31 Mar 2017 09:00
31 March 2017
RECKITT BENCKISER GROUP PLC
2016 Annual Report, 2016 Sustainability Report
and Notice of the 2017 Annual General Meeting
Reckitt Benckiser Group plc ("RB" or the "Company") released its preliminary announcement of annual results ("Preliminary Announcement") for the year ended 31 December 2016 on 10 February 2017. Further to the Preliminary Announcement, RB confirms that it has today published its Annual Report and Financial Statements 2016 ("2016 Annual Report") and Notice of the Annual General Meeting 2017 ("2017 AGM Notice").
Copies of both documents have today been posted to shareholders and are available on the Company's website at www.rb.com.
The Company's 2017 Annual General Meeting will be held at 11.15 a.m. on Thursday 4 May 2017 at the London Heathrow Marriott Hotel, Bath Road, Hayes, Middlesex, UB3 5AN.
The following documents have also been published today and are available on www.rb.com:
· RB's 2016 Sustainability Report
· Modern Slavery Act Statement
Sustainability is a key component of RB's betterbusiness strategy which defines the way we help to make healthier and happier lives through three strategic pillars: betterfinancials, bettersociety and betterenvironment. Our suite of annual and sustainability reports provides an overview of our performance in a consistent and integrated way.
In compliance with rule 6.3.5(3) of the Disclosure Guidance and Transparency Rules the following documents can be downloaded in pdf format from the Company's website at www.rb.com. In compliance with LR 9.6.3, the documents have also been submitted to the National Storage Mechanism and will shortly be available for inspection at http://www.morningstar.co.uk/uk/nsm
· 2016 Annual Report
· 2017 AGM Notice
· Form of Proxy for the 2017 Annual General Meeting
A condensed set of the Company's financial statements and information on important events that have occurred during the financial year and their impact on the financial statements were included in the Preliminary Announcement. That information, together with the information set out in the Appendix below, which is extracted from the 2016 Annual Report, constitutes the material required for the purposes of compliance with DTR 6.3.5R. This announcement is not a substitute for reading the full 2016 Annual Report. Page numbers in the extracted information below refer to page numbers in the 2016 Annual Report.
Enquiries: Tel: +44 (0)1753 217800
Investors/Analysts:
Rupert Bondy, SVP, General Counsel/Company Secretary
Richard Joyce, SVP, Investor Relations
Media:
Patty O'Hayer, Director, External Communications & Affairs
103-105 Bath Road, Slough SL1 3UH
Registered in England and Wales, No. 6270876
Reckitt Benckiser Group plc's LEI code is 5493003JFSMOJG48V108
About RB:
RB* is the world's leading consumer health and hygiene company. The company has operations in over 60 countries, with headquarters in London, Dubai and Amsterdam, and sales in most countries across the globe. The company employs approximately 35,000 people worldwide.
Led by a purpose of providing innovative solutions for healthier lives and happier homes, RB is amongst the top 10 companies listed on the London Stock Exchange. It is the global No 1 or No 2 in the majority of its fast-growing categories, driven by an exceptional focus on innovation. RB's Health, Hygiene and Home portfolio is led by its global Powerbrands including Nurofen, Strepsils, Gaviscon, Mucinex, Durex, Scholl, Clearasil, Lysol, Dettol, Veet, Harpic, Cillit Bang, Mortein, Finish, Vanish, Calgon, Air Wick, Woolite and French's. Powerbrands represent approximately 80% of RB's net revenue.
RB is redefining the world of consumer health and hygiene. Its people and unique culture are at the heart of its success. It has a drive for achievement and a passion to outperform wherever it focuses, including sustainability where it is targeting a 1/3 reduction in water impact, a 1/3 reduction in carbon and 1/3 of net revenue from more sustainable products. RB is proud to lead the Save a Child a Minute campaign, which aims to eliminate child deaths from diarrhoea, one of the world's largest killers of children under 5.
For more information visit www.rb.com
*RB is the trading name of the Reckitt Benckiser group of companies
Cautionary note concerning forward looking statements
This announcement and the Annual Report and Financial Statements contain statements with respect to the financial condition, results of operations and business of RB (the "Group") and certain of the plans and objectives of the Group that are forward-looking statements. Words such as ''intends', 'targets', or the negative of these terms and other similar expressions of future performance or results, and their negatives, are intended to identify such forward-looking statements. In particular, all statements that express forecasts, expectations and projections with respect to future matters, including targets for net revenue, operating margin and cost efficiency, are forward-looking statements. Such statements are not historical facts, nor are they guarantees of future performance.
By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including many factors outside the Group's control. Among other risks and uncertainties, the material or principal factors which could cause actual results to differ materially are: the general economic, business, political and social conditions in the key markets in which the Group operates; the ability of the Group to manage regulatory, tax and legal matters, including changes thereto; the reliability of the Group's technological infrastructure or that of third parties on which the Group relies; interruptions in the Group's supply chain and disruptions to its production facilities; the reputation of the Group's global brands; and the recruitment and retention of key management.
These forward-looking statements speak only as of the date of this announcement. Except as required by any applicable law or regulation, RB expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
Any information contained in the 2016 Annual Report and Financial Statements on the price at which shares or other securities in Reckitt Benckiser Group plc have been bought or sold in the past, or on the yield on such shares or other securities, should not be relied upon as a guide to future performance.
APPENDIX
The primary purpose of this announcement is to inform the market about the publication of RB's 2016 Annual Report, 2016 Sustainability Report and 2017 AGM Notice.
The information below, which is extracted from the 2016 Annual Report, is included solely for the purpose of complying with DTR 6.3.5R and the requirements it imposes on issuers as to how to make public annual financial reports. It should be read in conjunction with the Preliminary Announcement. Together these constitute the material required by DTR 6.3.5R to be communicated in unedited full text through a Regulatory Information Service. This material is not a substitute for reading the full 2016 Annual Report.
Page and note references in the text below relate to pages and notes in the 2016 Annual Report.
(i) OUR FRAMEWORK FOR RISK MANAGEMENT (pages 46 to 53)
The following table provides a summary review of the principal strategic risks and uncertainties that could affect the Group, as identified by management and the Board. RB operates a major risk assessment process to periodically identify, assess and mitigate those risks it considers to be most significant to the successful execution of our strategy.
The following table sets out the principal strategic risks and uncertainties facing the Group at the date of this report. They do not comprise all of the risks that the Group may face. Additional risks and uncertainties not presently known to management, or deemed to be less material at the date of this report, may also have an effect on the Group.
The Board retains responsibility for oversight of principal risks across RB and it considers the appropriateness of the risk exposure to its appetite for risk as laid out in the annual strategic planning process. The Board delegates the day-to-day monitoring of risk to the Executive Committee (EC) and each principal risk has an EC owner; principal risks are routinely reviewed not only at EC meetings but also by the appropriate Board committee (Audit Committee or CRSEC Committee) or by the Board itself. The Audit Committee holds responsibility for oversight of the principal risk assessment process, that it is appropriate to the needs of the business and that it works effectively; the Audit Committee performs an annual review of this process. The principal risk assessment process is led and facilitated by the Group Head of Internal Audit & Risk Management under the direction of the Group CEO and CFO. The principal risk assessment process consists of the following key elements.
The most senior leaders of our business dedicate time each year, in a facilitated discussion with the Group risk team to consider the risk environment for their particular functional or geographic area of responsibility and how their emerging or known risks could impact on the achievement of the Group's strategic objectives.
Similar sessions are held with the Group's external advisors and also with each Board member. The key content from these sessions is synthesised into the Group's principal risks, with the EC owner being accountable for executing the current control strategy and for compiling and executing a plan of mitigating actions to properly manage the Group's exposure to that risk. Progress is reviewed periodically and the summary output from the principal risk assessment process is formally submitted annually by the EC to the Board for its consideration and agreement. Through the course of each year, the EC, Board and Board committees' agendas address all of the principal risks through specific 'deep dives' to ensure proper focus, resourcing and progress with mitigation.
Viability Statement
The Board conducted a Viability Review covering a five-year period. This period was selected as it is the period covered in the Group's long-term forecasting process. This period covers the introduction to market of the current new product pipeline.
The five-year Viability Review first looks at the Group's ability to continue in operation if it performs in line with the Group forecast. This assumes that normal market conditions continue and current trends remain. The evaluation takes into account the Group's cash flow, historical Group planning accuracy, available banking facilities and interest cover ratios in connection with financial covenants. The analysis concluded that if RB performs in line with forecast it would have sufficient funds to trade, settle its liabilities as they fall due, and remain compliant with financial covenants.
The analysis goes on to consider the viability of the business should adverse unexpected events arise. To illustrate this, a sensitised view of the Group forecast was produced. The adverse assumptions are based primarily upon the realisation of key Group principal risks, which have the most relevant potential impact on viability (see risks marked "*" on the following pages).
The sensitivity assigns each adverse assumption an estimated annual monetary value and estimates the impact on interest cover ratios and headroom over available borrowing facilities. The analysis concludes that even with the occurrence of key unexpected scenarios, RB would still have sufficient funds to trade, settle its liabilities as they fall due, and remain compliant with financial covenants.
The Board has further considered the occurrence of a 'Black Swan' event: an event with sufficient potential impact to risk the future of RB as a strong and independent business operating in its chosen markets. The occurrence of a major issue could result in significant reputational impact, a catastrophic share price fall, significant loss of consumer confidence and inability to retain and recruit quality people. Such an event could have an impact on the viability of the business.
As there are a number of mitigating controls in place across the business, the occurrence of a Black Swan event is considered sufficiently unlikely that it has not been factored into the sensitivity analysis.
As a result of the Viability Review, the Board have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the five-year period covered in the Viability Review.
Risk management framework
Compared with a year ago, the individual risks have evolved as follows:
· 'Safety' both for consumers as well as for employees has been reassessed through a newly implemented Safety, Quality and Compliance (SQC) governance structure, implemented mid-year, and are now included as separate principal risks;
· Due to developments during 2016 in 'South Korea', this risk is now demonstrably material and is actively managed separately from the Legal Non-Compliance risk;
· 'RB Reputation' has been included for the first time as a principal risk, reflecting RB's increased maturity as a healthcare business;
· The 'Product and GXP Regulatory Non-Compliance' risks have been refocused, again in light of the newly implemented SQC governance structure; and
· The 'Significant Country Underperformance' risk has been removed from the list, as the materiality of the net exposure has reduced.
The Group risk profile has also shifted, with more principal risks carrying a higher likelihood than in the previous year, notably risk numbers 2, 3, 9 and 10 per the listing adjacent. This shift represents a recalibration from the perspective of a healthcare business in the case of numbers 2 and 3; the potential impact of risk number 9 is also considered to be higher than the previous year based on the experiences of 2016; and, in the case of risk number 10, the global tax environment is seen as generally tougher than was previously the case.
Overall, it is considered that the Group risk management framework has been considerably strengthened during 2016 through the combination of greater Board leadership and oversight with the establishment of the CRSEC Committee together with the establishment of executive management committees, the establishment of the Safety, Quality and Compliance function reporting directly to the Group CEO and the channelling of additional resources to strengthen compliance assurance across the Group.
Exchange rate risk
While the exchange rate is not considered to be a principal risk to the Group, the means used to mitigate this risk are considered in Note 14 on pages 131 to 132.
Current Group principal risks
1. Product Safety
2. Non-Compliance with Product Regulations
3. Non-Compliance with GXP Regulations
4. South Korea
5. Fatality or Major Employee Safety Incident
6. Supply Business Continuity Planning
7. ERP/IT Systems Failure
8. Cyber Security and Data Protection
9. Legal Non-Compliance
10. Major Tax Disputes
11. Loss of Key Management
12. RB Reputation
BS. 'Black Swan' Event
Routine Risks
Principal Risk | Description | Mitigation Status | Ongoing 2017 actions |
1. Product Safety* | Risk of not having a robust process for assessment of product safety; this may result in; Consumer safety issues; gaps in the completion of our safety assessment; Reputational damage with consumers, customers of regulators; Significant financial losses arising from supply disruption, product recalls, delayed launches, penalties, etc.; Possible criminal liability for RB senior management | A dedicated pharmacovigilance group monitors and reports on adverse events and manages patient safety risks.
Safety team has been strengthened during 2016 with clearer leadership of the safety Quality and Compliance organisation, reporting directly to Group CEO.
A Compliance Management Committee (CMC) has been established in 2016, meeting monthly and chaired by the Group CEO. This committee routinely reviews Product Safety governance and issues arising and escalates to the Executive Committee as necessary.
Quarterly updates of Product Safety progress from the CMC to the CRSEC Committee. | Review of Product Safety Evaluation Records (PSERs) to ensure current availability for all products.
Systems review to ensure that all product changes are satisfactorily tracked, controlled and updated.
Develop and deliver base training for all employees, and advanced training for relevant employees to fully understand their role in fulfilling safety, quality and compliance standards for RB products. |
2. Non-Compliance with Product Regulations* | Risk that non-compliance with regulations of relevant product classifications (e.g. medicinal products, medical devices, VMS, food, cosmetic, general products etc.) results in: Consumer safety issues; Reputational damage with consumers, customers or regulators; Significant financial losses arising from supply disruption, product recalls delayed launches, penalties, etc.; Possible criminal liability for RB senior management | REGEX (Regulatory Excellence) programme executed to review compliance of RB's medicine marketing authorisations.
Regulatory investment during 2016 to create a dedicated compliance and maintenance team to strengthen existing product regulatory control.
A Compliance Management Committee (CMC) has been established, meeting monthly and chaired by the Group CEO. This committee routinely reviews Product Regulatory governance and issues arising.
Quarterly updates of Product Regulatory progress from the CMC to the Board Compliance Committee.
REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) compliance programme progressing.
Best practice guidance on technical due diligence and vulnerability/compliance activities post acquisition has been developed, based on learnings from recent acquisitions. | Product Vulnerability Programme (review of ingredients, formulations, stability data, etc. in Health portfolio).
Pilot compliance programme for sexual wellbeing medical devices has started and will be accelerated as part of product integrity reviews.
Improve artwork and label approval process.
Continue comprehensive REACH compliance programme and implementation of business-wide change control capability. |
3. Non-Compliance with GXP Regulations* | Non-compliance with applicable regulations, guidelines, internal standards and/or registrations across the supply chain and throughout the product life cycle (PLC) governing how we produce and supply product.
Non-compliance results in risk to: Consumer, safety and efficacy; Business disruption including site or business closures; Possible criminal liability for RB senior management. | A CMC has been established, meeting monthly and chaired by the Group CEO. This committee routinely reviews GXP Regulatory governance and issues arising.
Quarterly updates of Product Regulatory progress from the CMC to the Board Compliance Committee.
Minimum standards programme in place to monitor and measure performance.
Health compliance regularly audited externally and clear actions in place.
Change management, already in place for Health, rollout to rest of the business in 2016. | Implementation of a full Company Quality Management System (QMS) to cover Health, Hygiene and Home and all supporting functions.
The establishment of an independent Quality Audit function reporting directly to the Chief Safety, Quality and Compliance Officer.
Enhance the Medical Device QMS to ensure compliance with new ISO and Authority Standards.
Improve and enhance the Global Consumer Relations function and system to facilitate appropriate signal detection and action to be taken.
External benchmarking and review of QMS. |
4. South Korea
| Significant financial and reputational risk as a result of death and lung injury caused by inhaling Oxy Sac Sac, a humidifier sanitiser product marketed by RB's Korean subsidiary Oxy RB.
While a fully appropriate provision was made at half year to cover the one-off costs of litigation, civil settlements and medical costs, as well as some impairment, the risk of additional exposure remains.
However, there was no substantive basis to take further provision at year end. | RB and Oxy RB crisis management team in place and functioning throughout the year to progress a compensation plan and address legal and governmental action.
Full public apology formally and repeatedly made by Oxy RB to affected parties.
Financial modelling completed to quantify risk and provide for financial exposure at the half year.
Compensation agreements reached with a significant proportion of Round 1 and Round 2 victims of lung damage.
Lessons learned exercise performed to understand required process and control enhancements to prevent reoccurrences. | RB continues to work closely with government, lawyers and other businesses to progress settlement with claimants. |
5. Fatality or Major Employee Safety Incident | Work accidents leading to death, injury or illness on RB premises or premises under RB supervision, in the case of outsourced operations, resulting in risks to: Loss of life; Company reputation brand and Company image damage; Operational efficiency - factory closures, significant supply disruption as issues are identified and rectified; Financial performance - loss of sales, fines and cost of remediation activities; Possible criminal liability for RB senior management
| Policy and minimum Environment, Health & Safety (EHS) standards established and confirmed through self-assessment, site visits and independent audits.
A CMC has been established, meeting monthly and chaired by the Group CEO. This committee routinely reviews Employee Safety governance and issues arising.
Quarterly updates of progress with Safety governance and issues from the CMC to the CRSEC Committee.
H&S training for both manufacturing site leadership and commercial offices running through 2016. | EHS resourcing review to consider appropriateness across RB for supply, R&D and commercial offices.
New independent internal EHS audit team and programme established for regional deployment. Clear guidelines and cultural safety programme to be developed as part of this.
|
6. Supply Business Continuity Planning | Risk that our business continuity plans (BCPs), including mono-sourcing of materials and finished products, do not adequately address all risks facing the Group, resulting in unforeseen business disruption. | Continued progress in driving principal single sourced manufacturing sites to achieve and maintain FM Global certification as 'Highly Protected Risk' (HPR) sites, or otherwise have fully tested risk mitigation plan.
Annual review of Business Interruption insurance policies to ensure adequate cover is in place.
Tested and proven product recall process. | BCP documentation and testing to be reviewed for each significant factory and in aggregate to ensure that business continuity arrangements remain sufficient. |
7. ERP/IT Systems Failure | Risk of IT disruption or accounting error, due to legacy Enterprise Resource Planning (ERP) and IT systems, impacts business operations in a number of areas, e.g. through unavailability of key management information or disruption to transactional processing.
There is an associated, additional risk that SAP deployment, to replace the existing legacy ERP (JDE), is delayed. | Executive Committee strategic decision committing to Group-wide ERP rollout.
SAP commercial and factory templates now live in two and four entities respectively, with multiple deployment teams now active in rapid rollout phase.
Disaster recovery plans for key IT systems redefined, reviewed and tested under new outsource provider platform, providing improved systems integrity. | SAP rapid rollout phase consists of five deployment teams working in separate geographies to deliver a single instance SAP for both commercial and manufacturing sites in those geographies.
Full migration of all servers to outsourced data centres. |
8. Cyber Security and Data Protection* | Risk that RB is subject to increasingly sophisticated cyber attacks aimed at causing business disruption, capture of data for financial gain, and reputational damage or that RB's data privacy is considered by regulators to be inadequate. | Cyber security awareness and data privacy training for all staff, and anti-phishing training for senior management.
Data Privacy programme in place.
Solutions implemented for data loss prevention and privileged access management.
Strengthening of Information Security resourcing and capabilities.
Proactive investment in system patching against cyber threats.
Transformation of internal cyber team, with additional resourcing for Security, Privacy and Compliance. Single Sign On platform implemented. | Transformation of hardware environment, Cyber Security Monitoring and Vulnerability Management tools being delivered.
Global Data Privacy compliance assessment to identify further remediation required.
Implement Digital Compliance programme.
Additional investment in Cyber Monitoring, Digital Cyber Protection and IT Forensic systems.
Implementation of a Cyber Breach Response framework. |
9. Legal Non-Compliance*
| Risk that we are not fully compliant with relevant laws and regulation, including anti-corruption laws and global competition laws, resulting in damage to RB's reputation, significant potential fines and possible criminal liability for RB senior management. (See Notes 17 and 19 of the Financial Statements for further details). | Group Legal Compliance programme strengthened.
Global Compliance Passport online training completed by all employees.
Group Whistleblower Hotline operational, widely communicated and embedded.
Legal Academy launched, providing centralised training facilities. | Appointment of new General Counsel to the Executive Committee.
Develop tool for ongoing monitoring to prevent abuse of significant market positions.
Development of global gift register to replace local tools. |
10. Major Tax Disputes | Risk of significant unprovisioned cash outflows as a result of tax authority challenge to filed tax positions. (See Note 7 of the Financial Statements for further detail.) | Implementation of a Governance Review Board to monitor and drive compliance against our operating model.
Ongoing monitoring of progress of European Community State Aid investigations and their possible impact on RB. Also for Base Erosion and Profit Shifting (BEPS) initiatives. | Ongoing proactive management to progress formal Advanced Pricing Agreements (APAs) and proactive management of ongoing tax audits. |
11. Loss of Key Management | Risk that RB cannot implement its strategies and meet objectives as a result of key management leaving the business who cannot be readily replaced by equally high-calibre experienced/qualified candidates. | Succession plans for key management positions are in place.
Retention risk analysis undertaken regularly, including review of turnover rates.
Continuous review of competitiveness of the total compensation programmes at RB.
DARE (Develop, Attract, Retain, Engage talented women) programme launched with the objective of reducing the drop-off rate of females from manager to senior management positions. | The Group structures its reward programme to attract and retain the best people. The formal succession planning process continues to evolve with plans being reviewed and updated regularly for all key positions and individuals.
The DARE programme is a key focus for 2017. |
12. RB Reputation | The risk of significant reputational damage within multiple external stakeholder groups, including consumers, customers, suppliers, investors and regulatory bodies, as a result of recent and any future publicly known issues. | Recent organisational changes, most notably development of the Safety, Quality and Compliance function, to strengthen RB's compliance culture.
A Board CRSEC Committee and an executive Compliance Management Committee (CMC) have been introduced and now meet regularly.
A Critical Event process has been formalised with clear decision making and escalation through an independent functional line to the CEO. | On executive pay, the Remuneration Committee has reduced LTIP awards across the Board for 2017, with the most substantial reduction being the CEO share awards.
Also, from 2017, variable pay awards may be withheld from individuals if it is considered that their results have not been achieved in alignment with RB values and Code of Conduct. |
BS. 'Black Swan' Event
| Significant reputational impact as a result of a major operational or product related safety issue resulting in very serious adverse impacts to third parties or the viability of the business, possibly compounded by apparently negligent management behaviour.
Extreme adverse press coverage and viral social media linking the RB name to consumer brands, leads to substantial share price fall, accompanied by collapse of consumer confidence and inability to retain and recruit quality employees. | A full and robust risk and control framework is in place and operating effectively across RB.
This framework is overseen by the Audit Committee on behalf of the Board and is routinely reviewed by an independent Internal Audit function, which reports directly to the Audit Committee.
Comprehensive crisis management training programme and support tools in place. | The adequacy of the risk and control framework, together with Group policies, is reviewed annually by the Audit and CRSEC Committees.
Incremental improvements are made each year to further strengthen RB's system of internal control and risk management. |
Routine Risks
| We are subject to a range of compliance and routine risks as part of everyday business. | In order to manage the more numerous and routine risks, the Group maintains a complete and robust governance framework. This consists of a full set of policies, processes and systems covering all aspects of compliance, with international and local laws as well as with the Group's stated minimum control standards.
Management provide primary assurance by driving risk compliance through their respective area, regional or functional responsibility. This is done through regular and detailed business and governance reviews. Secondary assurance is provided independently through a combination of Internal and External Audit covering all aspects of the Group's operations. | The adequacy of the risk and control framework, together with Group policies, is reviewed annually by the Audit and CRSEC Committees.
A fundamental element of the Mead Johnson Nutrition acquisition integration process will be to select the best combination of risk and control policies, processes and systems to further improve robustness for the enlarged RB business. |
(ii) RELATED PARTY TRANSACTIONS (pages 149 and 162)
[NOTE] 26 RELATED PARTY TRANSACTIONS
RB & Manon Business Co. Ltd (Manon). The Group completed new arrangements with the non-controlling Shareholders of Manon, agreeing to terminate the existing arrangement in line with the forward contract entered into in 2011. RB paid consideration totalling £27 million to the non-controlling Shareholders. An additional settlement amount of £12 million was also paid to the non-controlling Shareholders in 2015, of which £4 million was included within profit and loss in the current year, and £8 million in the prior year.
Under the terms of the new arrangements, the non-controlling Shareholders agreed to invest in two entities, RB (China Trading) Ltd and RB & Manon Business Ltd, thereby acquiring from RB 20% and 25% stakes in these entities respectively, whilst retaining their 24.95% stake in Manon, for a combined consideration of £27 million.
As part of the new arrangements, the parties are subject to symmetrical put and call options over the non-controlling Shareholdings, exercisable together after a period of six years, with possible extensions available at the agreement of the parties. The present value of the put option at year end was a liability of £94 million.
Indivior PLC. Subsequent to the demerger of RB Pharmaceuticals on 23 December 2014, the Group continues to lease part of a building to, and provide operational services to, Indivior PLC. The transitional services between the Group and Indivior PLC are on an arm's length basis. The amount included in other operating income in respect of these services is £5 million (2015: £8 million). Certain outstanding balances, totalling £6 million, were settled with Indivior during the period. These related to adjustments in the final UK corporation tax liabilities settled on behalf of Indivior by Reckitt Benckiser Plc. Adrian Hennah, the Reckitt Benckiser Group plc CFO, also sat on the Board of Directors in Indivior PLC until his resignation in May 2016. Rupert Bondy, SVP General Counsel and Company Secretary of Reckitt Benckiser Group plc was also a director of Indivior PLC until he resigned from the Board on 30 September 2016. He joined RB in January 2017.
Other. The Group has related party relationships with its Directors and key management personnel (Note 5) and pension schemes (Note 22).
[PARENT COMPANY NOTE] 12 RELATED PARTY TRANSACTIONS
Reckitt Benckiser Group plc has related party relationships with its pension schemes as disclosed in Note 22 of the Group Financial Statements.
Certain outstanding balances, totalling £6 million, were settled with Indivior PLC during the year. These related to adjustments to final UK corporation tax liabilities settled on behalf of Indivior PLC by Reckitt Benckiser plc.
There were no other transactions with related parties other than wholly-owned companies within the Group.
(iii) DIRECTORS' STATEMENT OF RESPONSIBILITIES
The Directors consider that the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Group and Parent Company's position and performance, business model and strategy.
Each of the Directors, whose names and functions are listed on pages 54 to 56 confirm that, to the best of his/her knowledge:
• the Parent Company Financial Statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', and applicable law), give a true and fair view of the assets, liabilities, financial position and profit of the Company;
• the Group Financial Statements, which have been prepared in accordance with IFRSs as adopted by the EU and IFRSs as issued by the IASB, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and
• the Strategic Report includes a fair review of the development and performance of the business and the position of the Group and Parent Company, together with a description of the principal risks and uncertainties that it faces.
Name Function
Adrian Bellamy Chairman and Non-Executive Director
Rakesh Kapoor Chief Executive Officer
Adrian Hennah Chief Financial Officer
Nicandro Durante Non-Executive Director
Mary Harris Non-Executive Director
Kenneth Hydon Non-Executive Director
Pamela Kirby Non-Executive Director
André Lacroix Senior Independent Director
Christopher Sinclair Non-Executive Director
Judith Sprieser Non-Executive Director
Warren Tucker Non-Executive Director
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