Full-year results & proposed acquisition of Initial Facilities - - PowerPoint PPT Presentation

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Full-year results & proposed acquisition of Initial Facilities - - PowerPoint PPT Presentation

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Full-year results & proposed acquisition of Initial Facilities acquisition of Initial Facilities T Twelve months ended l th d d 31 December 2013 Adrian Ringrose, Chief Executive Tim Haywood, Group Finance Director Delivering our

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SLIDE 1

Full-year results & proposed acquisition of Initial Facilities acquisition of Initial Facilities

T l th d d Twelve months ended 31 December 2013

Adrian Ringrose, Chief Executive Tim Haywood, Group Finance Director

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SLIDE 2

Delivering our strategy

Strategy FY 2013 results IF Acquisition

Building Strong Core businesses Increased service offering and capabilities Revenue +12% Headline pre-tax profit +8% Capturing related expansion opportunities Broader customer base +8% Solid three-year cash conversion (90% ) £6.4bn future workload Expand Internationally Multiple growth platforms Dividend +5%

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SLIDE 3

Tim Haywood

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SLIDE 4

Income statement Income statement

£ million 2013 2012 Revenue 2,192.6 1,958.4

+12%

Total operating profit 86.7 78.4

+11%

p g p . . Interest (5.6) (3.1) Headline profit 81.1 75.3

+8%

Amortisation of intangible assets (8.9) (6.5) Exceptional items (4.1) 111.0 P fit b f t ti 68 1 179 8 Profit before taxation 68.1 179.8 Taxation (13.1) (10.5) Profit after taxation 55.0 169.3 Profit after taxation 55.0 169.3 Headline EPS 47.7 45.3

+5%

Dividend per share 21.5p 20.5p

+5%

Redefining the future for people and places | 4

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SLIDE 5

Segmental analysis g y

£ million 2013 2012 Revenue TOP*

Margin

Revenue TOP*

Margin

%growth Revenue TOP

Margin

Revenue TOP

Margin

%growth in TOP S upport S ervices UK 1 196 6 56 0

4 7%

1 118 1 44 3

4 0% 26%

  • UK

1,196.6 56.0

4.7%

1,118.1 44.3

4.0% +26%

Redefining the future for people and places | 5

*Total operating profit

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SLIDE 6

Segmental analysis Segmental analysis

£ million 2013 2012 Revenue TOP*

Margin

Revenue TOP*

Margin

%growth Revenue TOP

Margin

Revenue TOP

Margin

%growth in TOP S upport S ervices UK 1 196 5 56 0

4 7%

1 118 1 44 3

4 0% 26%

  • UK

1,196.5 56.0

4.7%

1,118.1 44.3

4.0% +26%

  • International

57.5 4.1

4.4%

  • 3.7

12.8% +11%

Redefining the future for people and places | 6

*Total operating profit

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SLIDE 7

Segmental analysis g y

£ million 2013 2012 Revenue TOP*

Margin

Revenue TOP*

Margin

%growth Revenue TOP

Margin

Revenue TOP

Margin

%growth in TOP S upport S ervices UK 1 196 5 56 0

4 7%

1 118 1 44 3

4 0% 26%

  • UK

1,196.5 56.0

4.7%

1,118.1 44.3

4.0% +26%

  • International

57.5 4.1

4.4%

  • 3.7

12.8% +11%

Construction

  • UK

802.2 14.7

1.8%

737.2 14.6

2.0% +1%

Redefining the future for people and places | 7

*Total operating profit

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SLIDE 8

Segmental analysis g y

£ million 2013 2012 Revenue TOP*

Margin

Revenue TOP*

Margin

%growth Revenue TOP

Margin

Revenue TOP

Margin

%growth in TOP S upport S ervices UK 1 196 5 56 0

4 7%

1 118 1 44 3

4 0% 26%

  • UK

1,196.5 56.0

4.7%

1,118.1 44.3

4.0% +26%

  • International

57.5 4.1

4.4%

  • 3.7

12.8% +11%

Construction

  • UK

802.2 14.7

1.8%

737.2 14.6

2.0% +1%

  • International
  • 13.1

5.1%

  • 14.3

6.5%

  • 8%

Redefining the future for people and places | 8

*Total operating profit

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SLIDE 9

Segmental analysis g y

£ million 2013 2012 Revenue TOP*

Margin

Revenue TOP*

Margin

%growth Revenue TOP

Margin

Revenue TOP

Margin

%growth in TOP S upport S ervices UK 1 196 5 56 0

4 7%

1 118 1 44 3

4 0% 26%

  • UK

1,196.5 56.0

4.7%

1,118.1 44.3

4.0% +26%

  • International

57.5 4.1

4.4%

  • 3.7

12.8% +11%

Construction

  • UK

802.2 14.7

1.8%

737.2 14.6

2.0% +1%

  • International
  • 13.1

5.1%

  • 14.3

6.5%

  • 8%

E i t 169 6 20 1

11 9%

167 5 16 0

9 6% 26%

Equipment S ervices 169.6 20.1

11.9%

167.5 16.0

9.6% +26%

Redefining the future for people and places | 9

*Total operating profit

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SLIDE 10

Segmental analysis g y

£ million 2013 2012 Revenue TOP*

Margin

Revenue TOP*

Margin

%growth Revenue TOP

Margin

Revenue TOP

Margin

%growth in TOP S upport S ervices UK 1 196 6 56 0

4 7%

1 118 1 44 3

4 0% 26%

  • UK

1,196.6 56.0

4.7%

1,118.1 44.3

4.0% +26%

  • International

57.5 4.1

4.4%

  • 3.7

12.8% +11%

Construction

  • UK

802.2 14.7

1.8%

737.2 14.6

2.0% +1%

  • International
  • 13.1

5.1%

  • 14.3

6.5%

  • 8%

E i t 169 6 20 1

11 9%

167 5 16 0

9 6% 26%

Equipment S ervices 169.6 20.1

11.9%

167.5 16.0

9.6% +26%

Investments

  • 0.8
  • 6.6
  • 88%

Group S ervices (33.3) (22.1) (64.4) (21.1)

  • 5%

2,192.6 86.7

4.0%

1,958.4 78.4

4.0% +11%

JVs and 389.3 411.2 JVs and associates 389.3 411.2

2,581.9 2,369.6

*Total operating profit

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SLIDE 11

Group interest charge Group interest charge

£ illi 2013 2012 £ million 2013 2012 G t i t t bl (4 8) (6 6) Group net interest payable (4.8) (6.6) Investments sub debt interest receivable 0.6 5.4 Pension finance charge (1.4) (1.9) Net interest charge (5.6) (3.1)

Redefining the future for people and places | 11

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SLIDE 12

Exceptional items Exceptional items

£ illi 2013 £ million 2013 Exit Indian construction associate (5 1) Exit Indian construction associate (5.1) Net profit on disposal of PFI assets 1.5 Paragon earnout charge (0.5) Net Exceptional charge (4.1)

Redefining the future for people and places | 12

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SLIDE 13

Taxation Taxation

£ million 2013 2012 £ million 2013 2012 Profit Tax Rate Profit Tax Rate Total per income statement 68.1 (13.1) 19.2% 179.8 (10.6) 5.9% Gross profit on disposal of PFI (3.6)

  • (114.9)
  • Disposal Interserve India

5.1

  • Less : Joint Ventures and associates

(17.2)

  • (25.0)
  • Prior period adj ustment

(0 9) (2 3) Prior period adj ustment

  • (0.9)
  • (2.3)
  • Group companies’ effective rate

52.4 (14.0) 26.7% 39.9 (12.9) 32.3% ( ) ( )

Redefining the future for people and places | 13

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SLIDE 14

Balance sheet summary Balance sheet summary

£ million 31 Dec 30 June 31 Dec £ million 31 Dec 2013 30 June 2013 31 Dec 2012 Goodwill and intangible assets 286.6 277.7 265.8 Property, plant and equipment 155.9 148.2 137.8 Joint Ventures and associates 94.5 84.7 84.2 Assets held for sale 0.0 0.0 51.2 Working capital (136 1) (149 7) (162 2) Working capital (136.1) (149.7) (162.2) Taxation 13.9 15.8 6.0 Pension obligations (net of tax) (5 9) (7 3) (77 8) Pension obligations (net of tax) (5.9) (7.3) (77.8) Cash / (net debt) (38.6) 0.7 25.8 Net assets 370.3 370.1 330.8

Redefining the future for people and places | 14

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Movement in net cash / (debt) Movement in net cash / (debt)

Free cashflow of £24.0m

Redefining the future for people and places | 15

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Cash flow

£ million 2013 2012 Group JVs and Total Total Group JVs and Associates Total Total Total operating profit 69.4 17.3 86.7 78.4 Depreciation & amortisation 33 8

  • 33 8

29 3 Depreciation & amortisation 33.8 33.8 29.3 Net capital expenditure (33.7)

  • (33.7)

(14.9) Dividends in excess / (deficit) of profits

  • (3.6)

(3.6) (5.6) Oth h (10 0) (10 0) (10 0) Other non cash (10.0)

  • (10.0)

(10.0) Working capital movement (19.7)

  • (19.7)

0.2 Operating cash flow 39.8 13.7 53.5 77.4 Pension deficit payments, tax, interest (29.5)

  • (29.5)

(44.9) Free cash flow 11.3 13.7 24.0 32.5 Dividends (29.1)

  • (29.1)

(27.0) ( ) ( ) ( ) Acquisitions and investments (59.9)

  • (59.9)

63.0 Other 0.6

  • 0.6

1.5 Movement in net debt (78 1) 13 7 (64 4) 70 0 Movement in net debt (78.1) 13.7 (64.4) 70.0 3 year Gross operating cash conversion 90% 106%

Redefining the future for people and places | 16

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SLIDE 17

Banking facilities Banking facilities

Previous £250m facility replaced with: £200 l b f ilit til F b 2019

  • £200m club facility until February 2019
  • One £50m bilateral facility until February 2016
  • £200m bridge facility until February 2016
  • Aggregate £450m of facilities
  • Weighted average cost of debt LIBOR +2%

Covenants as previously:

  • Net debt : EBITDA < 3.0x (2013: 0.4x)

I t t 3 5 (2013 21 2 )

  • Interest cover > 3.5x (2013: 21.2x)

Redefining the future for people and places | 17

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SLIDE 18

IAS 19 Pensions IAS 19 Pensions

£ illi 2013 2012 £ million 2013 2012 Defined benefit obligations (826.9) (799.3) S cheme assets 819.2 698.2 Total deficit (7.7) (101.1) Deferred tax thereon 1.8 23.3 Net deficit (5.9) (77.8)

Redefining the future for people and places| 18

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SLIDE 19

Acquisitions and disposals

Cash Headline Pension

Acquisitions and disposals

Cash Headline EPS Pension funding Disposals

£119m 2.7p £55m

p Acquisitions No change

£94m 4.0p

Net movement

£25m £55m 1 3p

movement

£25m £55m 1.3p

Redefining the future for people and places | 19

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SLIDE 20

Summary

  • Strong trading performance
  • 11%

growth in Group operating profit

  • UK S

upport S ervices achieved their margin target with 5 1% margin in the UK S upport S ervices achieved their margin target with 5.1% margin in the second half of 2013

  • S

trong profit growth in Equipment services, stable margins & volumes in UK construction. S hort term weakness in international markets

  • Broadening our capabilities
  • Building an oil and gas maintenance footprint with the acquisitions of

TOCO & Adyard TOCO & Adyard

  • Increased UK capability with the acquisition of Paragon
  • Strong Balance Sheet; Investing for the Future
  • Reduced pension deficit
  • Increased capital investment
  • Year on year growth in EPS of 5%

Year on year growth in EPS of 5%

  • Year on year growth in DPS of 5%

Redefining the future for people and places | 20

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SLIDE 21

Adrian Ringrose g

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SLIDE 22

Support Services UK pp

Interserve Working Futures BBC, MediaCityUK, Salford Advantage Healthcare University of Sussex

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SLIDE 23

Support Services UK pp

  • Good work winning and revenue

growth

  • Won £1.1bn of new work
  • Division’s future workload stable at

£5.1bn (FY 2012: £5.2bn)

  • Revenues +7%

at £1,196.6m

  • (FY 2012: £1,118.1m)
  • 5%

margin target reached in H2 2013.

Patient Hotel, London

g g Future benefits targeted via

  • Business process improvement
  • More efficient back office

processes

  • Adding to service capabilities

Redefining the future for people and places | 23

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SLIDE 24

Support Services UK – work winning in FY 2013

New public sector clients & contracts: New public sector clients & contracts:

  • University of S

ussex

  • Department for Work & Pensions
  • Leicester Partnership NHS

Trust

  • London Borough of S
  • uthwark
  • London Borough of S
  • uthwark
  • Alder Hey Children’s NHS

Foundation Trust New private sector clients & contracts: p

  • BBC
  • Dixons
  • Magnox
  • Meggit

Meggit Client development:

  • Defence Infrastructure Organisation
  • HMRC
  • FCO

Redefining the future for people and places | 24

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SLIDE 25

Support Services International pp

TOCO, Oman - rig moving Habib Bank, Dubai - refit Adyard, UAE - fabrication Monte Carlo Beach Club, Abu Dhabi - FM

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SLIDE 26

Support Services International pp

  • Revenues* increased to £100.5m (FY

2012: £31.3m) 2012: £31.3m)

  • Operating profit increased to £4.1m

(FY 2012: £3.7m)

  • Good strategic progress & integration
  • f TOCO and Adyard acquisitions.
  • Madina and TOCO results impacted by

p y short-term demand weakness and pricing pressure.

  • Encouraging progress in other sectors

Khansaheb - FM

g g p g such as roads maintenance and building-related FM.

* Incl share of associates results

Redefining the future for people and places | 26

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SLIDE 27

Support Services International - k i i i FY 2013 work winning in FY 2013

New clients & contracts:

  • Habib Bank
  • Oasis Hospital
  • Monte Carlo Beach Club

Q t N ti l B k

  • Qatar National Bank
  • Doha Festival City
  • ZADCO
  • Movenpick Hotels

Movenpick Hotels Client development:

  • JDG Wasi
  • Chalhoub Group
  • Bright S

tar LLC

  • Government of Fuj airah
  • Meraas
  • Meraas
  • S

iemens

Redefining the future for people and places | 27

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SLIDE 28

Support Services - medium t tl k term outlook

UK: kl d f £5 1b

  • Future workload of £5.1bn
  • Maintain stable margins
  • Organic growth through work-winning, extending relationships and market extension.

S ti li t ffi i i ti

  • S

upporting client efficiency imperatives International:

  • Future workload of £0.2bn
  • S

ustainable margin improvement in the medium term

  • Y
  • ung, fast-growing building services markets
  • S

afety and time critical operating environments y p g

  • Growing presence and broadening offering in oil and gas services

Redefining the future for people and places | 28

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SLIDE 29

Construction UK

W t Y k hi P li HQ W k fi ld Sil U i i T h i l C ll West Yorkshire Police HQ, Wakefield Silverstone University Technical College Haymarket, Edinburgh Jaguar Land Rover Engine Manufacturing Centre, West Midlands

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SLIDE 30

Construction UK

  • S
  • lid future workload of £1.0bn (FY 2012:

£0.9bn)

  • S

table margins within expected range. g p g

  • Resilient performance against mixed

market conditions S t t b i d di ifi ti

The Sutton Academy, St Helens

  • S

trong repeat business and diversification e.g. energy-from-waste

  • Differentiated offering via improved

processes (BIM) and sustainability

y,

processes (BIM) and sustainability

Redefining the future for people and places | 30

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SLIDE 31

Construction UK work winning FY 2013 FY 2013

  • New clients & contracts
  • Allia
  • Allia
  • Defence Infrastructure Organization
  • S
  • uth East & S
  • uth West Water
  • Affinity Water
  • Affinity Water
  • Cornwall Council
  • Client development
  • Jaguar Land Rover
  • Jaguar Land Rover
  • Viridor
  • Highways Agency
  • NHS
  • NHS
  • United Utilities
  • National Academies Framework

Ministry of Justice

  • Ministry of Justice
  • New business streams
  • Property development (Haymarket)

E t W t Gl P t b h

  • Energy to Waste: Glasgow, Peterborough

Redefining the future for people and places | 31

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SLIDE 32

Construction International

Jumeirah beach resort, Dubai Sur Independent Power Project, Oman Mall of the Emirates, UAE Hyatt Hotel, Dubai

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SLIDE 33

Construction International

  • Future workload: FY 2013 £199m (FY 2012:

£162m)

  • UAE showing signs of recovery particularly
  • UAE showing signs of recovery, particularly

commercial and leisure developments

  • Steady performance in Oman
  • Ongoing margin pressures within Qatar

g g g p

  • Medium term fundamentals strong, growing

population and demand for investment

Dubai Festival City, UAE y,

Redefining the future for people and places | 33

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SLIDE 34

Construction International - k i i i FY 2013 work winning in FY 2013

New clients & contracts:

  • Dubai Festival City
  • Dubai Festival City
  • General Electric
  • Arabtec Construction
  • Oasis Hospital

Oasis Hospital

  • Hyatt Regency Hotels
  • Qatar & Dubai National Banks
  • HS

BC

Qatar Islamic Bank

HS BC

  • Four S

easons Hotels Client development: p

  • Maj id Al Futtaim
  • Office of the HM Prince of Dubai
  • Chalhoub Group
  • Government of Fuj airah
  • Meraas Holdings
  • Mitsubishi Corporation
  • Roads and Transport Authority (Dubai)

Redefining the future for people and places | 34

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SLIDE 35

Construction - medium term tl k

  • utlook

UK UK

  • Well-placed to take advantage of market improvements through 2014
  • Diversifying our service offering (Paragon Haymarket energy from waste)
  • Diversifying our service offering (Paragon, Haymarket, energy from waste)
  • Managing strong client relationships

M di t i f 1 5 2%

  • Medium term margin of 1.5 - 2%

International

  • Encouraging medium-term drivers (demographics, infrastructure investment)
  • Medium-term margin of 6%
  • Bringing project finance competences to bear

Redefining the future for people and places | 35

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SLIDE 36

Equipment Services q p

Mecca Mosque, Saudi Arabia West Kowloon Terminus, Hong Kong Jeddah Sewage works, Saudi Arabia Ljoen Bridge near Alsesund, Norway

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SLIDE 37

Equipment Services

  • High operational gearing helping to

drive strong margin improvement, d ve st o g a g p ove e t, 2013 TOP £20.1m (FY 2012: £16.0m)

  • Exploiting our engineering expertise &

t i i i ti th

Salalhal International Airport passenger terminal, Oman

customer service in existing growth markets

  • Chile, South Africa, Saudi Arabia,

Hong Kong g g

  • Geographic expansion into new

territories Singapore, Kurdistan

  • Positioning ourselves for market

recovery

  • Well-placed to service early cycle

p y y US growth and extended operation

  • n West Coast

Capital investment to support further

  • Capital investment to support further

growth

Redefining the future for people and places | 37

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SLIDE 38

Equipment Services - d l k medium term outlook

  • Further improvement in performance as business focuses on

margin improvement a g p ove e t

  • Benefitting from global economic upward trends
  • Well-targeted geographic expansion and growth in existing

markets markets

  • Return to medium term margin target of 15%

Redefining the future for people and places | 38

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SLIDE 39

Summary

  • Resilient performance across the Group in mixed market

conditions

  • Substantial gains in both revenue and headline profit
  • Good operational and strategic progress

Good operational and strategic progress

  • Acquisitions extended our capabilities and integration

progressing well progressing well

  • Strong balance sheet
  • Further increase in the dividend (+5%

)

Redefining the future for people and places | 39

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SLIDE 40

P d i iti f I iti l Proposed acquisition of Initial Facilities

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SLIDE 41

Introduction to Initial Facilities

  • £542.2m revenue and operating profit £25.6m (2013A), representing a margin of 4.7%
  • c25,000 employees
  • 22,000 based in UK and Ireland
  • 3,000 based in S

pain

  • Broad customer base within the private sector

Analysis of Turnover Comprehensive range of facilities services

Cleaning 26% Multi Service 32% Professional Services 25% Other 31% T Technical, Catering, Security & TFM 42% Transport 15% Healthcare 14% Local Government 15%
  • Largest customer £50m pa London Underground
  • Largest customer £50m pa London Underground
  • 85%

private sector, 15% public sector

Redefining the future for people and places | 41

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SLIDE 42

Compelling strategic rationale p g g

  • Increased scale and focus with a st ronger, more visible market presence
  • S

ignificantly broader addressable market

  • Greater breadth of services and capabilities
  • S

ynergy opportunities

  • Enhanced management and additional client relationships

Redefining the future for people and places | 42

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SLIDE 43

Complementary capabilities p y p

Combined N G Catering

  • Security
  • Cleaning
  • C E O F F E R I N

Reception

  • Grounds Maintenance
  • Mechanical & Electrical

O it

  • S E R V I C

On site

  • Mobile
  • Waste management
  • Energy management
  • Energy management

TFM

  • T
  • C O N T R A C

S I Z E S > £10m p.a.

  • £2m ‐ £10m p.a.
  • < £2m p.a.
  • Redefining the future for people and places | 43
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SLIDE 44

Summary

  • A complementary Facilities Business with operations principally in the UK
  • Will drive future growth in large and attractive markets
  • Builds on strong core business – consistent with strategy
  • Cash consideration of £250m (9.8x 2013 EBITA) funded through new and existing

bank facilities and cashbox placing for 9.99%

  • f issued share capital
  • Expected to be earnings enhancing in year ending December 2014 and significantly

so in year ending December 2015

Redefining the future for people and places | 44

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SLIDE 45

Questions

slide-46
SLIDE 46

Appendix 1

Interserve revenue and workload

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SLIDE 47

Substantial future workload

Redefining the future for people and places | 47

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SLIDE 48

Strong near-term revenue b l visibility

Redefining the future for people and places | 48

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SLIDE 49

Strong platform for growth

Group revenue mix by type Group revenue mix by sector Segmental operating profit - by activity Segmental operating profit – by geography

Redefining the future for people and places | 49

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SLIDE 50

Divisional revenue analysis

Revenue mix by sector – Support Services UK Revenue mix by sector – Construction UK Revenue mix by sector – Equipment Services Revenue mix by sector – International

Redefining the future for people and places | 50

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SLIDE 51

Appendix 2

Acquisition of Initial Facilities

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SLIDE 52

Ad i Ri Chi f E ti

Proposed Acquisition of Initial Facilities

R d fi i th f t f Adrian Ringrose, Chief Executive Tim Haywood, Group Finance Director Redefining the future for people and places

February 2014

slide-53
SLIDE 53

Proposed acquisition of Initial Facilities Services Business

  • A complementary Facilities Services Business with operations principally in the UK
  • Enhanced growth platform in large and attractive markets
  • Builds on strong core business – consistent with strategy
  • Cash consideration of £250m – 9.8x 2013 EBITA1
  • Funded through new and existing bank facilities and 9.99% cashbox placing
  • Expected to be earnings enhancing in year ending December 2014 and significantly so in year ending

December 2015

1 EBITA is operating profit before amortisation of intangible assets (excluding computer software), reorganisation costs, one-off items and Group management charges

Redefining the future for people and places | 53

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SLIDE 54

Compelling strategic rationale Compelling strategic rationale

  • Increased scale and focus with a stronger, more visible market presence
  • Creates a top three player by revenue
  • Clear opportunity to apply focus to a business that has been non core

pp y pp y

  • Significantly broader addressable market
  • Market for private sector outsourcing is nearly double that of the public sector
  • Creates a more balanced portfolio between public and private sector

p p p

  • Complementary services and capabilities
  • Initial Facilities: private sector, soft services, extensive client list
  • Interserve: public sector, TFM and hard services, focus on major accounts

p j

  • Synergy opportunities
  • Opportunity to leverage operational efficiencies and drive cost savings
  • Ability to access new revenue opportunities
  • Enhanced management and additional client relationships
  • Both Interserve and Initial Facilities have excellent reputations and strong track records of

customer retention

  • Access to a broader pool of management talent

Redefining the future for people and places | 54

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SLIDE 55

Introduction to Initial Facilities Introduction to Initial Facilities

  • £542.2m revenue and operating profit £25.6m (2013A), representing a margin of 4.7%1
  • c25,000 employees
  • 22,000 based in UK and Ireland
  • 3,000 based in Spain
  • Broad customer base within the private sector

Analysis of Turnover2 Comprehensive range of facilities services2

Cleaning 26% Multi Service 32% Professional Services 25% Other 31% T Technical, Catering, Security & TFM 42% Transport 15% Healthcare 14% Local Government 15%
  • Largest customer £50m pa London Underground
  • Largest customer £50m pa London Underground
  • 85% private sector3, 15% public sector3
1 The 2013 preliminary results discussed today are the expected results and remain subject to the finalisation of the audit. Accordingly, the information given to you today may therefore be different to the information contained in the final circular relating to the Company and Rentokil Initial plc. Operating profit is before amortisation of intangible assets (excluding computer software), reorganisation costs, one-off items and Group management charges 2 Source: Initial Facilities capital markets presentation August 2012 3 Split based on Interserve management estimates of customer contract type

Redefining the future for people and places | 55

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SLIDE 56

£70bn market for UK Facilities Management

R l t d2

Total and outsourced UK FM market1

£70bn market for UK Facilities Management

Regulated2 £5bn Regulated2 £3bn Public £25bn Private £40bn Public £14bn Private £25bn

Total FM spend £ 7 0 bn Total outsourced £ 4 2 bn

  • Expected market growth: 3‐4% p.a.
  • Acquisition gives increased access to the private sector ‐ the most significant part of the outsourced
  • Acquisition gives increased access to the private sector ‐ the most significant part of the outsourced

market

1 Source: Credo 2 Regulated industries include utilities, transport and logistics;

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SLIDE 57

Outsourced market breakdown Outsourced market breakdown

Outsourced market...

Technical/ Hard

...by offering1 ...by delivery2 ...by supplier3

TFM £6bn Single Top 10 providers £12bn Hard Services c.£17bn Bundled Services £8bn Single Services £28bn Soft Services c.£25bn Other providers £25bn Next 20 £5bn

£ 4 2 bn £ 4 2 bn £ 4 2 bn

  • Combination of the two businesses better reflects the market by reference to offering and delivery

model

  • Scale benefits from improved service range, geographical coverage, human capital and purchasing power
  • Significant opportunity to grow market share from smaller providers

g pp y g p

1 Split between offering based on Interserve management estimates 2 Split by delivery based off Initial Facilities capital markets presentation – August 2012 3 Source: Credo

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SLIDE 58

Initial Facilities income statement Initial Facilities income statement

£ million 31‐Dec‐11 31‐Dec‐12 31‐Dec‐13

1

Revenue 558.0 563.9 542.2 Underlying EBITA

2

26.7 29.5 25.6 M i 4 8% 5 2% 4 7% Margin 4.8% 5.2% 4.7% Reported Operating Profit 13.3 15.9 8.8

  • A number of restructuring exercises have occurred
  • Exited lower margin business – stable underlying margins
  • Business has been right sized in difficult markets

Business has been right sized in difficult markets

1 The 2013 preliminary results discussed today are the expected results and remain subject to the finalisation of the audit. Accordingly, the information given to you today may therefore be different to the information contained in the final circular relating to the Company and Rentokil Initial plc 2 EBITA is operating profit before amortisation of intangible assets (excluding computer software), reorganisation costs, one-off items and Group management charges

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SLIDE 59

Complementary capabilities p y p

Combined N G Catering

  • Security
  • Cleaning
  • C E O F F E R I N

Reception

  • Grounds Maintenance
  • Mechanical & Electrical

O it

  • S E R V I C

On site

  • Mobile
  • Waste management
  • Energy management
  • Energy management

TFM

  • T
  • C O N T R A C

S I Z E S > £10m p.a.

  • £2m ‐ £10m p.a.
  • < £2m p.a.
  • Redefining the future for people and places | 59
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SLIDE 60

Key Terms and Financing Structure Key Terms and Financing Structure

  • Acquisition conditional on approval from shareholders at General Meeting on 17 March
  • A Transitional Services Agreement (TSA) for the provision of certain services relating to IT, payroll,

g ( ) p g p y insurance, property and accounting support for a period of 12 ‐ 18 months from completion

  • Break fee of £3.5m is potentially payable if acquisition does not complete
  • Previous £250m facility replaced with:
  • £200m club facility until February 2019
  • One further £50m bilateral facility until February 2016

y y

  • £200m bridge facility until February 2016
  • Aggregate £500m of facilities – weighted average cost of debt LIBOR +2%
  • Covenants: Net debt to EBITDA < 3.0x and Interest cover > 3.5x
  • Pro forma Net Debt £227.7m1

Pro forma Net Debt £227.7m

  • Fully underwritten 9.99% cashbox placing

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1 Net Debt calculated as Bank Loans of £280m + Bank Overdrafts of £27.4m less cash and deposits of £79.7m
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SLIDE 61

Synergies and integration plan Synergies and integration plan

  • Transaction expected to generate pre tax cost synergies of approx £5m per annum (FY15)
  • Transaction expected to generate pre‐tax cost synergies of approx £5m per annum (FY15)
  • Cost savings to arise in the following areas:
  • Streamlining operational management
  • Streamlining operational management
  • Removal of duplicate functions
  • Procurement savings arising from economies of scale
  • One off exceptional costs of approx £10m to achieve synergies
  • One off exceptional costs of approx. £10m to achieve synergies
  • Clear integration plan
  • Integrated management team from Day 1
  • Integrated management team from Day 1
  • Stakeholder communications
  • Progressive integration of contract management and back office functions
  • Re‐branding during first six months

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SLIDE 62

Summary and Outlook Summary and Outlook

  • Strong set of results ‐ UK Support Services division performing well with improving margins and strong
  • utlook
  • utlook
  • Expect to deliver further progress in 2014 with revenue and margin growth
  • Remain confident in medium term outlook
  • Remain confident in medium term outlook
  • Acquisition will significantly enhance range of capabilities creating further opportunities to expand

client base and win new business

  • Creates one of the largest providers (top three by revenue) of Support Services Activities in the UK
  • Expected to be significantly earnings enhancing in the year ending 31 December 2015
  • Strong balance sheet maintained for future growth

An opportunity for Interserve to become one of the leading providers of Support Services in the UK

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SLIDE 63

Timetable Timetable

A i iti Acquisition

  • Announce acquisition: 7:00am 28 February
  • Post shareholder circular: 28 February
  • General Meeting 17 March
  • General Meeting: 17 March
  • Completion of acquisition: 18 March

Cashbox Placing Cashbox Placing

  • Looking for indications of interest by the afternoon 27 February
  • Announce placing: 7:00am 28 February
  • Pricing: to be determined by ABB
  • Pricing: to be determined by ABB
  • Pricing and allocation expected: 28 February 2014
  • Settlement: T+3

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SLIDE 64

Q&A Q&A

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SLIDE 65

Positions Interserve as one of the largest providers of support services in the UK services in the UK

£2 500

Leading FM suppliers

£2,000m £2,500m £1,500m ue (£m) £1,000m Revenu £0m £500m

Source: Credo

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SLIDE 66

Investor relations contacts:

Ian Bell 0118 9602284 Robin O’Kelly 0118 9320123 b ll i Ian.bell@interserve.com Robin.okelly@interserve.com