Slide 1: Interim Financial Results 2022
Interim Financial Results 2022 28 July, 2022 1
Slide 2: Additional Information About The Proposed Transaction And Where To Find It
Additional Information About The Proposed Transaction And Where To Find It In connection with the proposed transaction between Rentokil Initial plc (“Rentokil Initial”) and Terminix Global Holdings, Inc. (“Terminix”), Rentokil Initial has filed with the U.S. Securities and Exchange Commission (the “
Slide 3: H1 Highlights
H1 Highlights Strong H1 Performance. Global Pest Control and Hygiene & Wellbeing businesses performing well. Andy Ransom Chief Executive 3 3
Slide 4: 2022 Interim Results | Highlights
2022 Interim Results | Highlights +12.0% +9.6% Ongoing Revenue Growth Ongoing Operating Profit +12%* to £1,520.8m in H1 at CER. +9.6% at CER. +11.5% to £232.5m at AER. £1,534.4m including disinfection Group Net Operating Margin +60bps to 14.9% Double digit Ongoing Revenue growth in North - highest i
Slide 5: 2022 Interim Results | Highlights
2022 Interim Results | Highlights £136.3m 31 Deals Continued Strong Cash Management Excellent M&A in H1 Free cash flow of £136.3m. 31 deals with £68.4m acquired revenues. 88% cash conversion rate. Additional working capital Accelerated deal flow (31 deals vs 24 in H1 2021). spend on inventory to ens
Slide 6: 2022 Interim Results | Highlights
2022 Interim Results | Highlights ✓ Waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired, thereby satisfying the US antitrust condition. ✓ Disposal of Terminix’s UK and Norwegian businesses complete. ✓ 3 years of financials audited to US PCAOB standards complete. ✓ Draft UK
Slide 7: Financial & Regional Review
Financial & Regional Review Interim Financial Results 2022 Stuart Ingall-Tombs Chief Financial Officer
Slide 8: Financial highlights
Financial highlights H1 2022 Revenue +12.0% excluding disinfection, demonstrating strong momentum in £1,534.4m our core businesses £ million Δ Δ AER CER AER CER Ongoing Revenue* 1,571.2 1,534.4 8.1% 5.6% Profit +9.6% including disinfection Strong pricing offsetting increased £228.1m cost inflation O
Slide 9: North America
North America Pest Control Ongoing Revenue +12.0% (5.5% Organic), underpinned H1 2022 Δ by good price progression and despite modest headwind from cold Ongoing Revenue £656.1m +12.5%* weather that delayed the start to the pest season Organic Revenue +6.4% Good growth in the distribution business not
Slide 10: North America
North America Path to 18% Net Operating Margin Target / Activity Progress in H1 2022 4% to 5% Organic Growth 6.4% Organic Growth Performance delivered despite some supply chain constraints and unseasonably cold weather $50m to $80m additional Significant progress toward closing of Terminix revenues
Slide 11: North America
North America Implementation of Group Innovation On track to deliver 18% margin in North America by end of FY 2022 11
Slide 12: Europe (including LATAM)
Europe (including LATAM) 13.6% growth in Ongoing Revenue* supported by pricing and volumes H1 2022 Δ ➢ Pest Control Ongoing Revenue +14.4%, despite some continued supply Ongoing Revenue £439.9m +13.6%* chain disruption affecting the German fumigation business Organic Revenue +9.6% ➢ Hygiene & Wellbe
Slide 13: UK & Sub-Saharan Africa
UK & Sub-Saharan Africa Resilient trading performance against strong prior year comparators H1 2022 Δ ➢ Pest Control Ongoing Revenue +4.5%, slightly dampened by Ongoing Revenue £181.1m +5.6%* domestic property services reflecting slower growth housing market Organic Revenue +5.6% ➢ Hygiene & Wellbei
Slide 14: Asia and MENAT
Asia and MENAT H1 2022 Δ Strengthened regional performance with Ongoing Revenue growth of Ongoing Revenue £147.1m +15.5%* 15.5%. Overall demand recovery for core services, despite strict Covid lockdowns in China and other Asian markets Organic Revenue +8.3% Ongoing Operating Profit £20.6m 17.2% 17.2
Slide 15: Pacific
Pacific H1 2022 Δ Good trading performance alongside progressive reopening of markets Ongoing Revenue £107.7m +9.8%* ➢ Pest Control Ongoing Revenue +8.2%. Strong demand in commercial Organic Revenue +5.3% supported by rebound in residential ➢ Hygiene & Wellbeing Ongoing Revenue +11.1% Ongoing Operat
Slide 16: Pricing Management
Pricing Management Higher cost inflation actively managed Most commercial and residential customers on evergreen rolling contracts with automatic annual price increases (APIs) passed through Consistent governance on the anniversary of contract inception Global, regional & local committees (min 6x pa
Slide 17: Margin and Pricing
Margin and Pricing Strategy delivery on track whilst managing higher inflation environment 1. 60bps margin improvement delivered by continued 2. Effective cost inflation management to be margin execution on strategy: neutral: ➢ Driving post code density (# of customers on a route) ➢ Overall accelera
Slide 18: Operating Cash Flow
Operating Cash Flow £ million @AER H1 22 H1 21 Operating Cash Flow of £187.1m Adjusted Operating Profit 232.5 208.6 One-off items – Operating (23.1) (10.9) Reduction on prior year reflects: elevated prior year performance; non- Depreciation 113.7 108.1 repeat of disinfection revenues; increase in wo
Slide 19: Operating Cash Flow cont’d
Operating Cash Flow cont’d £ million H1 22 H1 21 Interest payments of £18.6m are £4.3m Operating Cash Flow – continuing 187.1 260.0 higher than prior year. Cash tax Cash interest @AER payments of £32.2m were £7.2m (18.6) (14.3) higher than prior year, reflecting higher Cash tax (32.2) (25.0) Group p
Slide 20: Balance Sheet
Balance Sheet £ million @AER H1 22 H1 21 Net increase/(decrease) in cash and cash equivalents 1,523.1 (153.8) Foreign exchange translation and Net debt related cash flows (1,606.4) 18.7 other items of £77.7m is primarily due to the strengthening of the IFRS 16 liability movement 0.8 1.3 Dollar again
Slide 21: Technical guidance and outlook for 2022
Technical guidance and outlook for 2022* P&L Cash Flow • Medium-term growth targets unchanged: Ongoing Revenue growth 6% • Neutral working capital to 9% (4% to 5% Organic), Ongoing Operating Profit 10%+, Free Cash • Capex £270m to £290m, reflecting more normal pattern Flow conversion c.90% of spend
Slide 22: H1 22 summary
H1 22 summary ✓ Excellent topline momentum, with strong demand for core business Outlook services and price progression ➢ +12.0% growth in Ongoing Revenue excluding disinfection The topline has sustained excellent ➢ +7.3% Organic growth (vs. medium term target 4% to 5%) momentum. We’ve been successf
Slide 23: High quality and resilient businesses
High quality and resilient businesses Strong H1 Performance. Global Pest Control and Hygiene & Wellbeing businesses performing well. Andy Ransom Chief Executive 23 23
Slide 24: Our Operating Model
Our Operating Model A proven, resilient operating model. Focused on creating value for colleagues, customers, shareholders and society. Multi-local business: • 89 countries • Combination of Growth & Emerging markets • Country-based management teams with local insight • +1,000 local branches with loc
Slide 25: World class standards of safety
Long-term commitment to Employer of Choice Excellent safety performance maintained in H1 World class standards of safety Individual drivers behaviours impact fleet & business performance Avoiding harsh H1 Lost Time Accidents rate: 0.38 (2021: 0.38) Smoother driving styles Safety H1 Working Days Lost
Slide 26: Global recruitment programme / Global retention programme
Long-term commitment to Employer of Choice Market-leading practices sustaining our performance Global recruitment programme More people than ever before applying to work for the company: Careers Portal visits +590,000 (2021-22) vs 18,000 (2017-18). Career+ social media app: +90,000 postings of job v
Slide 27: Culture Framework - Vision
Culture Framework - Vision Input from RI and Terminix teams Our Vision To be the most loved and respected services business on the planet – delivering in THE RIGHT WAY. 27 27
Slide 28: Culture Framework - Mission
Culture Framework - Mission Input from RI and Terminix teams Our Mission Protecting People. Enhancing Lives. Preserving our Planet. 28
Slide 29: Culture Framework - Values
Culture Framework - Values Input from RI and Terminix teams Service Teamwork We are passionate about delivering We are One Team – collaborating, supporting, and working together excellent service to every customer brilliantly. Relationships We value long-lasting Responsibility relationships with our
Slide 30: Culture Framework
Culture Framework Key culture characteristics – creating a great place to work Customer focused Driven to succeed Diverse Down to earth Innovative We aim to delight every By making good We value every colleague We treat others the way We constantly innovate, customer, each and every commercial decis
Slide 31: Net Zero carbon emissions by the end of 2040
Net Zero carbon emissions by the end of 2040 Clear plan and actions underway in all Regions Reducing travel emissions North America: All new Sedans and SUV replacements will now be hybrid or electric vehicles (400 in the fleet currently). Sustainable consumables Aim for >90% of all the paper product
Slide 32: ESG is real in Rentokil Initial
ESG is real in Rentokil Initial The S of ESG…. Continuing partnership with the Founding Platinum Supporter of The “In Ukraine UNICEF has delivered charity, Cool Earth, to support Queen’s Green Canopy part of the health and medical supplies for communities in the rainforests of Jubilee celebrations –
Slide 33: Rentokil Pest Control
Rentokil Pest Control 34% increase on H1 2020 Strong H1 2022 @CER @CER H1 Ongoing Revenue: £1,049m +12.1% H1 Profit: £189.8m +14.8% 2016-2022 REVENUE CAGR 12.5% +£1bn Ongoing Revenues in H1 for the first time. H1 Ongoing Revenue: Growth markets +11.0% and Emerging markets +19.9%. NA +12.0%, Europe +
Slide 34: Continuing investment in world-class innovation - further differentiation
Continuing investment in world-class +100,000 Lumnia innovation - further differentiation units sold in the last 12 months. supporting our commercial and environmental goals 62% reduction in emissions. All innovation aimed to support greater sustainability with enhanced efficacy Focus to support our
Slide 35: Connected growth - up to +262,000 units
Connected growth - up to +262,000 units (200,000 as at H1 2021) Good growth in lead markets with Netherlands close to 25% of commercial customers connected Clear Analogue to Digital benefits 24/7 monitoring & quicker response Secure data & 100% transparency Actionable insights and big data Great cus
Slide 36: Connected Cameras – field trial success
Connected Cameras – field trial success UK Pilot: Working with Vodafone and Google we installed our first camera trial and connected it to the Vodafone AI invent platform. Clear evidence of rodent activity within 24 hours. Advancing with AI identification and mobile reporting. 18 customer sites. 4,5
Slide 37: Self service portals
Good progress in technology Driving efficiency and for further differentiation Self service portals 24/7 residential pest control customer portal in U.S. Self-service - schedule service visit, view documents and pay bills online. >20,000 customers signed up. >12,500 invoices already paid by customer
Slide 38: Hygiene & Wellbeing
Hygiene & Wellbeing 19% growth vs. H1 2020 Excellent performance in H1 Total Hygiene & Wellbeing (H&W) @CER 2016-2022 Ongoing Revenue: £377.7m +10.8% REVENUE CAGR Ongoing Operating Profit: £77.1m -10.7% 6.7% Revenue excludes Disinfection of £13.6m in H1 2022 vs £95.3m in H1 2021 during the Covid cri
Slide 39: Hygiene & Wellbeing
Hygiene & Wellbeing High quality dispenser ranges Reflection for use inside and outside Contemporary range of premium stainless steel products. the washroom. Continuing to invest in our ranges to add differentiation and build upsell. Signature Signature Colour A suite of products delivering high Col
Slide 40: Healthier buildings & Clean Air - Enhancing our Clean Air Range
Healthier buildings & Clean Air - Enhancing our Clean Air Range InspireAir 72 Phase 1: First products, building on existing expertise Floor standing air purification solution with high filtration for clean air, InspireAir and VIRUSKILLER – best in class performance, removing particulate and air poll
Slide 41: Healthier buildings & Clean Air - Enhancing our Clean Air Range/2
Healthier buildings & Clean Air - Enhancing our Clean Air Range/2 Air Quality monitoring Baseline assessment of pollution and environmental conditions in a building according to healthy building standards Phase 2: Developing expertise Investigating opportunities to extend our clean air / wellbeing p
Slide 42: Initial Workwear
Initial Workwear 6% of Group Ongoing Revenues @CER H1 Ongoing Revenue: £91.6m +16.0% H1 Profit: £13.4m +122.5% Ongoing Revenues +16.0% in H1 2022 (Organic Revenue: +16.0%). Overall, France Workwear is back to pre-Covid levels. A lag in recovery of the ‘as-used’ business in the Paris region (which is
Slide 43: Value creating M&A programme
Excellent Progress in M&A in H1 2022 Cash paid in Accelerated 2021 deal of -£563m flow ahead 31 deals in H1of(vs £450m-£500m 24 in H1 2021)guidance with annualised revenues of £68.4m Value creating M&A programme. 31 acquisitions in H1 in 17 countries: 26 in Pest Control, 5 in H&W. • 18 acquisitions
Slide 44: Terminix
Terminix Compelling strategic rationale Increased scale, density and leadership in the global Pest Control 1 market. Growing at c. 4.5% – 5%+ p.a. Operations in the USA, Sweden, Spain, Ireland, Honduras, Mexico and Canada. Substantially increased scale in North America, providing an enlarged 2 platf
Slide 45: Terminix: Substantially increased scale in North America
Terminix: Substantially increased scale in North America Clear growth drivers fuelling future growth in the US Pest Control Market Growing Population Climate Change Standards Increase US population growing by 3.3m 2021–2050 annual US average Food Safety Modernization Act per year: Projected to rise
Slide 46: Mobilisation
Terminix Integration planning underway - we remain on track Waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired, thereby ✔ Completed satisfying the US antitrust condition Regulatory Sale of UK and Norway operations by Terminix ✔ Completed ✔ On Track Mobilisation Business st
Slide 47: Governance and planning
Terminix Governance and planning Governance structure in place. WEEKLY WEEKLY Global Steer Com NA Integration Steering Committee Excellent working relationships between integration planning teams in both companies. WEEKLY DAILY Integration Management Office Integration Investment Committee Supported
Slide 48: Branch integration is at the heart of the overall integration
Terminix Branch integration is at the heart of the overall integration Branch and route analysis to Property Systems & Admin Technician create the optimum network Processes Model Routes Leveraging best of breed for customer proximity and Activities route density. from both companies: • Sales (incl.
Slide 49: H1 2022 Summary
H1 2022 Summary Strong organic growth and record M&A execution. Ongoing Revenue growth: +12.0% 7.3% Organic Revenue growth in H1. 12.1% growth in Pest Control, 5.6% organic. 10.8% growth in Hygiene & Wellbeing, 10% organic. Ongoing Operating Profit growth: +9.6% to £228.1m (CER) Broad-based growth.
Slide 50: Interim Financial Results 2022
Interim Financial Results 2022 28 July, 2022 50