A World of Innovation Rentokil Initial Plc Annual Report 2019
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rentokil-initial.com rentokil.com Rentokil Initial plc initial.com ambius.com Protecting People. Enhancing Lives. Annual Report 2019 A world of innovation Rentokil Initial plc Annual Report 2019 © ©2019 2019 Friend Friend Studio Studio Ltd Ltd FileFile name: name: 01Rentokil_Cover_200313 01Rentokil_Cover_200313 ModificationModification Date: Date: 13 13March March 2020 2020 4:49 4:49 pm pm © 2019 Friend Studio Ltd File name: 01Rentokil_Cover_200313 Modification Date: 13 March 2020 4:49 pm About us Protecting people. About us Enhancing lives. Rentokil Initial is a global leader in the provision of route-based services which protect people and enhance lives. Our services At Rentokil Initial we protect people and enhance lives include pest control, hygiene and workwear, as well as a range of other smaller specialist services including plants, medical services, around the world from the dangers of pest-borne property care and specialist hygiene. disease and the risks of poor hygiene. We enhance lives We protect people from the dangers of pest-borne disease and the with services that protect the health and wellbeing of risks of poor hygiene. We enhance lives with services that protect the people, and the reputation of our customers’ brands. health and wellbeing of people, and the reputation of our customers’ brands. Strategic Report Rentokil is the world’s leading commercial pest control company and our engine for growth. Initial is a global leader in hygiene services. We have over 1,800 local service teams across the world covering over 90% of global GDP in over 90 of the world’s 100 largest cities across C North America, Europe, UK & Rest of World, Asia and the Pacific. We performed strongly in 2019 with our Operating in 81 countries, approximately 90% of our revenues are highest level of organic growth in 15 years, derived from outside of the UK. driven by our growing presence in higher growth markets, enhanced customer We have over a million customers to service from the largest retention and our strong innovation multinational pharmaceutical, industrial and food production programme. companies to local shops, restaurants and homes. With high Andy Ransom levels of customer service and retention rates, we continue Chief Executive to build our portfolio. Find out more at rentokil-initial.com. 2 Our Business at a Glance 39 Protect & Enhance 4 Q&A with Andy Ransom, Chief Executive 39 Introduction 6 Our ‘Big Six’ Challenges 39 2019 performance review 8 Reasons to Invest 41 Spotlight on Ambius Our Lumnia fly control unit is the world’s first to use energy efficient LEDs to transmit UV light in the capture of flies. B Find out more on page 24 Customer and regulatory requirements are 26 Pest Control We are proud to work with collaborative partners who bring specialist expertise leading to an increasing use of innovative, 26 Industry, market and customers non-toxic solutions in pest control. to our innovation projects. 27 Global growth drivers Find out more on page 42 B Find out more on page 10 27 2019 performance review B 28 Strategic priorities 12 Key Performance Indicators 44 Responsible Business 12 Colleagues 44 Key sustainability priority areas 13 Customers 52 Section 172(1) statement 14 Shareholders 53 Governance, trust and transparency 54 Non-financial information statement 55 Risks and Uncertainties Cautionary statement This report contains statements that are, Designed and produced by Friend www.friendstudio.com or may be, forward-looking regarding the Group’s financial position 60 Viability Statement and results, business strategy, plans and objectives. Such statements Print Pureprint Group We are digitally remastering our frontline involve risk and uncertainty because they relate to future events and This report has been printed on Amadeus Silk which service provision to enhance customer circumstances and there are accordingly a number of factors which is FSC® certified and made from 100% Elemental service and productivity. might cause actual results and performance to differ materially from Chlorine Free (ECF) pulp. Find out more on page 32 those expressed or implied by such statements. Forward-looking B statements speak only as of the date they are made and no The mill and the printer are both certified to ISO 14001 myLearning is Rentokil’s unique online, representation or warranty, whether expressed or implied, is given environmental management system. The report was e-learning Pest Awareness training 34 Hygiene in relation to them, including as to their completeness or accuracy printed using vegetable-based inks by a CarbonNeutral printer. platform accessible via PC, tablet and 34 Industry, market and customers or the basis on which they were prepared. Other than in accordance ® smartphone. with the Company’s legal or regulatory obligations (including under We are using unclaimed dividends 35 Global growth drivers the Listing Rules and the Disclosure Guidance and Transparency Find out more on page 16 to launch a fund – called Rentokil Initial B 36 Strategic priorities Rules), the Company does not undertake any obligation to update Cares – to support good causes around or revise publicly any forward-looking statement, whether as a result 37 2019 performance review the world. 18 Our Business Model of new information, future events or otherwise. Information contained Find out more on page 50 in this 2019 Annual Report relating to the Company or its share price, Our Culture B 20 or the yield on its shares, should not be relied upon as an indicator 22 Our Stakeholders of future performance. Nothing in this 2019 Annual Report should The Financial Review on pages 118 to 121 V be construed as a profit forecast. forms part of the Strategic Report © 2019 Friend Studio Ltd File name: 01Rentokil_Cover_200313 Modification Date: 13 March 2020 8:13 pm © 2019 Friend Studio Ltd File name: 01Rentokil_Cover_200313 Modification Date: 13 March 2020 8:13 pm Strategic Report Corporate Governance Financial Statements Other Information We are using QR codes throughout this document for you to use via your smartphone. Just scan the code to access richer video content. Corporate Governance Financial Statements Financial performance Ongoing Revenue (at CER) W £2,644.5m +8.6% Organic Revenue growth +4.5% (2018: 3.7%) Revenue (at AER) C C The business has performed well through We’ve had another very good year in 2019, £2,714.4m +9.8% the clarity of its strategic execution and with our financial results once again ahead the enthusiasm and delivery focus of our of our three medium-term targets of revenue, Ongoing Operating Profit (at CER)W colleagues. The Board remains highly profit and cash. engaged in all aspects of the business and Jeremy Townsend will continue to work with the leadership Chief Financial Officer £365.5m +10.5% team to help ensure future success for all our stakeholders. Profit before tax (at AER) Richard Solomons Chairman £338.5m +£452.6m 62 Chairman’s Introduction to Governance 118 Financial Review Free Cash Flow (at AER) W 64 Board of Directors 122 Consolidated Statement of Profit or 66 Executive Leadership Team Loss and Other Comprehensive Income £ m 98.6% 68 Corporate Governance Report 123 Consolidated Balance Sheet 250.7 Free Cash Flow 81 Audit Committee Report 124 Consolidated Statement of Changes conversion in Equity 88 Nomination Committee Report 2019 full-year dividend 125 Consolidated Cash Flow Statement 92 Directors’ Remuneration Report 126 Notes to the Financial Statements 112 Independent Auditor’s Report 165 Related Undertakings 5.15p +15.2% 171 Five-Year Summary KPIs, see more on page 12 172 Parent Company Balance Sheet W 173 P arent Company Statement of Changes in Equity Alternative Performance Measures This Annual Report includes certain financial 174 Notes to the Parent Company Accounts performance measures which are not GAAP measures as defined under International Financial Reporting Standards (IFRS). These include Ongoing Revenue, Ongoing Operating Profit, Adjusted Profit Before Tax Other Information and Free Cash Flow. Management believes these measures provide valuable additional information for users of the financial statements in order to understand the underlying trading performance. Ongoing Revenue Directors’ Report 179 and Ongoing Operating Profit measures represent the 182 Additional Shareholder Information performance of the continuing operations of the Group (including acquisitions) after removing the effect of 184 Glossary disposed or closed businesses. Ongoing Profit and Adjusted Profit Before Tax exclude certain items that could distort the underlying trading performance. Ongoing Revenue and Ongoing Operating Profit are presented at CER unless otherwise stated. An explanation of the measures used along with reconciliation to the nearest IFRS measures is provided in Section E – Alternative Performance Measures on pages 160 to 164. Rentokil Initial plc Annual Report 2019 1 © 2019 Friend Studio Ltd File name: StrategicXreportX1_v131 Modification Date: 16 March 2020 5:15 pm © 2019 Friend Studio Ltd File name: StrategicXreportX1_v131 Modification Date: 16 March 2020 5:15 pm Our Business at a Glance Global reach. Local focus. Rentokil Initial is a global leader in the provision of route-based services which protect people and enhance lives, everywhere. We operate in 90 of the world’s 100 leading cities – from Los Angeles to Amsterdam, and Singapore to Auckland. Our core services are pest control and hygiene and we offer a range of smaller specialist services including plants, property care and workwear. We are a multi-local business operating in 81 countries around the world, employing around 43,000 people in 2019. a Pest Control b Hygiene c Protect & Enhance Rentokil Pest Control is the world’s Initial Hygiene is the world’s leading Rentokil Initial offers a range of other leading international commercial pest commercial hygiene services provider route-based services to meet customer control service provider, offering the offering services including the provision needs in plants, workwear, property highest levels of risk management, and maintenance of products such as air care, medical and specialist hygiene reassurance and responsiveness fresheners, sanitisers, feminine hygiene services.