plan - - - 2.3 - 2.3
At 30 June 2016 18.3 6.8 (1,770.3) 2,062.5 0.2 317.5
2.3
-
2.3
At 30 June 2016
18.3
6.8
(1,770.3)
2,062.5
0.2
317.5
Treasury shares represent 5.4m (HY 2015: 3.8m) shares held by the Rentokil
Initial Employee Share Trust. The market value of these shares at 30 June 2016
was £10.4m (HY 2015: £5.6m). Dividend income from, and voting rights on, the
shares held by the Trust have been waived.
Analysis of other reserves
Capital reduction reserve Legal Cash flow hedge reserve Translation reserve Total
£m £m £m £m £m
At 1 January 2015 (1,722.7) 10.4 - (59.7) (1,772.0)
Net exchange adjustments offset in reserves - - - 11.6 11.6
Effective portion of changes in fair value of cash flow hedge - - 0.1 - 0.1
Total comprehensive income for the period - - 0.1 11.6 11.7
At 30 June 2015 (1,722.7) 10.4 0.1 (48.1) (1,760.3)
At 1 January 2016 (1,722.7) 10.4 0.2 (56.7) (1,768.8)
Net exchange adjustments offset in reserves - - - (0.7) (0.7)
Effective portion of changes in fair value of cash flow hedge - - (0.8) - (0.8)
Total comprehensive income for the period - - (0.8) (0.7) (1.5)
At 30 June 2016 (1,722.7) 10.4 (0.6) (57.4) (1,770.3)
(0.8)
(0.7)
(1.5)
At 30 June 2016
(1,722.7)
10.4
(0.6)
(57.4)
(1,770.3)
Consolidated cash flow statement
6 months to 30 June 6 months to 30 June
2016 2015
Notes £m £m
Profit for the period 65.1 55.8
Adjustments for:
- Tax 15.3 14.4
- Share of profit from associates (3.0) (2.7)
- Net interest credit from pensions (4.3) (3.0)
- Interest income (5.7) (5.3)
- Interest expense 24.4 25.2
Reversal of non-cash items:
- Depreciation and impairment of property, plant and equipment 87.8 80.4
- Amortisation and impairment of intangible assets1 20.1 13.9
- Amortisation of computer software 6.0 5.0
- Other non-cash items 1.6 7.9
Changes in working capital (excluding the effects of acquisitions and exchange differences on consolidation):
- Inventories (6.8) (2.0)
- Trade and other receivables (16.0) (12.0)
- Trade and other payables and provisions 14.5 0.3
Cash generated from operating activities 199.0 177.9
Interest received 6.3 5.0
Interest paid (28.5) (28.1)
Income tax paid (17.8) (14.7)
Net cash generated from operating activities 159.0 140.1
Cash flows from investing activities
Purchase of property, plant and equipment (89.0) (77.4)
Purchase of intangible fixed assets (8.8) (5.1)
Proceeds from sale of property, plant and equipment 3.3 3.6
Acquisition of companies and businesses, net of cash acquired 10 (27.6) (32.7)
Disposal of companies and businesses 0.5 -
Net cash flows from investing activities (121.6) (111.6)
Cash flows from financing activities
Issue of ordinary share capital 0.1 -
Dividends paid to equity shareholders (37.5) (33.1)
Interest element of finance lease payments (0.6) (0.4)
Capital element of finance lease payments (6.6) (4.5)
Cash inflow/(outflow) on settlement of debt related foreign exchange forward contracts 22.5 (0.3)
Proceeds from issue of debt 239.4 36.6
Net investment in term deposits 94.4 (47.1)
Net loan repayments (341.4) -
Net cash flows from financing activities (29.7) (48.8)
Net increase/(decrease) in cash and cash equivalents 7.7 (20.3)
Cash and cash equivalents at beginning of year 100.5 194.1
Exchange gains/(losses) on cash and cash equivalents 6.8 (6.5)
Cash and cash equivalents at end of the financial period 115.0 167.3
167.3
1 excluding computer software
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,
Camberley, Surrey, GU17 9AB.
The consolidated half-yearly financial information for the half-year to 30
June 2016 was approved for issue on 28 July 2016.
On pages 60 to 61 of the Annual Report 2015 we set out the group's approach to
risk management and on pages 35 to 37 we define the principal risks that are
most relevant to the group. These risks are described in detail and have
mitigating actions assigned to each of them. In our view the principal risks
remain unchanged from those indicated in the Annual Report 2015 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 2015. 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.
For all information relating to 2015 results please refer to the Annual Report
2015 which can be accessed here:
http://www.rentokil-initial.com/investors/year-in-review.aspx
2. Basis of preparation
These 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 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 2015 except for the changes described in note 3.
After reviewing group cash balances, borrowing facilities and projected cash
flows, the directors believe that the group has adequate resources to continue
operations for the foreseeable future. For this reason they continue to adopt
the going concern basis in preparing the consolidated financial statements.
3. Accounting policies
The accounting policies adopted are consistent with those of the annual
financial statements for the year ended 31 December 2015, as described in
those financial statements.
The preparation of the interim financial information for the half-year ended
30 June 2016 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.
Changes in accounting policies
The group has adopted the following amendments to standards with effect from 1
January 2016:
- Annual improvements to IFRS: September 2014 cycle - amendments to
IFRS 5, IFRS 7, IFRS 10, IFRS 11, IFRS 12, IAS 19 and IAS 34
- Amendments resulting from the disclosure initiative - IAS 1
- Amendments regarding the clarification of acceptable methods of
depreciation and amortisation - IAS 16 and IAS 38
- Amendments regarding the application of the consolidation exception -
IAS 28
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 2015 or 30 June 2015. The group has
not early adopted any standard, interpretation or amendment that was issued
but is not yet effective.
4. Segmental information
Segmental information has been presented in accordance with IFRS 8 "Operating
Segments". Reporting segments reflect the internal management organisation and
reporting structures. Each segment is headed by a Regional Managing Director
who reports directly to the Chief Executive and is a member of the Company
Executive Board responsible for the review of group performance. The operating
businesses within each segment report to the Regional Managing Directors.
Profit is shown before amortisation and impairment of intangible assets
(excluding computer software) and one-off items that have had a significant
impact on the results of the group. These costs have been separately
identified as they are not considered to be "business as usual" expenses and
have a varying impact on different businesses and reporting periods. From
January 2016 it was decided that all restructuring costs will now be reported
within APBITA (with the exception of integration costs for significant
acquisitions which will be reported as one-off items and excluded from
APBITA). Restructuring costs consist mainly of costs relating to initiatives
to deliver operational efficiencies and service quality improvements in Europe
and North America.
4. Segmental information (continued)
Revenue and profit excludes revenue and profit from businesses disposed or
closed but includes revenue and profit from acquisitions. Constant exchange
rates (CER) are used to assist with the year on year comparisons.
Revenue
Ongoing operations 6 months to30 June 2016£m 6 months to30 June 2015£m
France 149.5 151.0
Benelux 93.5 94.4
Germany 85.1 82.7
Southern Europe 30.3 30.0
Latin America 10.6 9.2
Europe 369.0 367.3
UK & Ireland 114.9 110.2
Rest of World 55.1 53.1
UK & Rest of World 170.0 163.3
Asia 57.9 51.8
North America 264.9 189.4
Pacific 66.6 60.8
Ongoing operations at constant exchange rates 928.4 832.6
Disposed businesses1 7.1 12.9
Continuing operations at constant exchange rates 935.5 845.5
Foreign exchange 51.6 9.8
Continuing operations at actual exchange rates 987.1 855.3
Operating ProfitRestated Adjusted profit before restructuring Restructuringcosts Adjusted operating profit Adjustedprofit before restructuring Restructuring costs Adjustedoperatingprofit
Ongoing operations 6 months to30 June 2016£m 6 months to30 June 2016£m 6 months to30 June 2016£m 6 months to30 June 2015£m 6 months to30 June 2015£m 6 months to30 June 2015£m
France 19.5 (0.8) 18.7 21.9 (1.2) 20.7
Benelux 15.0 (1.4) 13.6 15.3 - 15.3
Germany 20.9 (0.2) 20.7 21.3 - 21.3
Southern Europe 4.5 (0.3) 4.2 4.3 (0.2) 4.1
Latin America 1.4 - 1.4 1.2 - 1.2
Europe 61.3 (2.7) 58.6 64.0 (1.4) 62.6
UK & Ireland 21.2 - 21.2 19.2 (0.1) 19.1
Rest of World 11.9 - 11.9 11.5 (0.1) 11.4
UK & Rest of World 33.1 - 33.1 30.7 (0.2) 30.5
Asia 5.8 - 5.8 4.3 - 4.3
North America 31.4 (1.1) 30.3 19.1 (0.1) 19.0
Pacific 13.7 - 13.7 12.4 (0.1) 12.3
Central and regional overheads (34.4) - (34.4) (32.3) - (32.3)
Ongoing operations at constant exchange rates 110.9 (3.8) 107.1 98.2 (1.8) 96.4
Disposed businesses1 (0.3) - (0.3) (0.3) (0.6) (0.9)
Continuing operations at constant exchange rates 110.6 (3.8) 106.8 97.9 (2.4) 95.5
Foreign exchange 7.5 (0.3) 7.2 1.8 0.1 1.9
Continuing operations at actual exchange rates 118.1 (4.1) 114.0 99.7 (2.3) 97.4
One-off items (2.1) 0.9
Amortisation and impairment of intangible assets2 (20.1) (13.9)
Operating profit 91.8 84.4
Interest payable and similar charges (24.4) (25.2)
Interest receivable 5.7 5.3
Net interest credit from pensions 4.3 3.0
Share of profit from associates (net of tax) - Asia 3.0 2.7
Profit before income tax 80.4 70.2
70.2
1 disposed businesses are those businesses that have been disposed or exited
and therefore are not included as an ongoing operation
2 excluding computer software
4. Segmental information (continued)
One-off items and amortisation and impairment of intangible assets (at actual
exchange rates)
Amortisationand impairment6 months to30 June 2016 Amortisationand Impairment6 months to 30 June 2015 One-off items6 months to30 June 2016 One-off items6 months to 30 June 2015
£m £m £m £m
Europe 2.7 3.4 0.3 8.0
UK & Rest of World 2.6 2.6 0.2 2.0
Asia 1.2 0.8 0.4 0.1
North America 11.6 6.1 1.3 (0.3)
Pacific 0.4 0.2 (0.2) -
Central and regional 1.6 0.8 0.1 (10.7)
20.1 13.9 2.1 (0.9)
One-off items include £1.0m for the costs associated with the integration of
Steritech in North America.
5. Discontinued operations and disposals
There are no discontinued operations as at 30 June 2016. There were disposals
of two small non-core businesses in Australia and Malaysia for consideration
totalling £0.5m. These do not meet the definition of discontinued operations
but have been excluded from ongoing operations in the segmental analysis (note
4).
6. Dividends
6 months to 30 June 2016 6 months to 30 June 2015 Year to 31 December 2015
£m £m £m
2014 final dividend paid - 1.82p per share - 33.1 33.1
2015 interim dividend paid - 0.87p per share - - 15.8
2015 final dividend paid - 2.06p per share 37.5 - -
37.5 33.1 48.9
The directors have declared an interim dividend of 0.99p per share amounting
to £18.1m payable on 14 September 2016 to shareholders on the register at 12
August 2016. The Company has a progressive dividend policy and will take a
view on the level of any growth for 2016 based on the year-end results. These
interim financial statements do not reflect this dividend payable.
7. Bank and other borrowings
At 30 June 2016 At 31 December 2015
£m £m
Non-current
RCF and other bank borrowings 318.2 198.8
Bond debt 746.7 653.0
Finance lease liabilities 21.3 13.6
1,086.2 865.4
Current
Bank overdrafts 1.9 2.1
Bank borrowings 139.4 0.6
Bond debt - 302.3
Bond interest accruals 17.7 18.3
Finance lease liabilities 13.7 9.3
172.7 332.6
Total bank and other borrowings 1,258.9 1,198.0
1,258.9
1,198.0
Medium-term notes and bond debt comprises:
Bond interest coupon Effective hedged interest rate
Non-current
E500m bond due September 2019 Fixed 3.375% Fixed 3.62%
E350m bond due October 2021 Fixed 3.25% Fixed 3.52%
E50m bond due March 20181 Float 3M EURIBOR+0.48% Fixed 0.68%
£1.3m debentures Fixed 5.00% Fixed 5.00%
£0.3m debentures Fixed 4.50% Fixed 4.50%
Average cost of bond debt at period end rates 3.46%
1 The E50m bond due March 2018 was fixed at 0.57% payable quarterly. The
effective hedge rate is higher than the annual coupon on our bonds due to
discount and fees paid on issuance
Under the £315m RCF with a maturity date of January 2021, a maximum of £270m
can be drawn in cash and the remainder available for guarantees. The marginal
cost of borrowing under the facility at the period end was 0.96%. During the
six months to 30 June 2016, £139.4m of the facility was drawn.
Under the Term loan providing cash drawings of up to £200m and $157m with a
maturity date of December 2018, they were fully drawn during the six months to
30 June 2016. The cost of borrowing under the £200m and $157m loans were 1.52%
and 1.46% respectively.
The carrying values and the fair values of the group's non-current borrowings
are shown on the next page. Fair values are based on cashflows discounted at
the current market rates:
7. Bank and other borrowings (continued)
Carrying amount Carrying amount Fair Value Fair Value
30 June 2016 31 December 2015 30 June 2016 31 December 2015
£m £m £m £m
Bank borrowings 318.2 198.8 318.2 198.8
E500m bond due September 2019 415.1 363.0 455.5 396.1
E350m bond due October 2021 289.0 252.6 325.9 278.7
E50m bond due March 2018 41.6 36.4 41.6 36.6
£1.6m debentures 1.0 1.0 1.7 1.7
Finance lease liabilities 21.3 13.6 21.3 13.6
1,086.2 865.4 1,164.2 925.5
8. Derivative financial instruments
For all financial instruments held by the group, those that are held at fair
value are to be 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;
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;
Level 3 - inputs for the asset or liability that are not based on observable
market data.
The group holds all derivatives at fair value using discounted cash flow
models based on market rates which are observable. Therefore all derivative
financial instruments and available-for-sale assets held by the group fall
into Level 2. Contingent consideration payable on acquisitions by the group
falls into Level 3. No financial instruments have moved between levels in the
period.
Fair value assets Fair value assets Fair value liabilities Fair Value liabilities
30 June 2016 31 December 2015 30 June 2016 31 December 2015
£m £m £m £m
Interest rate swaps:
- non-hedge 5.7 - (13.2) (6.4)
- cash flow hedge 0.8 1.7 (0.7) (5.8)
- net investment hedge - 0.4 (44.5) (26.1)
Foreign exchange forwards:
- non-hedge - - (0.6) -
Foreign exchange swaps:
- non-hedge 0.2 0.1 (3.0) (1.0)
6.7 2.2 (62.0) (39.3)
Analysed as follows:
Current portion 6.7 0.8 (43.3) (21.7)
Non-current portion - 1.4 (18.7) (17.6)
6.7 2.2 (62.0) (39.3)
9. Retirement benefit obligations
Apart from the legally required social security state schemes, the group
operates a number of pension schemes around the world covering many of its
employees. The major schemes are of the defined benefit type with assets held
in separate trustee administered funds.
The principal scheme in the group is the Rentokil Initial 2015 Pension Scheme
in the United Kingdom ("the scheme"). It has a number of defined benefit
sections which are all now closed to new members. At 30 June 2016 the scheme
was valued at an accounting surplus of £337.4m (December 2015: £237.0m) on the
group's balance sheet.
The scheme is re-appraised semi-annually by independent actuaries based upon
actuarial assumptions in accordance with IAS 19 requirements. The principal
assumptions used for the scheme are shown below.
30 June 2016 31 December 2015
£m £m
Weighted average %
Discount rate 2.7% 3.8%
Future salary increases N/A N/A
Future pension increases 3.0% 3.3%
RPI Inflation 3.0% 3.4%
CPI Inflation 1.9% 2.3%
2.3%
The triennial actuarial valuation of the Rentokil Initial 2015 Pension Scheme
as at 31 December 2015 is substantially complete with the Trustees and the
Company agreeing that the Scheme is now fully funded on a technical provisions
basis. The Trustees have therefore agreed that the annual payments of £3.2m
the Company has been paying into an escrow arrangement each January will not
be required going forward.
In accordance with the terms of the escrow arrangement, the £9.6m currently
held in escrow will also be released back to the Company. The position will be
reviewed at the next actuarial valuation, which is expected to be carried out
at 31 December 2018.
10. Business combinations
The group purchased 100% of the share capital or the trade and assets of 20
companies and businesses in the period. The total consideration in respect of
acquisitions in the current year was £32.4m. Details of goodwill and the fair
value of net assets acquired are as follows:
6 months to 30 June 2016 6 months to 30 June 2015
£m £m
Purchase consideration:
- Cash paid 25.6 26.6
- Deferred and contingent consideration 6.8 8.0
Total purchase consideration 32.4 34.6
Fair value of net assets acquired (19.8) (12.8)
Goodwill from current period acquisitions 12.6 21.8
Goodwill represents the synergies, workforce and other benefits expected as a
result of combining the respective businesses.
Deferred consideration of £2.4m is payable in respect of the above
acquisitions. Contingent consideration of £4.4m is payable based on a variety
of conditions including revenue and profit.
The provisional fair value of assets and liabilities arising from acquisitions
in the period are shown below. The provisional fair values will be finalised
in the 2016 financial statements. The fair values are provisional as the
acquisition accounting has not yet been finalised as a result of the proximity
of the acquisitions to the period end.
6 months to 30 June 2016 6 months to 30 June 2015
£m £m
Non-current assets
- Intangible assets 21.3 12.8
- Property, plant and equipment 1.0 1.7
Current assets 2.2 1.3
Current liabilities (1.5) (0.5)
Non-current liabilities (3.2) (2.5)
Net assets acquired 19.8 12.8
From the dates of acquisition to 30 June 2016, these acquisitions contributed
£6.2m to revenue and £1.4m to operating profit. If the acquisitions had
occurred on 1 January 2016, the revenue and operating profit of the combined
entity would have amounted to £989.5m and £91.9m respectively.
In relation to the Steritech acquisition in October 2015 there has been an
adjustment to the provisional fair values resulting in an increase in Goodwill
of £4.2m.
In addition £2.2m was paid in respect of deferred and contingent consideration
for prior year acquisitions resulting in the total cash outflow in the period
from current and past period acquisitions, net of cash acquired, of £27.6m.
11. Events occurring after the balance sheet date
There were no significant events occurring after the balance sheet date.
Responsibility statement of the directors in respect of the half-yearly
financial report
We confirm that to the best of our knowledge:
· the condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the EU
· the interim management report includes a fair review of the
information required by:
o DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial statements;
and a description of the principal risks and uncertainties for the remaining
six months of the year; and
o DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so
By Order of the Board
Andy Ransom
Chief Executive
27 July 2016
The directors of Rentokil Initial plc are listed in the Rentokil Initial plc
Annual Report for 31 December 2015. A list of the current directors is
maintained on the Rentokil Initial website: www.rentokil-initial.com
INDEPENDENT REVIEW REPORT TO RENTOKIL INITIAL PLC
Introduction
We have been engaged by the Company to review the financial statements in the
half-yearly financial report for the six months ended 30 June 2016 which
comprises the consolidated income statement, consolidated balance sheet,
consolidated statement of comprehensive income, consolidated statement of
changes in equity, consolidated cash flow statement and the related
explanatory notes. We have read the other information contained in the
half-yearly financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the
financial statements.
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Disclosure
and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority
("the UK FCA"). Our review has been undertaken so that we might state to the
company those matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company for our review work,
for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the EU. The financial
statements included in this half-yearly financial report have been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the financial
statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK and Ireland) and consequently
does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the financial statements in the half-yearly financial report for
the six months ended 30 June 2016 is not prepared, in all material respects,
in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.
Paul Sawdon
for and on behalf of KPMG LLP,
Chartered Accountants
15 Canada Square
London
E14 5GL
27 July 2016
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