Prospectus • Apr 8, 2011
Prospectus
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(incorporated with limited liability in England with registration number 5393279)
Under this €2,500,000,000 Euro Medium Term Note Programme (the Programme), Rentokil Initial plc (the Issuer) may from time to time issue notes (the Notes) denominated in any currency agreed between the Issuer and the relevant Dealer (as defined below).
The maximum aggregate nominal amount of all Notes from time to time outstanding under the Programme will be €2,500,000,000 (or its equivalent in other currencies calculated as described herein), subject to increase as described herein.
The Notes may be issued on a continuing basis to one or more of the Dealers specified under "Description of the Programme" and any additional Dealer appointed under the Programme from time to time by the Issuer (each a Dealer and together the Dealers), which appointment may be for a specific issue or on an ongoing basis. References in this Prospectus to the relevant Dealer shall, in the case of an issue of Notes being (or intended to be) subscribed by more than one Dealer, be to all Dealers agreeing to subscribe such Notes.
Application has been made to the Financial Services Authority in its capacity as competent authority under the Financial Services and Markets Act 2000, as amended, (the UK Listing Authority) for Notes issued under the Programme during the period of 12 months from the date of this Prospectus to be admitted to the official list of the UK Listing Authority (the Official List). Application has also been made to the London Stock Exchange plc (the London Stock Exchange) for such Notes to be admitted to trading on the London Stock Exchange's regulated market. The London Stock Exchange's regulated market is a regulated market for the purposes of Directive 2004/39/EC (the Markets in Financial Instruments Directive). Application has also been made to the London Stock Exchange for such Notes to be admitted to trading on the London Stock Exchange's Professional Securities Market, which is not a regulated market for the purposes of the Markets in Financial Instruments Directive. The applicable Final Terms relating to each Tranche of Notes will specify whether such Notes are to be admitted to trading on the London Stock Exchange's regulated market or Professional Securities Market. Notice of the aggregate nominal amount of Notes, interest (if any) payable in respect of Notes, the issue price of Notes and any other terms and conditions not contained herein which are applicable to each Tranche (as defined under "Terms and Conditions of the Notes") of Notes will be set out in the applicable Final Terms which, with respect to Notes to be admitted to the Official List and admitted to trading on the London Stock Exchange's regulated market or Professional Securities Market, will be delivered to the UK Listing Authority and the London Stock Exchange on or before the date of issue of the Notes of such Tranche.
The rating of certain Series of Notes to be issued under the Programme may be specified in the applicable Final Terms. Whether or not each credit rating applied for in relation to relevant Series of Notes will be issued by a credit rating agency established in the European Union and registered under Regulation (EU) No 1060/2009 (the CRA Regulation) will be disclosed in the Final Terms. In general, European regulated investors are restricted from using a rating for regulatory purposes if such rating is not issued by a credit rating agency established in the European Union and registered under the CRA Regulation unless the rating is provided by a credit rating agency operating in the European Union before 7 June 2010 which has submitted an application for registration in accordance with the CRA Regulation and such registration is not refused.
Standard & Poor's Credit Market Services Europe Limited is established in the European Union and has applied for registration under Regulation (EC) No. 1060/2009, although notification of the corresponding registration decision has not yet been provided by the relevant competent authority.
The Issuer may agree with any Dealer and the Trustee (as defined herein) that Notes may be issued in a form not contemplated by the Terms and Conditions of the Notes herein, in which event a supplemental Prospectus, if appropriate, will be made available which will describe the effect of the agreement reached in relation to such Notes.
Dealers
The Royal Bank of Scotland UBS Investment Bank
Barclays Capital BNP PARIBAS HSBC Mizuho International plc This Prospectus comprises a base prospectus (the Base Prospectus) for the purposes of Article 5.4 of Directive 2003/71/EC (the Prospectus Directive).
This Prospectus also comprises the listing particulars approved by the UK Listing Authority as required by the Financial Services and Markets Act 2000, as amended, (the Listing Particulars) in relation to Notes admitted to the Official List and admitted to trading on the London Stock Exchange's Professional Securities Market and issued during the period of 12 months from the date of this Prospectus.
Each of the Issuer and the Guarantor (as defined herein) accepts responsibility for the information contained in this Prospectus. To the best of the knowledge and belief of the Issuer and the Guarantor (each of which has taken all reasonable care to ensure that such is the case) the information contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information.
Subject as provided in the applicable Final Terms, the only persons authorised to use this Prospectus in connection with an offer of Notes are the persons named in the applicable Final Terms as the relevant Dealer or the Managers, as the case may be.
This Base Prospectus and these Listing Particulars are to be read in conjunction with all documents which are deemed to be incorporated herein by reference (see "Documents Incorporated by Reference" below). This Base Prospectus and these Listing Particulars shall, save as specified herein, be read and construed on the basis that such documents are so incorporated and form part of this Base Prospectus and these Listing Particulars.
Neither the Dealers nor the Trustee have independently verified the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Dealers or the Trustee as to the accuracy or completeness of the information contained or incorporated in this Prospectus or any other information provided by the Issuer or the Guarantor in connection with the Programme. No Dealer or the Trustee accepts any liability in relation to the information contained or incorporated by reference in this Prospectus or any other information provided by the Issuer or the Guarantor in connection with the Programme.
No person is or has been authorised by the Issuer, the Guarantor or the Trustee to give any information or to make any representation not contained in or not consistent with this Prospectus or any other information supplied in connection with the Programme or the Notes and, if given or made, such information or representation must not be relied upon as having been authorised by the Issuer, any of the Dealers or the Trustee.
Neither this Prospectus nor any other information supplied in connection with the Programme or any Notes (i) is intended to provide the basis of any credit or other evaluation or (ii) should be considered as a recommendation by the Issuer, the Guarantor, any of the Dealers or the Trustee that any recipient of this Prospectus or any other information supplied in connection with the Programme or any Notes should purchase any Notes. Each investor contemplating purchasing any Notes should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer and the Guarantor. Neither this Prospectus nor any other information supplied in connection with the Programme or the issue of any Notes constitutes an offer or invitation by or on behalf of the Issuer, the Guarantor, any of the Dealers or the Trustee to any person to subscribe for or to purchase any Notes.
Neither the delivery of this Prospectus nor the offering, sale or delivery of any Notes shall in any circumstances imply that the information contained herein concerning the Issuer or the Guarantor is correct at any time subsequent to the date hereof or that any other information supplied in connection with the Programme is correct as of any time subsequent to the date indicated in the document containing the same. The Dealers and the Trustee expressly do not undertake to review the financial condition or affairs of the Issuer or the Guarantor during the life of the Programme or to advise any investor in the Notes of any information coming to their attention. Investors should review, inter alia, the most recently published documents incorporated by reference into this Prospectus when deciding whether or not to purchase any Notes.
The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended, (the Securities Act) and are subject to U.S. tax law requirements. Subject to certain exceptions, Notes may not be offered, sold or delivered within the United States or to, or for the account of, U.S. persons (see "Subscription and Sale").
This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any Notes in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The distribution of this Prospectus and the offer or sale of Notes may be restricted by law in certain jurisdictions. The Issuer, the Guarantor, the Dealers and the Trustee do not represent that this Prospectus may be lawfully distributed, or that any Notes may be lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for facilitating any such distribution or offering. In particular, no action has been taken by the Issuer, the Guarantor, the Dealers or the Trustee which is intended to permit a public offering of any Notes outside the EEA states which have implemented the Prospectus Directive or distribution of this Prospectus in any jurisdiction where action for that purpose is required. Accordingly, no Notes may be offered or sold, directly or indirectly, and neither this Prospectus nor any advertisement or other offering material may be distributed or published in any jurisdiction, except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose possession this Prospectus or any Notes may come must inform themselves about, and observe, any such restrictions on the distribution of this Prospectus and the offering and sale of Notes. In particular, there are restrictions on the distribution of this Prospectus and the offer or sale of Notes in the United States, European Economic Area (including the United Kingdom) and Japan (see "Subscription and Sale").
This Prospectus has been prepared on the basis that any offer of Notes in any Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State) will be made pursuant to an exemption under the Prospectus Directive, as implemented in that Relevant Member State, from the requirement to publish a prospectus for offers of Notes. Accordingly any person making or intending to make an offer in that Relevant Member State of Notes which are the subject of an offering contemplated in this Prospectus as completed by final terms in relation to the offer of those Notes may only do so in circumstances in which no obligation arises for the Issuer, the Guarantor or any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive, in each case, in relation to such offer. None of the Issuer, the Guarantor nor any Dealer has authorised, nor do they authorise, the making of any offer of Notes in circumstances in which an obligation arises for the Issuer, the Guarantor or any Dealer to publish or supplement a prospectus for such offer.
All references in this Prospectus to "sterling" and "£" refer to pounds sterling, to "euro" and "€" refer to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty on the Functioning of the European Union, as amended and to "US\$" refer to United States dollars.
| Clause | Page |
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| Description of the Programme 6 |
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| Risk Factors11 | |
| Documents Incorporated by Reference23 | |
| Form of the Notes 24 |
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| Form of Final Terms 26 |
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| Terms and Conditions of the Notes38 | |
| Use of Proceeds65 | |
| Rentokil Initial plc66 | |
| Rentokil Initial 1927 plc 73 |
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| United Kingdom Taxation82 | |
Subscription and Sale ...............................................................................................................................84 General Information.................................................................................................................................87
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In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) named as the Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s)) in the applicable Final Terms may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However, there is no assurance that the Stabilising Manager(s) (or persons acting on behalf of a Stabilising Manager) will undertake stabilisation action. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the relevant Tranche of Notes is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the relevant Tranche of Notes and 60 days after the date of the allotment of the relevant Tranche of Notes. Any stabilisation action or over-allotment must be conducted by the relevant Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s)) in accordance with all applicable laws and rules.
The following description does not purport to be complete and is taken from, and is qualified in its entirety by, the remainder of this Prospectus and, in relation to the terms and conditions of any particular Tranche of Notes, the applicable Final Terms. The Issuer and any relevant Dealer may agree that Notes shall be issued in a form other than that contemplated in the Terms and Conditions, in which event, in the case of listed Notes only and if appropriate, a supplemental Prospectus or, as the case may be, supplementary listing particulars, will be published.
Words and expressions defined in "Form of the Notes" and "Terms and Conditions of the Notes" shall have the same meanings in this description.
| Issuer: | Rentokil Initial plc |
|---|---|
| Guarantor: | Rentokil Initial 1927 plc, pursuant to a deed of guarantee. |
| All Notes issued under the Programme will be irrevocably and unconditionally guaranteed by way of a deed of guarantee (the Guarantee) dated 23 October 2008 by Rentokil Initial 1927 plc (the Guarantor). |
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| The Guarantee is an unsecured, unsubordinated obligation of the Guarantor, guaranteeing all monies due under the Notes, and will terminate on the date on which the issue of GBP 300,000,000 5.75 per cent. Notes due 31 March 2016 (XS0249085852), ceases to be outstanding. |
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| Description: | Euro Medium Term Note Programme |
| Arranger: | HSBC Bank plc |
| Dealers: | Barclays Bank PLC |
| BNP PARIBAS | |
| HSBC Bank plc | |
| Mizuho International plc | |
| The Royal Bank of Scotland plc | |
| UBS Limited | |
| and any other Dealers appointed in accordance with the Programme Agreement. |
|
| Risk Factors: | There are certain factors that may affect the ability of the Issuer and the Guarantor to fulfil their obligations in respect of Notes issued under the Programme. In addition, there are certain factors which are material for the purpose of assessing the market risks associated with Notes issued under the Programme. These are set out under "Risk Factors" and include the fact that the Notes may not be a suitable investment for all investors, certain risks relating to the structure of particular Series of Notes and certain market |
| risks. | |
|---|---|
| Certain Restrictions: | Each issue of Notes denominated in a currency in respect of which particular laws, guidelines, regulations, restrictions or reporting requirements apply will only be issued in circumstances which comply with such laws, guidelines, regulations, restrictions or reporting requirements from time to time (see "Subscription and Sale") including the following restrictions applicable at the date of this Prospectus. |
| Notes having a maturity of less than one year | |
| Notes having a maturity of less than one year will constitute deposits for the purposes of the prohibition on accepting deposits contained in section 19 of the Financial Services and Markets Act 2000 unless they are issued to a limited class of professional investors and have a denomination of at least £100,000 or its equivalent, see "Subscription and Sale". |
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| Trustee: | HSBC Corporate Trustee Company (UK) Limited |
| Issuing and Principal Paying Agent: | HSBC Bank plc |
| Programme Size: | Up to €2,500,000,000 (or its equivalent in other currencies calculated as described under "General Description of the Programme") outstanding at any time. The Issuer may increase the amount of the Programme in accordance with the terms of the Programme Agreement. |
| Distribution: | Notes may be distributed by way of private or public placement and in each case on a syndicated or non-syndicated basis. |
| Currencies: | Subject to any applicable legal or regulatory restrictions, any currency agreed between the Issuer and the relevant Dealer. |
| Redenomination: | The applicable Final Terms may provide that certain Notes may be redenominated in euro. |
| Maturities: | Such maturities as may be agreed between the Issuer and the relevant Dealer, subject to such minimum or maximum maturities as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the Issuer or the relevant Specified Currency. |
| Issue Price: | Notes may be issued on a fully-paid or a partly-paid basis and at an issue price which is at par or at a discount to, or premium over, par. |
| Form of Notes: | The Notes will be issued in bearer form as described in "Form of the Notes". |
| Fixed Rate Notes: | Fixed interest will be payable on such date or dates as may be agreed between the Issuer and the relevant Dealer and on |
7
redemption and will be calculated on the basis of such Day Count Fraction as may be agreed between the Issuer and the relevant Dealer.
Floating Rate Notes: Floating Rate Notes will bear interest at a rate determined:
The margin (if any) relating to such floating rate will be agreed between the Issuer and the relevant Dealer for each Series of Floating Rate Notes.
Index Linked Notes: Payments of principal in respect of Index Linked Redemption Notes or of interest in respect of Index Linked Interest Notes will be calculated by reference to such index and/or formula or to changes in the prices of securities or commodities or to such other factors as the Issuer and the relevant Dealer may agree.
Other provisions in relation to Floating Rate Notes and Index Linked Interest Notes: Floating Rate Notes and Index Linked Interest Notes may also have a maximum interest rate, a minimum interest rate or both.
Interest on Floating Rate Notes and Index Linked Interest Notes in respect of each Interest Period, as agreed prior to issue by the Issuer and the relevant Dealer, will be payable on such Interest Payment Dates, and will be calculated on the basis of such Day Count Fraction, as may be agreed between the Issuer and the relevant Dealer.
Redemption: The applicable Final Terms will indicate either that the relevant Notes cannot be redeemed prior to their stated
| maturity (other than in specified instalments, if applicable, or for taxation reasons or following an Event of Default) or that such Notes will be redeemable at the option of the Issuer and/or the Noteholders upon giving notice to the Noteholders or the Issuer, as the case may be, on a date or dates specified prior to such stated maturity and at a price or prices and on such other terms as may be agreed between the Issuer and the relevant Dealer. |
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|---|---|
| The applicable Final Terms may provide that Notes may be redeemable in two or more instalments of such amounts and on such dates as are indicated in the applicable Final Terms. |
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| Notes having a maturity of less than one year are subject to restrictions on their denomination and distribution, see "Certain Restrictions – Notes having a maturity of less than one year" above. |
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| Put Event: | In addition, upon the occurrence of a Put Event (as defined in Condition 6(g)) in respect of the Issuer, and subject to certain other conditions specified in Condition 6(g) being satisfied, the Notes may be redeemed at the option of the relevant Noteholders. |
| Denomination of Notes: |
Notes will be issued in such denominations as may be agreed between the Issuer and the relevant Dealer save that the minimum denomination of each Note will be such as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the relevant Specified Currency, see "Certain Restrictions – Notes having a maturity of less than one year" above, and save that the minimum denomination of each Note admitted to trading on a regulated market within the European Economic Area or offered to the public in a Member State of the European Economic Area in circumstances which require the publication of a prospectus under the Prospectus Directive will be €50,000 (or, if the Notes are denominated in a currency other than euro, the equivalent amount in such currency). |
| Taxation: | All payments in respect of the Notes will be made without deduction for or on account of withholding taxes imposed by the United Kingdom, subject as provided in Condition 7. In the event that any such deduction is made, the Issuer will, save in certain limited circumstances provided in Condition 7, be required to pay additional amounts to cover the amounts so deducted. |
| Negative Pledge: | The terms of the Notes will contain a negative pledge provision as further described in Condition 3. |
| Cross Default: | The terms of the Notes will contain a cross default provision as further described in Condition 9. |
| Status of the Notes: | The Notes will constitute direct, unconditional, |
| unsubordinated and (subject to the provisions of Condition 3) unsecured obligations of the Issuer and will rank pari passu among themselves and (subject as aforesaid and save for certain obligations required to be preferred by law) equally with all other unsecured obligations (other than subordinated obligations, if any) of the Issuer, from time to time outstanding. |
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| Listing: | Application has been made for Notes issued under the Programme to be admitted to the Official List and to trading on the London Stock Exchange's regulated market or Professional Securities Market, as specified in the applicable Final Terms. The Notes may also be listed on such other or further stock exchange(s) as may be agreed between the Issuer and the relevant Dealer in relation to each Series. |
| Notes may be listed or admitted to trading, as the case may be, on other or further stock exchanges or markets agreed between the Issuer and the relevant Dealer in relation to the Series. Notes which are neither listed nor admitted to trading on any market may also be issued. |
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| The applicable Final Terms will state whether or not the relevant Notes are to be listed and, if so, on which stock exchange(s). |
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| Governing Law: | The Notes will be governed by, and construed in accordance with, English law. |
| Selling Restrictions: | There are restrictions on the offer, sale and transfer of the Notes in the United States, the European Economic Area (including the United Kingdom) and Japan and such other restrictions as may be required in connection with the offering and sale of a particular Tranche of Notes (see "Subscription and Sale"). |
| United States Selling Restrictions: | Regulation S, Category 2. TEFRA C or TEFRA D, as specified in the applicable Final Terms. |
The Issuer and the Guarantor believe that the following factors may affect their ability to fulfil their obligations under Notes issued under the Programme. Most of these factors are contingencies which may or may not occur and neither the Issuer nor the Guarantor is in a position to express a view on the likelihood of any such contingency occurring.
In addition, factors which are material for the purpose of assessing the market risks associated with Notes issued under the Programme are also described below.
The Issuer and the Guarantor believe that the factors described below represent the principal risks inherent in investing in Notes issued under the Programme, but the inability of the Issuer or the Guarantor to pay interest, principal or other amounts on or in connection with any Notes or, in the case of the Guarantor under the Guarantee may occur for other reasons and the Issuer and the Guarantor do not represent that the statements below regarding the risks of holding any Notes are exhaustive. Prospective investors should also read the detailed information set out elsewhere in this Prospectus and reach their own views prior to making any investment decision. References in this section of this Prospectus to adjusted operating profit and losses refer to information as set out in the Issuer's financial statements for the year ended 31 December 2010.
The Group reports its results via the following six divisions (although not every division operates in all the countries where the Group has a presence): Textiles and Hygiene, Pest Control, Ambius, City Link, Initial Facilities Services and Rentokil Initial Asia Pacific.
The management of the Group, which is formed by the Issuer and its subsidiary undertakings (together, the Group), has stated that the Group's performance has been in need of improvement for a number of years. This is partly the result of increasingly competitive markets, but is also due to the Group's internal operational inefficiencies, such as a lack of customer focus and lower service quality, resulting in increased contract termination rates, a loss of customers in City Link and reduced profit margin.
The Group experienced declining operating profit performance over a number of years to 2008 when adjusted operating profit1 fell to £147.6 million.
The Group adopted five key goals (the Goals) for the succeeding three year period to address this poor operating performance. The Goals are:
1 Before amortisation and impairment of intangibles.
Progress was made in 2009, when adjusted operating profit1 increased to £180.6 million, helped by exchange rate effects bolstering profit by £22.4 million compared to the prior year.
This continued in 2010 as the Group achieved over £60 million of cost reductions and recorded adjusted operating profit2 of £239.3 million but suffered a small reduction in revenue as price competition remained fierce.
The performance of Pest Control in 2010 was strong, with a 10.0 per cent. improvement in adjusted operating profit3 at constant rates, reflecting good performances across the division.
Textiles and Hygiene adjusted operating profit3 was down 2.7 per cent. 2010 largely due to competitive pricing pressure in the Netherlands, Belgium and France. There was a significant profit decline in the Benelux, impacted by higher processing and distribution costs associated with restructuring of the businesses.
Despite considerable savings having been made, , City Link's adjusted operating loss3 of £9.6m is £4.0m worse than the corresponding loss in 2009. The operation was severely impacted at the beginning and end of the year by heavy snowfall resulting in lower levels of productivity and higher delivery costs, with an estimated in year impact of £4m. In December 2010, City Link announced the immediate departure of its Managing Director, Stuart Godman, to be replaced by the Group Chief Executive Officer Alan Brown until appointment of a permanent replacement.
The Group cannot assure Noteholders that trading performance will continue to improve, or that any improvements in its future trading performance will give rise to a corresponding improvement in the Group's operating cash flow generation. A requirement to invest in the growth of its business, to support its business restructuring plans or to support its trading performance may give rise to an adverse impact upon the Group's operating cash flow compared to its historic performance which in turn may adversely affect the Group's financial condition and results of operations.
In pursuit of the Goals, the Group is undergoing considerable operational change.
The Group's 18 February 2011 preliminary results announcement indicated that progress had been made on each of the five Goals. This was evidenced by internal customer service indicators together with strong cost saving, profit and cash delivery, despite challenging market conditions. However, the Group also acknowledged that operational change weaknesses and some weak personnel resulted in disappointing financial results at CityLink and in the hygiene business in the Benelux.
The Group cannot assure Noteholders that all of its proposed changes will be successfully implemented, implemented at all, or that such proposed changes will have a positive effect on the Group.
The Group operates in a number of highly competitive industries and it faces competition at local, national and international levels. Many of its competitors may have a larger market share and better financial resources than the Group. The entry barriers to most of the markets in which the Group operates are limited and, as a result, the entry of new competitors into such markets may affect the demand for the Group's services as well as impose pressure on its pricing strategies. Its ability to compete depends on its ability to provide excellent service to its customers at a reasonable price. Customers may elect to award contracts to the Group's competitors who are willing to accept a lower profit margin. If the Group is unable to compete
2 Before amortisation and impairment of intangibles
3 Before amortisation and impairments of intangibles and one-off items
effectively in the markets in which it operates, the Group's market share, and therefore its profits, may decrease.
The Group's success depends on the retention and renewal of its existing customer contracts and its ability to attract new customers. The Issuer's management believe that quality of service is often the single most important matter for the Group's customers and declines in service had resulted in a high level of contract terminations. Strong progress has been made in customer service, evidenced by internal benchmarks and the award of the 2010 Customer Care Award at the Transport & Logistics industry's annual Motor Transport Awards. The Group cannot assure Noteholders that this trend will continue and that it will be able to renew existing customer contracts on favourable terms or at all. The Group also recognises that the significant focus that it is placing upon its operational change initiatives may cause key customers to re-evaluate their business relationships with the Group with potential adverse financial consequences. If the Group is successful at winning contracts from new customers, it cannot be certain that these contracts will be profitable or at a level of profitability consistent with past financial performance. Whilst the Group has increased its investment in sales and service, the Group cannot give any assurance that these actions will be successful in improving customer retention rates and the Group's profitability. A loss of customers, if not replaced by new customers, would adversely affect the Group's financial condition and results of operations.
The Group also faces the risks associated with meeting its contractual performance obligations under existing or future contracts which may contain onerous indemnity or other provisions. In performing such contracts, the Group may be exposed to uninsured and/or uninsurable claims resulting in potentially large exposures for the Group.
The Group has underperforming businesses including City Link and Benelux Textiles and Hygiene. Significant costs have been reduced from City Link and new management put in place at Benelux Textiles and Hygiene. However, there can be no assurance that the Group's turnaround initiatives will improve the performance of these businesses or that their performance will not deteriorate again.
The senior management group have broad ranging industry experience and come from a variety of professional backgrounds. Weaknesses have been highlighted in Senior Management at City Link and the Benelux textiles businesses, resulting in new management being appointed. The Group cannot assure Noteholders that further weaknesses will not be identified, nor that these will be identified in a timely manner.
Management remuneration and benefit packages, including long-term incentive plans, have been implemented with a view to ensuring that the senior management team are appropriately incentivised to execute successfully business turnaround initiatives. The Group cannot assure Noteholders that such steps will be sufficient to retain key individuals or their management teams and if the Group is unable to retain such individuals or teams this may have a material adverse effect on the Group's financial condition and results of operations.
The Group's future trading performance depends on its ability to attract, train and retain staff with qualifications and experience that match its requirements in order for it to meet and exceed its customers' expectations. Effective staff personal development and succession planning is critical to the Group if it is to meet its changing business needs. The industry within which the Group operates is generally characterised by a relatively high staff turnover. If the Group is unable to offer satisfactory wages and working conditions to its employees, it may suffer from labour shortages in its sales, service and management positions and this may have an adverse effect on its activities. The Group cannot assure Noteholders that its employee recruitment, retention, training, personal development and succession planning activities will be sufficient for it to achieve all of its business objectives.
The Group has policies and practices in place to ensure that it employs, remunerates and manages its staff in accordance with applicable laws and regulations. These policies and practices include a requirement for its businesses to comply with local employment legislation covering all forms of potential discrimination in the workplace and minimum wage, maximum working hours, retirement pensions and health and safety requirements. The Group cannot assure Noteholders that these policies will be effective in all circumstances and that there might not be a material adverse financial impact on the Group arising from a claim or claims by members of staff relating to a breach of employment legislation or regulation.
In addition, under existing or future contracts, the Group may not be able to fully recover from its customers any incremental labour costs arising for any reason, including but not limited to annual pay awards, employment regulation and pension legislation. The Group's facilities services businesses have, in general, lower operating profit margins than its other businesses. As a result these businesses are more likely to be exposed to adverse financial effects arising from operational issues or from cost increases arising from changes to employment legislation which cannot be passed on to their customers in full.
Most of the Group's services require it to place its employees in the customers' premises. This involves a risk of claims in connection with damage to property, unauthorised use of the customers' property and other criminal or tortious acts, all of which may expose the Group to negative media publicity and/or uninsured or uninsurable claims.
The Group carries out activities that are labour intensive. Many of its employees are members of local trade unions or similar organisations. The Group seeks to work together with local trade unions to ensure good labour relations. Nevertheless, the Group cannot assure Noteholders that there will not, from time to time, be employee strike action leading to business disruption.
If any takeover of the Issuer is successful, this will constitute a Put Event as defined in condition 6(g) of the terms and conditions of the Notes (Condition 6(g)). If, while any Note is outstanding, a Put Event occurs and, as more particularly described in Condition 6(g), either the Notes are downgraded to a non investment grade rating, their rating is withdrawn, or the Notes were not at the time rated, the holder of such Note can require the Issuer to redeem that Notes on a particular date at its Early Redemption Amount, as defined in Condition 6(g), together if appropriate, with any accrued interest. If the holders of such Notes exercise their right to redeem the Notes, this could affect the liquidity of the Group.
The Group's pension funds are required to be accounted for under IAS 19 in its financial statements. The UK defined benefit pension scheme, although now closed to new accruals, accounts for substantially all of the Group's pension exposure. The Group's total IAS19 net deficit at 31 December 2010 was £11.9 million. The latest triennial valuation of the UK defined benefit scheme was undertaken in 2010 and the Issuer is in discussions with the Scheme Trustees regarding potential addition contributions.
The UK scheme's assets are held as approximately 20 per cent./80 per cent. equities/fixed interest bonds. The UK scheme also has entered into inflation and interest hedging contracts. These actions were undertaken so as to increase the likelihood that the UK scheme's assets, taken together with the Issuer's agreed future employer contributions, would be sufficient to meet its anticipated financial commitments to UK scheme members. Notwithstanding these actions, the Group is still exposed to the following principal risks within the UK scheme: changes in the market value of the equity assets; a movement in the interest rate used to discount liabilities for reporting purposes under IAS 19; changes over time to actuarial mortality assumptions; defaults on bonds and inflation (as mitigated by the inflation hedges put in place).
The Issuer also cannot assure Noteholders that the pension fund trustees and the pensions regulator will not issue a contributory notice to the Issuer requesting it to fund the deficit fully (or that the pension fund trustees will not require a more stringent funding standard than IAS 19 (short of buy-out), which could result in a drain on the Issuer's cash resource). Such a contributory notice by the pension fund trustees and/or the pensions regulator might require, or the Issuer might separately decide in appropriate circumstances, that the deficit should be funded on a "buy-out basis". This would require funding materially in excess of that required to fund a deficit calculated under IAS 19. If the Issuer is required or decides to fund the deficit fully (either on a "buy-out basis" or in order to remedy a deficit calculated under IAS 19) this may have a significant adverse effect on the Issuer's liquidity in the short term.
During 2010, the Group made a number of small acquisitions including Knightsbridge Guarding Limited for a net consideration of £19.6 million. The poor integration of acquired businesses such as Target Express and City Link franchisees has contributed significantly to the Group's current poor financial performance (see page 78 headed City Link for further details). The Group may in the future continue to make acquisitions. The Group cannot assure Noteholders that its acquisitions will improve its financial performance in the short or long term or at all because the Group may not successfully integrate the acquired businesses into its management systems. There is a risk that the Group's acquisitions could distract the Group's management from its work on internal efficiency improvements. The benefits of the acquisitions may not be as significant as anticipated because the acquired businesses may have liabilities or adverse operating issues which the Group may have failed to discover prior to such acquisition. Difficulties in integrating the acquired businesses and potential liabilities relating to the acquired businesses may have a material adverse effect on the Group's operating results and financial condition.
During the past five years the Group has sold a number of its businesses including the Textiles business in Spain and the Finland mats business for a net consideration of £8.9 million in 2010 and may continue to do so in the future.
The Group cannot assure Noteholders that it will retain all of its remaining business streams, or that in the event of a sale of any of them that any proceeds received will be reinvested or will be used to pay down debt.
Under business sale contracts, the Group may provide warranties and indemnities to purchasers. Accordingly, the Group makes provision, in its financial statements, for potential liabilities and costs relating to a disposed business. It may also make provision in its financial statements for amounts to cover legal or regulatory claims which are known to be outstanding at the time of sale, or which may subsequently become apparent. The Group cannot assure Noteholders that such provisions will be sufficient to cover potential losses, and therefore disposals of businesses carried out by it may subsequently give rise to a potential adverse impact on its financial condition, future trading performance and liquidity.
The Group, following its 2010 performance, has passed on the payment of both the interim 2010 dividend and the final 2010 dividend. This will be reviewed again following the interim results in August subject to progress at City Link and Textiles and Hygiene Benelux. Prior to these dividend suspensions, in the interim results announcement of 22 August 2008 the Group detailed a dividend policy of targeting dividends to be covered by profits after tax in the range of 2.2 to 2.5 times, before amortisation and restructuring charges, provided cash resources are available. The Group cannot assure Noteholders that it will not recommence paying dividends at this level or higher in the future even if profits have declined in the corresponding period.
The Group's businesses operate in price competitive markets and are exposed to potential rises in operating costs (including energy costs) which, in order to remain competitive, it may not be able to pass on fully to its customers. Any increase in operating costs that the Group is unable to pass on to its customers will have an adverse effect on its profitability through the deterioration of its margins.
The Group's business and growth strategies depend in large part on the willingness of customers to outsource certain services of the type provided by the Group. The decision by a customer to outsource will depend upon such customer's perception that outsourcing provides higher quality services at a lower overall cost ultimately permitting them to focus on their core business activities. Although the Group believes that there is currently no slowdown in the overall long-term trend towards outsourced services, there can be no assurance that a slowdown will not occur in either the long- or short-term. Additionally, if the current trend towards outsourcing services continues, the Group cannot be certain that it will be able to successfully capitalise on it.
The Group's information technology infrastructure potentially lacks resilience and has been recognised by management not to support business needs fully. The Group's management are taking steps to address a lack of comprehensive and effective disaster recovery and business continuity plans. The Group cannot assure Noteholders that, in the event of either information technology or other operational problems, existing disaster recovery and continuity plans will be sufficiently robust and comprehensive to support the effective management of a material incident arising in a major business unit or process. As a result, such an incident could adversely affect the Group's business, results of operations and financial condition.
Notwithstanding anything in this risk factor, this risk factor should not be taken as implying that any of the Issuer, the Guarantor or the Group will be unable to comply with its obligations as a company with securities admitted to the Official List.
The Group is also taking steps to increase efficiency in its administrative processes, for example the rolling out of a Groupwide operational efficiency project (Programme Olympic). The Group cannot assure Noteholders that such steps will be effective at supporting business needs fully and/or will generate cost savings.
Although the poor performance of the Group is showing some signs of improvement, due to factors such as the ongoing volatility in the debt capital markets, there can be no assurances that the Group will be able to access all its funding requirements. There may also be a significant risk that new funding will be at an increased cost.
The Group's policy is to manage interest rate exposures on a 12-month rolling basis (measured quarterly), with a minimum of 50 per cent. of the Group's estimated future interest rate exposures fixed (or capped) for a minimum period of twelve months forward. All of the Group's bond debt is at fixed rates. However, there can be no assurance that the Group's activities, operating results and financial position will not be adversely affected by changes in the level of interest rates.
The Group conducts its operations primarily in the UK, Europe, North America and the Far East. The Group's turnover is billed in many different currencies but the primary currencies are Sterling, US dollars and Euros. The Group's policy is not to hedge transactional or translational exposure but to fund business operations centrally with borrowings that are substantially denominated (50 per cent. or greater) in the same actual or effective currencies as in the proportion of the Group's forecast cash flows generated by the business operation. As a result, reported results may be materially affected by movements in foreign currency exchange rates.
The Group's policy is to operate its businesses in a manner that seeks to reduce the environmental impact of its businesses. However, the environmental requirements imposed on service industries are increasingly rigorous. To the extent that the Group is unable to pass costs associated with complying with stricter regulatory requirements on to its customers, it may have an adverse effect on the Group's operating result and financial position.
The Group also has certain obligations to remediate environmentally premises that it owned or previously occupied whilst conducting businesses that it formerly owned. Whilst the Group has made provisions for such environmental obligations, it cannot assure Noteholders that these provisions will be sufficient and that it will have adequate liquidity to fund remediation to the required regulatory standards that may vary over time. The Group also cannot assure Noteholders that it has identified all the sites where remediation work is required and it is possible that further sites where remediation is needed may be identified in the future, leading to additional costs or loss of revenue, which could materially adversely affect the Group's business, results of operations and financial condition.
The Group currently operates some of its activities, such as Pest Control and Textiles and Hygiene, in over 50 countries. Because of the international nature of its businesses, it faces a number of risks and challenges, including the management of a decentralised global business operation and compliance with increasing legislative requirements in various jurisdictions. The Group's international activities also expose it to political unrest and economic instability that may prevent it from carrying out its business for a short or a long period of time. The Group's strategy of seeking to become the market leader in the supply of its particular services can itself increase the risk of challenges by government regulators in certain jurisdictions both in respect of competition and foreign ownership laws. The economies of some of the countries in Europe and North America in which the Group operates are undergoing slow or negative growth. The Group also has smaller operations in emerging economies, some of which may be unstable in nature. The Group cannot assure Noteholders that its activities will not be adversely affected by these factors.
The Group is required to comply with a variety of laws and regulations of local, regional, national and international authorities. If the Group fails to comply with such laws and regulations it may have to pay penalties or private damages awards. In addition, changes in existing laws or regulations, or in their interpretation or enforcement, could require the Group to incur additional costs, or require changes to its operations, leading to additional costs or loss of revenue which could materially adversely affect the Group's business, results of operations and financial condition.
Each potential investor in the Notes must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should:
Some Notes are complex financial instruments. Sophisticated institutional investors generally do not purchase complex financial instruments as stand-alone investments. They purchase complex financial instruments as a way to reduce risk or enhance yield with an understood, measured, appropriate addition of risk to their overall portfolios. A potential investor should not invest in Notes which are complex financial instruments unless it has the expertise (either alone or with a financial adviser) to evaluate how the Notes will perform under changing conditions, the resulting effects on the value of the Notes and the impact this investment will have on the potential investor's overall investment portfolio.
A wide range of Notes may be issued under the Programme. A number of these Notes may have features which contain particular risks for potential investors. Set out below is a description of the most common such features:
An optional redemption feature of Notes is likely to limit their market value. During any period when the Issuer may elect to redeem Notes, the market value of those Notes generally will not rise substantially above the price at which they can be redeemed. This also may be true prior to any redemption period.
The Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest rate on the Notes. At those times, an investor generally would not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest rate on the Notes being redeemed and may only be able to do so at a significantly lower rate. Potential investors should consider reinvestment risk in light of other investments available at that time.
The Issuer may issue Notes with principal or interest determined by reference to an index or formula, to changes in the prices of securities or commodities, to movements in currency exchange rates or other factors (each, a Relevant Factor). In addition, the Issuer may issue Notes with principal or interest payable in one or more currencies which may be different from the currency in which the Notes are denominated. Potential investors should be aware that:
The historical experience of an index should not be viewed as an indication of the future performance of such index during the term of any Index Linked Notes. Accordingly, each potential investor should consult its own financial and legal advisers about the risk entailed by an investment in any Index Linked Notes and the suitability of such Notes in light of its particular circumstances.
The Issuer may issue Notes where the issue price is payable in more than one instalment. Failure to pay any subsequent instalment could result in an investor losing all of his investment.
Notes with variable interest rates can be volatile investments. If they are structured to include multipliers or other leverage factors, or caps or floors, or any combination of those features or other similar related features, their market values may be even more volatile than those for securities that do not include those features.
Inverse Floating Rate Notes have an interest rate equal to a fixed rate minus a rate based upon a reference rate such as LIBOR. The market values of those Notes typically are more volatile than market values of other conventional floating rate debt securities based on the same reference rate (and with otherwise comparable terms). Inverse Floating Rate Notes are more volatile because an increase in the reference rate not only decreases the interest rate of the Notes, but may also reflect an increase in prevailing interest rates, which further adversely affects the market value of these Notes.
Fixed/Floating Rate Notes may bear interest at a rate that converts from a fixed rate to a floating rate, or from a floating rate to a fixed rate. Where the Issuer has the right to effect such a conversion, this will affect the secondary market and the market value of the Notes since the Issuer may be expected to convert the rate when it is likely to produce a lower overall cost of borrowing. If the Issuer converts from a fixed rate to a floating rate in such circumstances, the spread on the Fixed/Floating Rate Notes may be less favourable than then prevailing spreads on comparable Floating Rate Notes tied to the same reference rate. In addition, the new floating rate at any time may be lower than the rates on other Notes. If the Issuer converts from a floating rate to a fixed rate in such circumstances, the fixed rate may be lower than then prevailing rates on its Notes.
The market values of securities issued at a substantial discount or premium from their principal amount tend to fluctuate more in relation to general changes in interest rates than do prices for conventional interestbearing securities. Generally, the longer the remaining term of the securities, the greater the price volatility as compared to conventional interest-bearing securities with comparable maturities.
Set out below is a brief description of certain risks relating to the Notes generally:
The conditions of the Notes contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Noteholders including Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority.
The conditions of the Notes also provide that the Trustee may, without the consent of Noteholders, agree to (i) any modification of, or to the waiver or authorisation of any breach or proposed breach of, any of the provisions of Notes or (ii) determine without the consent of the Noteholders that any Event of Default or potential Event of Default shall not be treated as such, in the circumstances described in Condition 14 of the conditions of the Notes.
In relation to any issue of Notes which have denominations consisting of a minimum Specified Denomination plus one or more higher integral multiples of another smaller amount, it is possible that such Notes may be traded in amounts that are not integral multiples of such minimum Specified Denomination. In such a case a holder who, as a result of trading such amounts, holds an amount which is less than the minimum Specified Denomination in his account with the relevant clearing system at the relevant time may not receive a definitive Note in respect of such holding (should definitive Notes be printed) and would need to purchase a principal amount of Notes such that its holding amounts to a Specified Denomination.
If definitive Notes are issued, holders should be aware that definitive Notes which have a denomination that is not an integral multiple of the minimum Specified Denomination may be illiquid and difficult to trade.
Under EC Council Directive 2003/48/EC on the taxation of savings income, each Member State is required to provide to the tax authorities of another Member State details of payments of interest (or similar income) paid by a person within its jurisdiction to an individual resident in that other Member State. However, for a transitional period, Luxembourg and Austria are instead required (unless during that period they elect otherwise) to operate a withholding system in relation to such payments (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries). A number of non-EU countries and territories including Switzerland have adopted similar measures (a withholding system in the case of Switzerland) with effect from the same date.
If a payment were to be made or collected through a Member State which has opted for a withholding system and an amount of, or in respect of, tax were to be withheld from that payment, neither the Issuer nor any Paying Agent nor any other person would be obliged to pay additional amounts with respect to any Note as a result of the imposition of such withholding tax. The Issuer is required, to maintain a Paying Agent in a Member State that is not obliged to withhold or deduct tax pursuant to the Directive.
The European Commission has proposed certain amendments to the Directive, which may, if implemented, amend or broaden the scope of the requirements described above.
Set out below is a brief description of the principal market risks, including liquidity risk, exchange rate risk, interest rate risk and credit risk:
Notes may have no established trading market when issued, and one may never develop. If a market does develop, it may not be very liquid. Therefore, investors may not be able to sell their Notes easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. This is particularly the case for Notes that are especially sensitive to interest rate, currency or market risks, are designed for specific investment objectives or strategies or have been structured to meet the investment requirements of limited categories of investors. These types of Notes generally would have a more limited secondary market and more price volatility than conventional debt securities. Illiquidity may have a severely adverse effect on the market value of Notes.
The Issuer will pay principal and interest on the Notes and the Guarantor will make any payments under the Guarantee in the Specified Currency. This presents certain risks relating to currency conversions if an investor's financial activities are denominated principally in a currency or currency unit (the Investor's Currency) other than the Specified Currency. These include the risk that exchange rates may significantly change (including changes due to devaluation of the Specified Currency or revaluation of the Investor's Currency) and the risk that authorities with jurisdiction over the Investor's Currency may impose or modify exchange controls. An appreciation in the value of the Investor's Currency relative to the Specified Currency would decrease (1) the Investor's Currency-equivalent yield on the Notes, (2) the Investor's Currencyequivalent value of the principal payable on the Notes and (3) the Investor's Currency-equivalent market value of the Notes.
Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate. As a result, investors may receive less interest or principal than expected, or no interest or principal.
Investment in Fixed Rate Notes involves the risk that subsequent changes in market interest rates may adversely affect the value of the Fixed Rate Notes.
One or more independent credit rating agencies may assign credit ratings to the Notes. The ratings may not reflect the potential impact of all risks related to structure, market, additional factors discussed above, and other factors that may affect the value of the Notes. A credit rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agency at any time.
The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent (1) Notes are legal investments for it, (2) Notes can be used as collateral for various types of borrowing and (3) other restrictions apply to its purchase or pledge of any Notes. Financial institutions should consult their legal advisors or the appropriate regulators to determine the appropriate treatment of Notes under any applicable risk-based capital or similar rules.
The following documents which have previously been published and have been filed with the Financial Services Authority shall be incorporated in, and form part of, this Prospectus:
For the avoidance of doubt, any documents or information incorporated by reference into the documents listed above shall not form part of this Prospectus.
Following the publication of this Prospectus, a supplement may be prepared by the Issuer and approved by the UK Listing Authority in accordance with Article 16 of the Prospectus Directive. Statements contained in any such supplement (or contained in any document incorporated by reference therein) shall, to the extent applicable (whether expressly, by implication or otherwise), be deemed to modify or supersede statements contained in this Prospectus or in a document which is incorporated by reference in this Prospectus. Any statement so modified or superseded shall not, except as so modified or superseded, constitute a part of this Prospectus.
Copies of documents incorporated by reference in this Prospectus can be obtained from the registered office of the Issuer and from the specified office of the Paying Agent for the time being in London.
The Issuer will, in the event of any significant new factor, material mistake or inaccuracy relating to information included in this Prospectus which is capable of affecting the assessment of any Notes, prepare a supplement to this Prospectus or publish a new Prospectus for use in connection with any subsequent issue of Notes. The Issuer has undertaken to the Dealers in the Programme Agreement (as defined in "Subscription and Sale") that it will comply with section 87G of the Financial Services and Markets Act 2000.
Each Tranche of Notes will be in bearer form and will be initially issued in the form of a temporary global Note (a Temporary Global Note) or, if so specified in the applicable Final Terms, a permanent global Note (a Permanent Global Note and together with the Temporary Global Note, the Global Notes) which, in either case, will be delivered on or prior to the original issue date of the Tranche to a common depositary (the Common Depositary) for Euroclear Bank SA/NV (Euroclear) and Clearstream Banking, société anonyme (Clearstream, Luxembourg). Whilst any Note is represented by a Temporary Global Note, payments of principal, interest (if any) and any other amount payable in respect of the Notes due prior to the Exchange Date (as defined below) will be made against presentation of the Temporary Global Note only to the extent that certification (in a form to be provided) to the effect that the beneficial owners of interests in such Note are not U.S. persons or persons who have purchased for resale to any U.S. person, as required by U.S. Treasury regulations, has been received by Euroclear and/or Clearstream, Luxembourg and Euroclear and/or Clearstream, Luxembourg, as applicable, has given a like certification (based on the certifications it has received) to the Agent.
On and after the date (the Exchange Date) which is 40 days after a Temporary Global Note is issued, interests in such Temporary Global Note will be exchangeable (free of charge) upon a request as described therein either for (i) interests in a Permanent Global Note of the same Series or (ii) definitive Notes of the same Series with, where applicable, receipts, interest coupons and talons attached (as indicated in the applicable Final Terms and subject, in the case of definitive Notes, to such notice period as is specified in the applicable Final Terms), in each case against certification of beneficial ownership as described above unless such certification has already been given. The holder of a Temporary Global Note will not be entitled to collect any payment of interest, principal or other amount due on or after the Exchange Date unless, upon due certification, exchange of the Temporary Global Note for an interest in a Permanent Global Note or for definitive Notes is improperly withheld or refused.
Payments of principal, interest (if any) or any other amounts on a Permanent Global Note will be made through Euroclear and/or Clearstream, Luxembourg against presentation or surrender (as the case may be) of the Permanent Global Note without any requirement for certification.
The applicable Final Terms will specify that a Permanent Global Note will be exchangeable (free of charge), in whole but not in part, for definitive Notes with, where applicable, receipts, interest coupons and talons attached upon either (i) not less than 60 days' written notice from Euroclear and/or Clearstream, Luxembourg (acting on the instructions of any holder of an interest in such Permanent Global Note) to the Agent as described therein or (ii) only upon the occurrence of an Exchange Event. A Permanent Global Note representing Notes having denominations consisting of a minimum Specified Denomination and integral multiples of a smaller amount there above may only be exchanged for definitive Notes upon an Exchange Event. For these purposes, Exchange Event means that (i) an Event of Default (as defined in Condition 9) has occurred and is continuing, (ii) the Issuer has been notified that both Euroclear and Clearstream, Luxembourg have been closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or have announced an intention permanently to cease business or have in fact done so and no successor clearing system satisfactory to the Trustee is available or (iii) the Issuer has or will become subject to adverse tax consequences which would not be suffered were the Notes represented by the Permanent Global Note in definitive form and a certificate to such effect signed by two Directors of the Issuer is given to the Trustee. The Issuer will promptly give notice to Noteholders in accordance with Condition 13 if an Exchange Event occurs. In the event of the occurrence of an Exchange Event, Euroclear and/or Clearstream, Luxembourg (acting on the instructions of any holder of an interest in such Permanent Global Note) or the Trustee may give notice to the Agent requesting exchange and, in the event of the occurrence of an Exchange Event as described in (iii) above, the Issuer may also give notice to the Agent requesting exchange. Any such exchange shall occur not later than 45 days after the date of receipt of the first relevant notice by the Agent.
The following legend will appear on all Notes which have an original maturity of more than 365 days and on all receipts and interest coupons relating to such Notes:
"ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE."
The sections referred to provide that United States holders, with certain exceptions, will not be entitled to deduct any loss on Notes, receipts or interest coupons and will not be entitled to capital gains treatment of any gain on any sale, disposition, redemption or payment of principal in respect of such Notes, receipts or interest coupons.
Notes which are represented by a Global Note will only be transferable in accordance with the rules and procedures for the time being of Euroclear or Clearstream, Luxembourg, as the case may be.
Pursuant to the Agency Agreement (as defined under "Terms and Conditions of the Notes"), the Agent shall arrange that, where a further Tranche of Notes is issued which is intended to form a single Series with an existing Tranche of Notes, the Notes of such further Tranche shall be assigned a common code and ISIN which are different from the common code and ISIN assigned to Notes of any other Tranche of the same Series until at least the expiry of the distribution compliance period (as defined in Regulation S under the Securities Act) applicable to the Notes of such Tranche.
Any reference herein to Euroclear and/or Clearstream, Luxembourg shall, whenever the context so permits, be deemed to include a reference to any additional or alternative clearing system specified in the applicable Final Terms or as may otherwise be approved by the Issuer, the Agent and the Trustee.
Set out below is the form of Final Terms which will be completed for each Tranche of Notes issued under the Programme.
[Date]
Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set forth in the Prospectus dated 8 April 2011 [which constitutes a base prospectus for the purposes of the Prospectus Directive (Directive 2003/71/EC) (the Prospectus Directive)/listing particulars approved by the UK Listing Authority as required by the Financial Services and Markets Act 2000]. This document constitutes the Final Terms of the Notes described herein [for the purposes of Article 5.4 of the Prospectus Directive] and must be read in conjunction with the Prospectus. Full information on the Issuer and the offer of the Notes is only available on the basis of the combination of these Final Terms and the Prospectus. The Prospectus is available for viewing on the website of the London Stock Exchange and is available for viewing at, and copies may be obtained from, the registered office of the Issuer at 2 City Place, Beehive Ring Road, Gatwick RH6 OHA, United Kingdom.
[The following alternative language applies if the first tranche of an issue which is being increased was issued under a Prospectus with an earlier date.
Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the Conditions) set forth in the Prospectus dated [original date] which are incorporated by reference in the Prospectus dated 8 April 2011 and are attached hereto. This document constitutes the Final Terms of the Notes described herein [for the purposes of Article 5.4 of the Prospectus Directive (Directive 2003/71/EC) (the Prospectus Directive)] and must be read in conjunction with the Prospectus dated 8 April 2011 which constitutes a base prospectus [for the purposes of the Prospectus Directive]. Full information on the Issuer and the offer of the Notes is only available on the basis of the combination of these Final Terms and the Prospectus dated 8 April 2011. Copies of such Prospectuses are available for viewing on the website of the London Stock Exchange and are available for viewing at, and copies may be obtained from, the registered office of the Issuer at 2 City Place, Beehive Ring Road, Gatwick RH6 OHA, United Kingdom.]
[Include whichever of the following apply or specify as "Not Applicable" (N/A). Note that the numbering should remain as set out below, even if "Not Applicable" is indicated for individual paragraphs or subparagraphs. Italics denote directions for completing the Final Terms.]
[If the Notes have a maturity of less than one year from the date of their issue, the minimum denomination must be £100,000 or its equivalent in any other currency.]
| 1. | (i) | Series Number: | [ ] |
|---|---|---|---|
| (ii) | Tranche Number: | [ ] (If fungible with an existing Series, details of that Series, including the date on which the Notes become fungible) |
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| 2. | Specified Currency or Currencies: | [ ] |
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| 3. | Aggregate Nominal Amount: | ||
| (i) | Series: | [ ] |
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| (ii) | Tranche: | [ ] |
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| 4. | Issue Price: | [ ] per cent. of the Aggregate Nominal Amount [plus accrued interest from [insert date] (if applicable)] |
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| 5. | (i) | Specified Denominations: | [ ] (Note – where multiple denominations above [€50,000] or equivalent are being used the following sample wording should be followed: |
| "[€50,000] and integral multiples of [€1,000] in excess thereof up to and including [€99,000], No Notes in definitive form will be issued with a denomination above [€99,000].") |
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| (N.B. If an issue of Notes is (i) NOT admitted to trading on a European Economic Area exchange; and (ii) only offered in the European Economic Area in circumstances where a prospectus is not required to be published under the Prospectus Directive the €50,000 minimum denomination is not required.) |
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| (ii) | Calculation Amount | [ ] (If only one Specified Denomination, insert the Specified Denomination. If more than one Specified Denomination, insert the highest common factor. Note: There must be a common factor in the case of two or more Specified Denominations.) |
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| 6. | (i) | Issue Date [and Interest Commencement Date]: |
[ ] |
| (ii) | Interest Commencement Date (if different from the Issue Date): |
[ ] |
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| 7. | Maturity Date: | [Fixed rate – specify date] Floating rate – Interest Payment Date falling in or nearest to [specify month]] |
| 8. | Interest Basis: | [[ ] per cent. Fixed Rate] [[LIBOR/EURIBOR] +/– [ ] per cent. Floating Rate] [Zero Coupon] [Index Linked Interest] [Dual Currency Interest] [specify other] (further particulars specified below) |
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|---|---|---|---|
| 9. | Redemption/Payment Basis: | [Redemption at par] [Index Linked Redemption] [Dual Currency Redemption] [Partly Paid] [Instalment] [specify other] |
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| 10. | Change of Interest Basis or Redemption/ Payment Basis: |
[Specify details of any provision for change of Notes into another Interest Basis or Redemption/ Payment Basis] |
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| 11. | Put/Call Options: | [Investor Put] [Issuer Call] [(further particulars specified below)] |
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| 12. | obtained: | [Date [Board] approval for issuance of Notes | [ ]] |
| 13. | Method of distribution: | [Syndicated/Non syndicated] | |
| PROVISIONS RELATING TO INTEREST (IF ANY) | PAYABLE | ||
| 14. | Fixed Rate Note Provisions | [Applicable/Not Applicable] (If not applicable, delete the remaining sub paragraphs of this paragraph) |
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| (i) | Rate(s) of Interest: | [ ] per cent. per annum [payable [annually/ semi annually/quarterly] in arrear] (If payable other than annually, consider amending Condition 4) |
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| (ii) | Interest Payment Date(s): | [[ ] in each year up to and including the Maturity Date]/[specify other] (NB: This will need to be amended in the case of long or short coupons) |
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| (iii) | Fixed Coupon Amount(s): | [ ] per Calculation Amount |
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| (iv) | Broken Amount(s): | [ ] per Calculation Amount, payable on the Interest Payment Date falling [on/in] [ ] |
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| (v) | Day Count Fraction: | [30/360 or Actual/Actual (ICMA) or specify other]) |
| (vi) | Determination Date(s): | [ ] in each year [Insert regular interest payment dates, ignoring issue date or maturity date in the case of a long or short first or last coupon] (NB: This will need to be amended in the case of regular interest payment dates which are not of equal duration) (NB: Only relevant where Day Count Fraction is Actual/Actual (ICMA)) |
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|---|---|---|---|
| (vii) | Other terms relating to the method of calculating interest for Fixed Rate Notes: |
[None/Give details] | |
| 15. | Floating Rate Note Provisions | [Applicable/Not Applicable] (If not applicable, delete the remaining sub paragraphs of this paragraph) |
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| (i) | Specified Period(s)/Specified Interest Payment Dates: |
[ ] |
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| (ii) | Business Day Convention: | [Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention/[specify other]] |
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| (iii) | Additional Business Centre(s): | [ ] |
|
| (iv) | Manner in which the Rate of Interest and Interest Amount is to be determined: |
[Screen Rate Determination/ISDA Determination/specify other] |
|
| (v) | Party responsible for calculating the Rate of Interest and Interest Amount (if not the Agent): |
[ ] |
|
| (vi) | Screen Rate Determination: | ||
| - Reference Rate: |
[ ] (Either LIBOR, EURIBOR or other, although additional information is required if other – including fallback provisions in the Agency Agreement) |
||
| - Interest Determination Date(s): |
[ ] (Second London business day prior to the start of each Interest Period if LIBOR (other than Sterling or euro LIBOR), first day of each Interest Period if Sterling LIBOR and the second day on which the TARGET 2 System is open prior to the start of each Interest Period if EURIBOR or euro LIBOR) |
||
| - Relevant Screen Page: |
[ ] (In the case of EURIBOR, if not Reuters |
EURIBOR01 ensure it is a page which shows a composite rate or amend the fallback provisions appropriately)
| (vii) | ISDA Determination: | ||
|---|---|---|---|
| - Floating Rate Option: |
[ ] |
||
| - Designated Maturity: |
[ ] |
||
| - Reset Date: |
[ ] |
||
| (viii) | Margin(s): | [+/-][ ] per cent. per annum |
|
| (ix) | Minimum Rate of Interest: | [ ] per cent. per annum |
|
| (x) | Maximum Rate of Interest: | [ ] per cent. per annum |
|
| (xi) | Day Count Fraction: | [Actual/Actual (ISDA) Actual/365 (Fixed) Actual/365 (Sterling) Actual/360 30/360 30E/360 30E/360 (ISDA) Other] (See Condition 4 for options) |
|
| (xii) | Fall back provisions, rounding provisions and any other terms relating to the method of calculating interest on Floating Rate Notes, if different from those set out in the Conditions: |
[ ] |
|
| 16. | Zero Coupon Note Provisions | [Applicable/Not Applicable] (If not applicable, delete the remaining sub paragraphs of this paragraph) |
|
| (i) | Accrual Yield: | [ ] per cent. per annum |
|
| (ii) | Reference Price: | [ ] |
|
| (iii) | Any other formula/basis of determining amount payable: |
[ ] |
|
| (iv) | Day Count Fraction in relation to Early Redemption Amounts and late payment: |
[Conditions 6(e)(iii) and 6(k) apply/specify other] |
|
| 17. | Index Linked Interest Note Provisions | [Applicable/Not Applicable] (If not applicable, delete the remaining sub paragraphs of this paragraph) |
| (i) | Index/Formula: | [give or annex details] | |
|---|---|---|---|
| (ii) | Calculation Agent: | [give name [and address]] | |
| (iii) | Party responsible for calculating the Rate of Interest (if not the Calculation Agent) and Interest Amount (if not the Agent): |
[ ] |
|
| (iv) | Provisions for determining coupon where calculation by reference to Index and/or Formula is impossible or impracticable: |
[need to include a description of market disruption or settlement disruption events and adjustment provisions] |
|
| (v) | Specified Period(s)/Specified Interest Payment Dates: |
[ ] |
|
| (vi) | Business Day Convention: | [Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention/specify other] |
|
| (vii) | Additional Business Centre(s): | [ ] |
|
| (viii) | Minimum Rate of Interest: | [ ] per cent. per annum |
|
| (ix) | Maximum Rate of Interest: | [ ] per cent. per annum |
|
| (x) | Day Count Fraction: | [ ] |
|
| 18. | Dual Currency Interest Note Provisions | [Applicable/Not Applicable] (If not applicable, delete the remaining sub paragraphs of this paragraph) |
|
| (i) | Rate of Exchange/method of calculating Rate of Exchange: |
[give or annex details] | |
| (ii) | Party, if any, responsible for calculating the principal and/or interest due (if not the Agent): |
[ ] |
|
| (iii) | Provisions applicable where calculation by reference to Rate of Exchange impossible or impracticable: |
[need to include a description of market disruption or settlement disruption events and adjustment provisions] |
|
| (iv) | Person at whose option Specified Currency(ies) is/are payable: |
[ ] |
|
| PROVISIONS RELATING TO REDEMPTION | |||
| 19. | Issuer Call: | [Applicable/Not Applicable] |
(If not applicable, delete the remaining subparagraphs of this paragraph)
| (i) | Optional Redemption Date(s): | [ ] |
|||
|---|---|---|---|---|---|
| (ii) | Optional Redemption Amount and method, if any, of calculation of such amount(s): |
[[ ] per Calculation Amount/specify other/see Appendix] |
|||
| (iii) | If redeemable in part: | ||||
| (a) Minimum Redemption Amount: |
[ ] |
||||
| (b) | Maximum Redemption Amount: |
[ ] |
|||
| (iv) | Notice period (if other than as set out in the Conditions): |
[ ] |
|||
| 20. | Investor Put: (Condition 6(d)) |
[Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph) |
|||
| (i) | Optional Redemption Date(s): | [ ] |
|||
| (ii) | Optional Redemption Amount and method, if any, of calculation of such amount(s): |
[[ ] per Calculation Amount/specify other/see Appendix] |
|||
| (iii) | Notice period (if other than as set out in the Conditions): |
[ ] |
|||
| 21. | Final Redemption Amount: | [[ ] per Calculation Amount/specify other/see Appendix] (N.B. If the Final Redemption Amount is other than 100 per cent. of the nominal value the Notes will be |
derivative securities for the purposes of the Prospectus Directive and the requirements of Annex XII to the Prospectus Directive Regulation will apply.)
and/or the method of calculating the same (if required or if different from that set out in
Condition 6(e)):
time/only upon an Exchange Event]]
[Temporary Global Note exchangeable for Definitive Notes on and after the Exchange Date]
[Permanent Global Notes exchangeable for Definitive Notes [on 60 days' notice given at any time/only upon an Exchange Event]]
(Ensure that this is consistent with the wording in the "Form of the Notes" section in the Prospectus and the Notes themselves. N.B. The exchange upon notice/at any time options should not be expressed to be applicable if the Specified Denomination of the Notes in paragraph 6 includes language substantially to the following effect: "[€50,000] and integral multiples of [€1,000] in excess thereof up to and including [€99,000]." Furthermore, such Specified Denomination construction is not permitted in relation to any issue of Notes which is to be represented on issue by a Temporary Global Note exchangeable for Definitive Notes.)
(Note that this item relates to the place of payment and not Interest Period end dates to which items
[Not Applicable/give details. NB: a new form of Temporary Global Note and/or Permanent Global
Note may be required for Partly Paid issues]
[Not Applicable/give details]
14(iii) and 16(vi) relate)
[Yes/No. If yes, give details]
| (i) | Instalment Amount(s): | [Not Applicable/give details] | |
|---|---|---|---|
| (ii) | Instalment Date(s): | [Not Applicable/give details] | |
| 28. | Redenomination applicable: | Redenomination [not] applicable [(if Redenomination is applicable, specify the terms of the redenomination in an Annex to the Final Terms)] |
|
| 29. | Other Final Terms: | [Not Applicable/give details] | |
| 30. | (i) | If syndicated, names of Managers: | [Not Applicable/give names] (If the Notes are derivative securities to which Annex XII of the Prospectus Directive Regulation applies, include names of entities agreeing to underwrite the issue on a firm commitment basis and names of the entities agreeing to place the issue without a firm commitment or on a "best efforts" basis if such entities are not the same as the Managers.) |
|---|---|---|---|
| (ii) | Date of [Subscription] Agreement: | [ ] (The above is only relevant if the Notes are derivative securities to which Annex XII of the Prospectus Directive Regulation applies). |
|
| (iii) | Stabilising Manager (if any): | [Not Applicable/give name] | |
| 31. | If non-syndicated, name of relevant Dealer: | [Not Applicable/give name] | |
| 32. | Whether TEFRA C or TEFRA D rules applicable or TEFRA rules not applicable: |
[TEFRA C/TEFRA D/TEFRA not applicable] | |
| 33. | Additional selling restrictions: | [Not Applicable/give details] |
These Final Terms comprise the details required to list the issue of Notes described herein pursuant to the listing of the €2,500,000,000 Euro Medium Term Note Programme of Rentokil Initial plc.]
The Issuer accepts responsibility for the information contained in these Final Terms. [[Relevant third party information, for example in compliance with Annex XII to the Prospectus Directive Regulation in relation to an index or its components] has been extracted from [specify source]. The Issuer confirms that such information has been accurately reproduced and that, so far as it is aware and is able to ascertain from information published by [specify source], no facts have been omitted which would render the reproduced information inaccurate or misleading.]
Signed on behalf of the Issuer:
By: ______________________
Duly authorised
(Where documenting a fungible issue need to indicate that original securities are already admitted to trading)
(iii) Estimate of total expenses related to admission to trading: [ ]
Ratings: The Notes to be issued [[have been]/[are expected to be]] rated [insert details] by [insert credit rating agency name(s)].
The Issuer is rated [insert details] by [insert credit rating agency name(s)]
(The above disclosure should reflect the rating allocated to Notes of the type being issued under the Programme generally or, where the issue has been specifically rated, that rating.)
4 [[Insert credit rating agency] is established in the European Union and has applied for registration under Regulation (EC) No. 1060/2009, although notification of the corresponding registration decision has not yet been provided by the relevant competent authority.]
[[Insert credit rating agency] is established in the European Union and is registered under Regulation (EC) No. 1060/2009.]
[[Insert credit rating agency] is not established in the European Union and is not registered in accordance with Regulation (EC) No. 1060/2009.]
[[Insert credit rating agency] is not established in the
4 Note that care should be taken to ensure that the information is accurate as of the date of the prospectus/final terms. Therefore, if there is a significant gap between the date when the CRA status has been verified and the date of the prospectus/final terms, you may need to verify the CRA status again. This is important because registration/certification may be withdrawn or temporarily suspended or other supervisory actions can be taken against the CRA in breach of the CRA Regulation which will impact on the ability to use credit ratings for regulatory purposes. If it is not possible to verify the CRA status closer to the closing of the deal, consider referring in the prospectus/final terms to the date when the CRA status was confirmed.
European Union and has not applied for registration under Regulation (EC) No. 1060/2009. However, the application for registration under Regulation (EC) No. 1060/2009 of [insert the name of the relevant EU CRA affiliate that applied for registration], which is established in the European Union, disclosed the intention to endorse credit ratings of [insert credit rating agency].]
[[Insert credit rating agency] is not established in the European Union and has not applied for registration under Regulation (EC) No. 1060/2009. The ratings [[have been]/[are expected to be]] endorsed by [insert the name of the relevant EU-registered credit rating agency] in accordance with Regulation (EC) No. 1060/2009. [Insert the name of the relevant EUregistered credit rating agency] is established in the European Union and registered under Regulation (EC) No. 1060/2009.]
disclosure of net proceeds and total expenses at (ii)
and (iii) above are also required.)]
[Save for any fees payable to the [Managers/Dealers], so far as the Issuer is aware, no person involved in the issue of the Notes has an interest material to the offer. – Amend as appropriate if there are other interests.]
[(When adding any other description, consideration should be given as to whether such matters described constitute "significant new factors" and consequently trigger the need for a supplement to the Prospectus under Article 16 of the Prospectus Directive.)]
| (i) | [Reasons for offer: | [ ] |
|---|---|---|
| (see "Use of Proceeds" wording in Prospectus – if reasons for offer different from making profit and/or hedging certain risks will need to include those reasons here) (ii) Estimated net proceeds: [ ] |
||
| (ii) | [Estimated net proceeds: | [ ]] |
| (iii) | [Estimated total expenses: | [ ]] (N.B.: Delete unless the Notes are derivative securities to which Annex XII of the Prospectus Directive Regulation applies, in which case (i) above is required where the reasons for the offer are different from making profit and/or hedging certain risks and, where such reasons are inserted in (i), |
5. YIELD (Fixed Rate Notes Only) [ ]
Indication of yield: The yield is calculated at the Issue Date on the basis of the Issue Price. It is not an indication of future yield.
[Need to include details of where past and future performance and volatility of the index/formula can be obtained.]
[Where the underlying is an index need to include the name of the index and a description if composed by the Issuer and if the index is not composed by the Issuer need to include details of where the information about the index can be obtained. Where the underlying is not an index need to include equivalent information.]
[Include other information concerning the underlying required by paragraph 4.2 of Annex XII of the Prospectus Directive Regulation.]
The Issuer [intends to provide post-issuance information [specify what information will be reported and where it can be obtained]] [does not intend to provide post-issuance information.]
(N.B. This paragraph 6 only applies if the Notes are derivative securities to which Annex XII of the Prospectus Directive Regulation applies.)
[Need to include details of where past and future performance and volatility of the relevant rates can be obtained.]
(N.B. This paragraph 7 only applies if the Notes are derivative securities to which Annex XII of the Prospectus Directive Regulation applies.)
The following are the Terms and Conditions of the Notes which will be incorporated by reference into each Global Note (as defined below) and each definitive Note, in the latter case only if permitted by the relevant stock exchange or other relevant authority (if any) and agreed by the Issuer and the relevant Dealer at the time of issue but, if not so permitted and agreed, such definitive Note will have endorsed thereon or attached thereto such Terms and Conditions. The applicable Final Terms in relation to any Tranche of Notes may specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with the following Terms and Conditions, replace or modify the following Terms and Conditions for the purpose of such Notes. The applicable Final Terms (or the relevant provisions thereof) will be endorsed upon, or attached to, each Global Note and definitive Note. Reference should be made to "Form of the Notes" for a description of the content of Final Terms which will specify which of such terms are to apply in relation to the relevant Notes.
This Note is one of a Series (as defined below) of Notes issued by Rentokil Initial plc (the Issuer) constituted by a Trust Deed (such Trust Deed as modified and/or supplemented and/or restated from time to time, the Trust Deed) dated 9 December 2005 made between the Issuer and HSBC Trustee (C.I.) Limited (the Trustee, which expression shall include any successor as Trustee).
References herein to the Notes shall be references to the Notes of this Series and shall mean:
The Notes, the Receipts (as defined below) and the Coupons (as defined below) have the benefit of an Agency Agreement (such Agency Agreement as amended and/or supplemented and/or restated from time to time, the Agency Agreement) dated 9 December 2005 and made between the Issuer, HSBC Bank plc as issuing and principal paying agent and agent bank (the Agent, which expression shall include any successor agent) and the Trustee and the other paying agents named therein (together with the Agent, the Paying Agents, which expression shall include any additional or successor paying agents).
Interest bearing definitive Notes have interest coupons (Coupons) and, if indicated in the applicable Final Terms, talons for further Coupons (Talons) attached on issue. Any reference herein to Coupons or coupons shall, unless the context otherwise requires, be deemed to include a reference to Talons or talons. Definitive Notes repayable in instalments have receipts (Receipts) for the payment of the instalments of principal (other than the final instalment) attached on issue. Global Notes do not have Receipts, Coupons or Talons attached on issue.
The Final Terms for this Note (or the relevant provisions thereof) are set out in Part A of the Final Terms attached to or endorsed on this Note which supplement these Terms and Conditions and may specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with these Terms and Conditions, replace or modify these Terms and Conditions for the purposes of this Note. References to the "applicable Final Terms" are to Part A of the Final Terms (or the relevant provisions thereof) attached to or endorsed on this Note.
The Trustee acts for the benefit of the holders for the time being of the Notes (the Noteholders, which expression shall, in relation to any Notes represented by a Global Note, be construed as provided below), the holders of the Receipts (the Receiptholders) and the holders of the Coupons (the Couponholders, which expression shall, unless the context otherwise requires, include the holders of the Talons), in accordance with the provisions of the Trust Deed.
As used herein, Tranche means Notes which are identical in all respects (including as to listing and admission to trading) and Series means a Tranche of Notes together with any further Tranche or Tranches of Notes which are (i) expressed to be consolidated and form a single series and (ii) identical in all respects (including as to listing and admission to trading) except for their respective Issue Dates, Interest Commencement Dates and/or Issue Prices.
Copies of the Trust Deed and the Agency Agreement are available for inspection during normal business hours at the specified office of each of the Paying Agents. Copies of the applicable Final Terms are available for viewing on the website of the London Stock Exchange and are available for viewing at, and copies may be obtained from, the registered office of the Issuer at Portland House, Bressenden Place, London, SW1E 5BH* . However, if this Note is neither admitted to trading on a regulated market in the European Economic Area nor offered in the European Economic Area in circumstances where a prospectus is required to be published under the Prospectus Directive, the applicable Final Terms will only be obtainable by a Noteholder holding one or more Notes and such Noteholder must produce evidence satisfactory to the Issuer and the relevant Paying Agent as to its holding of such Notes and identity.
In the case of a Tranche of Notes that is not offered to the public nor admitted to trading on a regulated market in any Member State of the European Union, Iceland, Norway or Liechtenstein (together, the European Economic Area) in circumstances requiring publication of a prospectus in accordance with Directive 2003/71/EC and any relevant implementing measure nor admitted to trading on the London Stock Exchange's Professional Securities Market, copies of the Final Terms will only be available for inspection by a Holder of or, as the case may be, a relevant account holder in respect of, such Notes.
The Noteholders, the Receiptholders and the Couponholders are deemed to have notice of, and are entitled to the benefit of, all the provisions of the Trust Deed and the Agency Agreement and the applicable Final Terms which are applicable to them. The statements in these Terms and Conditions include summaries of, and are subject to, the detailed provisions of the Trust Deed.
Words and expressions defined in the Agency Agreement or used in the applicable Final Terms shall have the same meanings where used in these Terms and Conditions unless the context otherwise requires or unless otherwise stated and provided that, in the event of inconsistency between the Trust Deed and the Agency Agreement, the Trust Deed will prevail and, in the event of inconsistency between the Trust Deed or the Agency Agreement and the applicable Final Terms, the applicable Final Terms will prevail.
The Notes are in bearer form and, in the case of definitive Notes, serially numbered, in the Specified Currency and the Specified Denomination(s). Notes of one Specified Denomination may not be exchanged for Notes of another Specified Denomination.
This Note may be a Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note, an Index Linked Interest Note, a Dual Currency Interest Note or a combination of any of the foregoing, depending upon the Interest Basis shown in the applicable Final Terms.
This Note may be an Index Linked Redemption Note, an Instalment Note, a Dual Currency Redemption Note, a Partly Paid Note or a combination of any of the foregoing, depending on the Redemption/Payment Basis shown in the applicable Final Terms.
Definitive Notes are issued with Coupons attached, unless they are Zero Coupon Notes in which case references to Coupons and Couponholders in these Terms and Conditions are not applicable.
* The registered office of the Issuer changed to 2 City Place, Beehive Ring Road, Gatwick RH6 OHA, United Kingdom on 6 May 2009. Copies of the applicable Final Terms shall be available for viewing at, and copies may be obtained from, this new address.
Subject as set out below, title to the Notes, Receipts and Coupons will pass by delivery. The Issuer, the Paying Agents and the Trustee will (except as otherwise required by law) deem and treat the bearer of any Note, Receipt or Coupon as the absolute owner thereof (whether or not overdue and notwithstanding any notice of ownership or writing thereon or notice of any previous loss or theft thereof) for all purposes but, in the case of any Global Note, without prejudice to the provisions set out in the next succeeding paragraph.
For so long as any of the Notes is represented by a Global Note held on behalf of Euroclear Bank SA/NV (Euroclear) and/or Clearstream Banking, société anonyme (Clearstream, Luxembourg), each person (other than Euroclear or Clearstream, Luxembourg) who is for the time being shown in the records of Euroclear or of Clearstream, Luxembourg as the holder of a particular nominal amount of such Notes (in which regard any certificate or other document issued by Euroclear or Clearstream, Luxembourg as to the nominal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes save in the case of manifest error) shall be treated by the Issuer, the Paying Agents and the Trustee as the holder of such nominal amount of such Notes for all purposes other than with respect to the payment of principal or interest on such nominal amount of such Notes, for which purpose the bearer of the relevant Global Note shall be treated by the Issuer, any Paying Agent and the Trustee as the holder of such nominal amount of such Notes in accordance with and subject to the terms of the relevant Global Note and the expressions Noteholder and holder of Notes and related expressions shall be construed accordingly. Notes which are represented by a Global Note will be transferable only in accordance with the rules and procedures for the time being of Euroclear and Clearstream, Luxembourg, as the case may be.
References to Euroclear and/or Clearstream, Luxembourg shall, whenever the context so permits, be deemed to include a reference to any additional or alternative clearing system specified in the applicable Final Terms or as may otherwise be approved by the Issuer, the Agent and the Trustee.
The Notes and any relative Receipts and Coupons are direct, unconditional, unsubordinated and (subject to the provisions of Condition 3) unsecured obligations of the Issuer and rank pari passu among themselves and (subject as aforesaid and save for certain obligations required to be preferred by law) equally with all other unsecured obligations (other than subordinated obligations, if any) of the Issuer, from time to time outstanding.
So long as any of the Notes remain outstanding the Issuer will not, and will procure that no Subsidiary (which expression shall, in these Terms and Conditions, unless the context otherwise expressly provides, means a subsidiary as defined in Section 736 of the Companies Act 1985) of the Issuer will, create or permit to subsist any mortgage, lien, pledge or other charge (each a Security Interest) upon, or with respect to, any of its present or future business, undertaking, assets or revenues (including any uncalled capital) to secure any existing or future Relevant Indebtedness of any person or any guarantee or indemnity given in respect thereof, unless the Issuer shall, simultaneously with, or prior to, the creation of such Security Interest take any and all action necessary to procure that all amounts payable by the Issuer under the Notes and the Trust Deed are secured equally and rateably by such Security Interest to the satisfaction of the Trustee or such other security or other arrangement is provided as the Trustee shall in its absolute discretion deem not materially less beneficial to the Noteholders or as shall be approved by an Extraordinary Resolution (as defined in the Trust Deed) of the Noteholders.
Notwithstanding the foregoing the Issuer or any Subsidiary may create or have outstanding a Security Interest in respect of any Relevant Indebtedness and/or any guarantee or indemnity given in respect thereof as aforesaid (without the obligation to provide a Security Interest or such other security or other arrangement in respect of the Notes and the Trust Deed as aforesaid) where such Security Interest is provided by or in respect of a company becoming a Subsidiary of the Issuer after the Issue Date of the first Tranche of Notes, and where such Security Interest exists at the time that company becomes a Subsidiary of the Issuer (provided that such Security Interest was not created in contemplation of that company becoming a Subsidiary of the Issuer and the principal amount secured at the time of that company becoming a Subsidiary of the Issuer is not subsequently increased).
For the purposes of this provision, Relevant Indebtedness means any of the Notes and, otherwise, any loan or other indebtedness which is in the form of, or represented by, any bonds, notes, depositary receipts or other securities having an original maturity of more than one year from its date of issue and for the time being, by agreement with the issuer thereof, quoted, listed (or capable of being quoted or listed) or dealt in on any stock exchange and/or quotation system or by any listing authority or other recognised securities market provided that such definition shall exclude any such indebtedness in existence before 14 November 2001 which has the benefit of a Security Interest created by the Issuer or any Subsidiary and which is no greater than £10,000,000 when aggregated with all other then existing such indebtedness.
Each Fixed Rate Note bears interest from (and including) the Interest Commencement Date at the rate(s) per annum equal to the Rate(s) of Interest. Interest will be payable in arrear on the Interest Payment Date(s) in each year up to (and including) the Maturity Date.
If the Notes are in definitive form, except as provided in the applicable Final Terms, the amount of interest payable on each Interest Payment Date in respect of the Fixed Interest Period ending on (but excluding) such date will amount to the Fixed Coupon Amount. Payments of interest on any Interest Payment Date will, if so specified in the applicable Final Terms, amount to the Broken Amount so specified.
As used in these Terms and Conditions, Fixed Interest Period means the period from (and including) an Interest Payment Date (or the Interest Commencement Date) to (but excluding) the next (or first) Interest Payment Date.
Except in the case of Notes in definitive form where an applicable Fixed Coupon Amount or Broken Amount is specified in the applicable Final Terms, interest shall be calculated in respect of any period by applying the Rate of Interest to:
and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Fixed Rate Note in definitive form is a multiple of the Calculation Amount, the amount of interest payable in respect of such Fixed Rate Note shall be the product of the amount (determined in the manner provided above) for the Calculation Amount and the amount by which the Calculation Amount is multiplied to reach the Specified Denomination without any further rounding.
Day Count Fraction means, in respect of the calculation of an amount of interest in accordance with this Condition 4(a):
In these Terms and Conditions:
Determination Period means each period from (and including) a Determination Date to (but excluding) the next Determination Date (including, where either the Interest Commencement Date or the final Interest Payment Date is not a Determination Date, the period commencing on the first Determination Date prior to, and ending on the first Determination Date falling after, such date); and
sub-unit means, with respect to any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, with respect to euro, means one cent.
(i) Interest Payment Dates
Each Floating Rate Note and Index Linked Interest Note bears interest from (and including) the Interest Commencement Date and such interest will be payable in arrear on either:
(A) the Specified Interest Payment Date(s) in each year specified in the applicable Final Terms; or
(B) if no Specified Interest Payment Date(s) is/are specified in the applicable Final Terms, each date (each such date, together with each Specified Interest Payment Date, an Interest Payment Date) which falls the number of months or other period specified as the Specified Period in the applicable Final Terms after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date.
Such interest will be payable in respect of each Interest Period (which expression shall, in these Terms and Conditions, mean the period from (and including) an Interest Payment Date (or the Interest Commencement Date) to (but excluding) the next (or first) Interest Payment Date).
If a Business Day Convention is specified in the applicable Final Terms and (x) if there is no numerically corresponding day in the calendar month in which an Interest Payment Date should occur or (y) if any Interest Payment Date would otherwise fall on a day which is not a Business Day, then, if the Business Day Convention specified is:
In these Terms and Conditions, Business Day means a day which is both:
The Rate of Interest payable from time to time in respect of Floating Rate Notes and Index Linked Interest Notes will be determined in the manner specified in the applicable Final Terms.
Where ISDA Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will be the relevant ISDA Rate plus or minus (as indicated in the applicable Final Terms) the Margin (if any). For the purposes of this subparagraph (A), ISDA Rate for an Interest Period means a rate equal to the Floating Rate that would be determined by the Agent under an interest rate swap transaction if the Agent were acting as Calculation Agent for that swap transaction under the terms of an agreement incorporating the 2006 ISDA Definitions, as published by the International Swaps and Derivatives Association, Inc. and as amended and updated as at the Issue Date of the first Tranche of the Notes (the ISDA Definitions) and under which:
For the purposes of this sub-paragraph (A), Floating Rate, Calculation Agent, Floating Rate Option, Designated Maturity and Reset Date have the meanings given to those terms in the ISDA Definitions.
Unless otherwise stated in the applicable Final Terms the Minimum Rate of Interest shall be deemed to be zero.
Where Screen Rate Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will, subject as provided below, be either:
(expressed as a percentage rate per annum) for the Reference Rate which appears or appear, as the case may be, on the Relevant Screen Page as at 11.00 a.m. (London time, in the case of LIBOR, or Brussels time, in the case of EURIBOR) on the Interest Determination Date in question plus or minus (as indicated in the applicable Final Terms) the Margin (if any), all as determined by the Agent. If five or more of such offered quotations are available on the Relevant Screen Page, the highest (or, if there is more than one such highest quotation, one only of such quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be disregarded by the Agent for the purpose of determining the arithmetic mean (rounded as provided above) of such offered quotations.
The Agency Agreement contains provisions for determining the Rate of Interest in the event that the Relevant Screen Page is not available or if, in the case of (1) above, no such offered quotation appears or, in the case of (2) above, fewer than three such offered quotations appear, in each case as at the time specified in the preceding paragraph.
If the Reference Rate from time to time in respect of Floating Rate Notes is specified in the applicable Final Terms as being other than LIBOR or EURIBOR, the Rate of Interest in respect of such Notes will be determined as provided in the applicable Final Terms.
If the applicable Final Terms specifies a Minimum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period determined in accordance with the provisions of paragraph (ii) above is less than such Minimum Rate of Interest, the Rate of Interest for such Interest Period shall be such Minimum Rate of Interest.
If the applicable Final Terms specifies a Maximum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period determined in accordance with the provisions of paragraph (ii) above is greater than such Maximum Rate of Interest, the Rate of Interest for such Interest Period shall be such Maximum Rate of Interest.
The Agent, in the case of Floating Rate Notes, and the Calculation Agent, in the case of Index Linked Interest Notes, will at or as soon as practicable after each time at which the Rate of Interest is to be determined, determine the Rate of Interest for the relevant Interest Period. In the case of Index Linked Interest Notes, the Calculation Agent will notify the Agent of the Rate of Interest for the relevant Interest Period as soon as practicable after calculating the same.
The Agent will calculate the amount of interest (the Interest Amount) payable on the Floating Rate Notes or Index Linked Interest Notes for the relevant Interest Period by applying the Rate of Interest to:
and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Floating Rate Note or an Index Linked Interest Note in definitive form is a multiple of the Calculation Amount, the Interest Amount payable in respect of such Note shall be the product of the amount (determined in the manner provided above) for the Calculation Amount and the amount by which the Calculation Amount is multiplied to reach the Specified Denomination, without any further rounding.
Day Count Fraction means, in respect of the calculation of an amount of interest in accordance with this Condition 4(b):
Day Count Fraction =
$$
\frac{[360 \times (Y_2 - Y_1)] + [30 \times (M_2 - M_1)] + (D_2 - D_1)}{360}
$$
where:
Day Count Fraction =
$$
\frac{[360 \times (Y_2 - Y_1)] + [30 \times (M_2 - M_1)] + (D_2 - D_1)}{360}
$$
where:
360 [360 x (Y - Y )] [30 x (M - M )] (D - D ) Day Count Fraction 2 1 + 2 1 + 2 1 =
where:
The Agent will cause the Rate of Interest and each Interest Amount for each Interest Period and the relevant Interest Payment Date to be notified to the Issuer and any stock exchange or other relevant authority on which the relevant Floating Rate Notes or Index Linked Interest Notes are for the time being listed or by which they have been admitted to listing and notice thereof to be published in accordance with Condition 13 as soon as possible after their determination but in no event later than the fourth London Business Day thereafter. Each Interest Amount and Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without prior notice in the event of an extension or shortening of the Interest Period. Any such amendment will be promptly notified to each stock exchange or other relevant authority on which the relevant Floating Rate Notes or Index Linked Interest Notes are for the time being listed or by which they have been admitted to listing and to the Noteholders in accordance with Condition 13. For the purposes of this paragraph, the expression London Business Day means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for general business in London.
If for any reason at any relevant time the Agent or, as the case may be, the Calculation Agent defaults in its obligations to determine the Rate of Interest or the Agent defaults in its obligation to calculate any Interest Amount in accordance with sub-paragraph (ii)(A) or (B) above or as otherwise specified in the applicable Final Terms, as the case may be, and in each case in accordance with paragraph (iv) above, the Trustee shall determine the Rate of Interest at such rate as, in its absolute discretion (having such regard as it shall think fit to the foregoing provisions of this Condition 4(b), but subject always to any Minimum Rate of Interest or Maximum Rate of Interest specified in the applicable Final Terms), it shall deem fair and reasonable in all the circumstances or, as the case may be, the Trustee shall calculate the Interest Amount(s) in such manner as it shall deem fair and reasonable in all the circumstances and each such determination or calculation shall be deemed to have been made by the Agent or the Calculation Agent, as applicable.
All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 4(b) and, whether by the Agent or, if applicable, the Calculation Agent or the Trustee, shall (in the absence of wilful default, bad faith or manifest error) be binding on the Issuer, the Agent, the Calculation Agent (if applicable), the other Paying Agents and all Noteholders, Receiptholders and Couponholders and (in the absence as aforesaid) no liability to the Issuer, the Noteholders, the Receiptholders or the Couponholders shall attach to the Agent or, if applicable the Calculation Agent or the Trustee in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to such provisions.
The rate or amount of interest payable in respect of Dual Currency Interest Notes shall be determined in the manner specified in the applicable Final Terms.
In the case of Partly Paid Notes (other than Partly Paid Notes which are Zero Coupon Notes), interest will accrue as aforesaid on the paid-up nominal amount of such Notes and otherwise as specified in the applicable Final Terms.
Each Note (or in the case of the redemption of part only of a Note, that part only of such Note) will cease to bear interest (if any) from the date for its redemption unless, upon due presentation thereof, payment of principal is improperly withheld or refused. In such event, interest will continue to accrue as provided in the Trust Deed.
Subject as provided below:
Payments will be subject in all cases to any fiscal or other laws and regulations applicable thereto in the place of payment, but without prejudice to the provisions of Condition 7.
Payments of principal in respect of definitive Notes will (subject as provided below) be made in the manner provided in paragraph (a) above only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of definitive Notes, and payments of interest in respect of definitive Notes will (subject as provided below) be made as aforesaid only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of Coupons, in each case at the specified office of any Paying Agent outside the United States (which expression, as used herein, means the United States of America (including the States and the District of Columbia, its territories, its possessions and other areas subject to its jurisdiction)).
Payments of instalments of principal (if any) in respect of definitive Notes, other than the final instalment, will (subject as provided below) be made in the manner provided in paragraph (a) above against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of the relevant Receipt in accordance with the preceding paragraph. Payment of the final instalment will be made in the manner provided in paragraph (a) above only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of the relevant Note in accordance with the preceding paragraph. Each Receipt must be presented for payment of the relevant instalment together with the definitive Note to which it appertains. Receipts presented without the definitive Note to which they appertain do not constitute valid obligations of the Issuer. Upon the date on which any definitive Note becomes due and repayable, unmatured Receipts (if any) relating thereto (whether or not attached) shall become void and no payment shall be made in respect thereof.
Fixed Rate Notes in definitive form (other than Dual Currency Notes, Index Linked Notes or Long Maturity Notes (as defined below)) should be presented for payment together with all unmatured Coupons appertaining thereto (which expression shall for this purpose include Coupons falling to be issued on exchange of matured Talons), failing which the amount of any missing unmatured Coupon (or, in the case of payment not being made in full, the same proportion of the amount of such missing unmatured Coupon as the sum so paid bears to the sum due) will be deducted from the sum due for payment. Each amount of principal so deducted will be paid in the manner mentioned above against surrender of the relative missing Coupon at any time before the expiry of 10 years after the Relevant Date (as defined in Condition 7) in respect of such principal (whether or not such Coupon would otherwise have become void under Condition 8) or, if later, five years from the date on which such Coupon would otherwise have become due, but in no event thereafter.
Upon any Fixed Rate Note in definitive form becoming due and repayable prior to its Maturity Date, all unmatured Talons (if any) appertaining thereto will become void and no further Coupons will be issued in respect thereof.
Upon the date on which any Floating Rate Note, Dual Currency Note, Index Linked Note or Long Maturity Note in definitive form becomes due and repayable, unmatured Coupons and Talons (if any) relating thereto (whether or not attached) shall become void and no payment or, as the case may be, exchange for further Coupons shall be made in respect thereof. A Long Maturity Note is a Fixed Rate Note (other than a Fixed Rate Note which on issue had a Talon attached) whose nominal amount on issue is less than the aggregate interest payable thereon provided that such Note shall cease to be a Long Maturity Note on the Interest Payment Date on which the aggregate amount of interest remaining to be paid after that date is less than the nominal amount of such Note.
If the due date for redemption of any definitive Note is not an Interest Payment Date, interest (if any) accrued in respect of such Note from (and including) the preceding Interest Payment Date or, as the case may be, the Interest Commencement Date shall be payable only against surrender of the relevant definitive Note.
Payments of principal and interest (if any) in respect of Notes represented by any Global Note will (subject as provided below) be made in the manner specified above in relation to definitive Notes and otherwise in the manner specified in the relevant Global Note against presentation or surrender, as the case may be, of such Global Note at the specified office of any Paying Agent outside the United States. A record of each payment made against presentation or surrender of any Global Note, distinguishing between any payment of principal and any payment of interest, will be made on such Global Note by the Paying Agent to which it was presented and such record shall be prima facie evidence that the payment in question has been made.
The holder of a Global Note shall be the only person entitled to receive payments in respect of Notes represented by such Global Note and the Issuer will be discharged by payment to, or to the order of, the holder of such Global Note in respect of each amount so paid. Each of the persons shown in the records of Euroclear or Clearstream, Luxembourg as the beneficial holder of a particular nominal amount of Notes represented by such Global Note must look solely to Euroclear or Clearstream, Luxembourg, as the case may be, for his share of each payment so made by the Issuer to, or to the order of, the holder of such Global Note.
Notwithstanding the foregoing provisions of this Condition, if any amount of principal and/or interest in respect of Notes is payable in U.S. dollars, such U.S. dollar payments of principal and/or interest in respect of such Notes will be made at the specified office of a Paying Agent in the United States if:
If the date for payment of any amount in respect of any Note, Receipt or Coupon is not a Payment Day, the holder thereof shall not be entitled to payment until the next following Payment Day in the relevant place and shall not be entitled to further interest or other payment in respect of such delay.; For these purposes, Payment Day means any day which (subject to Condition 8) is:
Any reference in these Terms and Conditions to principal in respect of the Notes shall be deemed to include, as applicable:
(v) in relation to Notes redeemable in instalments, the Instalment Amounts;
(vi) in relation to Zero Coupon Notes, the Amortised Face Amount (as defined in Condition 6(e)); and
Any reference in these Terms and Conditions to interest in respect of the Notes shall be deemed to include, as applicable, any additional amounts which may be payable with respect to interest under Condition 7 or under any undertaking or covenant given in addition thereto, or in substitution therefor, pursuant to the Trust Deed.
Unless previously redeemed or purchased and cancelled as specified below, each Note (including each Index Linked Redemption Note and Dual Currency Redemption Note) will be redeemed by the Issuer at its Final Redemption Amount specified in, or determined in the manner specified in, the applicable Final Terms in the relevant Specified Currency on the Maturity Date.
The Notes may be redeemed at the option of the Issuer in whole, but not in part, at any time (if this Note is neither a Floating Rate Note, an Index Linked Interest Note nor a Dual Currency Interest Note) or on any Interest Payment Date (if this Note is either a Floating Rate Note, an Index Linked Interest Note or a Dual Currency Interest Note), on giving not less than 30 nor more than 60 days' notice to the Trustee and the Agent and, in accordance with Condition 13, the Noteholders (which notice shall be irrevocable), if the Issuer satisfies the Trustee immediately before the giving of such notice that:
provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts were a payment in respect of the Notes then due.
Prior to the publication of any notice of redemption pursuant to this Condition, the Issuer shall deliver to the Trustee a certificate signed by two Directors of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred, and an opinion of independent legal advisers of recognised standing to the effect that the Issuer has or will become obliged to pay such additional amounts as a result of such change or amendment.
Notes redeemed pursuant to this Condition 6(b) will be redeemed at their Early Redemption Amount referred to in paragraph (e) below together, if appropriate, with interest accrued to (but excluding) the date of redemption.
If Issuer Call is specified in the applicable Final Terms, the Issuer may, having given:
(which notices shall be irrevocable and shall specify the date fixed for redemption), redeem all or some only of the Notes then outstanding on any Optional Redemption Date and at the Optional Redemption Amount(s) specified in, or determined in the manner specified in, the applicable Final Terms together, if appropriate, with interest accrued to (but excluding) the relevant Optional Redemption Date.
If the Notes are Fixed Rate Notes denominated in sterling, the Optional Redemption Amount will, unless otherwise specified in the applicable Final Terms, be an amount equal to the higher of (i) the outstanding nominal amount of the Notes and (ii) an amount calculated by multiplying the outstanding nominal amount of the Notes by that price (expressed as a percentage) (as reported in writing to the Issuer and the Trustee by a financial adviser nominated by the Issuer and approved by the Trustee) (and rounded to three decimal places (0.0005 being rounded upwards)) at which the Gross Redemption Yield on the Notes on the Determination Date (as defined below) is equal to the Redemption Rate (as defined below).
For the purposes of this Condition 6(c):
Determination Date means the date which is two Business Days prior to the publication or dispatch of the notice of redemption under this Condition 6(c);
Gross Redemption Yield means a yield calculated on the basis set out by the United Kingdom Debt Management Office in the paper "Formulae for Calculating Gilt Prices from Yields" page 4, Section One: Price/Yield Formulae "Conventional Gilts; Double-dated and Undated Gilts with Assumed (or Actual) Redemption on a Quasi-Coupon Date" (published 8/6/1998) or such other basis as the Trustee may approve;
Redemption Rate means the Relevant Swap Mid Curve Rate or, if the Relevant Swap Mid Curve Rate is not able to be determined, such rate as may be approved by the Trustee;
Relevant Swap Mid Curve Rate means the mid-point of the bid-side and offer-side rates for the fixed leg of a hypothetical interest rate swap with a notional profile equal to the semi-annual interest that would be payable on the Notes to be redeemed, with the same payment dates as the Notes to be redeemed, against a floating leg of Six Month Sterling LIBOR with no spread, where such hypothetical interest rate swap is between two highly-rated (AA- or equivalent or higher) and fully collateralised market counterparties (the Relevant Swap Mid Curve Rate shall be determined by a financial adviser (nominated by the Issuer and approved by the Trustee) using its standard valuation methodology as at the date of calculation) as at or about 11.00 a.m. (London time) on such Determination Date; and
Six Month Sterling LIBOR means the rate of interest for six month sterling deposits as determined as at or about 11.00 a.m. (London time) on the Determination Date by reference to the display designated as the British Bankers Association LIBOR Rates as quoted on Telerate Screen No. 3750 or such other page as may replace Telerate Screen No. 3750 on that service for the purposes of displaying such information; or if that service ceases to display such information, such page as displays such information on such service (or, if more than one, that one previously approved in writing by the Trustee) as may replace Telerate.
Any such redemption must be of a nominal amount not less than the Minimum Redemption Amount and not more than the Higher Redemption Amount, in each case as may be specified in the applicable Final Terms. In the case of a partial redemption of Notes, the Notes to be redeemed (Redeemed Notes) will be selected individually by lot, in the case of Redeemed Notes represented by definitive Notes, and in accordance with the rules of Euroclear and/or Clearstream, Luxembourg, in the case of Redeemed Notes represented by a Global Note, not more than 30 days prior to the date fixed for redemption (such date of selection being hereinafter called the Selection Date). In the case of Redeemed Notes represented by definitive Notes, a list of the serial numbers of such Redeemed Notes will be published in accordance with Condition 13 not less than 15 days prior to the date fixed for redemption. No exchange of the relevant Global Note will be permitted during the period from (and including) the Selection Date to (and including) the date fixed for redemption pursuant to this paragraph (c) and notice to that effect shall be given by the Issuer to the Noteholders in accordance with Condition 13 at least five days prior to the Selection Date.
If Investor Put is specified in the applicable Final Terms, upon the holder of any Note giving to the Issuer in accordance with Condition 13 not less than 15 nor more than 30 days' notice (which notice shall be irrevocable) the Issuer will, upon the expiry of such notice, redeem, subject to, and in accordance with, the terms specified in the applicable Final Terms, such Note on the Optional Redemption Date and at the Optional Redemption Amount together, if appropriate, with interest accrued to (but excluding) the Optional Redemption Date. It may be that before an Investor Put can be exercised, certain conditions and/or circumstances will need to be satisfied. Where relevant, the provisions will be set out in the applicable Final Terms.
To exercise the right to require redemption of this Note the holder of this Note must deliver, at the specified office of any Paying Agent at any time during normal business hours of such Paying Agent falling within the notice period, a duly completed and signed notice of exercise in the form (for the time being current) obtainable from any specified office of any Paying Agent (a Put Notice) and in which the holder must specify a bank account (or, if payment is required to be made by cheque, an address) to which payment is to be made under this Condition accompanied by, if this Note is in definitive form, this Note or evidence satisfactory to the Paying Agent concerned that this Note will, following delivery of the Put Notice, be held to its order or under its control.
For the purpose of paragraph (b) above, paragraph (g) below and Condition 9, each Note will be redeemed at its Early Redemption Amount calculated as follows:
Early Redemption Amount = RP x (1 + AY)y
where:
or on such other calculation basis as may be specified in the applicable Final Terms.
Instalment Notes will be redeemed in the Instalment Amounts and on the Instalment Dates. In the case of early redemption, the Early Redemption Amount will be determined pursuant to paragraph (e) above.
Further, (a) if at the time of the occurrence of the Change of Control the Notes carry a noninvestment grade credit rating from each Rating Agency then assigning a credit rating to the Notes or no credit rating from any Rating Agency, a Put Event will be deemed to occur upon the occurrence of a Change of Control alone; and (b) if at the time of the occurrence of the Change of Control the Notes carry a rating from more than one Rating Agency, at least one of which is investment grade, then sub-paragraph (ii) will apply.
If 80 per cent. or more in nominal amount of the Notes then outstanding have been redeemed pursuant to this Condition 6(g), the Issuer may, on not less than 30 or more than 60 days' notice to the Noteholders given within 30 days after the Put Date, redeem, at its option, the remaining Notes as a whole at a redemption price of the Early Redemption Amount thereof plus interest accrued to but excluding the date of such redemption.
Partly Paid Notes will be redeemed, whether at maturity, early redemption or otherwise, in accordance with the provisions of this Condition and the applicable Final Terms.
The Issuer or any Subsidiary of the Issuer may at any time purchase Notes (provided that, in the case of definitive Notes, all unmatured Receipts, Coupons and Talons appertaining thereto are purchased therewith) at any price in the open market or otherwise. Such Notes may be held, reissued, resold or, at the option of the Issuer, surrendered to any Paying Agent for cancellation.
All Notes which are redeemed will forthwith be cancelled (together with all unmatured Receipts, Coupons and Talons attached thereto or surrendered therewith at the time of redemption). All Notes so cancelled and any Notes purchased and cancelled pursuant to paragraph (i) above (together with all unmatured Receipts, Coupons and Talons cancelled therewith) shall be forwarded to the Agent and cannot be reissued or resold.
If the amount payable in respect of any Zero Coupon Note upon redemption of such Zero Coupon Note pursuant to paragraph (a), (b), (c), (d) or (g) above or upon its becoming due and repayable as provided in Condition 9 is improperly withheld or refused, the amount due and repayable in respect of such Zero Coupon Note shall be the amount calculated as provided in paragraph (e)(ii) above as though the references therein to the date fixed for the redemption or the date upon which such Zero Coupon Note becomes due and payable were replaced by references to the date which is the earlier of:
(i) the date on which all amounts due in respect of such Zero Coupon Note have been paid; and
(ii) five days after the date on which the full amount of the moneys payable in respect of such Zero Coupon Note has been received by the Trustee or the Agent and notice to that effect has been given to the Noteholders in accordance with Condition 13.
All payments of principal and interest in respect of the Notes, Receipts and Coupons by the Issuer will be made without withholding or deduction for or on account of any present or future taxes or duties of whatever nature imposed or levied by or on behalf of the United Kingdom unless such withholding or deduction is required by law. In such event, the Issuer will pay such additional amounts as shall be necessary in order that the net amounts received by the holders of the Notes, Receipts or Coupons after such withholding or deduction shall equal the respective amounts of principal and interest which would otherwise have been receivable in respect of the Notes, Receipts or Coupons, as the case may be, in the absence of such withholding or deduction; except that no such additional amounts shall be payable with respect to any Note, Receipt or Coupon:
As used in these Terms and Conditions the Relevant Date means the date on which such payment first becomes due, except that, if the full amount of the moneys payable has not been duly received by the Trustee or the Agent on or prior to such due date, it means the date on which, the full amount of such moneys having been so received, notice to that effect is duly given to the Noteholders in accordance with Condition 13.
The Notes, Receipts and Coupons will become void unless presented for payment within a period of 10 years (in the case of principal) and five years (in the case of interest) after the Relevant Date (as defined in Condition 7) therefor.
There shall not be included in any Coupon sheet issued on exchange of a Talon any Coupon the claim for payment in respect of which would be void pursuant to this Condition or Condition 5(b) or any Talon which would be void pursuant to Condition 5(b).
The Trustee at its discretion may, and if so requested in writing by the holders of at least one-quarter in nominal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution shall (subject in each case to being indemnified to its satisfaction), (but in the case of the happening of any of the events described in paragraphs (ii) to (viii) inclusive (other than (iv) in relation to the Issuer), only if the Trustee shall have certified in writing to the Issuer that such event is, in its opinion, materially prejudicial to the interests of the Noteholders), give notice in writing to the Issuer that the Notes are, and they shall thereupon immediately become, due and repayable at their Early Redemption Amount together with accrued interest as provided in the Trust Deed if any of the following events shall occur (Events of Default):
all or substantially all of its assets are transferred and the transferee is or immediately upon such transfer becomes a Principal Subsidiary, or (D) on terms previously approved in writing by the Trustee or by an Extraordinary Resolution of the Noteholders; or
The Trustee may at any time, at its discretion and without notice, take such proceedings against the Issuer as it may think fit to enforce the provisions of the Trust Deed, the Notes, the Receipts and the Coupons, but it shall not be bound to take any such proceedings or any other action in relation to the Trust Deed, the Notes, the Receipts or the Coupons unless (i) it shall have been so directed by an Extraordinary Resolution of the Noteholders or so requested in writing by the holders of at least onequarter in nominal amount of the Notes then outstanding, and (ii) it shall have been indemnified to its satisfaction.
No Noteholder, Receiptholder or Couponholder shall be entitled to proceed directly against the Issuer unless the Trustee, having become bound so to proceed, fails so to do within a reasonable period and the failure shall be continuing.
For the purposes of this Condition:
Principal Subsidiary at any time shall mean a Subsidiary of the Issuer inter alia:
all as more particularly defined in the Trust Deed; and
Indebtedness for Borrowed Money means (a) any indebtedness (whether being principal, premium, interest or other amounts) for or in respect of any notes, bonds, debentures, debenture stock, loan stock or other securities other than which is indebtedness owed to an entity within the Group or (b) any borrowed money other than money borrowed by one entity within the Group from another entity within the Group or (c) any liability under or in respect of any acceptance or acceptance credit.
Should any Note, Receipt, Coupon or Talon be lost, stolen, mutilated, defaced or destroyed, it may be replaced at the specified office of the Agent upon payment by the claimant of such costs and expenses as may be incurred in connection therewith and on such terms as to evidence and indemnity as the Issuer may reasonably require. Mutilated or defaced Notes, Receipts, Coupons or Talons must be surrendered before replacements will be issued.
The names of the initial Paying Agents and their initial specified offices are set out below.
The Issuer is entitled, with the prior written approval of the Trustee, to vary or terminate the appointment of any Paying Agent and/or appoint additional or other Paying Agents and/or approve any change in the specified office through which any Paying Agent acts, provided that:
(a) there will at all times be an Agent; and
In addition, the Issuer shall forthwith appoint a Paying Agent having a specified office in New York City in the circumstances described in Condition 5(d). Any variation, termination, appointment or change shall only take effect (other than in the case of insolvency, when it shall be of immediate effect) after not less than 30 nor more than 45 days' prior notice thereof shall have been given to the Noteholders in accordance with Condition 13.
In acting under the Agency Agreement, the Paying Agents act solely as agents of the Issuer and, in certain limited circumstances specified therein, of the Trustee and do not assume any obligation to, or relationship of agency or trust with, any Noteholders, Receiptholders or Couponholders. The Agency Agreement contains provisions permitting any entity into which any Paying Agent is merged or converted or with which it is consolidated or to which it transfers all or substantially all of its assets to become the successor paying agent.
On and after the Interest Payment Date on which the final Coupon comprised in any Coupon sheet matures, the Talon (if any) forming part of such Coupon sheet may be surrendered at the specified office of the Agent or any other Paying Agent in exchange for a further Coupon sheet including (if such further Coupon sheet does not include Coupons to (and including) the final date for the payment of interest due in respect of the Note to which it appertains) a further Talon, subject to the provisions of Condition 8.
All notices regarding the Notes will be deemed to be validly given if published in a leading English language daily newspaper of general circulation in London. It is expected that such publication will be made in the Financial Times in London. The Issuer shall also ensure that notices are duly published in a manner which complies with the rules and regulations of any stock exchange or other relevant authority on which the Notes are for the time being listed or by which they have been admitted to trading. Any such notice will be deemed to have been given on the date of the first publication or, where required to be published in more than one newspaper, on the date of the first publication in all required newspapers.
Until such time as any definitive Notes are issued, there may, so long as any Global Notes representing the Notes are held in their entirety on behalf of Euroclear and/or Clearstream, Luxembourg, be substituted for such publication in such newspaper(s) the delivery of the relevant notice to Euroclear and/or Clearstream, Luxembourg for communication by them to the holders of the Notes and, in addition, for so long as any Notes are listed on a stock exchange or are admitted to trading by another relevant authority and the rules of that stock exchange or other relevant authority so require, such notice will be published in a daily newspaper of general circulation in the place or places required by that stock exchange or other relevant authority. Any such notice shall be deemed to have been given to the holders of the Notes on the seventh day after the day on which the said notice was given to Euroclear and/or Clearstream, Luxembourg.
Notices to be given by any Noteholder shall be in writing and given by lodging the same, together (in the case of any Note in definitive form) with the relative Note or Notes, with the Agent. Whilst any of the Notes are represented by a Global Note, such notice may be given by any holder of a Note to the Agent through Euroclear and/or Clearstream, Luxembourg, as the case may be, in such manner as the Agent and Euroclear and/or Clearstream, Luxembourg, as the case may be, may approve for this purpose.
The Trust Deed contains provisions for convening meetings of the Noteholders to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of the Notes, the Receipts, the Coupons or any of the provisions of the Trust Deed. Such a meeting may be convened by the Issuer or the Trustee and shall be convened by the Issuer upon the requisition of Noteholders holding not less than five per cent. in nominal amount of the Notes for the time being remaining outstanding. The quorum at any such meeting for passing an Extraordinary Resolution is one or more persons holding or representing more than 50 per cent. in nominal amount of the Notes for the time being outstanding, or at any adjourned meeting one or more persons being or representing Noteholders whatever the nominal amount of the Notes so held or represented, except that at any meeting the business of which includes the modification of certain provisions of the Notes, the Receipts or the Coupons or the Trust Deed (including modifying the date of maturity of the Notes or any date for payment of interest thereon, reducing or cancelling the amount of principal or the rate of interest payable in respect of the Notes or altering the currency of payment of the Notes, the Receipts or the Coupons), the quorum shall be one or more persons holding or representing not less than two-thirds in nominal amount of the Notes for the time being outstanding, or at any adjourned such meeting one or more persons holding or representing not less than 25 per cent. in nominal amount of the Notes for the time being outstanding. An Extraordinary Resolution passed at any meeting of the Noteholders shall be binding on all the Noteholders, whether or not they are present at the meeting, and on all Receiptholders and Couponholders.
The Trustee may agree, without the consent of the Noteholders, Receiptholders or Couponholders, to any modification of, or to the waiver or authorisation of any breach or proposed breach of, any of the provisions of the Notes or the Trust Deed, or determine, without any such consent as aforesaid, that any Event of Default or potential Event of Default shall not be treated as such, where, in any such case, it is not, in the opinion of the Trustee, materially prejudicial to the interests of the Noteholders so to do or may agree, without any such consent as aforesaid, to any modification which is of a formal, minor or technical nature or to correct a manifest or proven error.
In connection with the exercise by it of any of its trusts, powers, authorities and discretions (including, without limitation, any modification, waiver, authorisation or determination), the Trustee shall have regard to the general interests of the Noteholders as a class (but shall not have regard to any interests arising from circumstances particular to individual Noteholders, Receiptholders or Couponholders whatever their number) and, in particular but without limitation, shall not have regard to the consequences of any such exercise for individual Noteholders, Receiptholders or Couponholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Noteholder, Receiptholder or Couponholder be entitled to claim, from the Issuer, the Trustee or any other person any indemnification or payment in respect of any tax consequences of any such exercise upon individual Noteholders, Receiptholders or Couponholders except to the extent already provided for in Condition 7 and/or any undertaking or covenant given in addition to, or in substitution for, Condition 7 pursuant to the Trust Deed.
Any such modification shall be binding on the Noteholders, the Receiptholders and the Couponholders and any such modification shall be notified to the Noteholders in accordance with Condition 13 as soon as practicable thereafter.
The Trustee may, without the consent of the Noteholders, agree with the Issuer to the substitution in place of the Issuer (or of any previous substitute under this Condition 14) as the principal debtor under the Notes, Receipts, Coupons and the Trust Deed of another company, being a Subsidiary of the Issuer or a parent undertaking of the Issuer, subject to (a) the Trustee being satisfied that the interests of the Noteholders will not be materially prejudiced by the substitution and (b) certain other conditions set out in the Trust Deed being complied with.
The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including provisions relieving it from taking action unless indemnified to its satisfaction.
The Trust Deed also contains provisions pursuant to which the Trustee is entitled, inter alia, (i) to enter into business transactions with the Issuer and/or any of its Subsidiaries and to act as trustee for the holders of any other securities issued or guaranteed by, or relating to, the Issuer and/or any of its Subsidiaries (ii) to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such transactions or, as the case may be, any such trusteeship without regard to the interests of, or consequences for, the Noteholders, Receiptholders or Couponholders, and (iii) to retain and not be liable to account for any profit made or any other amount or benefit received thereby or in connection therewith.
The Issuer shall be at liberty from time to time without the consent of the Noteholders, the Receiptholders or the Couponholders to create and issue further notes having terms and conditions the same as the Notes or the same in all respects save for the amount and date of the first payment of interest thereon and so that the same shall be consolidated and form a single Series with the outstanding Notes.
No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of the Notes but this does not affect any right on remedy of any person which exists or is available apart from that Act.
The Trust Deed, the Notes, the Receipts and the Coupons are governed by, and shall be construed in accordance with, English law.
The net proceeds from each issue of Notes will be applied by the Issuer for its general corporate purposes, which include making a profit. If, in respect of any particular issue, there is a particular identified use of proceeds, this will be stated in the applicable Final Terms.
Rentokil Initial plc (the Issuer) was incorporated in England and Wales on 15 March 2005 as a public limited company limited under the name of Rentokil Initial 2005 plc and subsequently changed its name to Renotkil Initial plc on 21 June 2005. The Issuer's registration number is 5393279 and its registered address is 2 City Place, Beehive Ring Road, Gatwick, West Sussex RH6 0HA (telephone number 01293 858000).
The Issuer was incorporated as part of a corporate reorganisation effected by way of a court-sanctioned scheme of arrangement under Section 425 of the Companies Act 1985 between Rentokil Initial 1927 plc and the shareholders of Rentokil Initial 1927 plc (the Corporate Reorganisation). The scheme of arrangement was approved by the court on 21 June 2005. The purpose of incorporating the Issuer was to create a newly listed holding company for the Group comprising the Issuer and its subsidiary undertakings (the Group).
The Issuer holds all the issued share capital of Rentokil Initial Holdings Limited which in turn holds all of the issued share capital of Rentokil Initial 1927 plc, which was the previous parent company of the Group and previously was called Rentokil Initial plc. In turn, Rentokil Initial 1927 plc is organised as a holding company of its subsidiary undertakings.
The Group's businesses are undertaken through legal entities in the country of their operation. Such legal entities are predominantly indirectly wholly owned subsidiaries of the Issuer, although in a number of cases such services are provided as separate divisions of wholly owned subsidiaries or in a very limited number of instances as joint ventures.
As at the date of this Prospectus, the Issuer is rated BBB- by Standard & Poor's Credit Market Services Europe Limited. Standard & Poor's Credit Market Services Europe Limited is established in the European Union and has applied to be registered under the CRA Regulation, although the result of such application has not yet been determined.
The consolidated financial statements of the Issuer are prepared in accordance with International Financial Reporting Standards (IFRS) adopted by the European Union (EU) and implemented in the United Kingdom. The 2010 Results were prepared in accordance with IFRS.
IFRS are subject to possible amendment by, and interpretive guidance from, the International Accounting Standards Board as well as ongoing review and endorsement by the EU, and are therefore subject to change.
Certain details of the principal operating subsidiaries and associated undertakings of the Issuer as at the date of this Prospectus are shown below:
| Name | Country of Incorporation |
Principal Activities |
|---|---|---|
| Rentokil Initial Holdings Limited | England & Wales | Holding company for all the entities listed below |
| Rentokil Initial 1927 plc | England & Wales | Holding company for all the entities listed below |
| City Link Limited | England & Wales | Parcels Delivery |
| Dudley Industries Limited | England & Wales | Manufacturing |
| Initial Building Services Limited | England & Wales | Facilities Management Services |
| Initial Catering Services Limited(1) | England & Wales | Catering |
| Initial Facilities Management Limited |
England & Wales | Facilities Management Services |
| Initial Hospital Services Limited | England & Wales | Hospital Services |
| Initial Medical Services Limited | England & Wales | Medical |
| Insitu Cleaning Limited | England & Wales | Cleaning |
| Lancaster Office Cleaning Company Limited |
England & Wales | Cleaning |
| Rentokil Initial Facilities Services (UK) Limited |
England & Wales | Cleaning |
| Rentokil Initial UK Limited | England & Wales | Hygiene, Pest Control, Tropical Plants and Property Care |
| Rentokil Initial Services Limited | England & Wales | Hygiene |
| Rentokil Insurance Limited | England & Wales | Insurance for Property Services |
| Rentokil Initial Pty Limited | Australia | Pest Control, Hygiene, Tropical Plants |
| Rentokil Initial GmbH | Austria | Pest Control |
| Initial Austria GmbH | Austria | Textiles and Hygiene |
| Initial Hygiene Austria GmbH | Austria | Hygiene |
| Rentokil Initial (Bahamas) Limited |
Bahamas | Pest Control and Hygiene |
| Rentokil Initial (Barbados) | Barbados | Pest Control and Hygiene |
| Name | Country of Incorporation |
Principal Activities |
|---|---|---|
| Limited | ||
| Initial Textiles NV | Belgium | Textiles and Hygiene |
| Ambius NV | Belgium | Tropical Plants |
| Rentokil NV | Belgium | Pest Control and Hygiene |
| Rentokil Initial (B) Sdn Bhd(2) | Brunei | Pest Control |
| Rentokil Pest Control Canada Limited |
Canada | Pest Control |
| Ambius Inc. | Canada | Tropical Plants |
| Rentokil Tai Ming China Co Limited(3) |
People's Republic of China |
Pest Control |
| Initial Ecotex sro | Czech Republic | Textiles and Hygiene |
| Rentokil Initial A/S | Denmark | Pest Control and Tropical Plants |
| Initial A/S | Denmark | Hygiene |
| Renotkil OU | Estonia | Pest Control |
| Rentokil Initial Limited | Fiji | Pest Control and Hygiene |
| Oy Rentokil Ambius AB | Finland | Pest Control and Tropical Plants |
| Oy Initial AB | Finland | Hygiene |
| Initial BTB SA | France | Textiles and Hygiene |
| Rentokil Initial SAS | France | Pest Control |
| Ambius SAS | France | Tropical Plants |
| Technivap SAS | France | Hygiene |
| Rentokil Initial Martinique SARL | France - overseas region |
Pest Control and Hygiene |
| Initial Textil Service GmbH & Co KG |
Germany | Textiles and Hygiene |
| Initial Waschraumservice GmbH | Germany | Hygiene |
| Medentex GmbH | Germany | Medical |
| Rentokil Initial GmbH | Germany | Pest Control, Tropical Plants and Hygiene |
| Rentokil Initial Hellas EPE | Greece | Pest Control and Hygiene |
| Rentokil Initial Guadeloupe Sarl | Guadeloupe | Pest Control and Hygiene |
| Felcourt Insurance Co. Limited | Guernsey | Insurance |
| Rentokil Initial Guyana Limited | Guyana | Pest Control and Hygiene |
| Rentokil Initial Hong Kong Limited |
Hong Kong | Pest Control, Hygiene and Cleaning |
| Name | Country of Incorporation |
Principal Activities |
|---|---|---|
| Po Hong Services Ltd | Hong Kong | Cleaning |
| Initial Textil Szolgaltato Kft | Hungary | Textiles and Hygiene |
| Rentokil India Pte Limited | India | Pest Control |
| PT Calmic Indonesia | Indonesia | Hygiene |
| PT Rentokil Indonesia | Indonesia | Pest Control |
| Initial Italia SpA | Italy | Hygiene |
| Rentokil Italia SpA | Italy | Pest Control |
| Rentokil Initial Jamaica Limited | Jamaica | Pest Control and Hygiene |
| Rentokil Initial Kenya Limited | Kenya | Pest Control and Hygiene |
| UAB Dezinfa | Lithuania | Pest Control |
| Rentokil Luxembourg Sarl | Luxembourg | Pest Control |
| Initial Textile Luxembourg Sarl | Luxembourg | Textiles and Hygiene |
| R-Control Desinfections SA | Luxembourg | Pest Control |
| Rentokil Initial (M) Sdn Bhd | Malaysia | Pest Control, Hygiene and Electronic Security |
| Initial Hokatex BV | Netherlands | Textiles and Hygiene |
| Rentokil Initial BV | Netherlands | Pest Control and Hygiene |
| Holland Herstel Groep/Ureco BV | Netherlands | Facilities Management Services |
| Ambius BV | Netherlands | Tropical Plants |
| Rentokil Initial Limited | New Zealand |
Pest Control, Tropical Plants and Hygiene |
| Rentokil Initial Norge AS | Norway | Pest Control, Tropical Plants and Hygiene |
| Rentokil Initial (Philippines) Inc | Philippines | Pest Control and Hygiene |
| Initial Matadoor Sp. z.o.o. | Poland | Hygiene |
| Rentokil Portugal-Serviços de protecção ambiental Lda |
Portugal | Pest Control |
| Initial Portugal-Serviços de Protecção ambiental Lda |
Portugal | Hygiene |
| Rentokil Initial Limited | Republic of Ireland | Pest Control, Tropical Plants and Hygiene |
| Initial Medical Sevices (Ireland) Ltd |
Republic of Ireland | Medical |
| Integrated Pest Management Limited |
Republic of Ireland | Pest Control |
| Name | Country of Incorporation |
Principal Activities |
|---|---|---|
| One Stop Habitat-Care Pte Ltd | Singapore | Pest Control |
| Initial Hygiene Services Pte Ltd | Singapore | Pest Control |
| Rentokil Initial Singapore Pte Ltd | Singapore | Pest Control, Textiles and Hygiene |
| Initial Textile Services Sro | Slovak Republic | Textiles and Hygiene |
| Rentokil Initial (Pty) Limited(4) | South Africa | Pest Control, Tropical Plants and Hygiene |
| Rentokil Initial Korea Limited | South Korea | Hygiene |
| Rentokil Enguard Limited(5) | South Korea | Pest Control |
| Calmic Co Limited(6) Yu Yu |
South Korea | Pest Control and Hygiene |
| Initial Gaviota SA | Spain | Textiles |
| Initial Textiles e Higiene SA | Spain | Hygiene |
| Initial Facilities Services S.A. | Spain | Cleaning |
| Rentokil Initial España SA | Spain | Pest Control |
| Rentokil AB | Sweden | Pest Control |
| Initial Sverige AB | Sweden | Hygiene |
| Ambius AB | Sweden | Tropical Plants |
| Initial Schweiz AG | Switzerland | Hygiene |
| Rentokil Schweiz AG | Switzerland | Pest Control |
| Initial Hygiene Co Limited | Taiwan | Hygiene |
| Rentokil Ding Sharn Co Limited | Taiwan | Pest Control |
| Rentokil Initial (Thailand) Limited |
Thailand | Pest Control and Hygiene |
| Rentokil Initial (Trinidad) Limited | Trinidad | Pest Control and Hygiene |
| Ambius Inc | USA | Tropical Plants |
| J. C. Ehrlich Inc | USA | Pest Control |
| Initial Services Co Limited | Vietnam | Pest Control and Hygiene |
Notes:
(1) The Issuer holds, directly or indirectly, 75 per cent. of the issued shares of this entity.
(2) The Issuer holds, directly or indirectly, 70 per cent. of the issued shares of this entity.
(3) The Issuer holds, directly or indirectly, 65 per cent. of the issued shares of this entity.
(4) The Issuer holds, directly or indirectly, 74.9 per cent. of the issued shares of this entity.
As at the date of this document the directors of the Issuer and their positions are as follows:
| Name | Position | Other principal directorships |
|---|---|---|
| Executive Directors | ||
| Alan J. Brown | Chief Executive Officer | Non-executive Director of Intertek Group plc (from 15 April 2011) |
| Jeremy Townsend | Chief Financial Officer | |
| Andrew M. Ransom | Executive Director | |
| Non-executive Directors | ||
| John D. G. McAdam | Chairman | Director of United Utilities PLC |
| Non-executive Director of Rolls-Royce Group plc, J Sainsbury plc and Sara Lee Corporation (USA) |
||
| Peter J. Long | Senior Independent Director and Chairman of the Remuneration Committee |
Chief Executive of TUI Travel PLC |
| Duncan Tatton-Brown | Director and Chairman of the Audit Committee |
Chief Finance Officer of Fitness First Group Limited |
| William Rucker | Director | Chief Executive of Lazard & Co Ltd UK, Deputy Chief Executive of European Investment Banking, Deputy Chairman of Lazard LLC |
| Chairman of Quintain Estates and Development PLC |
||
| Alan Giles | Director | A Chairman of Fat Face World Limited Director of the Office of Fair Trading |
| Director of Book Tokens Limited |
||
| Peter Bamford | Director | Chairman of MCPC-PRS Alliance Limited and SuperGroup plc. |
| Richard Burrows | Director | Director of Carlsberg A/S |
Chairman of British American Tobacco p.l.c. Non-Executive Director of Carlsberg A/S
The business address of each of the above is 2 City Place, Beehive Ring Road, Gatwick, West Sussex, RH6 0HA
There are no potential conflicts of interest between any duties to the Issuer of any of the directors and their private interests or other duties.
Rentokil Initial 1927 plc (the Guarantor) was incorporated in England and Wales on 1 October 1927 under the Companies Acts 1908 to 1917 as a public limited company limited under the name of Rentokil Initial plc. Its name was changed from Rentokil Initial plc to Rentokil Initial 1927 plc as part of the Corporate Reorganisation. The Guarantor's registration number is 002248414 and its registered address is 2 City Place, Beehive Ring Road, Gatwick, West Sussex RH6 0HA (telephone number 01293 858000).
The Issuer holds all the issued share capital of Rentokil Initial Holdings Limited which in turn holds all of the issued share capital of the Guarantor. The Guarantor was previously parent company of the Group and is now an indirect wholly-owned subsidiary of the Issuer, which is the new parent company of the Group. The Guarantor is organised as a holding company of its subsidiary undertakings.
The Group's businesses are undertaken through legal entities in the country of their operation. Such legal entities are predominantly indirectly wholly owned subsidiaries of the Issuer, although in a number of cases such services are provided as separate divisions of wholly owned subsidiaries or in a very limited number of instances as joint ventures.
As at the date of this document the directors of the Guarantor and their positions are as follows:
| Name | Position | Other principal directorships |
|---|---|---|
| Gareth Brown | Director | None |
| Paul Griffiths | Director | None |
| Martin Nicholas | Director | None |
| Chris Filby | Director | None |
| Jeremy Townsend | Director | Chief Financial Officer of Rentokil Initial plc |
The business address of each of the above is 2 City Place, Beehive Ring Road, Gatwick, West Sussex, RH6 OHA.
There are no potential conflicts of interest between any duties to the Guarantor of any of the directors and their private interests or other duties.
The non-consolidated financial statements of the Guarantor are prepared in accordance with the Generally Accepted Accounting Practice in the UK (UK GAAP). The Guarantor's 2009 Results were prepared in accordance with UK GAAP.
References in this section of this Prospectus to operating profit are for continuing businesses before amortisation and impairment of intangible assets (other than computer software) and goodwill impairment charges. The Group reports to 31 December. References to the Group's 2010 full year adjusted operating profit and adjusted profit before tax also exclude costs of a one-off nature of £25.9 million. References to the Group's adjusted operating profit and adjusted profit before tax for the final three months of 2010 also exclude costs of a one-off nature of £3.0 million. All references to 2009 numbers are (where applicable) at 2008 full year average rates of exchange. All references to 2010 numbers are (where applicable) at 2009 full year average rates of exchange (Constant Exchange Rates (CER)). State of Service is the total number of service visits performed divided by the total number of visits due. Portfolio refers to the measure of the annualised value of fixed price, as used (volume based) and mixed value customer contracts. References to profit unless otherwise stated represent operating profit before amortisation and impairment of intangibles and one-off items. References to adjusted operating profit and losses and adjusted profit before tax refer to information as set out in the Issuer's financial statements for the year ended 31 December 2010.
The Group currently has approximately 66,000 employees providing a range of business support services across more than 50 countries, including the major developed economies in Europe, North America, Asia Pacific and Africa.
| Results | Q4 2010 | Growth | FY 2010 | Growth | ||
|---|---|---|---|---|---|---|
| AER | AER | CER | AER | AER | CER | |
| Revenue | 642.4 | (0.8%) | (0.5%) | 2,496.5 | (1.4%) | (1.2%) |
| Adjusted Operating profit5 | 67.2 | (6.7%) | (6.6%) | 239.3 | 8.4% | 8.3% |
| Adjusted profit before tax5 | 58.5 | (5.3%) | (5.7%) | 192.3 | 15.5% | 15.1% |
| (Loss)/profit before tax | (55.7) | N/A | N/A | 14.5 | (77.7%) | (76.5%) |
| Operating cash flow6 | 85.5 | (10.8%) | (10.0%) | 220.1 | (30.5%) | (30.7%) |
| Adjusted EPS7 | 7.81p | 18.2% |
The Group's adjusted operating profit (before amortisation and impairment of intangibles) to 31 December 2010 was £239.3 million, from revenue of £2,496.5 million, an improvement of 8.4 per cent. on the prior year despite a small reduction in revenue (at Actual Exchange Rates (AER)).
Highlights in the period included:
5 Before amortisation and impairment of intangibles (excluding computer software) and one-off items.
6 Cash flow before interest, tax, acquisitions, disposals and foreign exchange adjustments.
7 Earning per share before the after tax effects of one-off items and amortisation and impairment of intangibles (excluding computer software).
The Group's strategic plan focuses on five key objectives:
The Group reported at 31 December 2010 strong progress in delivering outstanding customer service. The Group believes that progress has been made in delivering operational excellence, developing the capability of the Group's organisation and people and in operating at lowest possible cost. However, management weakness in a small number of operations was exposed during 2010, most notably in the Benelux operations of Textiles & Hygiene and in City Link, meaning that profitable growth has been limited. The Group also identifies that only limited progress has been made at delivering outstanding customer care. This will be a focus for 2011.
This division provides its services across the UK and Continental Europe, although its full range of services is not provided in all countries. Textiles and Hygiene offers a total washroom solution service and floor mat, garments and flat linen rental services. The Textiles business supplies bespoke workwear to commercial, industrial and hospitality customers, with full inventory management available. Specialist high performance workwear is designed and produced for sectors such as the medical, hi-tech and emergency services. Flat linen (primarily table and bedroom linen) is rented and laundered for corporate and hospitality customers and health service providers. The Hygiene business rents and services dispensers, drying equipment and disposable systems for workplace washrooms. It also provides protective floor mats to a wide customer base. 75 per cent. of the division's revenues come from France (39.6 per cent.), the Netherlands (12.7 per cent.), Germany (12.6 per cent.) and Belgium (11.5 per cent.).
8 After adjusting for one-off cash flows of £52.8 million.
| Results for the year ended 31 December 2010 | |
|---|---|
| -- | --------------------------------------------- |
| £ million | Fourth Quarter | Full Year | ||||
|---|---|---|---|---|---|---|
| 2010 | 2009 | change | 2010 | 2009 | change | |
| At 2009 constant exchange rates: Revenue |
211.9 | 217.3 | (2.5%) | 847.0 | 859.6 | (1.5%) |
| Adjusted operating profit (before one-off items and amortisation & impairment of intangible assets1 ) |
30.9 | 38.2 | (19.1%) | 124.9 | 128.4 | (2.7%) |
| At actual exchange rates: Adjusted operating profit (before one-off items and amortisation & impairment of intangible assets1 ) |
29.8 | 38.5 | (22.6%) | 120.7 | 128.4 | (6.0%) |
1 Other than computer software
Revenue fell 1.5 per cent. compared to the prior year. While robust performances were recorded in Germany (revenue up 2.6 per cent. year on year), the Nordics, and the Medical and Hygiene business units, overall performance was impacted by challenging market conditions in particular competitive pricing pressure in the Netherlands, Belgium and France. Revenue in the Netherlands declined by 7.6 per cent., while France remained flat year on year, reflecting contract losses in the first quarter of 2010. The Medical business recorded strong organic growth of 12.3 per cent. compared to the previous year.
Profit declined by 2.7 per cent. compared to the previous year. All territories with the exception of the Benelux and Portugal grew profits year on year, reflecting the impact of new management, robust cost control and restructuring programmes. There was a significant profit decline in the Benelux, impacted by higher processing and distribution costs associated with the restructuring in Belgium, and competitive pricing pressure.
A number of key appointments were made during the year including a new Managing Director and Finance Director
Rentokil Pest Control provides a service for the prevention of a wide variety of pests in the commercial, industrial and residential sectors. The largest operations are in the USA, the United Kingdom, France, Germany, Belgium and the Netherlands.
Results for the year ended 31 December 2010
| £ million | Fourth Quarter | Full Year | ||||
|---|---|---|---|---|---|---|
| 2010 | 2009 | change | 2010 | 2009 | change | |
| At 2009 constant exchange rates: | ||||||
| Revenue | 123.8 | 124.0 | (0.2%) | 511.1 | 512.7 | (0.3%) |
| Adjusted operating profit (before one-off items and | ||||||
| amortisation & impairment of intangible assets1 ) |
23.4 | 23.3 | 0.4% | 98.1 | 89.2 | 10.0% |
| At actual exchange rates: | ||||||
| Adjusted operating profit (before one-off items and | ||||||
| amortisation & impairment of intangible assets1 ) |
23.3 | 23.3 | - | 98.0 | 89.2 | 9.9% |
| 1 |
Other than computer software
Revenue in the Pest Control division declined year on year by 0.3 per cent. This was largely due to an 8.5 per cent. decline in the UK & Ireland Hygiene business where a 21 per cent. improvement in customer contract terminations failed to compensate for, declines in overall customer portfolio and contract sales. Consistent with contract structure, a contract entered into with the Libyan government produced lower revenue in the final quarter of 2010 compared to the same period in the prior year following the move in the first quarter of 2010 to locally resourced service provision also impacted revenue growth. Europe, North America, the UK and East Africa & Caribbean (EAC) businesses all recorded revenue growth. North America performed particularly well, increasing revenue by 5.2 per cent. compared to the previous year, attributable to new contract sales, reduced customer termination rates and 7.5 per cent. growth in the products distribution business. The turnaround of the UK Pest Control business has been a particular success story of 2010, with the business moving into positive growth (up 1.7 per cent.) versus a prior year decline of 5.8 per cent. Overall Europe was flat, with modest growth in Northern Europe largely offset by declines in France, Spain, Portugal and Greece. Revenue in the EAC grew by 7.9 per cent. Profit rose by 10.0 per cent.compared to the previous financial year with strong performances across most areas, most notably UK Pest which grew profit by 21.1 per cent. reflecting strong jobs, service productivity and lower overheads. Growth in Europe increased by 13.1 per cent. impacted largely by Spain (+189.1 per cent.), Switzerland (+19.3 per cent.) and Germany (+15.1 per cent) with all countries showing positive growth. Growth in Spain was supported by an insurance receipt of £1.1 million in 2010 and the impact of a number of unusual costs taken in 2009. Profit in North America rose by 13.7 per cent. on solid revenue growth, while the EAC and South Africa grew by 10.2 per cent. and 6.3 per cent. respectively.
Results for the year ended 31 December 2010
| £ million | Fourth Quarter | Full Year | ||||
|---|---|---|---|---|---|---|
| 2010 | 2009 | change | 2010 | 2009 | change | |
| At 2009 constant exchange rates: | ||||||
| Revenue | 49.0 | 48.9 | 0.2% | 192.2 | 202.1 | (4.9%) |
| Adjusted operating profit (before one-off items and | ||||||
| amortisation & impairment of intangible assets1 ) |
6.7 | 1.7 | 294.1% | 25.4 | 21.1 | 20.4% |
| At actual exchange rates: | ||||||
| Adjusted operating profit (before one-off items and | ||||||
| amortisation & impairment of intangible assets1 ) |
8.2 | 2.1 | 290.5% | 29.6 | 21.1 | 40.3% |
| 1 |
Other than computer software
Asia Pacific revenue declined by 4.9 per cent. compared to the prior year, impacted by the exit in 2009 of the low-margin Hong Kong Government contract. Underlying revenue growth was broadly flat year on year with Asia growing by 1.4 per cent. and the Pacific declining by 1.1 per cent. Asia showed solid revenue growth momentum in its established markets of Indonesia (up 9.6 per cent. year on year) and Thailand (up 4.5 per cent.), while the emerging businesses in Vietnam, India and Brunei delivered greater than double digit growth of 42.5 per cent., 15.7 per cent. and 14.2 per cent. respectively. Throughout the year China decreased its dependency on government sales, developing a fast-growing commercial business. In the Pacific region, New Zealand performed well but prior year contract losses in Australia Hygiene and Ambius and weaker residential job work in Australia Pest resulted in overall revenue decline of 1.1 per cent.
Profit grew by 20.4 per cent. compared to the prior year, supported by strong cost control and fewer asset write-offs. Both 2009 and 2010 had adjustments, mostly related to acquisitions made prior to 2008.
Tropical Plants are offered to customers on a rental and maintenance or purchase and maintenance basis, ranging from a single plant or tree to displays for the largest atrium. The Group's design and development team also offers a range of services to facilities managers, interior designers and architects, to introduce plants as an integral part of building design and refurbishment.
The largest market for the business is in the USA and it also operates in the United Kingdom and a number of Continental European countries.
| Results for the year ended 31 December 2010 | |||
|---|---|---|---|
| --------------------------------------------- | -- | -- | -- |
| £ million | Fourth Quarter | Full Year | ||||
|---|---|---|---|---|---|---|
| 2010 | 2009 | change | 2010 | 2009 | change | |
| At 2009 constant exchange rates: Revenue |
36.2 | 34.8 | 4.0% | 116.6 | 121.0 | (3.6%) |
| Adjusted operating profit (before one-off items and amortisation & impairment of intangible assets1 ) |
4.7 | 5.0 | (6.0%) | 8.4 | 8.8 | (4.5%) |
| At actual exchange rates: Adjusted operating profit (before one-off items and amortisation & impairment of intangible assets1 ) |
4.8 | 4.9 | (2.0%) | 8.6 | 8.8 | (2.3%) |
1 Other than computer software
While Ambius experienced a difficult trading environment during the first half of 2010, conditions showed signs of easing in the second half of 2010 with the division moving into positive revenue growth in the final quarter, the first time since the final quarter of 2008. Full year revenue declined by 3.6 per cent. year on year, but represents a significant improvement on 2009's decline of 10.5 per cent. Job revenue grew by 9.1 per cent. compared to the prior year, aided by good performances from the UK (+40 per cent.), France (+38 per cent.), the Netherlands (+22 per cent.) and North America (+6.0 per cent.). The US showed increases in Christmas job sales with the UK also benefiting from gritting work during the period of heavy snow in December.
Profit fell by 4.5 per cent. compared to the prior year, reflecting portfolio reductions offset by cost savings programmes and adjustments in service headcount in line with portfolio movement. Despite a 4.9 per cent. reduction in revenue, the North America business delivered a modest 0.6 per cent. profit increase attributable to strong cost control and increased service productivity.
The Group's City Link parcel delivery operation is a UK premium express service with options for next-day or specific delivery times. Its preferred traffic is parcels which are generally small in size and of relatively high value. Prior to 2005, City Link was largely a franchised network. Typically, franchisees were responsible for the local collection and delivery of parcels while City Link operated the trunking network and parcel sorting in the hubs. In 2005, City Link took steps to buy in the 20 franchisees' businesses. This was done progressively during 2006 and 2007, and the last franchisee was acquired on 28 February 2008. In November 2006, City Link acquired Target Express, a similar UK business, with a view to merging it with City Link's operations to create a leading UK next-day parcel business. The enlarged business was branded City Link on 1 May 2007. The business integration plan called for depots to be progressively combined; however, the integration plan was suspended in early 2008.
Failures integrating the Target Express business and the franchisees, together with tough competition resulted in City Link posting a £43.5 million loss for 2008 (at AER). The business has since been subject to aggressive cost cutting but revealed an over-reliance on sub-contractors in its March 2010 trading statement. This problem continued throughout the year. On 10 December 2010, the Group announced the departure of City Link's Managing Director, Stuart Godman. Alan Brown, Rentokil Initial CEO assumed responsibility for City Link until a permanent replacement is appointed.
Results from the year ended 31 December 2010
| £ million | Fourth Quarter | Full Year | |||||
|---|---|---|---|---|---|---|---|
| 2010 | 2009 | change | 2010 | 2009 | change | ||
| At 2009 constant exchange rates: | |||||||
| Revenue | 87.6 | 100.9 | (13.2%) | 335.5 | 353.1 | (5.0%) | |
| Adjusted operating loss (before one-off items and | |||||||
| amortisation & impairment of intangible assets1 ) |
(3.6) | 2.7 | (233.3%) | (9.6) | (5.6) | (71.4%) | |
| At actual exchange rates: | |||||||
| Adjusted operating loss (before one-off items and | |||||||
| amortisation & impairment of intangible assets1 ) |
(3.6) | 2.7 | (233.3%) | (9.6) | (5.6) | (71.4%) | |
1 Other than computer software
City Link's full year operating loss of £9.6 million was £4.0 million worse than the corresponding loss in 2009 on a £17.6 million (5.0 per cent.) reduction in reported revenue. The operation was severely impacted at the beginning and end of the year by heavy snow fall resulting in lower levels of productivity and higher delivery costs, with an estimated in year impact of £4 million.
The UK Parcels industry continued to be extremely competitive during 2010 with price cutting a continuing market dynamic. However, pricing pressure softened slightly on 2009, with revenue per consignment declining by 3.3 per cent. (2009: 4.5 per cent.). Parcel volumes were down 1.8 per cent. on 2009.
Service levels throughout 2010 were generally above 98.5 per cent. However, service levels were severely impacted during the period of heavy snow in the run up to Christmas and temporarily during the closure of the Wednesbury Hub in July.
Though good progress was made during 2010 in improving City Link's hub and depot structure and IT capability, its overall performance was particularly disappointing. While severe weather at the beginning and the end of the year was a contributing factor, the principal issue was that operational management of the business was poor, evidenced by high usage of subcontractors, inadequate contingency planning to deal with extreme conditions and poor engagement of front line colleagues. Significant management change has taken place and a detailed operating plan is now being pursued which should deliver substantial operational improvement prior to the Christmas seasonal peak.
The Facilities Services division incorporates cleaning, catering, hospital services and building services. Each of these services are provided individually, but also create the platform for multi-service contracts offering one point of customer contact. In addition, this division includes the Group's specialist hygiene businesses and product supply companies. The bulk of the division's revenues and profits are derived in the UK. Cleaning is the division's largest operation.
A manned guarding operation, Knightsbridge Guarding was acquired in June 2010. Knightsbridge has good market positions in London and offers the Issuer the opportunity to cross-sell manned guarding across its existing portfolio.
Results for the year ended 31 December 2010
| £ million | Fourth Quarter | Full Year | ||||||
|---|---|---|---|---|---|---|---|---|
| 2010 | 2009 | change | 2010 | 2009 | change | |||
| At 2009 constant exchange rates: | ||||||||
| Revenue | 148.6 | 136.3 | 9.0% | 556.4 | 547.6 | 1.6% | ||
| Adjusted operating profit (before one-off items and |
| amortisation & impairment of intangible assets1 ) |
9.1 | 8.5 | 7.1% | 25.9 | 21.3 | 21.6% |
|---|---|---|---|---|---|---|
| At actual exchange rates: Adjusted operating profit (before one-off items and |
||||||
| amortisation & impairment of intangible assets1 ) |
9.2 | 8.5 | 8.2% | 25.9 | 21.3 | 21.6% |
| 1 Other than computer software |
Despite challenging market conditions Facilities Services delivered an excellent performance on profit and cash in 2010, with an improving revenue line as the year progressed. Revenue grew 1.6 per cent. year on year, 9.0 per cent. in quarter 4, reflecting the contribution from Knightsbridge Guarding. Underlying revenue, excluding Knightsbridge, declined by 2.2 per cent. for the full year but grew by 1.6 per cent. in the final 3 months of the year, aided by a strong performance in Catering.
During the year Facilities Services continued to drive margin improvement and reduce its cost base through initiatives to improve operational efficiency, including an organisational simplification in the final 3 months of 2010. Contract wins, margin improvement and cost reductions all contributed to strong profit growth of 21.6 per cent. for the full year compared to the prior year. Excluding Knightsbridge, profit growth was 18.8 per cent.
| Fourth Quarter | Full Year | |||||
|---|---|---|---|---|---|---|
| change | ||||||
| (4.5) | (8.0) | 43.8% | (33.9) | (42.4) | 20.0% | |
| (4.5) | (8.0) | 43.8% | (33.9) | (42.4) | 20.0% | |
| 2010 | 2009 | change | 2010 | 2009 |
Central costs for the year were £8.5 million lower than last year primarily due to lower incentive costs and the impact of central accruals made in 2009.
Many of the Issuer's businesses provide services to corporate customers to improve the working environment for their own employees and customers. Such activities generally have a lower impact on the environment than results from manufacturing processes or extractive industries. The Issuer has a policy of operating its businesses in a manner that minimises damage to the environment and has an environmental management system, with good practice procedures covering the main areas of environmental impact within the business.
During 2010 the Group made a number of small acquisitions for a net consideration of £19.6 million, and disposed of a number of its businesses for a net consideration of approximately £8.9 million.
The Group's total IAS 19 net deficit was £11.9 million at 31 December 2010. The Group has a number of small defined benefit schemes outside the UK but the principal scheme (the Scheme) is in the UK.
The net deficit comprises the aggregate of the value of the Scheme assets and liabilities:
· Scheme assets comprise approximately 20 per cent. equities and 80 per cent. bonds and other financial instruments; and
· Scheme liabilities are dependent on mortality assumptions, the yield on AA corporate bonds, inflation prospects and company salary increases.
Asset allocation is determined by the trustees of the Scheme in conjunction with the company. The latest triennial valuation of the UK Scheme took place during 2010, the results of which have not yet been announced by the trustees of the Scheme.
The following applies only to persons who are the beneficial owners of Notes and is a summary of the Issuer's understanding of current law and practice in the United Kingdom relating only to United Kingdom withholding tax treatment on payments of principal and interest in respect of the Notes. It does not deal with any of the other United Kingdom tax implications of acquiring, holding or disposing of the Notes. The United Kingdom tax treatment of prospective Noteholders depends on their individual circumstances and may be subject to change in the future. Prospective Noteholders who may be subject to tax in a jurisdiction other than the United Kingdom or who may be unsure as to their tax position should seek their own professional advice.
Payments of interest by the Issuer made in respect of securities which are issued by a company and are listed on a "recognised stock exchange", within the meaning of section 1005 of the Income Tax Act 2007 (ITA) may be made without withholding or deduction for or on account of United Kingdom income tax. The London Stock Exchange is a recognised stock exchange. Securities will be treated as listed on the London Stock Exchange if they are included in the Official List (within the meaning of and in accordance with the provisions of Part 6 of the Financial Services and Markets Act 2000) and admitted to trading on the London Stock Exchange's regulated market or Professional Securities Market. Provided, therefore, that the Notes remain so listed, interest on the Notes will be payable without withholding or deduction on account of United Kingdom tax.
Interest on the Notes may be paid by the Issuer without withholding or deduction on account of United Kingdom tax where, at the time of payment, the Issuer (and any other person by or through whom the interest is paid) reasonably believes that the beneficial owner of the interest is either a company resident in the United Kingdom or a company not resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account the interest in computing its United Kingdom taxable profits, or where the interest otherwise constitutes an 'excepted payment' within the meaning of sections 935 to 937 of the ITA, in each case provided that H.M. Revenue & Customs has not given a direction in relation to any particular payment that the interest should be paid under deduction of tax.
Interest on the Notes will also be payable without withholding or deduction on account of United Kingdom tax in cases where the maturity of the Notes is less than 365 days and those Notes do not form part of a scheme or arrangement of borrowing intended to be capable of remaining outstanding for more than 364 days.
In other cases, interest will generally be paid by the Issuer under deduction of United Kingdom income tax at the basic rate (currently 20 per cent.), subject to any direction to the contrary by H.M. Revenue & Customs in respect of such relief as may be available pursuant to the provisions of an applicable double taxation treaty.
Noteholders may wish to note that, in certain circumstances, H.M. Revenue & Customs has power to obtain information (including the name and address of the beneficial owner of the interest) from any person in the United Kingdom who either pays or credits interest to or receives interest for the benefit of a Noteholder H.M. Revenue & Customs also has power, in certain circumstances, to obtain information from any person in the United Kingdom who pays amounts payable on the redemption of Notes which are deeply discounted securities for the purposes of the Income Tax (Trading and Other Income) Act 2005 to or receives such amounts for the benefit of, another person. H.M. Revenue & Customs published practice indicates that H.M. Revenue & Customs would not exercise the power referred to above to require this information in respect of amounts payable on the redemption of deeply discounted securities where such amounts are paid on or before 5 April 2012. Such information may include the name and address of the beneficial owner of the amount payable on redemption. Any information obtained may, in certain circumstances, be exchanged by H.M. Revenue & Customs with the tax authorities of the jurisdiction in which the Noteholder is resident for tax purposes.
Under the European Council Directive 2003/48/EC on the taxation of savings income (the Directive), Member States are required to provide to the tax authorities of another Member State details of payments of interest (or similar income) paid by a person within its jurisdiction to an individual resident in that other Member State, except that, for a transitional period, Luxembourg and Austria will instead be required (unless during that period they elect otherwise) to operate a withholding system in relation to such payments (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries). A number of non-EU countries and territories including Switzerland have adopted similar measures (a withholding system in the case of Switzerland).
The European Commission has proposed certain amendments to the Directive which may, if implemented, amend or broaden the scope of the requirements described above.
The Dealers have, in an amended and restated programme agreement (the Programme Agreement) dated 13 June 2008, agreed with the Issuer a basis upon which they or any of them may from time to time agree to purchase Notes. Any such agreement will extend to those matters stated under "Form of the Notes" and "Terms and Conditions of the Notes". In the Programme Agreement, the Issuer has agreed to reimburse the Dealers for certain of their expenses in connection with the establishment of the Programme and the issue of Notes under the Programme and to indemnify the Dealers against certain liabilities incurred by them in connection therewith.
The Notes have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the Securities Act.
The Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or to a United States person, except in certain transactions permitted by U.S. tax regulations. Terms used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code of 1986 and regulations thereunder.
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it will not offer, sell or deliver Notes (i) as part of their distribution at any time or (ii) otherwise until 40 days after the completion of the distribution, as determined and certified by the relevant Dealer or, in the case of an issue of Notes on a syndicated basis, the relevant lead manager, of all Notes of the Tranche of which such Notes are a part, within the United States or to, or for the account or benefit of, U.S. persons. Each Dealer has further agreed, and each further Dealer appointed under the Programme will be required to agree, that it will send to each dealer to which it sells any Notes during the distribution compliance period a confirmation or other notice setting forth the restrictions on offers and sales of the Notes within the United States or to, or for the account or benefit of, U.S. persons. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act.
Until 40 days after the commencement of the offering of any Series of Notes, an offer or sale of such Notes within the United States by any dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with an available exemption from registration under the Securities Act.
Each issuance of Index Linked Notes or Dual Currency Notes shall be subject to such additional U.S. selling restrictions as the Issuer and the relevant Dealer may agree as a term of the issuance and purchase of such Notes, which additional selling restrictions shall be set out in the applicable Final Terms.
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) it has not made and will not make an offer of Notes which are the subject of the offering contemplated by this Prospectus as completed by the final terms in relation thereto to the public in that Relevant Member State except that it may, with effect from and including the Relevant Implementation Date, make an offer of such Notes to the public in that Relevant Member State:
(a) at any time to any legal entity which is a qualified investor as defined in the Prospectus Directive;
provided that no such offer of Notes referred to in (a) to (c) above shall require the Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.
For the purposes of this provision, the expression an offer of Notes to the public in relation to any Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe the Notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression Prospectus Directive means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in the Relevant Member State and the expression 2010 PD Amending Directive means Directive 2010/73/EU.
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that:
The Notes have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No.25 of 1948, as amended; the FIEA) and each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree that it will not offer or sell any Notes, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (as defined under Item 5, Paragraph 1, Article 6 of the Foreign Exchange and Foreign Trade Act (Act No. 228 of 1949, as amended)), or to others for re-offering or resale, directly or indirectly, in Japan or to, or for the benefit of, a resident of Japan except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the FIEA and any other applicable laws and regulations of Japan.
Each Dealer has agreed and each further Dealer appointed under the Programme will be required to agree that it will (to the best of its knowledge and belief) comply with all applicable securities laws and regulations in force in any jurisdiction in which it purchases, offers, sells or delivers Notes or possesses or distributes this Prospectus and will obtain any consent, approval or permission required by it for the purchase, offer, sale or delivery by it of Notes under the laws and regulations in force in any jurisdiction to which it is subject or in which it makes such purchases, offers, sales or deliveries and neither the Issuer nor any of the other Dealers shall have any responsibility therefor.
None of the Issuer and the Dealers represents that Notes may at any time lawfully be sold in compliance with any applicable registration or other requirements in any jurisdiction, or pursuant to any exemption available thereunder, or assumes any responsibility for facilitating such sale.
With regard to each Tranche, the relevant Dealer will be required to comply with such other restrictions as the Issuer and the relevant Dealer shall agree and as shall be set out in the applicable Final Terms.
The establishment of the Programme and the issue of Notes have been duly authorised by resolutions of the Board of Directors of the Issuer dated 14 July 2005 and 18 December 2007 and a resolution of the Finance Committee of the Issuer dated 17 February 2011.
The admission of Notes to the Official List will be expressed as a percentage of their nominal amount (excluding accrued interest). It is expected that each Tranche of Notes which is to be admitted to the Official List and to trading on the London Stock Exchange's regulated market or the Professional Securities Market, as applicable, will be admitted separately as and when issued, subject only to the issue of a Global Note or Notes initially representing the Notes of such Tranche. Application has been made to the UK Listing Authority for Notes issued under the Programme to be admitted to the Official List and to the London Stock Exchange for such Notes to be admitted to trading on the London Stock Exchange's regulated market or Professional Securities Market, as applicable. The listing of the Programme in respect of Notes is expected to be granted on or around 13 April 2011.
Notes may be issued pursuant to the Programme which will not be admitted to the Official List or to trading on the London Stock Exchange or listed on any other stock exchange or which will be listed on such stock exchange as the Issuer and the relevant Dealer(s) may agree.
So long as Notes are capable of being issued under the Programme, copies of the following documents will, when published, be available from the registered office of the Issuer and from the specified office of the Paying Agent for the time being in London:
(vii) in the case of each issue of Notes admitted to trading on the London Stock Exchange's regulated market subscribed pursuant to a subscription agreement, the subscription agreement (or equivalent document).
The Guarantee is an unsecured, unsubordinated obligation of the Guarantor, guaranteeing all monies due under the Notes, and will terminate on the date on which the issue of GBP 300,000,000 5.75 per cent. Notes due 31 March 2016 (XS0249085852), ceases to be outstanding.
The Notes have been accepted for clearance through Euroclear and Clearstream, Luxembourg (which are the entities in charge of keeping the records). The appropriate Common Code and ISIN for each Tranche of Notes allocated by Euroclear and Clearstream, Luxembourg will be specified in the applicable Final Terms. If the Notes are to clear through an additional or alternative clearing system the appropriate information will be specified in the applicable Final Terms.
The address of Euroclear is Euroclear Bank SA/NV, 1 Boulevard du Roi Albert II, B-1210 Brussels and the address of Clearstream, Luxembourg is Clearstream Banking, 42 Avenue JF Kennedy, L-1855 Luxembourg.
The price and amount of Notes to be issued under the Programme will be determined by the Issuer and the relevant Dealer at the time of issue in accordance with prevailing market conditions.
There has been no significant change in the financial or trading position of the Group since 31 December 2010. There has been no significant change in the financial or trading position of the Guarantor's Group since 31 December 2009.
There has been no material adverse change in the financial position or prospects of the Group since 31 December 2010. There has been no material adverse change in the financial position or prospects of the Guarantor's Group since 31 December 2009.
Neither the Issuer nor the Guarantor nor any of their respective subsidiaries is or has been involved in any governmental, legal or arbitration proceedings (including any proceedings which are pending or threatened of which the Issuer or the Guarantor or any of their respective subsidiaries is aware) during the 12 months preceding the date of this document which may have, or have had in the recent past, a significant effect on the financial position or profitability of the Issuer, the Guarantor or any of their respective subsidiaries.
The auditors of the Issuer and the Guarantor are KPMG Audit Plc (Chartered Accountants and Registered Auditors). KPMG Audit Plc have no material interest in the Issuer or the Guarantor.
The audit report in respect of each of the Issuer and the Guarantor for the financial year ended 31 December 2009 stated that the report, including the opinion, was prepared for and only for the Issuer's and the Guarantor's respective members as a body in accordance with Section 235 of the Companies Act 1985 and for no other purpose and that the auditors did not, in giving the audit opinion, accept or assume responsibility for any other purpose or to any other person to whom the report was shown or into whose hands the report came except where expressly agreed with the auditor's prior consent in writing. The audit report in respect of each of the Issuer and the Guarantor for the financial year ended 31 December 2009 stated that the report, including the opinion, was prepared for and only for the Issuer's and the Guarantor's respective members as a body in accordance with Sections 495, 496 and 497 of the Companies Act 2006 and for no other purpose and that the auditors did not, in giving the audit opinion, accept or assume responsibility for any other purpose or to any other person to whom the report was shown or into whose hands the report came except where expressly agreed with the auditor's prior consent in writing.
The above was recommended in guidance issued by the Institute of Chartered Accountants in England and Wales for inclusion in all audit reports produced by audit firms in accordance with Section 235 of the Companies Act 1985 or Sections 495, 496 and 497 of the Companies Act 2006.
Any certificate or report of the auditors of the Issuer or the Guarantor or any other person called for by or provided to the Trustee (whether or not addressed to the Trustee) in accordance with or for the purposes of the Trust Deed may be relied upon by the Trustee as sufficient evidence of the facts stated therein whether or not such certificate or report and/or any engagement letter or other document entered into by the Trustee in connection therewith contains a monetary or other limit on the liability of the auditors of the Issuer or the Guarantor or such other person in respect thereof.
Save as set out in the Final Terms, the Issuer does not intend to provide any post-issuance information in relation to any issues of Notes.
Certain of the Dealers and their affiliates have engaged, and may in the future engage, in investment banking and/or commercial banking transactions with, and may perform services to the Issuer and its affiliates in the ordinary course of business.
2 City Place Beehive Ring Road Gatwick RH6 OHA
HSBC Corporate Trustee Company (UK) Limited 8 Canada Square London E14 5HQ
HSBC Bank plc 8 Canada Square London E14 5HQ
1 Grand Canal Square Grand Canal Harbour Dublin 2 Ireland
London EC2Y 8HQ London E1 6AD
To the Issuer To the Dealers and the Trustee
Linklaters LLP Allen & Overy LLP One Silk Street One Bishops Square
To the Issuer KMPG Audit Plc 8 Salisbury Square London EC4Y 8BB
5 The North Colonnade 10 Harewood Avenue London E14 4BB
8 Canada Square Bracken House
Canary Wharf London NW1 6AA
London E14 5HQ One Friday Street London EC4M 9JA
135 Bishopsgate 1 Finsbury Avenue London EC2M 3UR London EC2M 2PP
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