Company: RKLIF
Filing Date: 2025-03-06
Form Type: 6-K
Source: 0001654954-25-002335
Chunk: 32

Company: RENTOKIL INITIAL PLC /FI
Filing Date: 2025-03-06
Form: 6-K
Chunk 32
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 account for ageing of claims, to determine an estimate 
 for costs per claim. Recent fluctuations in input prices (e.g.      
 timber prices) means that there is potential for volatility in      
 claim values and therefore future material changes in provisions.   
 Management has modelled that an increase/decrease of 5% in claim    
 values would increase/decrease the provision by £9m (2023:          
 £15m). Over the 12 months to 31 December 2024, as a result of       
 accelerating the cleardown of legacy longstanding claims and other  
 macroeconomic factors, in-year costs per claim rose by c.40% (2023: 
 32%). This is not representative of management’s expectations       
 of future costs as ageing of claims, which drives an increased cost 
 per claim, has reduced significantly in recent months and is        
 expected to continue to improve.                                    |
| ● | Claim rate– Management has                                          
 estimated claim rates based on statistical historical incurred      
 claims. Data has been captured 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; however, management actions can     
 prevent claims from becoming litigated and hence more costly. These 
 factors cause estimation uncertainty that could lead to material    
 changes in provision measurement. Management has modelled that an   
 increase/decrease of 5% in overall claim rates would                
 increase/decrease the provision by £9m (2023: £15m),                
 accordingly. Over the 12 months to 31 December 2024, claim rates    
 fell by c.24% (2023: fell 7%).                                      |
| ● | 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 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 1% movement in customer churn rates, up or down,    
 would change the provision by £7m down or up (2023:                 
 £11m), accordingly. On