Protecting People. Enhancing Lives./media/Files/R/...H1 2017 Highlights 4 Ongoing Revenue growth...

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'sfinancial position and results, business strategy, plans and objectives. Such statements involverisk and uncertainty because they relate to future events and circumstances and there areaccordingly a number of factors which might cause actual results and performance to differmaterially from those expressed or implied by such statements. Forward-looking statementsspeak only as of the date they are made and no representation or warranty, whether expressed orimplied, is given in relation to them, including as to their completeness or accuracy or the basis onwhich they were prepared. Other than in accordance with the Company’s legal or regulatoryobligations (including under the Listing Rules and the Disclosure and Transparency Rules), theCompany does not undertake any obligation to update or revise publicly any forward-lookingstatement, whether as a result of new information, future events or otherwise. Informationcontained in this announcement relating to the Company or its share price, or the yield on itsshares, should not be relied upon as an indicator of future performance. Nothing in thispresentation should be construed as a profit forecast.

22

2

Protecting People.

Enhancing Lives.


The Next Phase.

Andy RansomChief Executive Officer

3

H1 2017 Highlights

4

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 Operat ing Prof i t growth 13.0% in H1 2017 at CER.

Good growth in North America, Germany, Asia and Pacif ic .

Offset by lower profits in France, investments in digital capability and increased LTIP funding.

Free Cash Flow from continuing operations £68.1m.

13.0%


H1 2017 Highlights

6


19 in Pest Control including PCI JV in India.

Annual ised 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-Quality Business

Focused on high-growth markets

7

Greater focus on growth markets

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.

Higher organic growth

Ongoing businesses delivered 4.2% organic revenue growth in H1 2017. Q2 organic 4.7%.

Further opportunities for margin uplift

Density building opportunities (organic & M&A) and scale efficiencies; North America and Asia in particular.

Lower capital intensity

Annual Capex reduced by ~ £60m.

Strong M&A pipeline

Pest Control and Hygiene - focused on higher growth markets.

JV with Haniel marks a step change in the execution of our strategy

Attractive price 40x+ FCF / 15x EBITA

Redeploying the proceeds into Pest Control and Hygiene

2017 Interim Results:

Financial Review

Jeremy TownsendChief 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 9

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%

10

*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 toDec2013

Yr toJune2014

Yr toDec2014

Yr toJune2015

Yr toDec2015

Yr toJune2016

Yr toDec2016

Yr toJune2017

Revenue (£m) Organic Growth %

10

30

50

70

90

110

130

150

170

Yr toDec2013

Yr toJune2014

Yr toDec2014

Yr toJune2015

Yr toDec2015

Yr toJune2016

Yr toDec2016

Yr toJune2017

150

170

190

210

230

250

270

Yr toDec2013

Yr toJune2014

Yr toDec2014

Yr toJune2015

Yr toDec2015

Yr toJune2016

Yr toDec2016

Yr toJune2017

*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%

11

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 Prof it

H1 2017 Growth

Ongoing Revenue £386.7m +29.7%

Ongoing Operating Profit £45.8m +29.5%

Operating Margin 11.9% Maintained

39% 30%

At constant 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 2017 Growth



Operating Margin 18.2% -0.7% points

Ongoing Group

Revenue

Ongoing Group

Operating Prof it


13

Ongoing Operating Profit +0.6%

Note: Ongoing Revenue and Operating Profit excludes numbers from those

operations 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

one 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 Operating Profit +4.8%

18% 23%

H1 2017 Growth



Operating Margin 19.4% -0.5% points

Ongoing Group

Revenue

Ongoing Group

Operating Prof it


14

Japanese JV

(Rentokil has 49% Share*)H1 2017 Growth



Operating Margin 24.3% +2.2% points

H1 2017 Growth



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

of 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

of c. £49m


• Successful execution of PCI joint venture and integration of

recent acquisitions

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

strategic market




reflecting higher revenue,

density and ser vice productivity

8% 5%

Ongoing Group

Revenue

Ongoing Group

Operating Prof it


*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


• Further improvements in performance through additional

acquisitions in Pest Control and Hygiene and service productivity




reflecting higher revenues

8% 11%

H1 2017 Growth



Operating Margin 20.9% Maintained

Ongoing Group

Revenue

Ongoing Group

Operating Prof it


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 FlowAt actual 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 actual 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 modelFocused 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

operational 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


Capex - pre JV Capex - post JV

~75% of capex spend on service

equipment and motor vehicles

Annual capex reduced by ~£60m post JVWorkwear 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

0

50

100

150

200

250


Service equipment Motor vehicles IT Other

0%

5%

10%

15%

20%

25%

30%


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 FY13

TTM H114

TTM FY14

TTM H115

TTM FY15

TTM H116

TTM FY16

TTM H117

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

23

H1 2013 Closing NetDebt

FCF Acquisitions spend netof disposals

Dividends FX / Other HI 2017 Closing NetDebt

Acquisitions Disposals

769 646

123

204 889

136 1,025

£m

Acquisitions and dividends funded from

Free Cash Flow and disposals

5601,122

Net Debt Bridge

H1 2013 – H1 2017

24

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



18% Group Revenue



Hygiene businesses Protect and Enhance businessesPest businesses

EmergingAsia

Middle East and Turkey

Latam

Central America

Mexico

Africa

GrowthNorth 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 26

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 debt5

(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

28

Protecting People.

Enhancing Lives.


The Next Phase.

Andy RansomChief 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

Gro

wth

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-digitprofit growth

Strong and sustainable delivery of free cash flow (£110m+ pa)

Business Model

Introduced in 2013

30

• North America

• Europe


• Asia

• Pacific

Multi-local Operations across the GlobeMarket-Leading Businesses

Hygiene

Focus: Operational excellence

Differentiated IRR

15% - 20%+

Protect and Enhance

Financial Model to Compound GrowthConsistent 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

outside the UK

New Model for Profitable Growth

Focused on compounding revenue, profit and cash growth

New Model for Profitable Growth


• North America

• Europe


• Asia

• Pacific

Multi-local Operations across the GlobeMarket-Leading Businesses

Hygiene

Focus: Operational excellence

Differentiated IRR

15% - 20%+

Protect and Enhance

Financial Model to Compound GrowthConsistent 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

outside 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


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

Greater focus on two core businesses in Pest Control and Hygiene, instead of three:

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

Maintaining differentiated approach; introduced through the businesses:

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 change to our Regions and low-cost operating model:

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

Up-weighted medium-term financial guidance:

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

Value-creating compound growth model.

Evolving our Model and Strategy – Greater Focus on Core Businesses

Pest Control businesses

63% Group Revenue


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



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



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 Priorities to Deliver Profitable Growth

* 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: NASA/GISS).

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 Asia: 12 countries, 7,500 technicians, 500+ locations:

No competitor has this footprint.

Leadership in India: PCI JV transaction has started very strongly.

Leadership in cities in Latin America:

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-term sustainable growth. We have

the scale, brand and experience.

Increasing Middle Classes Will Drive Increasing Spend on Pest Control

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

Science and Innovation

40

Strong pipeline of innovations driving 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

l ines, 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

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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

other pest areas.

PestConnectDigital 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

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Global presence and expertise to share

Major public health concerns eg vector -

bourne Dengue fever, Zika, Yellow fever and

West Nile virus continue to be endemic in

tropics, but spreading to more temperate

zones.

Warmer climate increases pest pressure:

Increased populations of existing pests (longer breeding seasons).

Introduction of new pests.

Global presence - strongly positioned to share expertise:

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.

Importance of Pest Control is Moving up the Public Health Agenda.

Convergence of Global Standards

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Convergence in Standards

Convergence of international standards

(par ticular ly in the food industr y) and the

drive for consistency from multi -nationals.

Rentokil’s international reach is a key differentiator:

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.

Experienced global accounts team in 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.

Leveraging Our Operational Model and International Reach Across Our Regions

Global-Local presence is a key differentiator

North America

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National coverage in the World’s largest pest control market

Rentokil has a strong and growing market position:

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. $9bnwww.rollins.com/rollins-2016-annual-report-and-2017-proxy-statement.pdf

* Source: Allied Market Research

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Rentokil Pest Control

Protecting People. Enhancing Lives.

Unrivalled Global Leadership

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

Strong Market Positions in Higher Growth markets

Strong position in Growth and Emerging markets.

Well placed to take advantage of the big demographic changes, climate impact, new pest threats etc.

Significant Operational Leverage

Proven, repeatable lean business model with best people, tools & training.

Deep understanding of route and product density.

Leading in Digital and Innovating at 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

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Initial Hygiene businesses:

Multiple drivers of growth, high-

quality products and focus on

operational execution.

Global Market Growth In Line With GDP

Multiple drivers of growth in Hygiene

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• 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

of 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-focusedProducts:

Best in Class

Innovation

Inc. Digital

Service:

High quality

Hygiene

“Execute

Now”

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• 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

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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 densityIL

LU

ST

RA

TIO

N

Sevenoaks

xxx

Product Density Customer & Product Density

10 Customers

Average 3 hygiene units per customer

Gross

Margin

= X%

20 Customers


10 Customers


Gross Margin

Improvement

+ c. 7% points

Gross Margin

Improvement

+ c.10% points

50

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Initial Hygiene

Protecting People. Enhancing Lives.

Best Hygiene Product Ranges

Outstanding product ranges in place – Signature, Reflection and Colour.

Strongest hygiene services brand around the world, particularly important in Emerging.

Deep Understanding of Density and Operational Drivers of Growth

Proven, repeatable lean business model with best people, tools & training. Digital expertise.

Expertise and tools in place to maximise route and product density.

Strong Market Positions in Higher Growth Markets

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 Positioned to Take Advantage of the Big Demographic 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

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Protect and Enhance

businesses: Focus on

enhanced service, customer

retention and profit protection.

Protect and Enhance Businesses

Account for <10% of Group Profits

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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

of 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

optimisation & 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 acquisitions with combined annualised

revenues of £175m (£21m revenues acquired in

H1 2016 from 20 deals).

Completed joint venture with Haniel on 30 June

Strong pipeline in place

Central and local teams maintaining key relationships.

H2 M&A spend

Expect to be c. £50m.

M&A Analysis:

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.

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Strong Execution Of M&A

Materially larger businesses acquired in H1 2017 vs H1 2016

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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.

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Reset Our Strategy And Guidance

Higher quality business, focused on higher growth markets

Evolved Business Model and Strategy

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.

Accelerated Organic Revenue Growth:

Attractive global markets with multiple growth drivers.

Strong Balance Sheet:

Annual Capex reduced by ~ £60m.

Heavy-lifting – pensions, long-term liabilities – mostly behind us.

Committed to BBB and progressive dividend policy.

Strong M&A Pipeline:

Maintaining differentiated IRR approach.

Up-Weighted Medium Term Guidance:

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.

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