Slide 1: Delivering the Pest Control Power House
Delivering the Pest Control Power House. 16 March, 2023. PROTECTING PEOPLE ENHANCING LIVES PRESERVING OUR PLANET
Slide 2: Information Regarding Forward-Looking Statements
Information Regarding Forward-Looking Statements In order to utilize the ‘safe harbor’ provisions of the U.S. Private Securities Litigation Reform Act of 1995 (the “PSLRA”) and the general doctrine of cautionary statements, Rentokil Initial plc (“the Company”) is providing the following cautionary s
Slide 3: Excellent performance in 2022 and a strong start with Terminix
Excellent performance in 2022 and a strong start with Terminix. Andy Ransom, Chief Executive. PROTECTING PEOPLE ENHANCING LIVES PRESERVING OUR PLANET 3
Slide 4: Agenda
Agenda 9.15am to 10.30am Highlights Andy Ransom, CEO Financial Results for 2022 Stuart Ingall-Tombs, CFO Operating Model and our Businesses in 2022 Andy Ransom, CEO Delivering the Pest Control Power House Andy Ransom, CEO • Terminix Integration Update Andy Ransom, CEO • Global and North America Pest
Slide 5: 2022 Group Highlights
2022 | Group Highlights Excellent performance in revenue, profit & cash; strong M&A execution At CER unless otherwise stated £3.5bn +19.1% +6.6% £542m +22.7% 15.4% +45bps REVENUE / GROWTH ORGANIC REVENUE GROWTH* ADJUSTED OPERATING PROFIT ADJUSTED OPERATING MARGIN £125m £859m +27.1% 91.8% +18.2% ACQU
Slide 6: 2022 Revenue by Regions and Categories
2022 | Revenue by Regions and Categories Broad-based growth with North America and Pest Control more significant than ever 8% XX% 23% 27% Regions Businesses 48% 71% 11% XX% 2022 FY Revenue at CER XX% Revenue % Growth % Organic* Revenue % Growth % Organic* North America £1,675m +29.7% +5.7% UK & SSA
Slide 7: Landmark Acquisition of Terminix
Landmark Acquisition of Terminix Swift transition from integration planning into execution ✓ Deal completed 12 October ✓ New organisation structure implemented ✓ Best of breed top team appointed ✓ Strong colleague engagement; new shared mission, vision & values ✓ Best of breed systems and processes
Slide 8: Clear strategy to deliver growth and margin expansion
Clear strategy to deliver growth and margin expansion ✓ Annualised net cost synergies of at least $200m by end 2025 ✓ Group Organic Growth of 5.0%+ (previously 4-5%) ✓ Organic growth in our US pest control business of 1.5x US industry post integration ✓ Group Adjusted Operating Margin greater than 1
Slide 9: Financial & Regional Review
Financial & Regional Review Preliminary Results 2022 Stuart Ingall-Tombs Chief Financial Officer PROTECTING PEOPLE ENHANCING LIVES PRESERVING OUR PLANET 9
Slide 10: Financial highlights
Financial highlights Revenue +6.6% Organic Revenue, FY 2022 £3,522m plus 52 bolt-on acquisitions £ million Δ Δ AER CER AER CER Profit +22.7%. Continued price progression £542m offsetting inflation. Margin up 45bps Revenue 3,714 3,522 25.6% 19.1% Adjusted Operating Profit 571 542 29.4% 22.7% Cash Rep
Slide 11: Strong track record
Strong track record £4,000 11.3% CAGR £3,714 16.0% 15.4% Revenue £m Adjusted Operating Margin % 14.9% 15.0% £2,957 £3,000 £2,704 £2,803 £2,405 £2,464 14.0% 13.7% £2,168 13.4% 13.5% 13.1% 13.1% £1,759 13.0% 12.8% £2,000 12.0% £1,000 11.0% £0 10.0% 2015 2016 2017 2018 2019 2020 2021 2022 2015 2016 201
Slide 12: Margin Development
Margin Development 45bps Group margin improvement through: FY 22 Group Adjusted Operating Margin • Continued execution on strategy: densification of 15.50% routes and products; optimisation of overhead; 0.26% 15.00% 0.45% 0.64% technology and innovation; active management of 14.50% cost base 15.4% 1
Slide 13: North America
North America Overall Organic Revenue* +5.7% underpinned by effective price FY 2022 Δ progression. Pest Control Organic Revenue +5.3%. Revenue £1,675m +29.7% Strong year end with Q4 Pest Control Organic Revenue +5.6% Organic Revenue +5.7% Good underlying trading at Terminix: similar rate of growth t
Slide 14: Europe (inc. LATAM)
Europe (inc. LATAM) FY 2022 Δ 13.2% growth in Revenue, of which 9.1% organic*, supported by pricing and volumes Revenue £942m +13.2% ➢ Pest Control Revenue +21.5%, with a strong contribution from Organic Revenue +9.1% large markets (France and Benelux) ➢ Hygiene & Wellbeing Revenue +2.4%, with a pos
Slide 15: UK & Sub-Saharan Africa
UK & Sub-Saharan Africa FY 2022 Δ Resilient trading performance against strong prior year comparators. Revenue up 2.9% with Organic Revenue* up 4.7% Revenue £370m +2.9% ➢ Pest Control Revenue +6.2%; Organic Revenue +4.7% ➢ Hygiene & Wellbeing Revenue down 0.2%, owing to the anticipated reduction in
Slide 16: Asia & MENAT
Asia & MENAT FY 2022 Δ Excellent regional performance with Organic Revenue* growth of Revenue* £308m +13.4% 11.0%, despite lockdowns in China and Hong Kong. Overall demand recovery led by two of the region’s largest markets, Indonesia and Organic Revenue +11.0% Malaysia Adjusted Operating Profit £43
Slide 17: Pacific
Pacific FY 2022 Δ Strong trading performance alongside progressive reopening of Revenue* £221m +12.8% markets. Organic Revenue* growth of 7.9% ➢ Pest Control Revenue +12.9%, driven by commercial services Organic Revenue +7.9% ➢ Hygiene & Wellbeing Revenue +12.7%, with good demand for Adjusted Operat
Slide 18: Adjusted Cash Flow
Adjusted Cash Flow @AER £ million 2022 2021 Adjusted Cash Flow of £490m Adjusted Operating Profit 571 442 Higher profits and higher depreciation drive Adjusted EBITDA up 27% to £859m Depreciation 276 224 Other 12 10 £9m working capital inflow due to tight management of receivables, partially Adjuste
Slide 19: Adjusted Cash Flow cont’d
Adjusted Cash Flow cont’d £ million 2022 2021 Higher interest payments at £39m. Adjusted Cash Flow 490 459 Interest charge payments relating to Cash interest (39) (37) Terminix deal financing are reflected as Cash tax higher interest accruals in Net Debt for (77) (69) payment in H1 2023. Higher cash
Slide 20: Net Debt
Net Debt £ million 2022 2021 Net increase/(decrease) @AER in cash and cash equivalents Foreign exchange translation and 726 (295) other items of £131m is primarily Debt related cash flows (1,566) 19 due to the strengthening of the IFRS 16 liability movement (34) (2) Dollar against Sterling Debt acqu
Slide 21: Technical guidance for 2023
Technical guidance for 2023 P&L Cash Flow • Restructuring costs ex Terminix: c.£7m • Overall exceptional items: c.£135m-£150m** • Deal related costs and costs to achieve*: c.£75m-£90m • Working Capital: c.£40m outflow including • Incremental c.$32m accounting benefit for Termites and termite provisi
Slide 22: Our Compounding Growth Model
Our Compounding Growth Model. Strong performance in 2022. Andy Ransom Chief Executive PROTECTING PEOPLE ENHANCING LIVES PRESERVING OUR PLANET 22
Slide 23: Compounding Growth
Compounding Growth Delivered though our operating model Employer of Choice (EoC) Careers+ App: 16,000 registered users, 28,000 applications. Now launched in Terminix. Strong independent ESG credentials. NA time to hire 32.5 days (2019 = 46.8 days). AA rated by MSCI. RI colleague retention: 82.6%. Al
Slide 24: 2022 Pest Control
2022 | Pest Control The global leader: Operating in 97 of the world’s 100 leading cities by GDP 29.0% Revenue growth to £2.52bn CAGR CAGR 88% revenues in Growth markets: +29.3% 15.8% 15.6% 12% in Emerging markets: +26.8%. £3,000 £500 +5.6% Organic growth (5.9% in H2) £2,500 £450 NA: 5.3%. Europe (in
Slide 25: 2022 Pest Control: Digital Pest Control
2022 | Pest Control Differentiation through technology – to drive enhanced customer experience and retention Digital Pest Control Further good growth in 2022 Rentokil Command Centre – powerful data: Live in 50+ countries. Over 200 dashboards. 325m status messages received in 2022. Pest Control insig
Slide 26: Next generation pest control early warning system
2022 | Pest Control Supporting the roll out of Digital Pest Control to 25% of Commercial portfolio by 2026 Next generation pest control providing an early warning system for faster and more effective prevention and control. Acquired Eitan Amichai in 2022 - largest pest control company in Israel and
Slide 27: 2022 Hygiene and Wellbeing
2022 | Hygiene and Wellbeing Initial has an unrivalled global position, operating in 70 markets All numbers exclude COVID disinfection services. At CER unless otherwise stated. CAGR CAGR Organic Revenue of +9.3% 6.3% 8.7% 900 160 Revenue up 9.8% to £787m Including COVID Disinfection services, revenu
Slide 28: Hygiene and Wellbeing: Expertise inside and outside the washroom
2022 | Hygiene and Wellbeing Expertise inside and outside the washroom Enhanced Environments Improving the occupant experience in Washroom Hygiene the built environment incl. plants, air quality and green walls. Brand leadership – expertise, Ambius Revenue growth of 15% year on innovation and scienc
Slide 29: Hygiene and Wellbeing: Driving upsell and efficiency
2022 | Hygiene and Wellbeing Driving upsell and efficiency Target exceeded. New products in 2022 supporting upsell, including: >90% of our hygiene paper products will hold Signature hand-print range - designed to attract younger an appropriate environmental certification children’s attention and enc
Slide 30: 2022 Workwear
2022 | Workwear Strong performance in 2022 Revenue growth of 16.6%, all Organic growth Adjusted Operating Profit growth of 81.6% New Bistro workwear Sales leads campaign More efficient equipment in laundries: CAGR CAGR • Nice: Replacement industrial tunnel washer and replacement of the flat linen ir
Slide 31: 2022 M&A
2022 | M&A Excellent density building infill M&A in 2022 Significant opportunity for value creation through highly targeted bolt-on acquisitions. 52 bolt-on acquisitions in 2022 with revenues of £125m for £259m consideration. 46 in Pest Control and 6 in Hygiene and Wellbeing. Targeting higher GDP gr
Slide 32: Delivering the Pest Control Power House
Delivering the Pest Control Power House. 16 March, 2023. PROTECTING PEOPLE ENHANCING LIVES PRESERVING OUR PLANET
Slide 33: North America leadership team
North America High quality ‘Best of Breed’ leadership team appointed CEO, North America, Rentokil Terminix Vice President, Canada Chief Financial Officer President and CEO, U.S. Pest Control Rentokil Terminix Rentokil Terminix Vice President Chief Human Resources Officer Chief Operating Officer Sr.
Slide 34: USA Pest Control
USA Pest Control Experienced operators in place New structure in US Pest Control comprises seven regions: Pacific, Mountain West, Central, Southeast, Florida, Atlantic and Northeast. Northeast Pacific Each geographic region comprises Residential, Termite and Commercial pest control. Mountain West Ce
Slide 35: Governance
Governance Proven ability and approach to synergy capture • Oversight and governance in place with robust tools and processes. Steering Committee • Programme management structure in place with key leaders from both RI and Terminix. Governance Strategy Investment • Executing Best of Breed approach wi
Slide 36: Synergies and Approximate Phasing
Synergies and Approximate Phasing Incremental P&L Impact by year Cumulative Organic Revenue Achieved 2023 2024-25 2022-25 Growth Opportunities: 2022 • Customer retention Selling, General and Admin Expenses: $15m $80m $55m $150m • Customer Sales productivity / Procurement / support functions penetrat
Slide 37: Selling, General and Administrative expenses (SG&A)
Selling, General and Administrative expenses (SG&A) Selling, General and Administrative expenses (SG&A) Key initiatives to drive efficiency, cost and scale. Sales Best Practice Up-Sell Delivering enhanced sales lead flow to front line sales team Selling and scheduling. Zip code focus and coordinatio
Slide 38: Field Operations
Field Operations Before After Field Operations Key initiatives to drive density, operational / branch excellence Systems & Admin Technician Property Leadership From: Processes Model Routes • 600+ branches. Inconsistent scale, spans of control Branch Co-location Property Synergies ✓ X X X X • Differe
Slide 39: Investments
Investments Investments To enable the success of the integration we are also investing in the future of our North American business. Additional SOX, Audit and Listing fees. Harmonisation of legacy Terminix and RI-NA management positions pay and further harmonisation of benefits. Management Benefits
Slide 40: USA Termite Control
USA Termite Control In 2021, 92% of new homes were wood-framed. Subterranean Drywood Formosan In wood framed buildings, termites can cause structural damage to properties. Submits a claim to Terminix: BAU Termites account for 21% of the US Pest Control market worth $2.2bn in 2022 Estimated 5.3% CAGR
Slide 41: Terminix Termite Control
Terminix Termite Control Terminix provides two core services for new customers: Basic Liquid treatment to the perimeter and any infested areas. Initial Treatment & Retreatment Warranty Only Proactive in-ground baiting - we install low-profile bait Treatment applied in and around structures and if te
Slide 42: Terminix Termite Control: Claims Process Improvements
Terminix Termite Control Claims Process Improvements 1. In the event that termites infest a structure that is under an ✓ More efficiently solve customer needs: Terminix is focused on advanced (treatment and repair warranty), we will open a providing enhanced tools and technology to colleagues. claim
Slide 43: Terminix Termite Control
Terminix Termite Control 3500 Total filed warranty claims reduced to 2,124 in 2022 (both Basic and Advanced treatment): 13% reduction on 3000 PY and by 35% since 2019. 2500 Open warranty claims reduced to 608 claims to end of ↓35% Total 2022: c.30% reduction on PY and by 50% since 2019. 2000 Claims
Slide 44: Synergies and Approximate Phasing
Synergies and Approximate Phasing Incremental P&L Impact by year Cumulative Organic Revenue Achieved 2023 2024-25 2022-25 Growth Opportunities: 2022 • Customer retention Selling, General and Admin Expenses: $15m $80m $55m $150m • Customer Sales productivity / Procurement / support functions penetrat
Slide 45: Brett Ponton, CEO Rentokil Terminix North America
Brett Ponton CEO Rentokil Terminix North America PROTECTING PEOPLE ENHANCING LIVES PRESERVING OUR PLANET 45
Slide 46: Estimated Global Pest Control Market
Estimated Global Pest Control Market (US$ bn) A strong and growing market ~5% - 6% CAGR ~$31.4 Global Global growth market ~$23.7 We expect the industry will continue to grow at ~5% - 6% CAGR (2022-27) taking the global pest control market to ~$31.4bn by ~5% ~$13.4 2027. ~$10.5 CAGR USA Established
Slide 47: Estimated Pest Control Market by Segment
Estimated Pest Control Market by Segment Global Market United States of America Market Commercial Residential Termite Total Commercial Residential Termite Total 2022 % Split 50% 33% 17% 100% 2022 % Split 33% 46% 21% 100% 2022 2022 Market Size ~$11.8 ~$7.9 ~$4.0 ~$23.7 Market Size ~$3.5 ~$4.8 ~$2.2 ~
Slide 48: Multiple growth drivers
Multiple growth drivers Pest Control Market Pest Control Market Low Residential Penetration Move away from DIY <15% of homes in the USA Millennial generation has propensity for Structural growth drivers – have professional pest care* services performed for them fuelling medium term growth in Urbanis
Slide 49: Global market of ~75,000 businesses
Global market of ~75,000 businesses Highly fragmented market Europe United States Companies Companies ~10,000 companies. ~18k ~5,000 members in the National ~10k ~40,000 technicians. Pest Management Association Pacific Companies Asia ~3,000 companies. Companies LatAm Companies ~30,000 companies. ~3k
Slide 50: Benefits of scale
Benefits of scale Ensuring we are leveraging our scale and the best practices of both companies and the industry. Procurement Marketing / Branding ● Purchasing Power ● Leading Residential Brand ● Exclusivity ● Leading Commercial Brand ● Global Scale ● Leading National Acc. Brand Number 1 in Commerci
Slide 51: Path to Organic Growth at 1.5x the industry average
Path to Organic Growth at 1.5x the industry average 5. Customer Pricing Acquisition 4. Innovation • Residential 3. Pricing marketing 2. Customer • NA innovation • Commercial sales centre • SEO and digital Penetration • Segmentation • Commercialise 1. Customer marketing 1.5x • Market-based existing I
Slide 52: #1 Customer Retention
#1 Customer Retention Delivering a superior customer experience that results in unparalleled customer loyalty The Rentokil Terminix Way – Residential Introducing the Rentokil Terminix Way across the combined organization and developing a legacy customer conversion process. Inventory best practices.
Slide 53: #2 Customer Penetration
#2 Customer Penetration Taking the best from both companies and upsell World Class Account Management Launching the Rentokil Terminix account development programme and developing propositions and capabilities by target verticals. Harmonising new account acquisition protocols and establishing first a
Slide 54: #3 Pricing
#3 Pricing Leveraging #1 brand position and premium customer experience to price accordingly and to support growth (and margins) Standardising “Go To Market” Strategy between Rentokil and Terminix Aligning standard service definitions and customer classifications. Harmonise Pricing Strategy across R
Slide 55: #4 Innovation
#4 Innovation Commercialising global innovation pipeline to drive future growth, supporting retention and customer acquisition Establishing the North America Innovation Centre To be established in Dallas, focused on termite and residential, with a new dedicated termite innovation team in Mobile from
Slide 56: #5 Customer Acquisition - Residential
#5 Customer Acquisition - Residential Leveraging #1 brand position, size and exposure advantages to enhance brand and market positions Executing Integrated Brand Strategy Harmonising brands through the colocation, consolidation and integration programme. World Class On-Line Customer Experience Devel
Slide 57: #5 Customer Acquisition - Commercial
#5 Customer Acquisition - Commercial Leveraging #1 brand position, size and exposure advantages to enhance brand and market positions Building The Rentokil National Account Brand Reviewing the brand landscape in North America. Developing clear brand strategies for our leading brands, focusing on seg
Slide 58: Employer of Choice
#6 Key Enablers Employer of Choice HR Project Senior org design & Project Summary Complete. Organisation design finalised and leadership positions appointed. Completion talent Benefits Harmonise benefits eg 401 (K). HR is a key enabler of the Paid time off Consistent approach for holidays, sick pay,
Slide 59: Technology
#7 Key Enablers Technology The standard operating system re- platforming was completed in Q1 2022. The end state systems and technology architecture has been defined using a ‘best-in-class’ selection process across Rentokil and Terminix. Combined IT organisation is in place. The end state Infrastruc
Slide 60: Industry Leadership
#8 Key Enablers Industry Leadership Commercialise Group Sustainable Solutions Implementing our environment plan to achieve net zero by 2040 including alternative service solutions for fumigation and organic / non-toxic solutions. Influencing progress and standards in the Pest Industry Influence indu
Slide 61: Clear and Compelling Growth Ambition
Clear and Compelling Growth Ambition Opportunity for sustainable value creation Pest Control Rentokil Terminix North Industry Growth America Growth Plan 1. Customer retention Ambition World class customer experience and for organic introduce the Rentokil Terminix Way playbook of best practices. grow
Slide 62: Andy Ransom, CEO Rentokil Initial
Andy Ransom CEO Rentokil Initial PROTECTING PEOPLE ENHANCING LIVES PRESERVING OUR PLANET 62
Slide 63: 2022 Summary
2022 Summary Excellent Financial and Operational Performance Strong organic revenue growth and margin expansion ✓ +19.1% growth in Revenue and +6.6% Organic growth (5.6% in Pest Control, 9.3% in H&W, 16.6% in Workwear) ✓ +22.7% increase in Adjusted Operating Profit ✓ 15.4% Adjusted Operating Margin
Slide 64: Clear strategy to deliver growth and margin expansion
Clear strategy to deliver growth and margin expansion Strong Platform for Delivery Clear Model for Value Creation Large and growing addressable Medium-term organic revenue >5% p.a. market. (previously 4.0% - 5.0%). Market leadership - globally and Group Adjusted Operating Margin in North America. gr
Slide 65: Q&A
Q&A PROTECTING PEOPLE ENHANCING LIVES PRESERVING OUR PLANET
Slide 66: Appendix
Appendix PROTECTING PEOPLE ENHANCING LIVES PRESERVING OUR PLANET
Slide 67: Terminix North America Margins
Terminix North America Margins Reported Margins Period Between October 12 and December 31, 2022 2022 FY £m @ CER Underlying Synergies/ Reported Terminix Terminix Accounting adjustments Revenue 320 - 320 Adjusted Operating Profit 33 21 55 Adjusted Operating Margin 10.3% 17.2% Normalised 2022 FY Margi
Slide 68: Alternative Performance Measure Reconciliation
Alternative Performance Measure Reconciliation Revenue and Adjusted Operating Profit - AER vs CER Revenue Operating profit Change from FY Change from FY 2022 2021 2022 2021 AER CER AER CER AER CER AER CER £m £m % % £m £m % % North America Pest Control 1,746 1,581 52.1% 37.7% 297 269 59.2% 44.1% Hygi
Slide 69: Alternative Performance Measure Reconciliation
Alternative Performance Measure Reconciliation Operating Profit to Adjusted Profit Before Tax 2022 2021 2020 £m £m £m Operating profit 317 347 294 Share of profit from associates (net of tax) 9 8 8 Net adjusted interest payable (48) (34) (37) Net interest adjustments 18 4 (35) Profit before tax 296
Slide 70: Alternative Performance Measure Reconciliation
Alternative Performance Measure Reconciliation Adjusted Free Cash flow Conversion % PROTECTING PEOPLE ENHANCING LIVES PRESERVING OUR PLANET 70
Slide 71: Terminix Termite Control: Existing and new customers
Terminix Termite Control Existing and new customers • Pre-existing Terminix customers: We have modelled, with the help of professional Note external valuation support, the expected whole life cost of future claims and provided for this on the balance sheet at the completion date of the transaction.
Slide 72: ESG ratings
DJSI Europe Index 8th out of 101 Maintained our C Maintained Low Our ESG rating in Member. member. companies in our rating (2021: C). Risk rating. Rated 2022 was Maintained our sector and 200th 16th out of 169 unchanged at AA strong score of in the overall companies in with a score of 69% in 2022 (6