2014 Preliminary Results Presentation 1 1 Welcome 27 February - - PowerPoint PPT Presentation

1 1

2014 Preliminary Results Presentation

Welcome

27 February 2015

1

This presentation contains statements that are, or may be, forward-looking regarding the group's financial position and results, business strategy, plans and objectives. Such statements involve risk and uncertainty because they relate to future events and circumstances and there are accordingly a number of factors which might cause actual results and performance to differ materially from those expressed or implied by such statements. Forward-looking statements speak only as of the date they are made and no representation or warranty, whether expressed or implied, is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Other than in accordance with the Company’s legal or regulatory

• bligations (including under the Listing Rules and the Disclosure and Transparency Rules), the

Company does not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise. Information contained in this announcement relating to the Company or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance. Nothing in this presentation should be construed as a profit forecast.

2 2

2

2014 Preliminary Results Introduction John McAdam Chairman

27 February 2015

3

Executing our Strategy: Andy Ransom Chief Executive

27 February 2015

4

Introduction

• Strong end to the year with Q4 revenue, profit and cash; contributing to good overall

performance for 2014:

• Ongoing* revenue +3.6%, organic +1.2%, +2.4% from acquisitions
• 6.5% ongoing* profit growth supported by reduction in central overheads
• £93m improvement in continuing free cash flow at £129m
• Accelerated M&A activity: 30 bolt-ons (23 in pest) with combined revenues of £66m
• Further rebalancing of portfolio to higher growth markets and segments:
• Expansion of Emerging and Growth quadrants to build density
• Sale of IFS in March, further divestments in Manage for Value quadrant
• £260m reduction in net debt – lowest net debt in 15 years – credit rating upgraded to BBB
• 12.1% proposed increase in dividend year on year

5

• Solid first year performance towards medium-term targets, despite ongoing market challenges in parts of Europe

*Ongoing revenue and profit exclude the financial performance of disposed businesses but include results from acquisitions At constant exchange rates

2014 Preliminary Results Financial Overview Jeremy Townsend CFO

27 February 2015

6

Q4 £ million FY

CER = constant exchange rates AER = actual exchange rates *Ongoing revenue and profit exclude the financial performance of disposed businesses but include results from acquisitions

Financial Highlights (Continuing Operations)

2014 2013 2014 2013 £m £m £m £m Revenue at CER 474.3 453.5 4.6% 1,840.3 1,791.4 2.7% Revenue at CER – ongoing* 472.0 449.5 5.0% 1,830.5 1,766.8 3.6% Adjusted PBITA at CER 74.7 71.9 4.0% 249.1 236.1 5.5% Adjusted PBITA at CER – ongoing* 74.6 70.1 6.4% 248.7 233.5 6.5% Adjusted PBTA at CER 64.9 56.3 15.3% 206.9 180.8 14.4% Adjusted PBTA at AER 59.8 54.04 9.9% 190.8 180.8 5.5% PBT at CER 52.2 23.8 119.3% 177.7 112.2 58.4% Operating cash flow at AER 209.5 137.1 Free cash flow at AER 128.9 36.3 Adjusted EPS at AER 8.05p 7.36p 9.4% Dividend 2.59p 2.31p 12.1%

CASH DIV PROFIT REV

7

Objectives

• Demonstrate growth in revenue
• Deliver improvement in profit performance
• Move away from reliance on restructuring charges
• Generate significant improvement in cash delivery
• Allowing greater freedom to execute M&A
• Pay down debt
• Increase dividend

Strong Progress

ü +3.6% increase in ongoing* revenue ü +6.5% increase in ongoing* operating profit, £11.4m

reduction in central and divisional overheads

ü P&L charge of £9.3m vs. £47.4m in 2013 ü £93m improvement in free cash flow at £129m ü 30 bolt-ons; in-year cash spend £68m

ü £260m reduction in debt at £775m, net debt to EBITDA 1.9x

ü +12.1% increase in dividend Our plan for 2014 was to improve our financial performance… quickly

8

Key Deliverables in 2014

*Ongoing revenue and profit exclude the financial performance of disposed businesses but include results from acquisitions

Objectives Strong Progress

At constant exchange rates

20.0% 13.6%

Revenue1 £366.9m 6.6%

• Adj. PBITA2

£42.9m 15.6% Margin % 11.7% 0.9% % Group Revenue % Adj. PBITA

1 ongoing revenue represents revenue with disposals

removed and includes revenue from acquisitions

2 before amortisation and impairment of intangible assets,

reorganisation costs and one-off items

North America

9 9

• Strong performance in 2014 supported by acquisitions
• Revenue1 up 6.6% (+1.7% organic), operating profit2 up 15.6%
• Strong end to the year with Q4 revenue up 8.4% (+3.3% organic)
• Revenue growth supported by acquisitions (10 bolt-ons with annualised

revenues of c.£20m)

• Strong profit growth driven by acquisitions as well as back office and

property rationalisation

• 0.9% improvement in margins, further improvement opportunities

through acquisitions, scale efficiencies and service productivity

At constant exchange rates

FY 2014 FY

FY 2014 FY

48.8% 53.2%

Revenue1

£892.6m

1.7%

• Adj. PBITA2

£167.8m (3.7%) Margin % 18.6% (0.9%) % Group Revenue % Adj. PBITA3

Europe

10 10

• 2014 financial performance held back by Benelux and challenging economic

environment

• FY revenue1 up 1.7% (-0.2% organic), operating profit2 down 3.7%

− More resilient Q4, revenue1 up 2.1% − 2014 revenue growth driven by Germany (+2.3%) and Latin America (+308%) -

France broadly flat (+0.3%), Benelux down 2.0%

− Profit down 3.7% largely due to Benelux (-£9.9m) impacted by continued effect of

poor service levels in 2013 and challenging economic conditions resulting in contract terminations and pricing pressure

• Outlook for European businesses in 2015 mixed

− German, Belgian and Italian businesses experiencing positive trading conditions -

expect to make good progress

− Outlook for France and Holland more uncertain with challenging economic

conditions and competitive markets expected to continue

• Overall profitability in the Europe region in 2015 expected to be broadly

in line with 2014

1 ongoing revenue represents revenue with disposals

removed and includes revenue from acquisitions

2 before amortisation and impairment of intangible assets,

reorganisation costs and one-off items

3 % excludes divisional overheads

At constant exchange rates

17.5% 21.2%

Revenue1 £321.2m 5.6%

• Adj. PBITA2

£66.7m (1.0%) Margin % 20.7% (1.3%)

Middle East Turkey, Africa

% Group Revenue % Adj. PBITA3

UK and ROW

11

• FY revenue1 up 5.6% (+3.2% organic), operating profit2 down 1.0%
• Strong end to the year with Q4 revenue up 8.3% (+4.2% organic)
• Continued growth from UK pest and hygiene categories, pest jobbing work

in particular, but margins held back by new large contract set-up in UK and integration of previously loss making Green Compliance acquisition

• Strong revenue growth in RoW, particularly Middle East and Caribbean,

but offset by lower revenues in South Africa. Margins held back in South Africa by industrial action and pricing pressure

• Good execution of M&A programme – six acquisitions in year

including Peter Cox property care business in Q4

• Margin improvement expected in 2015 as new contracts and

acquisitions mature

At constant exchange rates

1 ongoing revenue represents revenue with disposals

removed and includes revenue from acquisitions

2 before amortisation and impairment of intangible assets,

reorganisation costs and one-off items

3 % excludes divisional overheads

11 FY 2014 FY

5.8% 2.9%

% Group Revenue % Adj. PBITA

Asia

12

• Excellent progress in 2014
• FY revenue1 up 8.1% (+6.7% organic), operating profit2 up 18.2%
• Strong end to the year with Q4 revenue up 11.9%
• Good performances from both pest and hygiene categories
• Combined revenue growth of 29.1% from India, China and Vietnam
• Combined high single-digit revenue growth from Indonesia and Malaysia
• Profit increase reflecting leverage from revenue growth, 1.2%

improvement in margins

• Three small acquisitions in Singapore, Korea and India; M&A

pipeline strong

• Further margin improvement opportunities from revenue growth

and back office rationalisation

At constant exchange rates

1 ongoing revenue represents revenue with disposals

removed and includes revenue from acquisitions

2 before amortisation and impairment of intangible assets,

reorganisation costs and one-off items

12 FY 2014 FY Revenue1

£105.8m

8.1%

• Adj. PBITA2

£9.1m 18.2% Margin % 8.6% 1.2%

7.9% 9.1%

% Group Revenue % Adj. PBITA

Pacific

13

• Businesses performing well in 2014
• FY revenue1 up 0.9% (+0.9% organic), operating profit2 up 5.9%
• Strong end to the year – Q4 revenue1 up 2.5%
• Revenue driven by growth in contract revenue in pest and hygiene

but offset by reduced pest jobs and contract revenue in Ambius

• Margin improvement supported by business efficiencies, cost savings

and branch administration rationalisation

• Seeking to build M&A pipeline in 2015
• Further margin improvement opportunities from improved service

productivity and targeted acquisitions

At constant exchange rates

Revenue1

£144.0m

0.9%

• Adj. PBITA2

£28.7m 5.9% Margin % 19.9% 0.9% FY 2014 FY

1 ongoing revenue represents revenue with disposals

removed and includes revenue from acquisitions

2 before amortisation and impairment of intangible assets,

reorganisation costs and one-off items

13

Adjusted PBITA 232.2 236.1 Restructuring costs (8.8) (47.4) One-off items (0.1) (4.6) Depreciation 187.6 200.7 Non-cash items1

(1.3)

9.6 EBITDA 409.0 394.4 Working capital (4.4) (21.4) Movement on provisions (16.5) (8.1) Capex (191.6) (234.0) Fixed asset disposal proceeds2

13.0

6.2 Operating cash flow – continuing operations 209.5 137.1 Operating cash flow – discontinued operations (41.1) (18.9) Operating cash flow 168.4 118.2

FY 2014 FY 2013

1 Profit on sale of fixed assets, IFRS 2 etc. 2 Property, plant, vehicles

Operating Cash Flow

At constant exchange rates

81% reduction on 2013 Capex and depreciation now in line

£15.6m better than £20m target for 2014 reflecting asset backed financing initiative

• Vs. guidance of at or below £210m,

reflecting reduced levels of investment in IT and phasing

• f spend

£72.4m increase in operating cash flow

14

Free Cash Flow and Movement in Net Debt

15

Operating cash flow – continuing 209.5 137.1 Cash interest (49.5) (51.2) Special pension contributions (1.0) (13.6) Disposal of available-for-sale investments

• 1.2

Cash tax (30.1) (37.2) Free cash flow – continuing 128.9 36.3 Free cash flow – discontinued (41.1) (18.9) Free cash flow 87.8 17.4 Acquisitions (68.1) (12.0) Disposals 256.0 2.0 Restricted cash disposed (IFS) (16.7)

• Dividends

(43.2) (38.6) FX and other 44.0 (14.1) Reduction/(Increase) in net debt 259.8 (45.3) Opening net debt (1,034.8) (989.5) Closing net debt (775.0) (1,034.8)

At actual exchange rates £93.6m increase on 2013 £44m benefit from foreign exchange £60m reduction on continuing basis (adj for IF disposal) (2013: -£25m) Lowest group debt since year 2000

15

FY 2014 FY 2013

Balance Sheet Financially strong

• Free cash flow now £100m+ per annum on a sustainable basis
• Net debt to EBITDA: 1.9x
• Pension scheme well funded – over £50m surplus on a technical basis

– one of the strongest positions in the FTSE 350

• Credit rating upgraded to BBB (stable outlook) on 30 June 2014
• £270m RCF and £40m letter of credit facility renewed to January 2020
• Average cost of net debt reduced from 5.1% to 4.0% over last two years,

falling to c.3.5% by 2016

• Proposed dividend growth of 12.1% – funded out of free cash flow

Strong balance sheet facilitates M&A agenda and supports progressive dividend growth

16

Delivering Shareholder Value

Transparent in Delivering Our Performance

2015 reporting framework

• Full update on performance at H1 and FY, summary update on trading at Q1 and Q3
• Organisational structure locked down and unchanged

– Five core regions – Three core categories

• Therefore no changes to reporting structure in 2015
• Quadrant analysis used to articulate strategy – minor changes in 2015, but no impact on formal reporting

Committed to a transparent reporting regime

17

Guidance for 2015

• Central and divisional overheads in line with 2014
• P&L impact of restructuring costs no greater than £10m
• Interest costs c.£43m – reflecting impact of recent refinancings – cash impact slightly higher than P&L impact
• Adjusted effective tax rate c.23.5%; cash tax payable of c.£40m
• Impact of exchange rates on profit – adverse impact c. £14m based on current rates
• Other cash flow guidance:

– Working capital outflow at or below £20m – Net capex c.£200m – M&A spend on acquisitions c.£50m

18 18

Executing our Strategy:

Andy Ransom Chief Executive

27 February 2015

19

The Rentokil Initial Model

20 Our Business Organisation

Strong Regional Businesses Category Leadership

Our Core Competencies

Lean, Multi-Business Ops Differential Strategies Six Operational Growth Levers

Managing for Profitable Growth

• Where to Play
• Mastering our Markets
• Building the Pipeline
• Sales Brilliance
• Delivering Our Promise
• Engaging Our Customers
• Targeting our Offer
• Sales Effectiveness
• Retention & Growth

Enhanced by focused

M&A

Growth Profit EMERGING PROTECT & ENHANCE MANAGE FOR VALUE GROWTH

Our Colleagues As Experts

• Europe
• North America
• Asia
• Pacific
• UK & Rest of World

Branch

Pest Workwear Hygiene

Pest Control

Rentokil – global leaders in pest control

21

World Number 1 for Commercial Pest Control Market Leadership in 44 out of 60+ markets

Executing our Strategy in 2014

• Pest Control ongoing revenue +8.5% in 2014 (+12% in Q4)
• Category profit +8.4% in 2014 (+10% in Q4)
• Pest Control: 41% of group revenue and 44% of group profit
• 70% of pest revenue in Growth and Emerging quadrants
• 23 acquisitions in 2014, seven of which were in NA
• Good momentum building in Latin America
• Built strong innovation pipeline

Emerging: 11% Growth: 59% Protect & Enhance: 23% Manage for Value: 7%

Category Revenue by Quadrant

2014 Revenue: £740m 2014 Op Profit: £140m 2014 Op Margin: 18.9%

Netherlands Germany US UK Australia Other

41% 44%

Group Pest

Netherlands Germany US UK Australia Other

Group Pest

Pest Control

Rentokil – global leaders in pest control

22

• Strategy to build this category - offers excellent prospects for profitable
• growth. Building presence in Growth and Emerging quadrants.
• Well placed to continue to develop our strengths:

– Brand strength – Strong brand and reputation for technical expertise – Global footprint – Landing first international accounts for companies looking for consistent standard of risk management. – Leading digital platforms – New digital platforms eg extranet platform with remote monitoring to support customers who most need to protect their brand; and websites with high search performance – Knowledge sharing – Building and sharing best practice service processes and systems that are consistent around the world – Expertise and Innovation - Leading technical capability and unique proprietary products that lead the market and underpin our differentiation

Pest Control

Rentokil – global leaders in pest control

23

• Strongest pipeline of innovation and product development for

many years eg: – Novel Biocides – Entopathogenic fungi, next generation rodenticide development – Rodent Gate - Keeps bait safe until the mechanism is activated – Pest Connect – Utilising smart sensor technology for the early detection of rats, mice and insects – Cage Connect – Cage trap for small vertebrates that alerts when triggered via SMS – Active Bed Bug detector – Using a chemical pheromone to attract bed bugs onto glue covered surface

Cage Connect smart trap New rodent unit with ‘gate’ that opens to allow access to poison using sensors

Pest Control

Investor Relations Day

24

Agenda

• 1. Q1 Results and Q&A
• 2. Global PC market & our leadership position

(trends from 2012 onwards)

• 3. Evolution of the pest control market
• 4. How we are positioned for growth
• 5. Our key markets
• 6. M&A – the opportunity in pest control
• 7. Innovation – series of break-out sessions

covering key new developments

Date: 1 May 2015 Duration: 09.00 to 13.00 Location: Sydney Suite The Grange Tower Bridge Hotel 45 Prescot Street London E1 8GP

Global Leaders in Pest Control

Group Hygiene Group Hygiene

Hygiene

Initial – global leaders in Hygiene services

25

Number 1 in Pacific, Asia and Caribbean Number 2 in Europe and Africa Market Leadership in 26 out of 40+ markets

26%

France UK Australia Germany Netherlands Other

30%

Executing our strategy in 2014

• Hygiene ongoing revenue +1% (ex Benelux +1.8%)
• Category profit -5.6% in 2014, mainly Benelux
• Hygiene: 26% of group revenue and 30% of group profit
• 41% of Hygiene revenue in Growth and Emerging quadrants
• Expanded Signature range with new Colour range
• Developed No Touch range
• Customer satisfaction score +1.7% (Benelux +5.3%)
• Initial Sensing piloted ahead of launch in 2015

Emerging: 11% Growth: 30% Protect & Enhance: 52% Manage for Value: 7%

Category Revenue by Quadrant

2014 Rev: £474m 2014 Op Profit: £94m 2014 Op Margin: 19.8%

France UK Australia Germany Netherlands Other

Hygiene

Initial - global leaders in Hygiene services

26

• Significantly improved service ranges
• Signature and Reflection product ranges now fully rolled out
• 7 new Signature products and 5 new Reflection products
• Signature Colour range launched
• 9 new colours in Matt, Gloss and Metallic
• Signature No Touch range rolling out this year
• Clear user preference for ‘no touch’ in the washroom
• Reduces risk of cross-contamination
• A full range of ‘No Touch’ products including:
• Soap & Foam Dispensers, Hand Sanitiser & Stand
• Paper Towel Dispenser, Linen Towel Cabinet
• Feminine Hygiene Units
• Opportunity through ‘self-help’ improvement

measures

• Focus on: pricing; density; selling including better bundle

selling; service and retention

Launch of Initial HygieneConnect New value adding innovation

27

World’s first integrated wireless monitoring and display system

• Measures hand-washing compliance on a systematic

basis

• Displays combined compliance levels on the LCD units:

fully anonymised data

• Piloted across Europe: 100,000 people
• Leads to behaviour change: hand-washing compliance

increased from 50% to 80% in pilots and was sustained

• Compliance value particularly high for food

manufacturing and health sectors

• Reduces risk of cross-infection and contamination

Commercial launch in the Netherlands

Workwear

A leading brand with scale across the major European markets

28

Number 1 in Belgium Number 2 in France & The Netherlands Number 4 in Germany

21%

23%

France Benelux Germany Other

No 2

Executing our Strategy in 2014

• Workwear ongoing revenue flat (ex. Benelux +0.3%)
• Category profit -5.5% in 2014 (ex. Benelux +4.8%)
• Category profit +1.1% in H2 vs -8.5% in H1 2014
• Cleanroom sector +7.9% revenue; +3% profit
• Workwear: 23% of group revenue and 21% of group profit
• 80% of Workwear revenue in Protect & Enhance quadrant
• New Workwear ranges now launched in all markets

Emerging: 0% Growth: 18% Protect & Enhance: 80% Manage for Value: 2%

Category Revenue by Quadrant

2014 Rev: £428m

2014 Op Profit: £66m 2014 Op Margin: 15.4%

France Benelux Germany Other

Group Workwear Group Workwear

Workwear

Service development and innovation

• New Workwear ranges

– Five ranges in the process of launching eg

• Alpha – entry level protection garments
• Delta – premium full PPE protection with welding, high visibility

and multi-protective options. – Positive customer feedback: quality, design, functionality & comfort

• Body Scanning machine live in Belgium

– Walk-in unit which scans and provides the perfect fit – 20 – 30 measures taken, depending on the garment – Benefits include:

• Enhanced customer experience
• Improved accuracy and reliability
• Cost efficiencies
• Time savings
• Online size-taking

– Online retail approach – customers input details – Time saving and reducing cost – Pilot in Q2 to test productivity benefits

• Lower value/capita markets
• High GDP growth
• High growth in pest &

hygiene:

• Growing middle class in cities
• Tighter hygiene legislation
• End-user expectations
• Established markets
• Established demand for

pest, hygiene and/or workwear

• Average or above GDP

growth

• Often unconsolidated
• Low/negative GDP growth
• Higher risk of economic shocks
• Highly competitive environment
• Shrinking markets
• Massive price pressure
• Business viability under

pressure

• Average/low GDP growth
• Concentrated markets
• RI relatively high share
• Stable demand for pest,

hygiene and workwear

Growth Potential Profit Contribution

• Our strategy for managing the

business is unchanged

• Four distinct quadrants and

targeted strategies for capital allocation, specific to each quadrant

• Each business and category is

mapped against a number of factors such as GDP growth, competitive environment and performance

• Quadrants reviewed annually

to match economics and business performance

A clear differential management strategy

To drive performance and capital allocation

30

Financials

Emerging

Focus on building market share and city focused acquisitions

31

Strategy into Action

2013 (£m) 2014 (£m) Change Revenue* 111.2 135.4 +21.7% Operating profit 15.3 18.8 +22.6% Capex 7.3 8.0 +10.4% Restructuring costs 0.5 0.2

• 60.0%

Acquisition Revenue 2.1 2 deals 16.9 8 deals 2014 Revenue £m

Pest: 83 Hyg: 52 WW: -

• Emerging markets remain strong with increasing expectations

for improved hygiene standards

• Building sales capability in Asia
• Strengthened sales leadership teams to increase sales productivity
• Good progress in recruiting professional sales directors in Malaysia,

India, Indonesia, Thailand and Singapore

• Targeted sales activity in China
• Focus: Largest 15 cities, top 10 industrial zones
• Targeting sales activities and density building
• Strong sales growth in food processing sector
• Building position of growth in Latin America
• Entry into Chile and Colombia in 2014. Continuing to grow in Brazil

(2014 revenue +36%); continuing to build density in key cities

• 8 acquisitions, mainly targeting cities in LatAm, plus Korea, India,

Singapore, Mozambique and Brunei

* Quadrant revenues: 60% pest control, 38% hygiene Revenue for Ongoing operations Quadrant - 2014

Asia Latin America MENAT Kenya

Executing our Strategy

Financials

Growth

Focus on growing market share, building density and sales pipeline

32 * Quadrant revenues: 58% pest control, 19% hygiene, 10% workwear. Revenue for Ongoing operations

• Growth markets remain strong: Good growth in UK & USA
• Digital marketing focus to drive sales leads
• New websites launched in NA, UK and Germany
• Leading to significant performance improvement in search and enquiries
• Strong line up of new products and extranets
• c.30% of UK pest revenues from services launched after 2011
• MyRentokil, MyInitial, MyAmbius extranets developed
• MyPestGuide App to build up-sell
• App shows every product solution to increase number of quotes per sales lead
• Rodent control units + proofing + pest disinfectant
• Fly control units + door screens + wall insecticide wipes
• Acquisitions extend reach and density
• 15 acquisitions; £42m revenues
• Of which, 10 deals in NA as we build our presence

Quadrant - 2014

North America UK Germany Caribbean

2014 Revenue £m

Pest: 438 Hyg: 142 WW: 78

2013 (£m) 2014 (£m) Change Revenue* 711.6 751.7 +5.7% Operating profit 120.7 128.3 +6.3% Capex 59.4 53.6

• 9.8%

Restructuring costs 10.6 2.8

• 73.6%

Acquisition Revenue 7.8 10 deals 41.7 15 deals

Executing our Strategy

Financials

Protect & Enhance

Focus on pricing and productivity

33 * Quadrant revenues: 21% pest control, 30% hygiene, 42%

• workwear. Revenue for Ongoing operations
• Market conditions challenging in some European markets, performance

held back by Benelux. Positive outlook in Pacific

• Customer satisfaction remains high
• South Africa +10%; Nordics +4%; Benelux +3.8%
• Pricing and customer profitability analytics
• Detailed profitability analysis – by sector, tier, service line, branch, manager,

sales rep – for improved price management. Rolling out in Europe in 2015

• Service productivity improvements
• Branch optimisation: New scheduling tool launched in 45 branches in Europe, SA

and Pacific in 2014. Further roll out in 2015

• Route optimisation: New optimisation tool – rolling out to 50% of 1,000+ service

routes in major Europe businesses in 2015

• France
• Pricing, yield management and branch admin rationalisation.
• Benelux
• Much more customer-focused and a stable environment
• Sales capability upgraded – Belgium much improved, Holland work in progress

2013 (£m) 2014 (£m) Change Revenue* 818.3 817

• 0.1%

Operating profit 161.4 154.2

• 4.4%

Capex 138.0 123

• 10.9%

Restructuring costs 20.9 4.8

• 77.0%

Acquisition Revenue 6.6 3 deals 2.9 3 deals Quadrant - 2014 2014 Revenue £m

Pacific France Nordics South Africa Benelux Pest: 172 Hyg: 245 WW: 340

Executing our Strategy

Financials

Manage for Value

Focus on profit improvement strategies

34

Strategy into Action

* Quadrant revenues: 38% pest control, 28% hygiene Revenue for Ongoing operations

• Market conditions in Southern European remain challenging
• Strong performances in Italy Pest and Ireland
• Italy Pest Control and businesses in Ireland performed more strongly than

expected in 2014

• Italy Pest Control: +10% revenue, +38.4% profit. Small acquisitions added

density

• Ireland: +4.8% revenue, -2.6% adjusted profit
• Productivity enhancements
• Italy Hygiene: Introduced better service scheduling and re-zoning of technicians

to better fit customer density

• Disposal of non-core MfV businesses
• Disposal of IFS
• We continue to focus on cleaning up this quadrant (focus on smaller, lower

margin businesses) similar to Austrian products and Spanish medical

2013 (£m) 2014 (£m) Change Revenue* 125.7 126.4 +0.5% Operating profit 19.1 18.2

• 4.5%

Capex 3.9 3.4

• 14.6%

Restructuring costs 1.9 0.4

• 78.9%

Acquisition Revenue 0.1 1 deal 4.2 4 deals Quadrant - 2014 2014 Revenue £m

Italy Ireland Portugal Spain Greece

Pest: 48 Hyg: 35 WW: 10

Executing our Strategy

• For 2015 the encouraging

performance of several businesses in the MfV and P&E quadrants means that we can now move them into new quadrants with stronger growth prospects

• Seven businesses move from P&E

into Growth with combined revenues

• f £130m (+3.7% in 2014)
• Four businesses move from MfV into

Protect & Enhance with combined revenues of £38m (+5.7% in 2014)

• Fiji moves from P&E to Emerging
• Fiji Pest Control
• France Pest Control
• France Cleanrooms
• Netherlands Cleanrooms
• Nordics Pest Control
• SA Pest Control
• Australia Pest Control
• New Zealand Pest Control

Updating the quadrant mix

Reflecting changes to growth potential

35

• France Technivap
• Italy Pest Control
• Ireland Pest Control
• Ireland Hygiene

Profit Contribution Growth Potential

Revenue by quadrant Growth and Emerging now account for 50+% of group revenue Growth increased from 23% of group revenue to almost 50% since 2012 MFV reduced from 41% of group revenue to below 5% over the same period

Quadrant analysis

Growth and Emerging – increasing focus for the portfolio

36

* Includes City Link and IF

Emerging Growth Protect & Enhance MFV*

% of Group Revenue

41% 23% 4.5% 49.2% 8.3% 38.0%

Profit Contribution Growth Potential

• 30 deals completed; 23 in Growth and Emerging

– £66m annualised revenues – Pest Control - first steps in Chile, Colombia, Bahamas and Mozambique – Property Care leadership in the UK – Building density across NA and Europe

• Good pipeline in all five Regions, continue to

evaluate exit opportunities for some in MfV

• High quality M&A now part of our DNA - strong

internal capability. Maintaining disciplined approach to M&A

• Reviewed acquisitions completed in last 2 years –

M&A programme on track to deliver or exceed expected returns

• So far in 2015 we have completed 3 pest control

deals, with combined annual revenues prior to acquisition of around £7m Acquisitions: 1 Revenue: £0.5m

Spain

Disposals: £255.6m

IFS and Spanish Medical, Austrian products

Acquisitions: 8 Revenue: £16.9m

Chile (2), India, Mozambique, Korea, Brazil, Brunei, Singapore

Acquisitions: 6 Revenue: £6.6m

Netherlands, Sweden, Zambia, Italy (2 x pest), Ireland

Acquisitions: 15 Revenue: £41.7m

UK (3), Bahamas, 10 bolt-on deals in US, Lithuania

Continued expansion in Growth and Emerging markets

Executing our Strategy

37

2015 country / quadrant structure.

Key takeaways

38

A strong global business with leading positions across three core categories and excellent growth opportunities through differentiated investment and accretive M&A, delivered at pace.

Protecting People. Enhancing Lives.

Mid-single digit revenue growth High-single digit profit growth Strong and sustainable delivery of free cash flow (£100m+ pa) Medium-term targets:

1.

A leader in our chosen markets, generating high returns with good growth opportunities

2.

Clear differential strategy to drive performance and capital allocation

3.

Financially strong

4.

Experienced and proven management team executing strategy at pace

5.

Clear plan to deliver mid single-digit revenue growth

6.

Further scope for profit growth and margin enhancement