The RI GHT WAY Plan The Next Phase. 1 This presentation contains - - PowerPoint PPT Presentation

Protecting People. Enhancing Lives.

The RIGHT WAY Plan… The Next Phase.

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.

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Protecting People. Enhancing Lives.

The RIGHT WAY Plan… The Next Phase.

Andy Ransom Chief Executive Officer

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H1 2017 Highlights

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Ongoing Revenue growth 16.0% in H1 2017 (H1 2016: 14.3%) at CER. Organic Revenue growth 4.2% vs 3.0% in H1 2016 (2.5% previously reported). Strong M&A delivering 11.8% of revenue growth. Pest Control 25.8% revenue growth of which 6.5% was organic growth.

16.0%

Executing our strategy in 2017

H1 2017 Highlights

5

Ongoing Operating Profit growth 13.0% in H1 2017 at CER. Good growth in North America, Germany, Asia and Pacific. Offset by lower profits in France, investments in digital capability and increased LTIP funding. Free Cash Flow from continuing operations £68.1m.

13.0%

Executing our strategy in 2017

H1 2017 Highlights

6

Executing our strategy in 2017

19 in Pest Control including PCI JV in India. Annualised revenues of £175m. Haniel JV completed on 30 June. CWS-boco Italy (Hygiene) acquired. Agreement in place to dispose of 8 French laundries (mainly flat linen), expected to complete in H2.

25 Acquisitions

High High-Quality Quality Business Business

Focused on high-growth markets

7

Gr Grea eater ter focu

• cus

s on g

• n growth

wth mar markets ets Pest Control in particular – now 63% of group revenues c.70% of group profits. c.90% of group revenues are generated outside of the UK. Over 1,800 local service teams covering: 90% of global GDP and 90 of the 100 largest cities. High Higher er or

• rga

ganic g nic growth th Ongoing businesses delivered 4.2% organic revenue growth in H1 2017. Q2 organic 4.7%. Fu Furthe ther opp r oppor

• rtun

tuniti ities es for mar

• r margin

gin up upli lift ft Density building opportunities (organic & M&A) and scale efficiencies; North America and Asia in particular. Lo Lower er ca capital pital inten intensi sity ty Annual Capex reduced by ~ £60m. Str Stron

• ng M

g M&A &A pipe pipeli line ne Pest Control and Hygiene - focused on higher growth markets.

JV JV wi with th Han Haniel ma iel marks ks a ste a step c p cha hang nge e in in th the e e exec ecut ution ion of

• f ou
• ur str

r strate tegy

Attractive price 40x+ FCF / 15x EBITA Redeploying the proceeds into Pest Control and Hygiene

201 2017 Interim Interim Resu esults: lts: Fina Financ ncial ial Review view

Jeremy Townsend Chief Financial Officer

8

Disposals – Impact on H1 Financials

£ million

As reported Disposals Ongoing

(Restated)

Pre- disposals Disposals Ongoing Ongoing Revenue* 1,023.1 (164.0) 859.1 1,162.9 (166.3) 996.6 Disposed businesses 8.0 164.0 172.0 2.0 166.3 168.3 Total revenue 1031.1

• 1031.1

1,164.9

• 1,164.9

Ongoing Operating Profit* 121.0 (20.6) 100.4 133.6 (20.2) 113.4 Disposed businesses (0.4) 20.6 20.2 (0.3) 20.2 19.9 Total operating profit 120.6

• 120.6

133.3

• 133.3
• The results of the Rentokil Initial

businesses contributed into the Haniel JV are classified as Disposed Businesses and are therefore excluded from Ongoing Revenue and Ongoing Profit

• The financial results of the French

Flat Linen businesses that are proposed to be sold to RLD have also been excluded from Ongoing Revenue and Ongoing Profit, recognising an expected completion of the transaction in the second half of 2017 H1 2016 H1 2017 Accounting treatment

*Ongoing Revenue and Ongoing Operating Profit exclude the results of disposed businesses, including the businesses contributed into the Haniel JV and the French laundries to be sold to RLD Charts calculated on a 12-month trailing basis

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Financial Highlights (Continuing Operations)

H1 2017

£ million

AER CER Δ AER Δ CER Ongoing Revenue * 1,056.0 996.6 28.4% 16.0% Ongoing Operating Profit * 122.1 113.4 29.2% 13.0% Adjusted PBTA 126.3 117.3 28.5% 12.5% PBT 592.9 582.9 637.4% 581.8% Free Cash Flow 68.1 Adjusted EPS 5.36p 4.97p 27.6% 10.9% Dividend 1.14p 15.2%

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*Ongoing Revenue and Ongoing Operating Profit exclude the results of disposed businesses, including the businesses contributed into the Haniel JV and the French laundries to be sold to RLD

Strong Financial Progress

Building a track record of delivery

Mid-single digit Revenue Growth

(CER)

High-single digit Profit Growth

(CER)

Strong and sustainable delivery of Free Cash Flow (AER)

Ongoing Revenue* Growth Ongoing Operating Profit* Growth Free Cash Flow

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 1000 1200 1400 1600 1800 2000 2200 Yr to Dec 2013 Yr to June 2014 Yr to Dec 2014 Yr to June 2015 Yr to Dec 2015 Yr to June 2016 Yr to Dec 2016 Yr to June 2017

Revenue (£m) Organic Growth %

10 30 50 70 90 110 130 150 170 Yr to Dec 2013 Yr to June 2014 Yr to Dec 2014 Yr to June 2015 Yr to Dec 2015 Yr to June 2016 Yr to Dec 2016 Yr to June 2017 150 170 190 210 230 250 270

Yr to Dec 2013 Yr to June 2014 Yr to Dec 2014 Yr to June 2015 Yr to Dec 2015 Yr to June 2016 Yr to Dec 2016 Yr to June 2017 *Ongoing Revenue and Ongoing Operating Profit exclude the results of Disposed Businesses, including the businesses contributed into the Haniel JV and the French laundries to be sold to RLD Charts calculated on a 12-month trailing basis

4 YR CAGR 10.4%

£m £m £m

4 YR CAGR 13.3% 4 YR CAGR 2.6%

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North America

• Organic Revenue Growth of +5.6% supported by strong growth in

product sales, Pest Control organic growth +6.0%

• Operating Margin maintained at 11.9%:

– +1.6% points improvement in pest control service margins offset by higher mix of low-margin product sales

• Five pest control acquisitions in H1 with combined annualised

revenues of c. £61m Strategic focus for H2 2017:

• Continued focus on driving Organic Growth initiatives
• Ongoing integration of Steritech, Residex and other acquisitions
• Further margin improvement opportunities from M&A, scale

efficiencies and density

Strong Ongoing Revenue +29.7%

Ongoing Group Revenue Ongoing Group Operating Profit

H1 H1 2017 2017 Gr Growt wth

Ongoing Revenue £386.7m +29.7% Ongoing Operating Profit £45.8m +29.5% Operating Margin 11.9% Maintained

39% 30%

At At const stant exchange rates 12

Ongoing Operating Profit +29.5%, reflecting higher revenues and acquisitions, including synergy deliver y in Steritech

Europe

• Strong performances from Germany (+10.2%), Latin America

(+38.8%) and Southern Europe (+5.8%) together with improved performance from France (+0.6%)

• +3.5% growth in Hygiene, +10.6% growth in Pest Control
• -0.7% points decline in Operating Margin, reflecting ongoing market

challenges in our France Workwear business

• Six acquisitions in H1 – two in Pest Control and four in Hygiene

(including CWS-Boco’s Italian hygiene operations) with combined annualised revenues of c. £41m

• Successful completion of JV with Haniel on 30 June 2017
• Proposed divestment of eight laundries in France to RLD – completion

expected in Q4 2017 Strategic focus for H2:

• Continued focus on Quality initiative in remaining France Workwear

businesses to mitigate competitive environment and pricing pressure

Ongoing Revenue +4.3% (+3.0% Organic Revenue growth)

27% 31%

H1 H1 2017 2017 Gr Growt wth

Ongoing Revenue £264.0m +4.3% Ongoing Operating Profit £48.2m +0.6% Operating Margin 18.2%

• 0.7% points

Ongoing Group Revenue Ongoing Group Operating Profit

At At const stant exchange rates 13

Ongoing Operating Profit +0.6%

Note: Ongoing Revenue and Operating Profit excludes numbers from those

• perations transferred to the Haniel JV and the French laundries to be sold to RLD

UK and Rest of World

• Continuation of growth trend in Pest Control and Hygiene, with Pest

Control benefitting from increased jobbing work in particular

• Challenging UK market for Property Care impacting revenue and

margins

• +10.3% Ongoing Revenue growth in RoW, across all regional

clusters in the Nordics, Caribbean, Africa and MENAT

• Margin decline of 0.5% points reflecting weakness in Property Care
• Seven businesses acquired in H1, including five in Pest Control and
• ne in Hygiene – with combined annualised revenues of c. £22m

Strategic focus for 2017:

• Successful integration of recent acquisitions and continued M&A
• Further improvements in revenue and profit through application of

successful UK operating model across the region

Ongoing Revenue +7.1% (+2.1% Organic Revenue growth) Ongoing Operating Profit +4.8%

18% 23%

H1 H1 2017 2017 Gr Growt wth

Ongoing Revenue £182.7m +7.1% Ongoing Operating Profit £35.5m +4.8% Operating Margin 19.4%

• 0.5% points

Ongoing Group Revenue Ongoing Group Operating Profit

At At const stant exchange rates 14

Japanese JV (Rentokil has 49% Share*)

H1 1 2017 2017 Growth th

Ongoing Revenue £23.0m +3.9% Ongoing Operating Profit £5.6m +14.2% Operating Margin 24.3% +2.2% points

H1 1 2017 2017 Growth th

Ongoing Revenue £82.4m +29.7% Ongoing Operating Profit £8.2m +30.5% Operating Margin 9.9% +0.1% points

Asia

• Good performances from both Pest Control and Hygiene
• Excluding impact from PCI JV, combined Ongoing Revenue growth
• f 16.8% from India, China and Vietnam (+166% including PCI)
• +0.1% improvement in Operating Margin – growth in Hygiene

margins offset by dilutive effect of lower-margin PCI business

• Four pest control acquisitions in H1 with annualised revenues
• f c. £49m

Strategic focus for 2017:

• Successful execution of PCI joint venture and integration of

recent acquisitions

• Further M&A opportunities to build scale in this key

strategic market

Ongoing Revenue +29.7% (+7.4% Organic Revenue growth) Ongoing Operating Profit +30.5%, reflecting higher revenue, density and ser vice productivity

8% 5% Ongoing Group Revenue Ongoing Group Operating Profit

At At const stant exchange rates

*Reported within Share of Profit from Associates (net of tax)

15

Pacific

• Good performances in Australia pest control and hygiene portfolio

businesses offsetting some weakness in residential pest control work in Australia

• Operating Margins maintained at 20.9%
• Three small pest control acquisitions in H1 with combined

annualised revenues of c. £2m Strategic focus for 2017:

• Further improvements in performance through additional

acquisitions in Pest Control and Hygiene and service productivity

Ongoing Revenue +8.9% (+4.7% Organic Revenue growth) Ongoing Operating Profit +8.9%, reflecting higher revenues

8% 11%

H1 H1 2017 2017 Gr Growt wth

Ongoing Revenue £80.8m +8.9% Ongoing Operating Profit £16.9m +8.9% Operating Margin 20.9% Maintained

Ongoing Group Revenue Ongoing Group Operating Profit

At At const stant exchange rates 16

JV with Haniel and Proposed French Flat Linen Disposal

• Our JV with Haniel completed on 30 June 2017. £396m proceeds received on that date net of transaction costs paid and cash disposed. Further £30m

to be received subject to completion adjustments

• We will receive an annual dividend from the JV of €19m for five years (first dividend to be received in Q2 2018) and will equity account for our retained

share in the JV from H2

• Proposed disposal of eight laundries in France to Regie Linge Development (RLD). Expected completion in Q4 2017 subject to employee consultation
• process. Laundries currently breakeven and generated revenues of €78m in 2016
• One-off costs (including deal costs) estimated to be c. £20m, of

which ~£15m in cash in 2017 (recorded against cash proceeds)

• Company’s Net Debt: EBITDA ratio reduced from 2.5x to c. 2x at

30 June 2017

• Estimated £18m reduction in Free Cash Flow in 2017 with similar

impact in 2018 after receipt of six months’ dividend in Q2 2018 –

• c. £10m reduction from 2019 when full annual dividend received
• French laundry assets written down to their recoverable amount

ahead of anticipated disposal in H2

• In accordance with IFRS 5, net assets of these businesses

categorised as ‘held for sale’ and therefore not subject to depreciation: - H1 2017 impact of £34.3m. Estimated impact in H2 of £4m (assuming Q4 completion)

£m

Joint Venture proceeds:

• Cash consideration (included deferred)

449

• Share of JV

254 Total consideration 703 Net assets contributed to the JV / recycled FX (203) Transaction costs (19) Profit on disposal – JV 481 Estimated loss on disposal – French laundries (19) Profit on disposed businesses 462

Net profit on disposal of businesses £m

17

£ million H1 2017 H1 2016 Adjusted Operating Profit 143.1 114.0 One-off items - Operating (7.7) (2.1) Depreciation 107.3 93.8 Other1 3.1 1.6 EBITDA 245.8 207.3 Working capital (24.1) (2.9) Provisions (6.0) (5.4) Capex (124.8) (104.6) Fixed asset disposal proceeds2 3.0 3.3 Operating Cash Flow – continuing operations 93.9 97.7

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

Operating Cash Flow

At At actual l exchange rates 18

Phasing of insurance payments (~£10m) and impact of US products growth Impacted by FX, underlying growth in line with revenue growth

£ million H1 2017 H1 2016 Operating Cash Flow – continuing 93.9 97.7 Cash interest (6.3) (22.8) Cash tax (19.5) (17.8) Free Cash Flow – continuing 68.1 57.1 Acquisitions (206.8) (34.9) Disposals 396.1 0.5 Dividends (43.5) (37.5) FX and other (0.7) (142.8) Movement in Net Debt 213.2 (157.6) Opening Net Debt (1,238.7) (1,026.6) Closing Net Debt (1,025.5) (1,184.2)

Free Cash Flow & Movement in Net Debt

At At actual l exchange rates 19

Cash interest lower following refinancing of GBP bond in March 2016 Net proceeds from contribution of businesses into JV Minimal FX impact on debt in H1

Capital Allocation

Increased density Low cost operating model Focused investment Turbo-charging growth Progressive dividend growth

Compounding revenue, profit and cash flow growth

20

Organic and M&A Revenue Growth Strong Profit And Free Cash Flow Financially disciplined M&A programme and

• perational investment

Improved Gross Margins

4% 5% 6% 7% 8% 9% 10% 11% TTM FY 15 TTM H1 16 TTM FY 16 TTM H1 17 Depr % revenue - pre JV Depr % revenue - post JV 50 100 150 200 TTM FY 15 TTM H1 16 TTM FY 16 TTM H1 17 Capex - pre JV Capex - post JV

~75% of capex spend on service equipment and motor vehicles Annual capex reduced by ~£60m post JV Workwear the most capital intensive category Depreciation as % revenue reduced post Haniel JV

• c. 7% Revenue
• c. 7% Revenue

10% Revenue 10% Revenue

Capital Expenditure

Lower capital intensity post JV

50 100 150 200 250 TTM FY 15 TTM H1 16 TTM FY 16 TTM H1 17 Service equipment Motor vehicles IT Other 0% 5% 10% 15% 20% 25% 30% TTM FY 15 TTM H1 16 TTM FY 16 TTM H1 17 Pest Hygiene Workwear

TTM H1 2017 figures Presented on a pro forma basis to exclude those businesses transferred to the Haniel JV and the French laundries to be sold to RLD

£m £m

Depr as % Revenue

21

20% 40% 60% 80% 100% 120% 140% TTM FY 13 TTM H1 14 TTM FY 14 TTM H1 15 TTM FY 15 TTM H1 16 TTM FY 16 TTM H1 17 Free cashflow conversion %

+90% average Free Cash Flow conversion Central provision spend now expected to reduce

0.0 2.0 4.0 6.0 8.0 10.0 12.0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Historical Projected

Cash Conversion

+90% conversion of net profit to cash

90%+ £m 22

Balance Sheet

Strong balance sheet to support future M&A investment

Cash proceeds from Haniel transaction has reduced ratio of Net Debt: EBITDA to c. 2x

• Net debt to EBITDA reduced to c. 2x at 30 June 2017 post

completion of JV (FY 2016: 2.5x)

• Free Cash Flow guidance for 2017 increased to £150m,

reflecting net benefits of ongoing weakness in Sterling offset by estimated impact of Haniel JV

• £507m of centrally-held funds and undrawn committed facilities
• Average cost of net debt c. 3.5%
• Pension scheme in surplus on a technical provisions basis –

no future cash payments expected

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H1 2013 Closing Net Debt FCF Acquisitions spend net

• f disposals

Dividends FX / Other HI 2017 Closing Net Debt

Acquisitions Disposals

769

646

123 204 889 136 1,025 £m

Acquisitions and dividends funded from Free Cash Flow and disposals

560 1,122

Net Debt Bridge

H1 2013 – H1 2017

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Year to Dec 2013 12 months to June 20171 Pest Control and Hygiene (% of Group Revenue)

49% 82%

Organic Revenue growth

• 1.2%

4.2%

Net Operating Margin

8.8% 12.9%

APBITA (including restructuring costs)

£206m £260m

Restructuring costs

£52m £7m

Free Cash Flow

£17m £167m

Free Cash Flow conversion

44% 92%

Net debt to EBITDA

2.5x

• c. 2x

S&P rating

BBB- BBB

Transforming Our Business: FY 2013 to H1 2017

Strategy into action

£

1 Revenue and profit for the 12 months to 2017, excluding the results of the businesses contributed to the Haniel JV and the French Flat Linen business

25

New Segment Reporting

Changes to Category and Quadrant reporting post Haniel JV

Pest Control Hygiene Protect & Enhance

63% Group Revenue 70% Group Operating Profit

• c. 19% Net Operating Margin1

19% Group Revenue 22% Group Operating Profit

• c. 19% Net Operating Margin1

18% Group Revenue 8% Group Operating Profit

• c. 10% Net Operating Margin1

Hygiene businesses Protect and Enhance businesses Pest businesses

Emerging

Asia Middle East and Turkey Latam Central America Mexico Africa

Growth

North America Pest, Distribution & Brand Standards Europe UK Caribbean South Africa Pacific

Washrooms and Mats Medical and Specialist Hygiene UK Europe Asia Pacific South Africa Caribbean France Workwear Ambius UK Property Care and Products Other small businesses

1 Full year annualised margins

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2017 Guidance

Impact of Haniel JV £m Impact of FX £m

• Central & Regional overheads c. £6m higher than the prior

year, reflecting increased investment in digital capability, increased LTIP charges offset by targeted reductions following the JV completion – net £4m higher than previously guided

• Above the line restructuring costs c. £7m, in line with 2016
• Interest costs c. £40m reflecting interest on receipt of proceeds

post JV completion, cash interest in line with P&L impact

• Adjusted effective tax rate of 22.5%, cash tax payable of
• c. £40m to £45m
• Other cash flow guidance:
• Working capital outflow around £10m (in line with 2016)
• Net capex c. £210m to £220m (subject to FX movements)
• Minimum Free Cash Flow guidance revised to £150m

Other 2017 guidance

H2 profit from those businesses transferred to JV (19)* Our share of JV profit 7 Reduction in central overheads and interest on lower debt 5 (7) H1 9 H2 c.11

• c. 20

* Based on financial performance in H2 2016

27

Summary and Guidance for H2 2017

H1 2017 financial summar y  Ongoing Revenue growth of +16.0%

 Improvement in Organic Revenue growth +4.2% (H1 2016: +3.0%)  Ongoing operating profit increase of +13.0%  £68.1m Free Cash Flow on track to achieve revised full year guidance of £150m  Balance sheet remains robust  Year-on-year total dividend increase of 15.2%  Confident in further progress in H2 2017

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Protecting People. Enhancing Lives.

The RIGHT WAY Plan… The Next Phase.

Andy Ransom Chief Executive Officer

29

Our colleagues as Experts Strong Regional Businesses

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

Lean, Multi-Business Operations

Branch

Capital allocation model Differentiated strategies Increasing exposure to Growth & Emerging markets Growth Profit

EMERGING PROTECT & ENHANCE MANAGE FOR VALUE GROWTH

Pest Control: Accelerate Hygiene: Operational execution Workwear: Quality focus

Leadership in our Business Lines Levers to drive profitable growth Digital expertise Sales effectiveness Density building Innovation Service efficiency & retention Value creating M&A Financial targets: Mid-single-digit revenue growth High-single-digit profit growth Strong and sustainable delivery of free cash flow (£110m+ pa)

Business Model

Introduced in 2013

30

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

Multi-local Operations across the Globe Market-Leading Businesses

Hygiene

Focus: Operational excellence

Differentiated IRR

15% - 20%+

Protect and Enhance

Financial Model to Compound Growth Consistent and Efficient Operational Model

Pest Control Focus: Growth and Emerging Markets Differentiated IRR Growth 13%+ Emerging 15%+

Focus: Retention and enhancing profitability

Differentiated IRR

20%+

Leadership in Digital and Innovation Expertise of our People

31 Over 1800 local service teams covering:

• 90% global GDP
• 90/100 largest cities
• c. 90% of revenues
• utside the UK

New Model for Profitable Growth

Focused on compounding revenue, profit and cash growth

New Model for Profitable Growth

Focused on compounding revenue, profit and cash growth

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

Multi-local Operations across the Globe Market-Leading Businesses

Hygiene

Focus: Operational excellence

Differentiated IRR

15% - 20%+

Protect and Enhance

Financial Model to Compound Growth Consistent and Efficient Operational Model

Pest Control Focus: Growth and Emerging Markets Differentiated IRR Growth 13%+ Emerging 15%+

Focus: Retention and enhancing profitability

Differentiated IRR

20%+

Leadership in Digital and Innovation Expertise of our People

Over 1800 local service teams covering:

• 90% global GDP
• 90/100 largest cities
• c. 90% of revenues
• utside the UK

32

Operating Model

Multiple growth levers throughout the model

Colleague expertise, engagement, safety and retention. Becoming an Employer of Choice. Delivering customer service and customer engagement (CVC) Sales Excellence driving gross sales (Contract and Jobs) Service efficiency Customer retention Contract portfolio growth Price management Jobbing and product sales Revenue Growth Profit and Cash

RIGHT PEOPLE RIGHT THINGS RIGHT WAY

Productivity and effective cost management. Density building. Sharing best practices, common IT and digital solutions. Digital expertise and leadership in innovation 33

New Model and Guidance

Focused on compounding revenue, profit and cash growth

Medium-Term Financial Guidance: Ongoing Revenue growth: 5 - 8% Ongoing Profit growth: c. 10% 34 Free Cash Flow conversion: 90%+

35

Summary of Changes

Evolving our business model and strategy

Gr Grea eater ter foc

• cus

us on

• n tw

two

• co

core bu e busi sine ness sses i es in n Pest C est Con

• ntr

trol

• l an

and d Hygien Hygiene, e, instead instead of

• f thr

three ee:

New Protect and Enhance group includes French Workwear, Ambius and Property Care. <10% of group profits.

Mainta aintaining ining dif differ eren entia tiated ted a app pproa

• ach;

h; intr introd

• duc

uced ed thr throu

• ugh

gh the bu the busi sine ness sses: es:

Continue to focus on Growth and Emerging markets within Pest Control. Manage for Value quadrant is now redundant. Updated IRRs:

• Pest Control: Growth 13%+, Emerging 15%+
• Hygiene 15% to 20%+
• Protect and Enhance 20%+

No No cha hang nge e to to ou

• ur

r Region gions s an and d lo low-co cost o st ope perating mod ting model el:

Continue to focus on profitable growth levers – innovation, digital, expertise of our people, etc – embedded within our operating model.

Up Up-weigh eighted ted medium medium-ter term m fina financ ncial ial gu guidan idance ce:

Ongoing revenue growth: 5-8%; Ongoing profit growth: c. 10%; Free cash flow conversion: 90%+

Value alue-cr crea eating ting co compo mpoun und d growth th mod model. el.

Ev Evolving our

• lving our Model and Str
• del and Strate

tegy y – Gr Grea eater ter Focus on C

• cus on Cor
• re Bus

e Business inesses es

Pest Control businesses 63% Group Revenue 70% Group Operating Profit

• c. 19% Net Operating Margin*

36

Ongoing Businesses

92% of Group Operating Profit in Pest Control and Hygiene

Revenue: £632m Profit: £107.6m 25.8% 21.4%

• World-class business performing well.
• Growth (Rev £543.9m +22% YoY; Profit £94.1m

+16.8% YoY). Emerging (Rev £87.7m +53.4% YoY; Profit £13.5m +68.2% YoY)

• Leadership in digital and innovation.
• Top 3 in 60+ of our 70 markets (No1. in 44)

H1 2017

Hygiene businesses 19% Group Revenue 22% Group Operating Profit

• c. 19% Net Operating Margin*

Revenue: £191m Profit: £33.6m 3.7% 9.9%

• High-quality business, well positioned with

multiple growth drivers.

• Outstanding product range.
• Focus on operational execution and density.
• Top 3 in 35+ of our 40+ markets (No1. in 23)

H1 2017

Protect & Enhance businesses

18% Group Revenue 8% Group Operating Profit

• c. 10% Net Operating Margin*

Revenue: £174m Profit: £13.4m 0.6%

• 32.1%
• Profitable and cash-generative businesses in:

Plants (Ambius), Property Care (UK) and Workwear (France).

• Remain focused on protect and enhance

strategies – service, retention, productivity and cash.

H1 2017

Clear Clear Prior Prioriti ities es to D to Deliv eliver er Pr Profita

• fitable

ble Gr Growt wth

* Annualised Net Operating Margin

37

Rentokil Pest Control: World’s largest commercial pest control company.

Global Market CAGR of 5% - 6%*

Multiple drivers of demand for Pest Control services

38

• Increasing regulation and enforcement.
• Demand for higher quality reporting and risk

management assurance.

• Impact of social media driving companies to

invest in brand protection.

Emerging Markets and Urbanisation Climate and New Pest Threats Science and Innovation Global standards Compliance, Risks and Digital Reporting Growth in North America

• Global middle class will increase from 1.8 billion

in 2009 to 3.2 billion by 2020. By 2030 Asia will represent 66% of the global middle-class (Source: OECD).

• The share of urban population to grow from 54%

to 66% by 2050 (Source: UN).

• Global warming enabling pests to become

endemic.

• Rise of the mosquito threat: dengue fever, Zika,

yellow fever, encephalitis, West Nile virus, chikungunya and malaria.

• Innovations driving growth, particularly in

established markets.

• Rising expectations from consumers driving

continuous improvement and innovation.

• Convergence of international standards

(particularly in the food industry) and the drive for consistency from multi-nationals.

• World’s largest pest control market.
• National accounts.
• Strong growth in Mosquito control.

Source: Various market reports forecasting over 5+ years incl. Markets & Markets, Allied Market Research, Future Market Insight (all 2017)

Emerging Markets

39

No competitor can match our footprint

RI I Asi sia: a: 12 cou 12 countri ntries, es, 7,500 technicians, 7,500 technicians, 500 500+ l + loca

• cati

tions:

• ns:

No competitor has this footprint. Leadership in India: PCI JV transaction has started very strongly. Lea Leadershi dership p in in citi cities es in in Latin Latin Ameri merica: ca: Rentokil in Brazil growing at 37% in H1. Continue to target new cities to enter and to build density.

Rentokil has a powerful market position in Emerging markets, which will deliver long-ter m sustainable growth. We have the scale, brand and experience. Inc Increasing M easing Mid iddle Clas dle Classes ses Will D ill Driv rive e Inc Increasing Spend on P easing Spend on Pest est Cont Control

• l

By 2030 Asia will represent 66% of the global middle-class (OECD)

Science and Innovation

40

Stron Strong pipe g pipeli line ne of

• f inno

innovations vations drivi driving ng sales: sales: Targeted investment particularly in key product areas e.g. rodents. Important in more mature markets. Next generation PestConnect digital pest control solutions coming through in H2, further enhancing our industry-leading solution. Lumnia – innovative LED fly control. Launched in 10 markets. Strong sales 40% ahead of internal forecasts. UK performing very well. Selling into a wide range of customer sectors. Positive customer feedback.

Rentokil leads the industr y in providing innovative new solutions to enhance core lines, meet emerging threats and the requirements of new regulation. New Science, Training and Innovation Centre to Open in September.

• c. 3x the area for science labs and studies.

Industry-leading innovation and technical expertise

Digital Leadership

41

Digital tools & services in operation across the customer experience

• Strong demand for PestConnect:

– Particularly high dependency customers – 12 countries, +30,000 devices. – +25m messages sent from remote units

• Online Command Centre (Google):

– Developed to capitalise on data & insight

• Extending our Connect capability to
• ther pest areas.

PestConnect Digital Leadership

• Integrated digital approach:

– Customer facing systems

• 34% growth in web visits YTD

– Colleague support systems – Analytical tools and insight

• Digital Services:

– Remote monitoring for 24/7 monitoring of pest issues – myRentokil (45% of commercial customers). – myInitial. myAmbius.

Higher Scrutiny

• Increasing risk in customer sectors.

Driven by:

– Legislation and hygiene audits – Awareness of social media spreading bad news quickly

• Customers investing to manage

potential risks:

– Consultative sales and digital reporting to help manage risk.

Building a Deeper Customer Relationship: All commercial customers will benefit from myRentokil portal by the end of 2019.

Climate Change

42

Global presence and expertise to share

Major public health concer ns eg vector- bour ne Dengue fever, Zika, Yellow fever and West Nile virus continue to be endemic in tropics, but spreading to more temperate zones.

War arme mer r cli lima mate te incr increa eases ses pe pest st pr pressur essure: e: Increased populations of existing pests (longer breeding seasons). Introduction of new pests. Globa lobal l pr presen esence ce - str stron

• ngly

y po posi sitione tioned to d to shar share e exp xper ertis tise: e: Strong market presence in Asia, LatAm, Caribbean, Africa & NA. Rentokil’s expertise is trusted eg Rio Olympics. Award of CDC Zika contract in US and Puerto Rico. Dengue fever prevention in Asia.

Impo Import rtance of ance of Pest Pest Cont Control rol is is Mov Moving up the ing up the Public Public Health Health Agenda. genda.

Convergence of Global Standards

43

Convergence in Standards Convergence of inter national standards (par ticularly in the food industr y) and the drive for consistency from multi-nationals.

Rentokil’s international reac each i h is s a k a key ey dif differ erentia entiator tor: Over 65 territories, 91% of world GDP covered. Strategic alliance with British Retail Consortium - collaboration and adoption of common standards and developing industry best practice. Experience Experienced d global lobal acc accoun

• unts

ts team team in in place: place: Tight customer profiling where Rentokil has a lower share. Framework sets broad parameters - service model and pricing only agreed after site survey. Pipeline c. £50m.

Lever Leveraging aging Our Our Operat Operational ional Model and Inter Model and International national Reach A Reach Acros cross s Our Our Regions Regions

Global-Local presence is a key differentiator

North America

44

National coverage in the World’s largest pest control market

Ren entok tokil il ha has s a str a stron

• ng

g an and d growing ing mar market et po posi sition: tion: Combination of organic and acquisitive growth has created a high quality, national pest control business in a large and growing market. Strong growth in national accounts. Mosquito control - demand expected to grow faster than general pest control. Leverage global expertise and scale where appropriate – e.g. IT, innovation etc. M&A pipeline remains strong - the ‘buyer of choice’. Building scale and customer density to drive margin expansion.

The Nor th America Pest Control market is expected to reach $10bn in 2020. Growing at a CAGR of 5.2% through to 2023*.

Our Ambition: To become a $1.5bn business in NA Margins of c. 18% by the end of 2020 North America Benchmark: Orkin: Rollins Pest Control (FY 2016) Revenues: $1.57bn. EBITA Margins: 18.3%. Market capitalisation as at 30 June 2017: c. $9bn

www.rollins.com/rollins-2016-annual-report-and-2017-proxy-statement.pdf

* Source: Allied Market Research

45

Rentokil Pest Control

Protecting People. Enhancing Lives.

Unri Unrivalled valled Global Leader Global Leadership ship

Most international – top 3 in 60+ of our 70 markets (No1. in 44). Strongest brand.

Str Strong

• ng Mar

Market et Posit

• sitions

ions in Higher G in Higher Growt wth mar h markets ets

Strong position in Growth and Emerging markets. Well placed to take advantage of the big demographic changes, climate impact, new pest threats etc.

Signif Significant icant Oper Operational Le tional Lever erage ge

Proven, repeatable lean business model with best people, tools & training. Deep understanding of route and product density.

Leading Leading in in Digit Digital al and I and Inno nnova vating a ting at pace t pace

Best management information tools – building a deeper customer relationship. High-quality web platform driving sales enquiries. Innovation pipeline that’s second to none eg Lumia, PestConnect, RapidPro. New Global Innovation Centre.

The World’s Leading Commercial Pest Control Company

46

Initial Hygiene businesses: Multiple drivers of growth, high- quality products and focus on

• perational execution.

Global Market Growth In Line With GDP

Multiple drivers of growth in Hygiene

47

• Risks of having poor hygiene facilities:
• Protecting people: Increasing awareness of

the link between good hand hygiene and wellbeing / cost of absence / Illness.

• Expectations for healthy workplaces and

healthcare facilities eg MRSA.

• Mitigate risk. Impact of social media driving

companies to invest in brand protection.

• Convergence of technologies / use of IOT
• Sustainability
• Reducing water usage, paper saving, etc.
• Clean air – major topic in Asia

Changing Demographics Rising Consumer Expectations Enhanced Brand Experience

• Population growth / ageing population:
• Resulting in more health issues and

hygiene product requirements.

• Expectations for nappy changing/disposal

in public areas/retail.

• Rising health issues (eg aging population
• incontinence facilities).
• Emerging markets
• Rise of middle classes
• More women are at work
• Requiring more feminine hygiene facilities

and service.

Increasing Regulation

• Tighter regulation across the globe
• Compliance with workplace hygiene, food

production/retail hygiene and environmental standards.

• Importance of brand experience
• Organisations investing in enhance

experiences through scent, design and use

• f colour. Seeking to differentiate.

Bloomberg: Global GDP projected to be 2.5% – 3.5% in 2018-19

Hygiene: Execute Now

Operational strategy and targeted M&A to build route density

Operational Focus

Market Scale and Operational Execution to Drive Profitable Growth

Density:

Customer and Product M&A: City-focused

Products: Best in Class

Innovation

• Inc. Digital

Service: High quality

Hygiene “Execute Now”

48

• The best product ranges in the market.
• Excellent service culture.
• Strong market positions.
• National coverage for key accounts.
• An emerging tech/digital overlay.
• Leading brand (esp. in Emerging markets).
• Targeted M&A to build density and translate into profit.

City-focused pipeline in place.

• Leveraging much of Pest Control model.

Strong Operational Focus

High-Quality Products

Developed to match growth drivers and increase range selling

49 In-cubical services (c. 40% of Hygiene market) Products to comply with sanitary waste disposal regulations and the needs of a larger and ageing population, and larger female population in the workplace. Initial: Signature, Reflection and Colour ranges. Different size of bins options to suit customer requirements. Premium ‘no touch’.

Demographics. Increasing regulation. Rising consumer expectations. Enhanced brand experience.

Products to meet customers demand to deliver an enhance brand experience through scent and colour. Higher air quality expectations in Asia given health concerns. Initial: Complete range of air freshener and air purification

• products. Premium Scenting. Colour Hygiene range.

Premium ‘no touch’. Products to allow customers to mitigate risk by preventing slips, trips and falls.. Other services eg vending. Initial: Comprehensive range of textile & non-textile floor mats for use in washroom, receptions, industrials, food preparation area etc. Logo/branded mats also available. Products to meet rising consumer expectations for hygiene facilities and avoid risk – quick to use social media if lacking. Initial: Soap and sanitiser dispensers, hand driers, roller towels and paper towel dispensers, plus consumables. Premium ‘no touch’.

Hand Hygiene services (c. 25% of Hygiene market) In-cubical services (c. 40% of Hygiene market) Air Care (c. 20% of Hygiene market) Floor care/other services (c. 15% of Hygiene market)

Hygiene: Execute Now

Deep understanding of Product and Customer density

ILLUSTRATION

Sevenoaks

xxx

Product Density Customer & Product Density

10 Customers Average 3 hygiene units per customer

Gross Margin = X%

20 Customers Average 6 hygiene units per customer 10 Customers Average 6 hygiene units per customer Gross Margin Improvement + c. 7% points Gross Margin Improvement + c.10% points

50

51

Initial Hygiene

Protecting People. Enhancing Lives.

Bes Best t Hygiene Pr Hygiene Product R

• duct Ranges

anges Outstanding product ranges in place – Signature, Reflection and Colour. Strongest hygiene services brand around the world, particularly important in Emerging. Deep Under Deep Underst standing anding of

• f Dens

Density ity and Oper and Operational tional Dr Driv iver ers s of

• f Gr

Growt wth Proven, repeatable lean business model with best people, tools & training. Digital expertise. Expertise and tools in place to maximise route and product density. Str Strong

• ng Mar

Market et Positions

• sitions in Hig

in Higher Gr her Growt wth Mar h Markets ets Strong market positions in higher growth markets – UK, Asia, Pacific, Caribbean and southern Africa. Top 3 in 35+ of our 40+ markets (No1. in 23). Well P ell Posit

• sitioned

ioned to to Tak ake Adv e Advanta antage ge of

• f the

the Big D Big Demog emographic phic Changes Changes Growing and aging population; growing middle classes and rising hygiene expectations. Increasing hygiene regulation and auditing.

One of the World’s Leading Commercial Hygiene Services Companies

52

Protect and Enhance businesses: Focus on enhanced service, customer retention and profit protection.

Protect and Enhance Businesses

Account for <10% of Group Profits

53

Property Care (U.K.) Workwear (France)

Profitable, Cash-Generative, Route-based Businesses

Ambius (Global)

• 17 countries with leadership positions in
• US, Canada
• Australia, New Zealand
• Broadly consistent around the world:
• Interior Landscaping, Living Green Walls
• Holiday Décor
• Premium Scenting
• Living walls: Global market to grow by CAGR
• f 11% during the period 2017-2021

(Technavio)

• Key sectors: Office, FM, Hospitality and Retail
• Focus: Higher margin green walls and

premium scenting; expand and exploit international agreements; drive lead generation via digital

• >£150m U.K. market - woodworm , damp

proofing and dry rot - highly fragmented

• RI has built a leading position the last few years

– Peter Cox & Wise acquisitions

• Strong operational capability - certified teams
• Mainly ‘jobbing‘ although recurring revenue

streams in commercial / social housing

• Defensive cash position – advance payment
• Slowing U.K. property market – fewer enquiries
• Focus: Shared digital expertise with pest, cost
• ptimisation & efficiency, IT System integration

and margin management focus

• French GDP 0.4% ahead of forecasts in Q1,

but slower growth than other Eurozone

• countries. Remains challenging
• Market consolidation: Elis-Berendsen

proposed merger, RI’s JV with Haniel and RI’s proposed sale of 8 laundries in France to RLD

• H1: Continued operational improvement and

improved new business margins. Proposed divestment of 8 laundries. See Appendix

• Focus: Combination of Quality of products

and services, together with profit improvement / protection initiatives

• Ambition to return France to profitable

growth by end of 2018

25 25 acquisit acquisitions ions wi with th combined annualised combined annualised revenu enues of es of £17 £175m ( 5m (£21 £21m r m revenu enues acq es acquir uired in ed in H1 2016 fr H1 2016 from 20 deals)

• m 20 deals).

Comp

• mpleted

leted joint joint ven entur ture w e with ith Ha Haniel niel on

• n 30

30 Jun une Str Stron

• ng pipe

g pipeli line ne in in plac place e Central and local teams maintaining key relationships. H2 H2 M&A &A spen spend Expect to be c. £50m. M&A &A Ana nalys ysis is: : Acquisitions over 18 month period (October 2014 to March 2016), trading for > one year. 35 acquisitions. Only one acquisition delivering returns slightly lower than their target hurdle rate.

54

Strong Execution Of M&A

Materially larger businesses acquired in H1 2017 vs H1 2016

55

2017 Priorities – H1 Progress Update

Executing our Strategy

Accelerate Organic Revenue growth Good progress: 4.2% in H1 (4.7% in Q2). Highest growth for 10+ years. Improve margins, particularly in Hygiene Progress in Pest Control services and Hygiene. Much more to go for, through density building in particular. Ongoing execution of M&A Strong H1. 25 acquisitions - annualised revenues of £175m. Enhance capability in digital, innovation and the ‘Internet of Things’ Further good progress with Lumnia sales 40% ahead of forecast. PestConnect performing well. Strong web performance in H1 – web visits on Rentokil sites up 34% YTD. Improve operational and financial performance in France Workwear Agreement to divest 8 healthcare flat linen operations. Return France to profitable growth by end of 2018.

56

Reset Our Strategy And Guidance

Higher quality business, focused on higher growth markets

Ev Evolv

• lved Bus

ed Business iness Model Model and Str and Strate tegy y

Greater focus on higher growth markets. Multi-local, low-cost operating model covering 90% of global GDP. Core businesses in Pest Control and Hygiene – highly defensive. Ambition to create c. $1.5bn / 18% margin business in North America.

Acceler Accelerated ted Or Organic ganic Revenue enue Gr Growt wth: h:

Attractive global markets with multiple growth drivers.

Str Strong Balance Sheet:

• ng Balance Sheet:

Annual Capex reduced by ~ £60m. Heavy-lifting – pensions, long-term liabilities – mostly behind us. Committed to BBB and progressive dividend policy.

Str Strong M&A Pipeline:

• ng M&A Pipeline:

Maintaining differentiated IRR approach.

Up Up-Weigh eighted Medium ted Medium Ter erm m Guid Guidanc ance: :

Ongoing revenue growth: 5 - 8%. Ongoing profit growth: c. 10%. Free cash flow conversion: 90%+.

French Workwear

Healthcare laundries - proposed divestment

Proposed sale of eight laundries in France, primarily focused on healthcare

Rentokil Initial has an Option agreement in place to sell eight textile laundries / branches in France to Mutuelle Nationale des Hospitaliers, through its subsidiary Regie Linge Developpement. Mainly supplies Flat Linen (sheets and towels) to the highly competitive healthcare sector Delivered revenues of €78m and was break-even at the adjusted operating profit level for the year ended 31 December 2016. Employs c. 1,000 people Transaction has received unconditional clearance from the French Antitrust Authority. Consulting with employee representative bodies. A decision to exercise the Option will be made at the end of the consultation process. Assuming the successful completion of the employee consultation process, we expect to complete the disposal in late Q3 / early Q4.

58