Company: RKLIF
Filing Date: 2025-03-06
Form Type: 6-K
Source: 0001654954-25-002335
Chunk: 31

Company: RENTOKIL INITIAL PLC /FI
Filing Date: 2025-03-06
Form: 6-K
Chunk 31
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419 |

|             | 2024Total£m | 2023Total£m |
| Analysed as 
 follows:    |             |             |
| Non-current |         304 |         357 |
| Current     |         115 |          94 |
| Total       |         419 |         451 |

Termite damage claims

The Group holds provisions for termite damage claims covered by contractual warranties. Termite damage claim provisions are subject to significant assumptions and estimation uncertainty. The assumptions included in valuing termite provisions are based on an estimate of the volume and value of future claims (based on historical and forecast information), customer churn rates, and discount rates. These provisions are expected to be substantially utilised within the next 16 years at a declining rate. The trend of volume and value of claims is monitored and reviewed over time (with the support of external advisors) and as such the value of the provision is also likely to change.

The Group’s provision relates to legacy claims (from the period prior to the acquisition of Terminix), estimated at £197m (2023: £247m); and new customer claims, estimated at £16m (2023: £13m). The sensitivity of the legacy claims liability balance to changes in the inputs is illustrated as follows:

| ● | Discount rate– The exposure to                                      
 termite damage claims is largely based within the United States,    
 therefore measurement is based on a seven-year US bond risk-free    
 rate. During 2024, interest rates (and therefore discount rates)    
 have increased. Rates could move in either direction and management 
 has modelled that an increase/decrease of 50 bps in yields would    
 decrease/increase the provision by £5m (2023: £8m). Over            
 the 12 months to 31 December 2024, seven-year risk-free rate yields 
 have increased 60 bps from 3.88% to 4.48% (2023: decrease 15        
 bps).                                                               |
| ● | Claim value– Claim value                                            
 forecasts have been based on the latest available historical        
 settled Terminix claims. Claims values are dependent on a range of  
 inputs including labour cost, materials costs (e.g. timber),        
 whether a claim becomes litigated or not, and specific              
 circumstances including contributory factors at the premises.       
 Management has used an average of claim costs for the last 12       
 months for each material category of claim, adjusted where          
 necessary to