[6-K] Rentokil Initial plc American Current Report (Foreign Issuer)
Filing Impact
Filing Sentiment
Form Type
6-K
H1 2025 highlights: Revenue from continuing operations grew 3.1 % YoY to $3.36 bn (1.6 % organic). Adjusted operating profit slipped 4.5 % to $511 m, cutting margin 120 bps to 15.2 %. Adjusted PBT was $418 m (-7.8 %) and adjusted EPS 12.46 c (-11 %). Statutory PBT fell 26 % to $216 m after a $79 m increase in the termite-damage provision.
Cash & capital: Free cash flow rose 31 % to $282 m with 93 % conversion (vs 80 % guidance). Net debt climbed to $4.22 bn, or 2.8× adjusted EBITDA, largely due to bond financing and FX; liquidity headroom is $2.0 bn. Interim dividend maintained at 4.15 c.
Operating trends: North America revenue +2.0 % (organic +1.1 %) but adjusted profit -7.3 % and margin 16.9 %. International revenue +5.1 %, adjusted profit +4.6 %, margin steady at 19.3 %. Group organic growth improved in Q2, with North America organic growth 1.4 % versus 0.7 % in Q1. Integration of Terminix continues; ~$100 m cost-reduction target and >20 % NA margin post-2026 reiterated. FY-25 outlook and technical guidance unchanged.
Punti salienti del primo semestre 2025: I ricavi dalle attività continue sono cresciuti del 3,1% su base annua, raggiungendo 3,36 miliardi di dollari (1,6% organico). L'utile operativo rettificato è diminuito del 4,5% a 511 milioni di dollari, con un margine ridotto di 120 punti base al 15,2%. L'utile ante imposte rettificato è stato di 418 milioni di dollari (-7,8%) e l'utile per azione rettificato di 12,46 centesimi (-11%). L'utile ante imposte statutario è sceso del 26% a 216 milioni di dollari, a seguito di un incremento di 79 milioni nella provision per danni da termiti.
Liquidità e capitale: Il flusso di cassa libero è aumentato del 31% a 282 milioni di dollari, con una conversione del 93% (rispetto a una previsione dell'80%). L'indebitamento netto è salito a 4,22 miliardi di dollari, pari a 2,8 volte l'EBITDA rettificato, principalmente a causa del finanziamento tramite obbligazioni e delle variazioni valutarie; la liquidità disponibile è di 2,0 miliardi di dollari. Il dividendo intermedio è stato mantenuto a 4,15 centesimi.
Tendenze operative: I ricavi del Nord America sono aumentati del 2,0% (organico +1,1%), ma l'utile rettificato è diminuito del 7,3% e il margine è al 16,9%. I ricavi internazionali sono saliti del 5,1%, con un utile rettificato in crescita del 4,6% e un margine stabile al 19,3%. La crescita organica del gruppo è migliorata nel secondo trimestre, con una crescita organica del Nord America dell'1,4% rispetto allo 0,7% del primo trimestre. Prosegue l'integrazione di Terminix; confermato l'obiettivo di riduzione dei costi di circa 100 milioni di dollari e un margine superiore al 20% in Nord America dopo il 2026. Le previsioni per l'intero anno 2025 e le indicazioni tecniche restano invariate.
Aspectos destacados del primer semestre de 2025: Los ingresos de las operaciones continuas crecieron un 3,1 % interanual hasta 3,36 mil millones de dólares (1,6 % orgánico). El beneficio operativo ajustado cayó un 4,5 % hasta 511 millones de dólares, reduciendo el margen en 120 puntos básicos hasta el 15,2 %. El beneficio antes de impuestos ajustado fue de 418 millones (-7,8 %) y el BPA ajustado de 12,46 céntimos (-11 %). El beneficio antes de impuestos legal cayó un 26 % hasta 216 millones tras un aumento de 79 millones en la provisión por daños de termitas.
Efectivo y capital: El flujo de caja libre aumentó un 31 % hasta 282 millones con una conversión del 93 % (frente a la guía del 80 %). La deuda neta subió a 4,22 mil millones, o 2,8 veces el EBITDA ajustado, principalmente por financiamiento mediante bonos y tipo de cambio; la liquidez disponible es de 2,0 mil millones. El dividendo intermedio se mantuvo en 4,15 céntimos.
Tendencias operativas: Los ingresos en Norteamérica crecieron un 2,0 % (orgánico +1,1 %) pero el beneficio ajustado bajó un 7,3 % y el margen fue del 16,9 %. Los ingresos internacionales subieron un 5,1 %, el beneficio ajustado un 4,6 % y el margen se mantuvo estable en 19,3 %. El crecimiento orgánico del grupo mejoró en el segundo trimestre, con un crecimiento orgánico en Norteamérica del 1,4 % frente al 0,7 % del primer trimestre. Continúa la integración de Terminix; se reiteró el objetivo de reducción de costes de unos 100 millones y un margen superior al 20 % en Norteamérica tras 2026. La perspectiva para todo el año 2025 y la guía técnica permanecen sin cambios.
2025년 상반기 주요 내용: 지속 영업에서의 매출이 전년 대비 3.1% 증가하여 33억 6천만 달러(유기적 성장 1.6%)를 기록했습니다. 조정 영업이익은 4.5% 감소한 5억 1,100만 달러로, 마진은 120bp 하락하여 15.2%가 되었습니다. 조정 세전이익은 4억 1,800만 달러(-7.8%), 조정 주당순이익은 12.46센트(-11%)였습니다. 법정 세전이익은 흰개미 피해 충당금이 7,900만 달러 증가하면서 26% 감소한 2억 1,600만 달러를 기록했습니다.
현금 및 자본: 잉여현금흐름은 31% 증가한 2억 8,200만 달러로, 현금 전환율은 93%를 기록했으며(기대치 80% 대비), 순부채는 채권 조달과 환율 영향으로 인해 42억 2천만 달러, 조정 EBITDA의 2.8배로 증가했습니다. 유동성 여유는 20억 달러입니다. 중간 배당금은 4.15센트로 유지되었습니다.
운영 동향: 북미 매출은 2.0%(유기적 1.1%) 증가했으나 조정 이익은 7.3% 감소했고, 마진은 16.9%였습니다. 국제 매출은 5.1%, 조정 이익은 4.6% 증가했으며 마진은 19.3%로 안정적이었습니다. 2분기 그룹 유기적 성장이 개선되었으며, 북미 유기적 성장은 1분기 0.7%에서 2분기 1.4%로 상승했습니다. Terminix 통합은 계속 진행 중이며, 약 1억 달러의 비용 절감 목표와 2026년 이후 북미 마진 20% 이상 목표가 재확인되었습니다. 2025년 연간 전망과 기술 가이던스는 변동 없습니다.
Points forts du premier semestre 2025 : Le chiffre d'affaires des activités poursuivies a augmenté de 3,1 % en glissement annuel pour atteindre 3,36 milliards de dollars (1,6 % en organique). Le résultat opérationnel ajusté a reculé de 4,5 % à 511 millions de dollars, réduisant la marge de 120 points de base à 15,2 %. Le résultat avant impôts ajusté s'est élevé à 418 millions (-7,8 %) et le BPA ajusté à 12,46 cents (-11 %). Le résultat avant impôts statutaire a chuté de 26 % à 216 millions après une augmentation de 79 millions de la provision pour dommages causés par les termites.
Trésorerie et capital : Le flux de trésorerie disponible a progressé de 31 % pour atteindre 282 millions avec un taux de conversion de 93 % (contre 80 % prévu). La dette nette a augmenté à 4,22 milliards, soit 2,8 fois l'EBITDA ajusté, principalement en raison du financement obligataire et des effets de change ; la marge de liquidité est de 2,0 milliards. Le dividende intérimaire est maintenu à 4,15 cents.
Tendances opérationnelles : Le chiffre d'affaires en Amérique du Nord a augmenté de 2,0 % (organique +1,1 %), mais le résultat ajusté a diminué de 7,3 % et la marge s'établit à 16,9 %. Le chiffre d'affaires international a progressé de 5,1 %, le résultat ajusté de 4,6 %, la marge restant stable à 19,3 %. La croissance organique du groupe s'est améliorée au deuxième trimestre, avec une croissance organique en Amérique du Nord de 1,4 % contre 0,7 % au premier trimestre. L'intégration de Terminix se poursuit ; l'objectif de réduction des coûts d'environ 100 millions de dollars et une marge supérieure à 20 % en Amérique du Nord après 2026 ont été réaffirmés. Les perspectives pour l'exercice 2025 et les indications techniques restent inchangées.
Highlights H1 2025: Die Umsätze aus fortgeführten Geschäftsbereichen stiegen im Jahresvergleich um 3,1 % auf 3,36 Mrd. USD (organisch 1,6 %). Das bereinigte Betriebsergebnis sank um 4,5 % auf 511 Mio. USD, die Marge verringerte sich um 120 Basispunkte auf 15,2 %. Das bereinigte Ergebnis vor Steuern lag bei 418 Mio. USD (-7,8 %) und das bereinigte Ergebnis je Aktie bei 12,46 Cent (-11 %). Das gesetzliche Ergebnis vor Steuern fiel um 26 % auf 216 Mio. USD nach einer Erhöhung der Rückstellung für Termitenschäden um 79 Mio. USD.
Cash & Kapital: Der Free Cashflow stieg um 31 % auf 282 Mio. USD bei einer Umwandlungsrate von 93 % (vs. 80 % Prognose). Die Nettoverschuldung stieg auf 4,22 Mrd. USD bzw. das 2,8-fache des bereinigten EBITDA, hauptsächlich bedingt durch Anleihefinanzierung und Wechselkurseffekte; die Liquiditätsreserve beträgt 2,0 Mrd. USD. Die Zwischen Dividende wurde bei 4,15 Cent gehalten.
Operative Trends: Der Umsatz in Nordamerika stieg um 2,0 % (organisch +1,1 %), das bereinigte Ergebnis sank jedoch um 7,3 % und die Marge lag bei 16,9 %. Der internationale Umsatz stieg um 5,1 %, das bereinigte Ergebnis um 4,6 %, die Marge blieb stabil bei 19,3 %. Das organische Wachstum der Gruppe verbesserte sich im zweiten Quartal, mit einem organischen Wachstum in Nordamerika von 1,4 % gegenüber 0,7 % im ersten Quartal. Die Integration von Terminix läuft weiter; das Kostensenkungsziel von rund 100 Mio. USD und eine Nordamerika-Marge von über 20 % nach 2026 wurden bestätigt. Die Prognose für das Geschäftsjahr 2025 und die technische Guidance bleiben unverändert.
Positive
- Free cash flow up 31 % to $282 m with 93 % conversion, beating 80 % target
- $2.0 bn liquidity headroom; successful $1.25 bn bond issue refinanced 2025 term loan
- FY-25 guidance and ~$100 m cost-reduction synergy target reaffirmed
- International division delivered 5.1 % revenue growth and stable 19.3 % margin
Negative
- Adjusted operating margin compressed 120 bps to 15.2 %; North America margin 16.9 %
- Adjusted operating profit down 4.5 % and adjusted EPS down 11 %
- $79 m increase in termite damage provision highlights ongoing liability risk
- Net debt rose to $4.22 bn (2.8× EBITDA) following adverse FX and new bonds
Insights
TL;DR: Solid top-line and cash flow, but margin pressure and higher provisions keep outlook merely steady; guidance unchanged.
Revenue growth of 3 % met expectations and cash conversion was excellent (93 %), demonstrating disciplined working-capital control. However, operating leverage remains negative: adjusted operating profit declined 4.5 % and North American margin is now below 17 %, reflecting wage inflation and integration drag. The $79 m termite provision signals continuing liability risk. Net debt edged higher, yet leverage at 2.8× and $2 bn liquidity headroom look manageable. Dividend stability and reaffirmed FY-25 guidance limit downside, but catalysts for EPS upgrades are absent until NA integration benefits materialise. Overall neutral impact.
TL;DR: Execution on synergies progressing, organic growth stabilising, but competitive US market still weighs on profitability.
The pest-control market’s secular growth persists, and Rentokil’s International division is capturing price-led gains (5 % reported rev, 19 % margin). In North America, Q2 organic re-acceleration and lead-flow uptick are encouraging, aided by 100 satellite branches and data-driven marketing. Yet integration costs and labour inflation depressed profit by 7 %. Management’s unchanged ~$100 m cost-save target and >20 % NA margin after 2026 provide medium-term upside, although extended timelines temper near-term expectations. Bond refinancing extends maturities, but termite warranty liabilities remain a watch item. Net effect: strategically positive, tactically neutral.
Punti salienti del primo semestre 2025: I ricavi dalle attività continue sono cresciuti del 3,1% su base annua, raggiungendo 3,36 miliardi di dollari (1,6% organico). L'utile operativo rettificato è diminuito del 4,5% a 511 milioni di dollari, con un margine ridotto di 120 punti base al 15,2%. L'utile ante imposte rettificato è stato di 418 milioni di dollari (-7,8%) e l'utile per azione rettificato di 12,46 centesimi (-11%). L'utile ante imposte statutario è sceso del 26% a 216 milioni di dollari, a seguito di un incremento di 79 milioni nella provision per danni da termiti.
Liquidità e capitale: Il flusso di cassa libero è aumentato del 31% a 282 milioni di dollari, con una conversione del 93% (rispetto a una previsione dell'80%). L'indebitamento netto è salito a 4,22 miliardi di dollari, pari a 2,8 volte l'EBITDA rettificato, principalmente a causa del finanziamento tramite obbligazioni e delle variazioni valutarie; la liquidità disponibile è di 2,0 miliardi di dollari. Il dividendo intermedio è stato mantenuto a 4,15 centesimi.
Tendenze operative: I ricavi del Nord America sono aumentati del 2,0% (organico +1,1%), ma l'utile rettificato è diminuito del 7,3% e il margine è al 16,9%. I ricavi internazionali sono saliti del 5,1%, con un utile rettificato in crescita del 4,6% e un margine stabile al 19,3%. La crescita organica del gruppo è migliorata nel secondo trimestre, con una crescita organica del Nord America dell'1,4% rispetto allo 0,7% del primo trimestre. Prosegue l'integrazione di Terminix; confermato l'obiettivo di riduzione dei costi di circa 100 milioni di dollari e un margine superiore al 20% in Nord America dopo il 2026. Le previsioni per l'intero anno 2025 e le indicazioni tecniche restano invariate.
Aspectos destacados del primer semestre de 2025: Los ingresos de las operaciones continuas crecieron un 3,1 % interanual hasta 3,36 mil millones de dólares (1,6 % orgánico). El beneficio operativo ajustado cayó un 4,5 % hasta 511 millones de dólares, reduciendo el margen en 120 puntos básicos hasta el 15,2 %. El beneficio antes de impuestos ajustado fue de 418 millones (-7,8 %) y el BPA ajustado de 12,46 céntimos (-11 %). El beneficio antes de impuestos legal cayó un 26 % hasta 216 millones tras un aumento de 79 millones en la provisión por daños de termitas.
Efectivo y capital: El flujo de caja libre aumentó un 31 % hasta 282 millones con una conversión del 93 % (frente a la guía del 80 %). La deuda neta subió a 4,22 mil millones, o 2,8 veces el EBITDA ajustado, principalmente por financiamiento mediante bonos y tipo de cambio; la liquidez disponible es de 2,0 mil millones. El dividendo intermedio se mantuvo en 4,15 céntimos.
Tendencias operativas: Los ingresos en Norteamérica crecieron un 2,0 % (orgánico +1,1 %) pero el beneficio ajustado bajó un 7,3 % y el margen fue del 16,9 %. Los ingresos internacionales subieron un 5,1 %, el beneficio ajustado un 4,6 % y el margen se mantuvo estable en 19,3 %. El crecimiento orgánico del grupo mejoró en el segundo trimestre, con un crecimiento orgánico en Norteamérica del 1,4 % frente al 0,7 % del primer trimestre. Continúa la integración de Terminix; se reiteró el objetivo de reducción de costes de unos 100 millones y un margen superior al 20 % en Norteamérica tras 2026. La perspectiva para todo el año 2025 y la guía técnica permanecen sin cambios.
2025년 상반기 주요 내용: 지속 영업에서의 매출이 전년 대비 3.1% 증가하여 33억 6천만 달러(유기적 성장 1.6%)를 기록했습니다. 조정 영업이익은 4.5% 감소한 5억 1,100만 달러로, 마진은 120bp 하락하여 15.2%가 되었습니다. 조정 세전이익은 4억 1,800만 달러(-7.8%), 조정 주당순이익은 12.46센트(-11%)였습니다. 법정 세전이익은 흰개미 피해 충당금이 7,900만 달러 증가하면서 26% 감소한 2억 1,600만 달러를 기록했습니다.
현금 및 자본: 잉여현금흐름은 31% 증가한 2억 8,200만 달러로, 현금 전환율은 93%를 기록했으며(기대치 80% 대비), 순부채는 채권 조달과 환율 영향으로 인해 42억 2천만 달러, 조정 EBITDA의 2.8배로 증가했습니다. 유동성 여유는 20억 달러입니다. 중간 배당금은 4.15센트로 유지되었습니다.
운영 동향: 북미 매출은 2.0%(유기적 1.1%) 증가했으나 조정 이익은 7.3% 감소했고, 마진은 16.9%였습니다. 국제 매출은 5.1%, 조정 이익은 4.6% 증가했으며 마진은 19.3%로 안정적이었습니다. 2분기 그룹 유기적 성장이 개선되었으며, 북미 유기적 성장은 1분기 0.7%에서 2분기 1.4%로 상승했습니다. Terminix 통합은 계속 진행 중이며, 약 1억 달러의 비용 절감 목표와 2026년 이후 북미 마진 20% 이상 목표가 재확인되었습니다. 2025년 연간 전망과 기술 가이던스는 변동 없습니다.
Points forts du premier semestre 2025 : Le chiffre d'affaires des activités poursuivies a augmenté de 3,1 % en glissement annuel pour atteindre 3,36 milliards de dollars (1,6 % en organique). Le résultat opérationnel ajusté a reculé de 4,5 % à 511 millions de dollars, réduisant la marge de 120 points de base à 15,2 %. Le résultat avant impôts ajusté s'est élevé à 418 millions (-7,8 %) et le BPA ajusté à 12,46 cents (-11 %). Le résultat avant impôts statutaire a chuté de 26 % à 216 millions après une augmentation de 79 millions de la provision pour dommages causés par les termites.
Trésorerie et capital : Le flux de trésorerie disponible a progressé de 31 % pour atteindre 282 millions avec un taux de conversion de 93 % (contre 80 % prévu). La dette nette a augmenté à 4,22 milliards, soit 2,8 fois l'EBITDA ajusté, principalement en raison du financement obligataire et des effets de change ; la marge de liquidité est de 2,0 milliards. Le dividende intérimaire est maintenu à 4,15 cents.
Tendances opérationnelles : Le chiffre d'affaires en Amérique du Nord a augmenté de 2,0 % (organique +1,1 %), mais le résultat ajusté a diminué de 7,3 % et la marge s'établit à 16,9 %. Le chiffre d'affaires international a progressé de 5,1 %, le résultat ajusté de 4,6 %, la marge restant stable à 19,3 %. La croissance organique du groupe s'est améliorée au deuxième trimestre, avec une croissance organique en Amérique du Nord de 1,4 % contre 0,7 % au premier trimestre. L'intégration de Terminix se poursuit ; l'objectif de réduction des coûts d'environ 100 millions de dollars et une marge supérieure à 20 % en Amérique du Nord après 2026 ont été réaffirmés. Les perspectives pour l'exercice 2025 et les indications techniques restent inchangées.
Highlights H1 2025: Die Umsätze aus fortgeführten Geschäftsbereichen stiegen im Jahresvergleich um 3,1 % auf 3,36 Mrd. USD (organisch 1,6 %). Das bereinigte Betriebsergebnis sank um 4,5 % auf 511 Mio. USD, die Marge verringerte sich um 120 Basispunkte auf 15,2 %. Das bereinigte Ergebnis vor Steuern lag bei 418 Mio. USD (-7,8 %) und das bereinigte Ergebnis je Aktie bei 12,46 Cent (-11 %). Das gesetzliche Ergebnis vor Steuern fiel um 26 % auf 216 Mio. USD nach einer Erhöhung der Rückstellung für Termitenschäden um 79 Mio. USD.
Cash & Kapital: Der Free Cashflow stieg um 31 % auf 282 Mio. USD bei einer Umwandlungsrate von 93 % (vs. 80 % Prognose). Die Nettoverschuldung stieg auf 4,22 Mrd. USD bzw. das 2,8-fache des bereinigten EBITDA, hauptsächlich bedingt durch Anleihefinanzierung und Wechselkurseffekte; die Liquiditätsreserve beträgt 2,0 Mrd. USD. Die Zwischen Dividende wurde bei 4,15 Cent gehalten.
Operative Trends: Der Umsatz in Nordamerika stieg um 2,0 % (organisch +1,1 %), das bereinigte Ergebnis sank jedoch um 7,3 % und die Marge lag bei 16,9 %. Der internationale Umsatz stieg um 5,1 %, das bereinigte Ergebnis um 4,6 %, die Marge blieb stabil bei 19,3 %. Das organische Wachstum der Gruppe verbesserte sich im zweiten Quartal, mit einem organischen Wachstum in Nordamerika von 1,4 % gegenüber 0,7 % im ersten Quartal. Die Integration von Terminix läuft weiter; das Kostensenkungsziel von rund 100 Mio. USD und eine Nordamerika-Marge von über 20 % nach 2026 wurden bestätigt. Die Prognose für das Geschäftsjahr 2025 und die technische Guidance bleiben unverändert.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
FORM 6-K
__________________
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For
the month of July 2025
Commission File Number: 001-41524
___________________________________
Rentokil Initial plc
(Registrant’s name)
___________________________________
Compass House
Manor Royal
Crawley
West Sussex RH10 9PY
United Kingdom
(Address of principal executive office)
_____________________________________
Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form
40-F ☐
Indicate by check mark if the registrant is
submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(1): ☐
Indicate by check mark if the registrant is
submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(7): ☐
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Half-year
Report dated 31 July 2025
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2025 Interim Results
Performance and outlook in line with expectations
Improved cashflows. Cost savings on track. Encouraging recent lead
generation
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Financial Results
6 months to 30 June 2025
Continuing Operations
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Adjusted Results
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Statutory Results
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||||||
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$m
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H1
2025
$m
|
H1
2024
$m
|
Change(reported)
%
|
Change (constant currency)
%
|
|
H1 2025
$m
|
H1
2024
$m
|
Change (reported)
%
|
Change
(constant currency)
%
|
|
Revenue
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3,364
|
3,266
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3.0%
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3.1%
|
|
3,364
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3,266
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3.0%
|
3.1%
|
|
EBITDA
|
686
|
707
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(3.0)%
|
|
|
|
|
|
|
|
Operating Profit
|
511
|
537
|
(4.7)%
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(4.5)%
|
|
304
|
380
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(19.9)%
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(19.7)%
|
|
Operating Profit margin
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15.2%
|
16.4%
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(120)bps
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(120)bps
|
|
9.0%
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11.6%
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(260)bps
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(260)bps
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|
Profit before Tax
|
418
|
459
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(8.7)%
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(7.8)%
|
|
216
|
294
|
(26.5)%
|
(25.3)%
|
|
Free Cash Flow
|
282
|
215
|
31.2%
|
-
|
|
|
|
|
|
|
Basic EPS
|
12.46c
|
14.00c
|
(11.0)%
|
(9.5)%
|
|
6.49c
|
9.09c
|
(28.6)%
|
(26.8)%
|
|
Dividend Per Share
|
4.15c
|
4.15c
|
-
|
-
|
|
4.15c
|
4.15c
|
-
|
-
|
|
Group (including discontinued operations)
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
3,532
|
3,425
|
3.1%
|
3.2%
|
|
|
|
|
|
|
Operating profit
|
538
|
564
|
(4.5)%
|
(4.4)%
|
|
|
|
|
|
|
Profit before tax
|
444
|
485
|
(8.4)%
|
(7.5)%
|
|
|
|
|
|
|
Basic EPS
|
13.42c
|
14.76c
|
(9.1)%
|
(7.7)%
|
|
|
|
|
|
|
Net debt
|
(4,220)
|
(4,070)
|
(3.7)%
|
|
|
|
|
|
|
Andy Ransom, Chief Executive of Rentokil Initial plc ("the
Company"), said:
"We delivered a solid first half performance, in line with
expectations, with Revenue growth of 3.1% and Adjusted Group Profit
before tax (including discontinued operations) of $444m. We also
delivered a strong free cash flow performance, with conversion of
93%, ahead of our guidance of 80%. Our sales and marketing
initiatives in North America are starting to have an impact, with
organic revenue growth of 1.4% in the second quarter up from 0.7%
in the first quarter. We are refocusing our marketing budget
towards driving organic lead flow and we are seeing encouraging
results, including from our satellite branches, where we now have
100 in operation. While it is still early, we are encouraged with
our progress, with residential and termite lead flow growing in
June for the first time this year, up 6.6%. We are also encouraged
by the early results that we are seeing from the door to door pilot
that we started in the second quarter.
Improving our data analytics and insights is allowing us to more
precisely target our underperforming branches with our new sales
and marketing initiatives. Together with our integration
experience, it is also helping us refine our integration plans and
timelines. In H2 we will re-start integration with standalone,
mainly commercial branches. Our expectations of the c.$100m cost
reduction opportunity and attaining an operating margin in North
America above 20% post 2026 remain unchanged, but our refined
timelines may mean not all branches are fully integrated by that
time.
Current trading is in line with expectations and our outlook for
the remainder of the year remains unchanged. We expect to deliver
FY25 results in line with market expectations."
H1 2025 Financial Highlights
|
● Financial
performance in line with expectations
●
Group Revenue growth of 3.1% with International business growth of
5.1%
● Organic
Growth1 of
1.6%
○
North America organic growth 1.1%; International organic growth
2.7%
●
North America organic growth improvement in Q2: 1.4% (Q1:
0.7%)
● Group
adjusted operating margin2 of
15.2%, reduced North America margin of 16.9%
●
Strong cash flow performance; 93% FCF conversion, ahead of our
guidance of 80%
●
Interim dividend maintained at 4.15 cents per share
●
Net debt to Adjusted EBITDA ratio of 2.8x, reflecting c.$175m
adverse foreign exchange impact on period end net debt
(31 December 2024: 2.7x)
|
H1 2025 Strategic Highlights
|
Driving the top line
●
North America RIGHT WAY 2 continued progress
○
Improved Colleague retention: 80.7% (H1 24: 77.8%)
○
Improved Customer retention: 80.5% (H1 24: 79.8%)
●
Refocusing of marketing budget towards organic lead
generation
●
100 satellite branches in operation (Q1: 36); 150 planned by end of
year
●
Recent improvement in residential and termite lead flow (up 6.6% in
June)
Integration
update
●
Integration activities in H2 will be focused on:
○
Migrating standalone businesses (mainly commercial businesses
already on Pestpac)
○
Detailed programme of work to make process, system and execution
improvements in previously migrated branches, where lead flow and
customer retention are not yet at their required
levels
○
Refining the end-to-end integration playbook for future branch
integration
●
Our expectations of the c.$100m cost reduction
opportunity from the integration and attaining an operating margin
in North America above 20% post 2026 remain unchanged, but our
refined timelines may mean not all branches are fully integrated by
that time
Ongoing focus on core areas
●
Sale of France Workwear business; transaction approved
by European Commission and on track to complete in late Q3/earlyQ4
2025
|
2025 Outlook and H2 current trading
|
●
Current trading is in line with expectations and our
outlook for the remainder of the year remains unchanged. We expect
to deliver FY25 financial results in line with market
expectations
|
Enquiries:
|
Investors / Analysts:
|
Hugo Fisher
Morenike Ogunseye
|
Rentokil Initial plc
|
07920 714700
07818 883094
|
|
Media:
|
Malcolm Padley
|
Rentokil Initial plc
|
07788 978199
|
A management presentation and Q&A for investors and analysts
will be held virtually today, 31 July
2025 at 9.15am (UK time). Dial-in details will be
provided on the website
(https://www.rentokil-initial.com/investors.aspx). A recording will
be made available following the conclusion of the
presentation.
Notes
With effect from 1 January 2025 the Group changed its presentation
currency from sterling to US dollars. All comparatives from 2024
have been represented in USD. In addition and following the
acquisition of the Terminix business whereby the majority of the
Group's revenues are now in North America, the Group's remaining
regions have been combined into an International segment and
reporting is on this basis. In order to
help understand the underlying trading performance, unless
otherwise stated, all commentary and comparable analysis in the
summary and operating review relates to the continuing operations
of the Group on a constant currency basis. The France Workwear
business has been classified as a discontinued operation following
the announcement of the intended sale of the business, and all
comparatives have been represented accordingly.
1 Organic Revenue growth represents the growth in Revenue
excluding the effect of businesses acquired during the year.
Acquired businesses are included in organic measures in the year
following acquisition, and the comparative period is adjusted to
include an estimated full year performance for growth calculations
(pro forma revenue).
2 Excludes costs to achieve which are one-off by
nature. Non-IFRS measures - This statement includes certain
financial performance measures which are not measures defined under
International Financial Reporting Standards (IFRS). These measures
include Adjusted Operating Profit, Adjusted Profit Before Tax,
Adjusted Profit After Tax, Adjusted EBITDA, Adjusted Interest,
Adjusted Earnings Per Share, Free Cash Flow, Adjusted Free Cash
Flow, Adjusted Free Cash Flow Conversion, Adjusted Effective Tax
Rate and Organic Revenue. Management believes these measures
provide valuable additional information for users of the financial
statements to aid better understanding of the underlying trading
performance. Adjusted Operating Profit, Adjusted Profit
Before/After Tax and Adjusted EBITDA exclude certain items that
could distort the underlying trading performance of the business.
An explanation of all the above non-IFRS measures used along with
reconciliation to the nearest IFRS measures is provided in Use of
Non-IFRS measures in the financial statements.
Summary of financial performance
Regional Performance
|
|
Revenue
|
|
Adjusted Operating Profit
|
||
|
|
H1 2025
$m
|
Change
%
|
|
H1 2025
$m
|
Change
%
|
|
North America
|
|
|
|
|
|
|
Pest
Control
|
2,044
|
1.9%
|
|
348
|
(7.4)%
|
|
Hygiene
& Wellbeing
|
62
|
4.0%
|
|
8
|
(0.9)%
|
|
|
2,106
|
2.0%
|
|
356
|
(7.3)%
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
Pest
Control
|
747
|
5.7%
|
|
153
|
4.1%
|
|
Hygiene
& Wellbeing
|
504
|
4.3%
|
|
89
|
5.5%
|
|
|
1,251
|
5.1%
|
|
242
|
4.6%
|
|
|
|
|
|
|
|
|
Central
|
7
|
(9.2)%
|
|
(85)
|
(8.5)%
|
|
Restructuring costs
|
-
|
-
|
|
(2)
|
4.1%
|
|
Total
|
3,364
|
3.1%
|
|
511
|
(4.5)%
|
Category Performance
|
|
Revenue
|
|
Adjusted Operating Profit
|
||
|
|
H1 2025
$m
|
Change
%
|
|
H1 2025
$m
|
Change
%
|
|
Pest Control
|
2,791
|
2.9%
|
|
501
|
(4.2)%
|
|
Hygiene & Wellbeing
|
566
|
4.3%
|
|
97
|
5.0%
|
|
Central
|
7
|
(9.2)%
|
|
(85)
|
(8.5)%
|
|
Restructuring costs
|
-
|
-
|
|
(2)
|
4.1%
|
|
Total
|
3,364
|
3.1%
|
|
511
|
|
Revenue
Group Revenue increased 3.1% to $3,364m in H1. Group Organic
Revenue grew 1.6%. Revenue growth in North America was up
2.0% (+1.1% organic). The International business performed well
with Revenue up 5.1% in H1 (+2.7% Organic) with growth across the
region.
Our Pest Control category grew Revenue by 2.9% (1.8% Organic)
to $2,791m, driven mainly by 3.8% Organic Growth in our
International region. Hygiene & Wellbeing Revenue increased by
4.3% (0.9% Organic) to $566m, driven principally by increased
pricing.
|
Revenue ($m)
|
Q1
|
Q2
|
H1
|
|
Group
|
1,556
|
1,808
|
3,364
|
|
North America
|
951
|
1,155
|
2,106
|
|
International
|
601
|
650
|
1,251
|
|
Organic Revenue Growth
|
Q1
|
Q2
|
H1
|
|
Group
|
1.6%
|
1.6%
|
1.6%
|
|
North America
|
0.7%
|
1.4%
|
1.1%
|
|
International
|
3.2%
|
2.2%
|
2.7%
|
Profit
Adjusted Operating Profit in H1 reduced by 4.5% compared to the
prior period, to $511m, driven principally by the reduced
profitability in North America from lower volumes more than
offsetting profit growth in our International business. The period
saw a 120bps decrease year on year in Group Adjusted Operating
Margin to 15.2%. Within
business categories, Adjusted Operating Margin for Pest Control was
18.0% (H1 24: 19.2%). Hygiene & Wellbeing Adjusted Operating
Margin was 17.2% (H1 24: 17.2%).
Adjusted Profit before Tax of $418m, which excludes one-off and
adjusting items and amortisation costs, decreased by 7.8%
predominantly due to reduced profitability in North America.
Adjusted interest of $98m at actual exchange rates was $15m higher
year on year. One-off and adjusting items of $110m includes an
increase to the provision for Termite Damage claims of $79m (H1
24:$nil), $30m (H1 24: $39m) of integration costs related to the
Terminix acquisition and a net $1m (H1 24: $8m) of other M&A
costs. Statutory Operating Profit was $304m (H1 24: $380m) with the
decrease principally due to the $79m increase to the provision for
Termite Damage claims. Statutory profit before tax was $216m (H1
24: $294m).
Cash Flow
Cash generation continues to be an important priority with a strong
focus on operational cash conversion as well as a disciplined
approach to working capital management, yielding improved results
in the half year.
Net cash flows from operating activities were $412m. Free Cash Flow
of $282m was $67m higher than in H1 24 due to an improved working
capital performance. The $66m (H1 24: $5m) one-off and adjusting
items is predominantly the increase in the provision for Termite
Damage claims, offset by deferred consideration
releases.
The Group had a $51m working capital outflow in the first six
months of the year, an improvement of $64m compared to the
comparable period. The movement on provisions of $40m predominantly
reflects the increase in the provision for Termite Damage claims.
Capital expenditure of $89m was incurred in the period (H1 24:
$89m), with lease payments at $90m, compared to $87m in the prior
period.
Cash interest payments of $106m were $25m lower than in the prior
year, principally reflecting changes in timing of bond interest
payments. Cash tax payments for the period were $43m, an increase
of $7m compared with the corresponding period last year. Adjusted
Free Cash Flow Conversion was 93%, ahead of guidance.
Cash spend on current and prior year acquisitions was $70m,
dividend payments were $198m and the cash impact of one-off and
adjusting items was $48m, largely related to the costs associated
with the Terminix integration.
For FY 25 we now expect c.$200m of M&A expenditure and capital
expenditure of c.$210-220m. In addition to reducing net debt from
the sale proceeds, the pending sale of the France Workwear business
would reduce capital expenditure by c.$100m on an annualised
basis.
Regional performance review
North America
|
|
H1 2025
$m
|
H1 2024
$m
|
Change (reported)
%
|
Change (constant currency)
%
|
Organic Growth
|
|
Revenue
|
2,106
|
2,067
|
1.9%
|
2.0%
|
1.1%
|
|
Operating Profit
|
213
|
308
|
(30.8)%
|
(30.7)%
|
|
|
Adjusted Operating Profit
|
356
|
385
|
(7.3)%
|
(7.3)%
|
|
|
Adjusted Operating Margin
|
16.9%
|
18.6%
|
(1.7)%
|
(1.7)%
|
|
|
Organic Growth
|
Q1
|
Q2
|
H1 2025
|
|
North America
|
0.7%
|
1.4%
|
1.1%
|
|
North America Pest Control
|
0.5%
|
1.6%
|
1.1%
|
|
North America Pest Control Services
|
(0.2%)
|
0.3%
|
0.1%
|
North America includes Pest Control and Hygiene & Wellbeing and
Business Services.
North America Pest Control Services is Pest Control excluding
Business Services.
H1 2025 Performance
Half year Revenue was up 2.0%, with Organic Revenue
up 1.1%. There was an improved performance during
the half year with 1.4% Organic Revenue growth in
Q2 (0.7% in Q1). Overall, good price realisation and
contributions from acquisitions have more than offset volume
reductions to deliver revenue growth. Organic Revenue growth in
Pest Control Services for our commercial, residential, and termite
customers was 0.1%, with Q2 driven by a stronger performance in
June (0.3% in Q2, -0.2% in Q1).
North America Business Services has seen positive momentum during
H1, with Revenue of $400m and Organic Growth of 5.8%.
During the period we saw ongoing price inflation, particularly in
relation to labour. Consequently, Adjusted Operating
Margin in North America declined to 16.9% and
Adjusted Operating Profit of $356m was down 7.3%. Statutory
Operating Profit was $213m.
In-bound residential lead flow remained weak until April but has
seen substantial improvements since then as a result of our new
sales and marketing strategies, with June lead flow up
6.6%.
Customer retention improved over H124, from 79.8% to 80.5%.
Technician participation in the Trusted Advisor lead programme
improved to 64% (FY 24: 50%), supported by stronger alignment
between Sales and Service under Field Operations leadership,
helping drive improved customer engagement.
Total North America colleague retention increased 2.9ppts to 80.7%
(H1 24: 77.8%).
Our North American bolt-on M&A programme continued, with
the purchase of 8 businesses with combined revenues of c.$18m
in the year prior to purchase. We continue to selectively pursue
high quality M&A assets in the North America
region.
Integration update
Improving our data analytics and insights is allowing us to more
precisely target our underperforming branches with our new sales
and marketing initiatives. Together with our integration
experience, it is also helping us refine our integration plans and
timelines. In H2 we will re-start integration with standalone,
mainly commercial branches and complete a detailed programme of
work to make process, system and execution improvements in
previously migrated branches, where lead flow and customer
retention are not yet at their required levels. Our expectations of
the c.$100m cost reduction opportunity from the integration and
attaining an operating margin in North America above 20% post 2026
remain unchanged, but our refined timelines may mean not all
branches are fully integrated by that time.
We continue to achieve cost synergies in 2025, whilst also
continuing our investments in salary and benefit
harmonisation, safety, innovation and IT. A number of efficiency
programmes are underway to deliver the c.$100m cost reduction
including a headcount reduction programme during the period,
procurement initiatives to benefit from purchasing scale and
back-office role outsourcing.
We continue to expect total one-time integration costs to be
c.$350m. This encompasses c.$250m incurred to 2024 and c.$100m
across 2025 and 2026.
Legacy termite warranty obligations
The methodology for assessing the appropriate provision in relation
to termite warranty claims looks out over a sixteen year period and
is sensitive to movements in the underlying assumptions relating to
the number, location and severity of those claims. In the first
half of the year we saw an increase in the number of complex
litigation claims, outside of Mobile Alabama, when compared to
similar claims in the same period of 2024. We also saw a 9%
increase in the cost per warranty claim in the period, as a
proactive strategy to solve customer problems and reduce litigation
continues. As a result, the provision in relation to
such claims has been increased from $236m at 31 December 2024 to
$276m at 30 June 2025.
International
|
|
H1 2025
$m
|
H1 2024
$m
|
Change (reported)
%
|
Change (constant currency)
%
|
Organic Growth
|
|
Revenue
|
1,251
|
1,192
|
4.9%
|
5.1%
|
2.7%
|
|
Operating Profit
|
214
|
194
|
10.0%
|
9.4%
|
|
|
Adjusted Operating Profit
|
242
|
231
|
4.9%
|
4.6%
|
|
|
Adjusted Operating Margin
|
19.3%
|
19.3%
|
-%
|
(0.1)%
|
|
|
Organic Growth
|
Q1
|
Q2
|
H1 2025
|
|
International
|
3.2%
|
2.2%
|
2.7%
|
H1 2025 Performance
Revenue
Half year Revenue was up 5.1%, Organic Revenue was up 2.7%, with
growth across the business.
Growth in Europe was particularly strong, driven by price increases
and resilience in overall demand, predominantly from the Southern
European countries of Portugal and Spain.
In Asia, we saw strong growth in Indonesia and India, supported in
the latter by the acquisition and successful integration of the Hi
Care business.
However, International growth was impacted by a weaker revenue
performance in the UK, where strong performance in core Pest was
offset by our Property Service business being impacted by the
slowdown of the UK commercial property market and tightening Local
Authority spending.
In our Pacific region, organic revenue growth was slightly below
the average for International, with good growth in Pest Control and
Ambius mitigating a flat organic performance in Hygiene. Within
Pest Control, our contract business performed well, offsetting a
subdued jobbing market, which was impacted by weather delays due to
both flooding and droughts.
Profit
Adjusted Operating Profit of $242m was up 4.6%, broadly in line
with revenue growth. Adjusted Operating Margin in our International
division remained at 19.3%. Statutory Operating Profit was $214m,
compared to $194m in the prior period.
Europe adjusted profit was slightly up, despite a small decrease in
margin. While there has been ongoing inflationary pressure
throughout the period, we have continued to be successful at
mitigating its impact by pass-through pricing.
The UK and Sub-Saharan Africa region delivered resilient profit
growth despite revenue headwinds against a continued subdued
macro-economic backdrop. Adjusted Operating Profit increased ahead
of the divisional average with operating margins also showing good
growth in the period. The Hygiene and Wellbeing category showed
good margin growth through price and yield management, continual
focus on higher margins sectors, and continual process
improvement
Within Asia and MENAT, operating profit increased ahead of the
regional average. Margin was modestly up as a result of continued
increasing scale in India and Indonesia, investment in Singapore in
2024 supporting margin improvement in 2025 and pricing continuing
to improve in India.
Within the Pacific region, operating profit grew slightly below the
overall International region, consistent with the revenue
growth.
The International region acquired 10 businesses with total revenues
in the year prior to purchase of $17m.
Category performance review
Pest Control
|
|
H1 2025
$m
|
H1 2024
$m
|
Change (reported)
%
|
Change (constant currency)
%
|
Organic Growth
|
|
Revenue
|
2,791
|
2,717
|
2.7%
|
2.9%
|
1.8%
|
|
Operating Profit
|
329
|
415
|
(20.8)%
|
(21.0)%
|
|
|
Adjusted Operating Profit
|
501
|
522
|
(4.1)%
|
(4.2)%
|
|
|
Adjusted Operating Margin
|
18.0%
|
19.2%
|
(1.2)%
|
(1.3)%
|
|
|
Organic Growth
|
Q1
|
Q2
|
H1
|
|
Pest Control
|
1.7%
|
1.9%
|
1.8%
|
Our Pest Control business is the largest operator in both the US,
the world's biggest pest control market, and the world overall,
providing services in around 90 markets. We are a leading global
player in a resilient and non-cyclical industry characterised by
positive and strong long-term structural growth
drivers.
Market
According to latest industry reports, published in H1 25, over the
past 10 years the global pest control market has grown from a value
of $14.4bn in 2014 to $27.3bn in 2024 at a CAGR of 6.6%. Industry
forecasts for the next 10 years deliver a CAGR of 6.2% - with the
value of the global market expected to reach around $50bn by
2034.
H1 2025
In H1 25, our Pest Control category grew Revenue by 2.9% (1.8%
Organic) to $2,791m. Within the International business, good
Revenue growth of 5.7% (3.8% Organic) was driven principally by the
performance in Europe (3.8% Organic Growth) and Asia and MENAT
(4.8% Organic Growth). In the UK our core Pest Control business
grew 7.5% organically, held back by lower growth in Property Care.
Pest Control Revenue growth in the International region of 5.7% was
partially offset by growth of 1.9% in North America.
Adjusted operating profit of $501m declined by 4.2%, with
International growth offset by decline in North
America.
We acquired 16 Pest Control businesses in the period, with revenues
in the year prior to acquisition of c.$32m.
Innovation and Technology
We lead our industry in the use of digital technologies in pest
control, and we are continuing to build upon this competitive
advantage. Our smart technology is providing more remote monitoring
solutions and increased transparency of data.
Our digital Pest Control programme continues to move forward. An
additional 106,000 PestConnect devices, which offer 24/7
monitoring, were installed in customers' premises over the last 12
months to 30 June 2025, and we now have around 540,000 devices
operating in customers' premises. The number of connected customer
sites has reached 32,500.
In H1, we began to roll out our first AI-enabled pest control
services. Our new PestConnect Optix service utilises AI and
motion-detection camera technology to identify individual rodents.
Now in operation in the UK, France and Netherlands, it is adding
predominantly one-time job revenue to existing customer accounts.
We're also piloting this new service in Belgium, Norway, Portugal,
Australia and the US.
Our Innovation teams have continued to explore ways to expand the
AI-enabled Optix service to other services and different pest types
and are currently piloting the new Lumnia Optix service - a digital
insect light trap solution with camera and AI analysis. Launches
are planned in the International region and then will be expanded
initially into US key accounts.
Hygiene & Wellbeing
|
|
H1 2025
$m
|
H1 2024
$m
|
Change (reported)
%
|
Change (constant currency)
%
|
Organic Growth
|
|
Revenue
|
566
|
542
|
4.5%
|
4.3%
|
0.9%
|
|
Operating Profit
|
98
|
87
|
12.8%
|
12.9%
|
|
|
Adjusted Operating Profit
|
97
|
94
|
4.9%
|
5.0%
|
|
|
Adjusted Operating Margin
|
17.2%
|
17.2%
|
-
|
0.1%
|
|
|
Organic Growth
|
Q1
|
Q2
|
H1
|
|
Hygiene & Wellbeing
|
1.6%
|
0.4%
|
0.9%
|
Rentokil Initial is a leader in the provision of hygiene and
wellbeing services, operating in around 70 markets around the
world. Inside the washroom we provide hand hygiene (soaps and
driers), air care, in-cubicle (feminine hygiene units), no-touch
products and digital hygiene services. In addition to core washroom
hygiene, we deliver specialist services outside the washroom such
as premium scenting, plants, air quality monitoring, green walls
and specialist waste collection services.
Market
According to latest industry reports, published in H1 25, over the
next 10 years the global Core Hygiene market is expected to grow at
a CAGR of approximately 4%, driven by macro factors including the
needs of an ageing population, the rise of urban populations and
middle classes, and increasing hygiene expectations.
H1 2025
In H1 25, Hygiene & Wellbeing Revenue increased by 4.3% (0.9%
Organic) to $566m, driven principally by increased pricing. Within
Europe and LATAM revenue grew organically by 2.6% led equally by
Core Hygiene and Enhanced Environments.
Within the UK and Sub-Saharan Africa region, a more challenging
environment led to Organic Revenue decrease of 1.6%, while in our
Pacific region market conditions remain challenging, with
heightened price competition and lower customer retention resulting
in low contract revenue growth in H1.
Adjusted operating profit increased by 5.0%, broadly in line with
revenue growth as the pricing benefit and contribution from
acquisitions more than offset the impact of cost inflation.
Adjusted operating profit margins remained flat as pricing and
tight cost control mitigated cost inflation.
We acquired two Hygiene and Wellbeing companies with revenues of
c.$4m in the year prior to purchase.
Operational excellence
The Hygiene & Wellbeing business continues to focus on
operational excellence, product development, disciplined sales
activity and dedicated Hygiene digital marketing. It has shared
overheads with Pest Control and areas of operational efficiency
including density (route and product), improved colleague
retention, deploying technology, and procurement - materials and
product costs.
Disposal of France Workwear
On the 28 May 2025, we announced our agreement with H.I.G Capital
for the intended sale of France Workwear which values France
Workwear at a gross enterprise value of approximately €410m
(c.$465m) on a cash-free debt-free basis including an earn-out
mechanism with a maximum value of €30m (c.$34m) linked to the
performance of the business in 2026. Total net cash proceeds are
expected to be approximately €370m (c.$420m), subject to
customary closing adjustments and the final earn-out outcome.
Completion is expected to occur in late Q3 / early Q4 25. The
business has been accounted for as a discontinued operation since
31 May 2025. In FY 24, France Workwear, including flat linen
textile and clean room business, generated Revenue of $324m,
Adjusted Operating Profit of $57m and had associated
capital expenditure of $93m.
Good contributions from bolt-on M&A
In H1, we acquired 18 businesses, comprising 16 in Pest Control and
two in Hygiene & Wellbeing for a total consideration of $68m,
with revenues of c.$36m in the year prior to purchase. We added
eight new businesses in North America during the period with c.$18m
revenues acquired, and 10 businesses in our International region
(annualised revenues of c.$17m).
M&A remains relevant for our strategy for growth. We
continue to seek attractive bolt-on deals, both in Pest Control and
Hygiene & Wellbeing, to build density in existing and new
markets. Our pipeline of prospects remains strong and our current
guidance on spend on M&A for FY25 is now c.$200m.
Employer of Choice
Rentokil Initial is committed to being a world-class Employer of
Choice, with colleague safety and the attraction, recruitment and
retention of the best people from the widest possible pool of
talent, being key business objectives globally.
Group colleague retention continued to rise at 87.0% (H1 24:
85.9%).
Financial review
Central and regional overheads
Central and regional overheads of $85m were up 8.5% on a constant
currency basis predominantly as a result of inflationary
increases.
Restructuring costs
With the exception of integration costs for significant
acquisitions, the Group reports restructuring costs within Adjusted
Operating Profit. Costs associated with significant acquisitions
are reported as one-off and adjusting items and excluded from
Adjusted Operating Profit. Restructuring costs of $2m were in line
with the prior year.
Interest
Adjusted interest of $98m includes $15m of lease interest charges
and a $24m offsetting reduction from the impacts of hyperinflation
and net interest received. In the year, hyperinflation of $1m was
$6m lower than the prior year (HY 24: $7m) due to a drop in
hyperinflation in Argentina and devaluation of the Argentinian
peso. Cash interest in HY 25 was $106m (HY 24: $131m), with the
year on year reduction principally reflecting changes in timing of
bond interest payments.
Tax
The income tax charge for the period on continuing operations at
actual exchange rates was $52m on the reported profit before tax of
$216m, giving an effective tax rate (ETR) of 24.2% (HY 24: 22%).
The Group's ETR before amortisation of intangible assets (excluding
computer software), one-off and adjusting items and the net
interest adjustments for HY25 was 25.0% (HY 24: 23.1%). This
compares with a blended rate of tax for the countries in which the
Group operates of 25.2% (HY 24: 25.3%).
Net debt and cash flow
Group Free Cash Flow was $288m, $66m better than the prior period,
predominantly due to an improved working capital performance and
lower interest payments. After M&A spend of $70m, dividends of
$198m and net debt related cash inflows of $562m, there was an
increase in cash and cash equivalents of $534m compared to a
decrease in the prior period of $125m. However, the weakening of
the USD had a translational impact on our EUR and GBP denominated
bonds carrying value as well as a positive impact on our EUR
denominated derivatives leading to a net c.$175m adverse
foreign exchange impact. This resulted in net debt of $4,220m, up
$204m from the year end.
The debt related cash inflows of $562m resulted from the issuance
of the Group's inaugural USD bond transaction in April,
raising $1.25bn across two tranches; $750m 5 year bond at 5.0% and
a $500m 10 year bond at 5.625%. Subsequently the Group repaid its
$700m term loan which was falling due in October 2025.
|
$m at actual exchange rates
|
Year to Date
|
||
|
|
2025 HY
$m
|
2024 HY
$m
|
Change
$m
|
|
Adjusted Operating Profit
|
511
|
537
|
(26)
|
|
Depreciation
|
158
|
153
|
5
|
|
Other
|
17
|
17
|
-
|
|
Adjusted EBITDA
|
686
|
707
|
(21)
|
|
One-off and adjusting items (non-cash)
|
(66)
|
5
|
(71)
|
|
Working capital
|
(51)
|
(115)
|
64
|
|
Movement on provisions
|
40
|
(41)
|
81
|
|
Capex - additions
|
(89)
|
(89)
|
-
|
|
Capex - disposals
|
1
|
2
|
(1)
|
|
Capital of lease payments and initial direct costs
incurred
|
(90)
|
(87)
|
(3)
|
|
Interest
|
(106)
|
(131)
|
25
|
|
Tax
|
(43)
|
(36)
|
(7)
|
|
Free Cash Flow - continuing operations
|
282
|
215
|
67
|
|
Free Cash Flow - discontinued operations
|
6
|
7
|
(1)
|
|
Free Cash Flow
|
288
|
222
|
66
|
|
Acquisitions
|
(70)
|
(96)
|
26
|
|
Dividends
|
(198)
|
(186)
|
(12)
|
|
Cash impact of one-off and adjusting items
|
(48)
|
(52)
|
4
|
|
Debt related cash flows
|
|
|
|
|
Cash inflow/(outflow) on settlement of debt related foreign
exchange forward contracts
|
30
|
(8)
|
38
|
|
Proceeds from issue of debt
|
1,232
|
-
|
1,232
|
|
Debt repayments
|
(700)
|
(5)
|
(695)
|
|
Debt related cash flows
|
562
|
(13)
|
575
|
|
|
|
|
|
|
Net increase/ (decrease) in cash and cash equivalents
|
534
|
(125)
|
659
|
|
Cash and cash equivalents at the beginning of the year
|
467
|
1,062
|
(595)
|
|
Exchange gains /(losses) on cash and cash equivalents
|
26
|
(31)
|
57
|
|
Cash and cash equivalents at end of the financial year
|
1,027
|
906
|
121
|
|
Net increase/(decrease) in cash and cash equivalents
|
534
|
(125)
|
659
|
|
Debt related cash flows
|
(562)
|
13
|
(575)
|
|
IFRS 16 asset/ (liability) movement
|
5
|
(1)
|
6
|
|
Debt acquired
|
-
|
(5)
|
5
|
|
Bond interest accrual
|
16
|
44
|
(28)
|
|
Foreign exchange translation and other items
|
(197)
|
11
|
(208)
|
|
Increase in net debt
|
(204)
|
(63)
|
(141)
|
|
Opening net debt
|
(4,016)
|
(4,007)
|
(9)
|
|
Closing net debt
|
(4,220)
|
(4,070)
|
(150)
|
Funding
As at 30 June 2025, the Group had liquidity headroom of $2,003m,
including $1,000m of undrawn revolving credit facilities, with a
maturity date of October 2029. The net debt to Adjusted EBITDA
ratio was 2.8x at 30 June 2025 (31 December 2024:
2.7x).
Interim Dividend
An interim dividend payment of 4.15c per share, will be paid on 22
September 2025 to shareholders on the register at the close of
business on 15 August 2025. The last day for DRIP elections is 1
September 2025. These interim financial statements do not reflect
this dividend payable.
Technical guidance update for FY 25
|
|
Current guidance*
|
Prior guidance**
(6 March 2025)
|
|
P&L
|
|
|
|
Restructuring
costs; and One-off/Adjusting items excl. Terminix
|
$10m;
$10m
|
$10m;
$15m
|
|
Terminix
integration Costs to Achieve***
|
c.$70-80m
|
c.$55-65m
|
|
P&L
adjusted interest costs (incl. hyperinflation)
|
c.$200-210m
(incl. $5-10m)
|
c.$190-200m
(incl. 5-10)
|
|
Estimated
Adjusted Effective Tax Rate (%)
|
25%-26%
|
25%-26%
|
|
Share
of Profits from Associates
|
c.$8-10m
|
c.$8-10m
|
|
Impact
of FX within range****
|
c.
-$10 to +$10m
|
c.
-$10 to -$20m
|
|
Intangibles
amortisation
|
$190-200m
|
$190-200m
|
|
|
||
|
Cash
|
|
|
|
One-off
and adjusting items
|
c.$80-90m
|
c.$70-80m
|
|
Working
Capital outflow; and provision payments
|
c.$75-85m
(outflow); c.$80-90m
|
c.$75-85m
(outflow); c.$80-90m
|
|
Capex
excluding ROU asset lease payments
|
$210-220m
|
$300-310m
|
|
Cash
interest
|
c.$190-200m
|
c.$185-195m
|
|
Cash
tax payments
|
$110-120m
|
$140-150m
|
|
Anticipated
spend on M&A in 2025
|
c.$200m
|
c.$250m
|
* For Continuing Operations
** For Group (prior to the announcement of the sale of France
Workwear)
*** Reported as one-off and adjusting items and excluded from
Adjusted Operating Profit and Adjusted PBTA
**** Based on maintenance of current FX rates
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
For the period ended 30 June 2025
|
|
Note
|
Unaudited
6 months to
30 June 2025
$m
|
Unaudited / Represented
6 months to
30 June 20241
$m
|
|
Continuing operations
|
|
|
|
|
Revenue
|
4
|
3,364
|
3,266
|
|
Operating expenses
|
|
(3,021)
|
(2,855)
|
|
Net impairment losses on financial assets
|
|
(39)
|
(31)
|
|
Operating profit
|
|
304
|
380
|
|
Finance income
|
|
24
|
31
|
|
Finance cost
|
|
(117)
|
(122)
|
|
Share of profit from associates net of tax
|
|
5
|
5
|
|
Profit before income tax
|
|
216
|
294
|
|
Income tax expense
|
5
|
(52)
|
(65)
|
|
Profit from continuing operations
|
|
164
|
229
|
|
|
|
|
|
|
Profit from discontinued operations
|
6
|
24
|
19
|
|
Profit for the interim period
|
|
188
|
248
|
|
|
|
|
|
|
Profit for the period attributable to:
|
|
|
|
|
Equity holders of the Company
|
|
188
|
248
|
|
Non-controlling interests
|
|
-
|
-
|
|
|
|
|
|
|
Other comprehensive income:
|
|
|
|
|
Items that may be reclassified subsequently to the income
statement:
|
|
|
|
|
Re-measurement of net defined benefit liability
|
|
1
|
-
|
|
Net exchange adjustments offset in reserves
|
|
(182)
|
(18)
|
|
Net gain/(loss) on net investment hedge
|
|
165
|
(11)
|
|
Effective portion of changes in fair value of cash flow
hedge
|
|
(21)
|
6
|
|
Cost of hedging
|
|
(1)
|
(2)
|
|
Tax related to items taken to other comprehensive
income
|
|
12
|
2
|
|
Other comprehensive income for the period
|
|
(26)
|
(23)
|
|
Total comprehensive income for the period
|
|
162
|
225
|
|
Total comprehensive income for the period attributable
to:
|
|
|
|
|
Equity holders of the Company
|
|
162
|
225
|
|
Non-controlling interests
|
|
-
|
-
|
|
Total comprehensive income for the period arising
from:
|
|
|
|
|
Continuing operations
|
|
119
|
214
|
|
Discontinued operations
|
6
|
43
|
11
|
|
|
|
162
|
225
|
|
Earnings per share for profit from continuing operations
attributable to the Company's equity holders:
|
|
|
|
Basic (cents)
|
6.49
|
9.09
|
|
Diluted (cents)
|
6.47
|
9.06
|
|
Earnings per share attributable to the Company's equity
holders:
|
|
|
|
Basic (cents)
|
7.44
|
9.85
|
|
Diluted (cents)
|
7.41
|
9.81
|
1. With effect from 1 January 2025 the Group changed its
presentation currency from sterling to US dollar. All comparatives
from 2024 have been represented in US dollar (see Note 2).
Comparatives have also been represented following the announcement
of the intention to sell the France Workwear operations (see Note
6).
The weighted average number of ordinary shares in issue is 2,522m
(30 June 2024: 2,521m). For the diluted EPS calculation the
adjustment for share options and LTIPs is 9m (30 June 2024:
9m).
Consolidated Balance Sheet
|
|
Note
|
Unaudited
At 30 June2025
$m
|
Unaudited
At 31 December 2024
$m
|
|
Assets
|
|
|
|
|
Non-current assets
|
|
|
|
|
Intangible assets
|
|
8,957
|
8,899
|
|
Property, plant and equipment
|
|
434
|
628
|
|
Right-of-use assets
|
|
584
|
577
|
|
Investments in associated undertakings
|
|
54
|
46
|
|
Other investments
|
|
26
|
26
|
|
Deferred tax assets
|
5
|
51
|
43
|
|
Contract costs
|
|
296
|
298
|
|
Retirement benefit assets
|
|
12
|
4
|
|
Trade and other receivables
|
|
59
|
71
|
|
Derivative financial instruments
|
11
|
113
|
8
|
|
Total non-current assets
|
|
10,586
|
10,600
|
|
Current assets
|
|
|
|
|
Other investments
|
|
2
|
1
|
|
Inventories
|
|
281
|
287
|
|
Trade and other receivables
|
|
1,180
|
1,137
|
|
Current tax assets
|
|
14
|
28
|
|
Derivative financial instruments
|
11
|
68
|
-
|
|
Cash and cash equivalents
|
|
1,689
|
1,158
|
|
Total current assets excluding assets classified as held for
sale
|
|
3,234
|
2,611
|
|
Assets classified as held for sale
|
6
|
413
|
-
|
|
Total current assets
|
|
3,647
|
2,611
|
|
Liabilities
|
|
|
|
|
Current liabilities
|
|
|
|
|
Trade and other payables
|
|
(1,371)
|
(1,400)
|
|
Current tax liabilities
|
|
(54)
|
(53)
|
|
Provisions for liabilities and charges
|
13
|
(158)
|
(144)
|
|
Bank and other short-term borrowings
|
|
(1,309)
|
(1,460)
|
|
Lease liabilities
|
|
(166)
|
(163)
|
|
Derivative financial instruments
|
11
|
(7)
|
(4)
|
|
Total current liabilities excluding liabilities classified as held
for sale
|
|
(3,065)
|
(3,224)
|
|
Liabilities classified as held for sale
|
6
|
(202)
|
-
|
|
Total current liabilities
|
|
(3,267)
|
(3,224)
|
|
Non-current liabilities
|
|
|
|
|
Other payables
|
|
(64)
|
(86)
|
|
Bank and other long-term borrowings
|
|
(4,178)
|
(3,127)
|
|
Lease liabilities
|
|
(388)
|
(394)
|
|
Deferred tax liabilities
|
5
|
(598)
|
(638)
|
|
Retirement benefit obligations
|
|
(31)
|
(32)
|
|
Provisions for liabilities and charges
|
13
|
(404)
|
(381)
|
|
Derivative financial instruments
|
11
|
(36)
|
(36)
|
|
Total non-current liabilities
|
|
(5,699)
|
(4,694)
|
|
Net assets
|
|
5,267
|
5,293
|
|
Equity
|
|
|
|
|
Capital and reserves attributable to the Company's equity
holders
|
|
|
|
|
Share capital
|
|
41
|
41
|
|
Share premium
|
|
20
|
20
|
|
Other reserves
|
|
(971)
|
(932)
|
|
Retained earnings
|
|
6,179
|
6,166
|
|
|
|
5,269
|
5,295
|
|
Non-controlling interests
|
|
(2)
|
(2)
|
|
Total equity
|
|
5,267
|
5,293
|
Consolidated Statement of Changes in Equity
|
|
Attributable to equity holders of the Company
|
|
|
|||
|
|
Share capital
$m
|
Share premium
$m
|
Other reserves
$m
|
Retained earnings
$m
|
Non-controlling interests
$m
|
Total equity
$m
|
|
At 1 January 2024
|
41
|
19
|
(903)
|
6,053
|
(2)
|
5,208
|
|
Profit for the period
|
-
|
-
|
-
|
248
|
-
|
248
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
Net exchange adjustments offset in reserves
|
-
|
-
|
(18)
|
-
|
-
|
(18)
|
|
Net loss on net investment hedge
|
-
|
-
|
(11)
|
-
|
-
|
(11)
|
|
Net gain on cash flow hedge1
|
-
|
-
|
6
|
-
|
-
|
6
|
|
Cost of hedging
|
-
|
-
|
(2)
|
-
|
-
|
(2)
|
|
Tax related to items taken directly to other comprehensive
income
|
-
|
-
|
-
|
2
|
-
|
2
|
|
Total comprehensive income for the period
|
-
|
-
|
(25)
|
250
|
-
|
225
|
|
Transactions with owners:
|
|
|
|
|
|
|
|
Dividends paid to equity shareholders
|
-
|
-
|
-
|
(186)
|
-
|
(186)
|
|
Cost of equity-settled share-based payment plans
|
-
|
-
|
-
|
14
|
-
|
14
|
|
Tax related to items taken directly to equity
|
-
|
-
|
-
|
(1)
|
-
|
(1)
|
|
At 30 June 2024 (unaudited)
|
41
|
19
|
(928)
|
6,130
|
(2)
|
5,260
|
|
At 1 January 2025
|
41
|
20
|
(932)
|
6,166
|
(2)
|
5,293
|
|
Profit for the period
|
-
|
-
|
-
|
188
|
-
|
188
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
Remeasurement of net defined benefit liability
|
-
|
-
|
-
|
1
|
-
|
1
|
|
Net exchange adjustments offset in reserves
|
-
|
-
|
(182)
|
-
|
-
|
(182)
|
|
Net gain on net investment hedge
|
-
|
-
|
165
|
-
|
-
|
165
|
|
Net loss on cash flow hedge1
|
-
|
-
|
(21)
|
-
|
-
|
(21)
|
|
Cost of hedging
|
-
|
-
|
(1)
|
-
|
-
|
(1)
|
|
Tax related to items taken directly to other comprehensive
income
|
-
|
-
|
-
|
12
|
-
|
12
|
|
Total comprehensive income for the period
|
-
|
-
|
(39)
|
201
|
-
|
162
|
|
Transactions with owners:
|
|
|
|
|
|
|
|
Dividends paid to equity shareholders
|
-
|
-
|
-
|
(198)
|
-
|
(198)
|
|
Cost of equity-settled share-based payment plans
|
-
|
-
|
-
|
12
|
-
|
12
|
|
Tax related to items taken directly to equity
|
-
|
-
|
-
|
(3)
|
-
|
(3)
|
|
Movement in the carrying value of put options
|
-
|
-
|
-
|
1
|
-
|
1
|
|
At 30 June 2025 (unaudited)
|
41
|
20
|
(971)
|
6,179
|
(2)
|
5,267
|
1. $21m net loss (2024: $6m net gain) on cash flow hedge includes a
$44m gain (2024: $45m loss) from the effective portion of changes
in fair value and a $65m loss (2024: $51m gains) reclassification
to the income statement due to changes in foreign exchange
rates.
Shares of $nil (2024: $nil) have been netted against retained
earnings. This represents 10.3m (2024: 11.9m) shares held by the
Rentokil Initial Employee Share Trust. The market value of these
shares at 30 June 2025 was $50m (2024: $69m). Dividend income from,
and voting rights on, the shares held by the Trust have been
waived.
Consolidated Statement of Changes in Equity
(continued)
Analysis of other reserves
|
|
Capital reduction reserve
$m
|
Merger relief reserve
$m
|
Cash flow hedge reserve
$m
|
Translation reserve
$m
|
Cost of hedging
$m
|
Total
$m
|
|
At 1 January 2024
|
(3,146)
|
3,327
|
9
|
(1,099)
|
6
|
(903)
|
|
Net exchange adjustments offset in reserves
|
-
|
-
|
-
|
(18)
|
-
|
(18)
|
|
Net loss on net investment hedge
|
-
|
-
|
-
|
(11)
|
-
|
(11)
|
|
Net gain on cash flow hedge1
|
-
|
-
|
6
|
-
|
-
|
6
|
|
Cost of hedging
|
-
|
-
|
-
|
-
|
(2)
|
(2)
|
|
Total comprehensive income for the period
|
-
|
-
|
6
|
(29)
|
(2)
|
(25)
|
|
At 30 June 2024 (unaudited)
|
(3,146)
|
3,327
|
15
|
(1,128)
|
4
|
(928)
|
|
At 1 January 2025
|
(3,146)
|
3,327
|
44
|
(1,156)
|
(1)
|
(932)
|
|
Net exchange adjustments offset in reserves
|
-
|
-
|
-
|
(182)
|
-
|
(182)
|
|
Net gain on net investment hedge
|
-
|
-
|
-
|
165
|
-
|
165
|
|
Net loss on cash flow hedge1
|
-
|
-
|
(21)
|
-
|
-
|
(21)
|
|
Cost of hedging
|
-
|
-
|
-
|
-
|
(1)
|
(1)
|
|
Total comprehensive income for the period
|
-
|
-
|
(21)
|
(17)
|
(1)
|
(39)
|
|
At 30 June 2025 (unaudited)
|
(3,146)
|
3,327
|
23
|
(1,173)
|
(2)
|
(971)
|
1. $21m net loss (2024: $6m net gain) on cash flow hedge includes a
$44m gain (2024: $45m loss) from the effective portion of changes
in fair value and a $65m loss (2024: $51m gains) reclassification
to the income statement due to changes in foreign exchange
rates.
Consolidated Cash Flow Statement
|
|
Note
|
6 months to
30 June 2025
$m
|
6 months to
30 June 2024
$m
|
|
Cash flows from operating activities
|
|
|
|
|
Operating profit from:
|
|
|
|
|
- Continuing operations
|
|
304
|
380
|
|
- Discontinued operations
|
6
|
35
|
27
|
|
Operating profit including discontinued operations
|
|
339
|
407
|
|
Adjustments for:
|
|
|
|
|
- Depreciation and impairment of property, plant and
equipment
|
|
95
|
98
|
|
- Depreciation and impairment of leased assets
|
|
80
|
79
|
|
- Amortisation and impairment of intangible assets (excluding
computer software)
|
|
97
|
110
|
|
- Amortisation and impairment of computer software
|
|
18
|
16
|
|
- Other non-cash items
|
|
13
|
17
|
|
Changes in working capital (excluding the effects of acquisitions
and exchange differences on consolidation):
|
|
|
|
|
- Inventories
|
|
2
|
7
|
|
- Contract costs
|
|
(9)
|
(7)
|
|
- Trade and other receivables
|
|
(47)
|
(89)
|
|
- Trade and other payables and provisions
|
|
34
|
(75)
|
|
Interest received
|
|
81
|
24
|
|
Interest paid1
|
|
(188)
|
(156)
|
|
Income tax paid
|
5
|
(46)
|
(39)
|
|
Net cash flows from operating activities
|
|
469
|
392
|
|
Cash flows from investing activities
|
|
|
|
|
Purchase of property, plant and equipment
|
|
(108)
|
(106)
|
|
Purchase of intangible fixed assets
|
|
(28)
|
(27)
|
|
Proceeds from sale of property, plant and equipment
|
|
1
|
2
|
|
Acquisition of companies and businesses, net of cash
acquired
|
8
|
(70)
|
(96)
|
|
Net cash flows from investing activities
|
|
(205)
|
(227)
|
|
Cash flows from financing activities
|
|
|
|
|
Dividends paid to equity shareholders
|
7
|
(198)
|
(186)
|
|
Capital element of lease payments
|
|
(94)
|
(91)
|
|
Cash inflow/(outflow) on settlement of debt-related foreign
exchange forward contracts
|
|
30
|
(8)
|
|
Proceeds from new debt
|
|
1,232
|
-
|
|
Debt repayments
|
|
(700)
|
(5)
|
|
Net cash flows from financing activities
|
|
270
|
(290)
|
|
Net increase/(decrease) in cash and cash equivalents
|
|
534
|
(125)
|
|
Cash and cash equivalents at beginning of period
|
|
467
|
1,062
|
|
Exchange gain/(loss) on cash and cash equivalents
|
|
26
|
(31)
|
|
Cash and cash equivalents at end of the financial
period
|
|
1,027
|
906
|
1. Interest paid includes the interest element of lease payments of
$15m (2024: $16m).
Explanatory notes to the unaudited interim financial
statements
1. General information
The Company is a public limited company incorporated in England and
Wales and domiciled in the UK with listings on the London Stock
Exchange and the New York Stock Exchange. The address of its
registered office is Rentokil Initial plc, Compass House, Manor
Royal, Crawley, West Sussex, RH10 9PY.
The consolidated half-yearly financial information for the
half-year to 30 June 2025 was approved on 30 July 2025 for issue on
31 July 2025.
On page 83 and 84 of the 2024 Annual Report we set out the Group's
approach to risk management and on pages 85 to 89 we define the
principal risks that are most relevant to the Group. These risks
are described in detail and have mitigating actions assigned to
each of them. In our view the principal risks remain unchanged from
those indicated in the Annual Report 2024. A summary of the risks
is laid out in the table below:
|
Principal risk
|
Summary of risk
|
|
Failure to integrate acquisitions and execute disposals from
continuing business
|
The Group has a strategy that includes growth by acquisition, and
has acquired 18 businesses in H1 2025. These companies need to be
integrated quickly and efficiently to minimise potential impact on
the acquired business and the existing business.
|
|
Failure to develop products and services that are tailored and
relevant to local markets and market conditions
|
The Group operates across markets that are at different stages in
the economic cycle, at varying stages of market development and
have different levels of market attractiveness. We must be
sufficiently agile to develop and deliver products and services
that meet local market needs which allows us to meet our growth
objectives and stay ahead in a highly competitive
industry.
|
|
Failure to grow our business profitably in a changing
macro-economic environment
|
The Group's two core categories (Pest Control and Hygiene &
Wellbeing) operate in a global macro-economic environment that is
subject to uncertainty and volatility.
|
|
Failure to mitigate against financial market risks
|
Our business is exposed to foreign exchange risk, interest rate
risk, liquidity risk, counterparty risk and settlement
risk.
|
|
Breaches of laws or regulations (including tax, competition and
anti-trust laws)
|
As a responsible company we aim to comply with all laws and
regulations that apply to our businesses across the
globe.
|
|
Failure to ensure business continuity in case of a material
incident
|
The Group needs to have resilience to ensure business can continue
if impacted by external events, e.g. cyber attack, hurricane or
terrorism.
|
|
Fraud, financial crime and loss or unintended release of personal
data
|
Collusion between individuals, both internal and external, could
result in fraud if internal controls are not in place and working
effectively. The business holds personal data on colleagues, some
customers and suppliers; unintended loss or release of such data
may result in sanctions, fines and reputational risk.
|
|
Safety, health and the environment (SHE) and
sustainability
|
The Company is responsible for minimising its environmental impact
and ensuring the health and safety of its employees, customers, and
other stakeholders in the workplace.
|
|
Failure to deliver consistently high levels of service to the
satisfaction of our customers
|
Our business model depends on servicing the needs of our customers
in line with internal high standards and to levels agreed in
contracts.
|
These interim financial results do not comprise statutory accounts
within the meaning of Section 435 of the Companies Act 2006, and
should be read in conjunction with the Annual Report 2024. Those
accounts have been audited and delivered to the registrar of
companies. The report of the auditor was unqualified, did not
include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their report and
did not contain statements under section 498(2) or (3) of the
Companies Act 2006.
For all information relating to 2024 results please refer to the
Annual Report 2024 which can be accessed here:
https://www.rentokil-initial.com/investors/annual-reports.aspx
2. Basis of preparation
The condensed consolidated financial statements have been prepared
in accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority and in accordance with IAS 34 Interim
Financial Reporting as contained in UK-adopted international
accounting standards. The condensed consolidated financial
statements should be read in conjunction with the annual financial
statements for the year ended 31 December 2024 which have been
prepared in accordance with UK-adopted International Accounting
Standards and with the requirements of the Companies Act 2006 as
applicable to companies reporting under those standards. The annual
financial statements for the year ended 31 December 2024 and the
condensed consolidated financial statements also comply fully with
International Financial Reporting Standards (IFRSs) as issued by
the International Accounting Standards Board (IASB).
Going concern
The Directors have prepared Board-approved cash flow forecasts that
demonstrate that the Group has sufficient liquidity to meet its
obligations as they fall due for the period of at least 12 months
from the date of approval of these Financial
Statements.
Additionally, the Directors have assessed a severe but plausible
downside scenario. The downside scenario includes a 20% revenue
decline for 12 months which is considerably worse than the actual
impact of the COVID-19 pandemic in 2020. Following the issuance of
$1.25bn bonds in H1 to finance the $700m Term Loan maturity,
headroom increased to approximately $1.9bn (excluding c.$100m of
cash subject to exchange controls) at June 2025. In the downside
scenario, the minimum headroom modelled was approximately $1.1bn
(excluding c.$100m of cash subject to exchange controls) before the
inclusion of mitigating actions (adjusting the level of M&A
activity, and/or dividends paid) which are all within the Group's
control and were used during the COVID-19 pandemic.
The Directors have therefore concluded that the Group will have
sufficient liquidity to continue to meet its liabilities as they
fall due for this period and therefore have prepared the
Consolidated Financial Statements on a going concern
basis.
Foreign currency translation
The results and financial position of Group entities are translated
into the presentation currency using the following rates for key
currencies.
GBP balances were translated at a closing GBP/USD rate of 0.7290
(June 2024: 0.7915) and an average GBP/USD rate of 0.7706 (June
2024: 0.7900).
EUR balances were translated at a closing EUR/USD rate of 0.8497
(June 2024: 0.9338), and an average EUR/USD rate of 0.9183 (June
2024: 0.9242).
Change in presentation currency
On 25 July 2024, the Group announced that with effect from 1
January 2025 it would be changing its presentation currency from
sterling to US dollar. Within the Group's current portfolio of
businesses, sterling denominated earnings, while sizeable, are a
relatively small proportion of overall earnings. To reduce the
potential for foreign exchange volatility in our future reported
earnings, the Board determined that, with effect from 1 January
2025, the Group will present its results in US dollar.
Accordingly, to satisfy the requirements of IAS
21 The
Effects of Changes in Foreign Exchange Rates, the reported results for the periods ended
30 June 2024, 31 December 2024 and 30 June 2025 have been
translated from sterling to US dollar using the following
procedures:
|
●
|
assets and liabilities denominated in non-US dollar currencies were
translated into US dollar at the relevant closing rates of
exchange;
|
|
●
|
the trading results of subsidiaries whose functional currency was
other than US dollar were translated into US dollar at the average
rates of exchange for the relevant period, with material items
translated at the rate on the dates of transaction;
|
|
●
|
share capital, share premium, capital reduction reserve, and merger
relief reserve were translated at the historic rates prevailing on
the date of each transaction; and
|
|
●
|
the cumulative translation reserve balance was set to nil on 1
January 2004, the date of transition to IFRS, and has been
represented on the basis that the Group has reported in US dollar
since that date.
|
A change in presentation currency represents a change in accounting
policy under IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors which is accounted for retrospectively. The
£/$ rates used for this exercise are: average FY2024 1.2773,
HY2024 1.2658; and closing FY2024 1.2519, HY2024
1.2635.
3. Accounting policies
The Group makes estimates and assumptions concerning the future.
Estimates and assumptions are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates and
revisions to estimates are recognised prospectively. Sensitivities
to the estimates and assumptions are provided, where relevant, in
the notes to the financial statements.
The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are listed
below:
|
●
|
Termite damage claim provisions - Note 13
|
Further detail can be found in the Annual Report 2024.
Significant seasonal or cyclical variations in the Group's total
revenues are not experienced during the financial
year.
Changes in accounting policies
Except as described below, the accounting policies applied in these
interim financial statements are the same as those applied in the
Group's consolidated financial statements as at and for the year
ended 31 December 2024. The changes in accounting policies are also
expected to be reflected in the Group's consolidated financial
statements as at and for the year ending 31 December
2025.
The Group has adopted the following new standards and amendments to
standards, including any consequential amendments to other
standards, with effect from 1 January 2025:
|
●
|
Amendments to IAS 21 - Lack of exchangeability
|
The application of this amendments has had no material impact on
the disclosures of the amounts recognised in the Group's
consolidated financial statements. Consequently, no adjustment has
been made to the comparative financial information. The Group has
not early adopted any standard, interpretation or amendment that
was issued but is not yet effective.
4. Segmental information
Segment reporting
Segmental information has been presented in accordance with IFRS 8
Operating Segments below. The Group's reporting segments are
regions and this reflects management reporting structures and the
way information is reviewed by the Chief Operating Decision Maker
(CODM) (the Chief Executive). The businesses within each reporting
segment operate in a number of different countries and sell
services across two business segments with the Workwear segment
currently held as a discontinued operation (see Note
6).
Following the acquisition of Terminix, the majority of the Group's
activity is in North America. With effect from 1 January 2025, the
Group's reporting structure has been changed to combine Europe
incl. LATAM, UK & SSA, Pacific and Asia & MENAT regions
into a single reporting segment, International. The Chief Executive
remains as CODM and reviews the results on a monthly basis for
North America and International segments. All reporting to the
Board is also done on this basis. Comparative segmental financial
information for 2024 has been represented.
Disaggregated revenue under IFRS 15 is the same as the segmental
analysis presented below. Restructuring costs, one-off and
adjusting items, amortisation and impairment of intangible assets
(excluding computer software), and central and regional costs are
presented at a Group level as they are not targeted or managed at
reportable segment level. The basis of presentation is consistent
with the information reviewed by management.
Revenue and profit from continuing operations
|
Continuing operations
|
Revenue
30 June 2025
$m
|
Revenue
30 June 2024
$m
|
Operatingprofit
30 June 2025
$m
|
Operatingprofit
30 June 2024
$m
|
|
North America
|
|
|
|
|
|
Pest Control
|
2,044
|
2,007
|
348
|
377
|
|
Hygiene & Wellbeing
|
62
|
60
|
8
|
8
|
|
|
2,106
|
2,067
|
356
|
385
|
|
International
|
|
|
|
|
|
Pest Control
|
747
|
710
|
153
|
145
|
|
Hygiene & Wellbeing
|
504
|
482
|
89
|
86
|
|
|
1,251
|
1,192
|
242
|
231
|
|
|
|
|
|
|
|
Total
|
3,357
|
3,259
|
598
|
616
|
|
|
|
|
|
|
|
Central and regional overheads
|
7
|
7
|
(85)
|
(77)
|
|
Restructuring costs
|
-
|
-
|
(2)
|
(2)
|
|
Revenue and Adjusted Operating Profit
|
3,364
|
3,266
|
511
|
537
|
|
One-off and adjusting items
|
|
|
(110)
|
(47)
|
|
Amortisation and impairment of intangible assets
|
|
|
(97)
|
(110)
|
|
Operating profit
|
|
|
304
|
380
|
Analysis of revenue by type
|
Continuing operations
|
Revenue
30 June 2025
$m
|
Revenue
30 June 2024
$m
|
|
Contract service revenue
|
2,371
|
2,312
|
|
Job work
|
730
|
705
|
|
Sales of goods
|
263
|
249
|
|
Total
|
3,364
|
3,266
|
Other segment items included in the consolidated income statement
are as follows:
|
Continuing operations
|
Amortisation andimpairment of intangibles
30 June 2025
$m
|
Amortisation andimpairment of intangibles
30 June 2024
$m
|
|
North America
|
66
|
74
|
|
International
|
26
|
31
|
|
Central and regional
|
5
|
5
|
|
Total
|
97
|
110
|
5. Income tax expense
Analysis of charge in the period for continuing
operations:
|
|
6 months to
30 June 2025
$m
|
6 months to
30 June 2024
$m
|
|
UK corporation tax at 25.0% (2024: 25.0%)
|
4
|
5
|
|
Overseas taxation
|
52
|
53
|
|
Adjustments in respect of prior periods
|
(1)
|
8
|
|
Total current tax
|
55
|
66
|
|
|
|
|
|
Deferred tax expense
|
(3)
|
8
|
|
Adjustments in respect of prior periods
|
-
|
(9)
|
|
Total deferred tax
|
(3)
|
(1)
|
|
Total income tax expense
|
52
|
65
|
|
|
|
|
|
Income tax expense for discontinued operations
|
9
|
7
|
The tax charge for the period has been calculated by applying the
effective tax rate which is expected to apply to the Group for the
year ended 31 December 2025 using rates substantively enacted by 30
June 2025. A separate effective income tax rate has been calculated
for each jurisdiction in which the Group operates, applied to the
pre-tax profits for the interim period. The following tax
disclosures and rates are presented in respect of continuing
operations.
The reported tax rate for the period was 24.2% (June 2024: 22.0%).
The Group's Adjusted Effective Tax Rate (ETR) before amortisation
of intangible assets (excluding computer software), one-off items
and the net interest adjustments for the period was 25.0% (June
2024: 23.1%). This compares with a blended rate of tax for the
countries in which the Group operates of 25.2% (June 2024:
25.3%).
Total uncertain tax positions (including interest thereon) amounted
to $45m as at 30 June 2025 (December 2024: $44m). Included within
this amount is $6m (December 2024: $6m) in respect of interest
arising on tax provisions, which is included within other
payables.
Total tax payments for the period amounted to $43m (June 2024:
$36m), an increase of $7m.
The Group is subject to Pillar 2 which aims to ensure all Group
profits are taxed in each jurisdiction at a minimum rate of 15%.
The additional top up tax charge for the Group is not expected to
be significant, and for H1 2025 the top up charge is expected to be
less than $1m (June 2024: less than $1m).
The movement on the deferred income tax account is as
follows:
|
|
6 months to
30 June 2025
$m
|
6 months to
30 June 2024
$m
|
|
At 1 January
|
(597)
|
(604)
|
|
Exchange differences
|
(5)
|
3
|
|
Acquisitions of companies and businesses
|
(2)
|
(10)
|
|
Charged to the income statement
|
-
|
(1)
|
|
Credited/(charged) to other comprehensive income
|
12
|
(1)
|
|
Charged to equity
|
(3)
|
(1)
|
|
At 30 June
|
(595)
|
(614)
|
|
|
|
|
|
Deferred taxation for continuing operations has been presented on
the balance sheet as follows:
|
|
|
|
Deferred tax asset within non-current assets
|
51
|
61
|
|
Deferred tax liability within non-current liabilities
|
(598)
|
(675)
|
|
|
(547)
|
(614)
|
|
|
|
|
|
Deferred taxation for discontinued operations has been presented on
the balance sheet as follows:
|
|
|
|
Deferred tax liability within liabilities classified as held for
sale
|
(48)
|
-
|
|
|
(48)
|
-
|
A deferred tax asset of $48m has been recognised in respect of
losses (December 2024: $51m), of which $34m (December 2024: $38m)
relates to UK losses carried forward at 30 June 2025. This amount
has been calculated by estimating the future UK taxable profits,
against which the UK tax losses will be utilised, progressively
risk weighted, and applying the tax rates (substantively enacted as
at the balance sheet date) applicable for each year. Deferred tax
is fully recognised on UK tax losses (excluding capital losses) as
at 30 June 2025 as it is considered probable that future taxable
profits will be available against which the tax losses can be
offset.
At the balance sheet date the Group had tax losses of $329m
(December 2024: $303m) on which no deferred tax asset is recognised
because it is not considered probable that future taxable profits
will be available in certain jurisdictions to be able to benefit
from those tax losses.
On 4 July 2025, the "One Big Beautiful Bill Act" (OBBBA) was signed
by President Trump, making significant changes to US federal tax
policy. The Group is still evaluating the impact of this bill and
currently does not anticipate any material impact on its post tax
earnings.
6. Discontinued operations
On 28 May 2025, the Group announced that it has entered into an
agreement for the intended sale of its Workwear business in France
with H.I.G. Capital (the 'proposed transaction'), for which
approval was granted by the European Commission on 25 July
2025.
The proposed transaction values France Workwear at a gross
enterprise value of approximately €410m (c.$465m), on a
cash-free, debt-free basis, including an earn-out mechanism with a
maximum value of €30m (c.$34m), linked to the performance of
the business in 2026. Total net cash proceeds are expected to be
approximately €370m (c.$420m), subject to customary closing
adjustments and the final earn-out outcome. Completion of the
proposed transaction is expected to occur in Q4 2025.
Financial information relating to the discontinued operations for
the period is set out below:
|
|
|
Unaudited
6 months to
30 June 2025
$m
|
Unaudited
6 months to
30 June2024
$m
|
|
Revenue
|
|
168
|
159
|
|
Operating expenses
|
|
(133)
|
(131)
|
|
Net impairment losses on financial assets
|
|
-
|
(1)
|
|
Operating profit
|
|
35
|
27
|
|
Finance cost
|
|
(2)
|
(1)
|
|
Profit before income tax
|
|
33
|
26
|
|
Income tax expense
|
|
(9)
|
(7)
|
|
Profit from discontinued operations
|
|
24
|
19
|
|
Profit for the period attributable to:
|
|
|
|
|
Equity holders of the Company
|
|
24
|
19
|
|
Non-controlling interests
|
|
-
|
-
|
|
Other comprehensive income:
|
|
|
|
|
Items that may be reclassified subsequently to the income
statement:
|
|
|
|
|
Net exchange adjustments offset in reserves
|
|
19
|
(8)
|
|
Other comprehensive income for the period
|
|
19
|
(8)
|
|
Total comprehensive income for the period
|
|
43
|
11
|
|
Total comprehensive income for the period attributable
to:
|
|
|
|
|
Equity holders of the Company
|
|
43
|
11
|
|
Non-controlling interests
|
|
-
|
-
|
|
|
|
|
|
|
Earnings per share attributable to the Company's equity
holders:
|
|
|
|
|
Basic (cents)
|
|
0.95
|
0.76
|
|
Diluted (cents)
|
|
0.94
|
0.75
|
|
Net cash generated from operating activities
|
57
|
55
|
|
Net cash flows from investing activities
|
(47)
|
(44)
|
|
Net cash flows from financing activities
|
(4)
|
(4)
|
|
Net increase in cash generated by discontinued
operations
|
6
|
7
|
A non-current asset or a disposal group is classified as held for
sale if its carrying amount will be recovered principally through
sale rather than through continuing use, it is available for
immediate sale, and sale is highly probable within one
year.
On initial classification as held for sale, non-current assets and
disposal groups are measured at the lower of previous carrying
amount and fair value less costs to sell with any adjustments taken
to profit or loss, with the exception of inventories, financial
assets, deferred tax assets and employee benefit assets, which
continue to be measured in accordance with the Group's accounting
policies. There were no impairments to the disposal group in the
period to 30 June 2025. Intangible assets and property, plant and
equipment once classified as held for sale or distribution are not
amortised or depreciated.
Net assets of disposal group held for sale
|
|
At 30 June 2025
$m
|
|
Assets held for sale
|
|
|
Intangible assets
|
7
|
|
Property, plant and equipment
|
265
|
|
Right-of-use assets
|
21
|
|
Contract costs
|
20
|
|
Inventories
|
12
|
|
Trade and other receivables
|
75
|
|
Cash and cash equivalents
|
13
|
|
|
413
|
|
Liabilities held for sale
|
|
|
Trade and other payables
|
(109)
|
|
Lease liabilities
|
(21)
|
|
Deferred and current tax
|
(54)
|
|
Retirement benefit obligations
|
(7)
|
|
Provisions
|
(11)
|
|
|
(202)
|
|
Net assets held for sale
|
211
|
The cumulative foreign exchange losses recognised in other
comprehensive income in relation to the discontinued operation as
at 30 June 2025 were $48m.
7. Dividends
Dividend distribution to the Company's shareholders is recognised
as a liability in the Group's financial statements in the period in
which the dividends are approved by the Company's shareholders.
Interim dividends are recognised when paid.
|
|
6 months to
30 June 2025
$m
|
6 months to
30 June 2024
$m
|
|
2023 final dividend paid - 7.41 cents per share1
|
-
|
186
|
|
2024 final dividend paid - 7.91 cents per share1
|
198
|
-
|
|
Total
|
198
|
186
|
1. Represented at exchange rate prevailing at AGM's date (2024 -
5.93 pence per share; 2023 - 5.93 pence per share)
The directors have declared an interim dividend of 4.15 cents per
share amounting to $105m payable on 22 September 2025 to
shareholders on the register at close of business on 15 August
2025. The last day for DRIP elections is 1 September 2025. These
interim financial statements do not reflect this dividend
payable.
8. Business combinations
During the period the Group purchased 100% of the share capital or
trade and assets of 18 companies and businesses (2024: 23). An
overview of the acquisitions in the year can be found under the
'Good contributions from Bolt-on M&A' heading. The Group
acquires companies and businesses as part of its growth
strategy.
The total consideration in respect of these acquisitions was $68m
(2024: $143m). The provisional fair values of assets and
liabilities arising from acquisitions will be finalised within 12
months of the dates of acquisition.
Details of goodwill and the provisional fair value of net assets
acquired in the period are as follows:
|
|
6 months to
30 June 2025
$m
|
6 months to
30 June 2024
$m
|
|
Purchase consideration
|
|
|
|
- Cash paid
|
55
|
74
|
|
- Deferred and contingent consideration
|
13
|
69
|
|
Total purchase consideration
|
68
|
143
|
|
Provisional fair value of net assets acquired
|
(19)
|
(50)
|
|
Goodwill from current-period acquisitions
|
49
|
93
|
Goodwill represents the synergies and other benefits expected to be
realised from integrating acquired businesses into the Group, such
as improved route density, expansion in use of best-in-class
digital tools and back office synergies.
Deferred consideration of $7m and contingent consideration of $6m
are payable in respect of the above acquisitions (2024: $37m and
$32m respectively). Contingent consideration is payable based on a
variety of conditions including revenue and profit targets being
met. During the period $10m (2024: $nil) of contingent
consideration liabilities were released.
The provisional fair values of assets and liabilities arising from
acquisitions in the period are as follows:
|
|
6 months to
30 June 2025
$m
|
6 months to
30 June 2024
$m
|
|
Non-current assets
|
|
|
|
- Intangible assets1
|
19
|
56
|
|
- Property, plant and equipment
|
2
|
6
|
|
Current assets
|
3
|
16
|
|
Current liabilities
|
(2)
|
(10)
|
|
Non-current liabilities
|
(3)
|
(18)
|
|
Net assets acquired
|
19
|
50
|
1. Includes $19m (2024: $51m) of customer lists and $nil (2024:
$5m) of other intangibles.
Acquired receivables are disclosed at fair value and represent the
best estimate of the contractual cash flows expected to be
collected.
From the dates of acquisition to 30 June 2025, these acquisitions
contributed $7m to revenue and $nil to operating profit (2024: $21m
and $1m respectively) for continuing operations. If the
acquisitions had occurred on 1 January 2025, the revenue and
operating profit of the Group, including discontinued operations,
would have amounted to $3,542m and $341m respectively (2024:
$3,453m and $407m respectively).
The Group paid $15m in respect of deferred and contingent
consideration for current and prior year acquisitions (2024: $23m),
resulting in the total cash outflow in the period from current and
past period acquisitions, net of $nil (2024: $1m) cash acquired, of
$70m (2024: $96m).
9. Goodwill
Goodwill represents the excess of the cost of an acquisition over
the fair value of the Group's share of the net identifiable assets
of the acquired business at the date of acquisition. It is
recognised as an intangible asset. Goodwill arising on the
acquisition of an associate is included in investments in
associates.
Goodwill is carried at cost less accumulated impairment losses and
is tested annually for impairment. For the purpose of impairment
testing, goodwill is allocated to cash-generating unit (CGU) groups
identified according to region of operation and reportable business
unit.
At the start of the period, management reviewed its grouping of
CGUs and its allocation of goodwill for the purposes of assessing
impairment based on the lowest level at which the goodwill is
monitored. Based on this review, management has determined that the
Group now has six CGU groups. These are North America, UK &
SSA, Europe, LATAM, Asia & MENAT and Pacific. The key factors
considered in management's conclusion included the change in
reporting segments to North America and International, to reflect
the high proportion of business in the US, and the subsequent
allocation of resources based on the results for each operating
segment.
Before initiating the change in CGU grouping, in accordance with
IAS 36, management performed a value-in-use impairment test on the
pre-existing CGU groups and determined there to be no impairment of
goodwill within any of the groups.
The recoverable amount of a CGU group is determined based on the
higher of value-in-use calculations using cash flow projections and
fair value less costs to sell, if appropriate. The cash flow
projections in year one are based on financial budgets approved by
the board, which are prepared as part of the Group's normal
planning process. Cash flows for years two to five use the group
expectation of sales growth, operating costs and margin, based on
past experience and expectations regarding future performance and
profitability for each CGU group. Cash flows beyond the five-year
period are extrapolated using estimated long-term growth
rates.
An assessment has been performed for all material CGU groups at the
half year to identify any possible indicators of impairment. The
assessment included a review of internal and external factors that
have the potential to significantly reduce the CGU group value. The
indicator assessment resulted in no CGU groups showing indicators
of impairment.
10. Net debt
Reconciliation of net change in cash and cash equivalents to net
debt for continuing operations:
|
|
At 30 June 2025
$m
|
At 31 December 2024
$m
|
|
Current
|
|
|
|
Cash and cash equivalents in the Consolidated Balance
Sheet
|
1,689
|
1,158
|
|
Other investments
|
2
|
1
|
|
Fair value of debt-related derivatives
|
61
|
(4)
|
|
Bank and other short-term borrowings¹
|
(1,309)
|
(1,460)
|
|
Lease liabilities
|
(166)
|
(163)
|
|
|
277
|
(468)
|
|
Non-current
|
|
|
|
Fair value of debt-related derivatives
|
77
|
(28)
|
|
Bank and other long-term borrowings²
|
(4,178)
|
(3,127)
|
|
Lease liabilities
|
(388)
|
(394)
|
|
|
(4,489)
|
(3,549)
|
|
Total net debt
|
(4,212)
|
(4,017)
|
1. Bank and other short-term borrowings consists of $588m bond debt
(2024: $nil), $677m overdraft (2024: $693m), $28m loans (2024:
$719m) and $16m bond accruals (2024: $48m).
2. Bank and other long-term borrowings consists of $4,176m bond
debt (2024: $3,122m) and $2m loans (2024: $5m).
Fair value is equal to carrying value for all elements of net debt
with the exception of bond debt which has a carrying value of
$4,764m (December 2024: $3,122m) and a fair value of $4,822m
(December 2024: $3,104m).
Cash at bank and in hand includes $24m (December 2024: $20m) of
restricted cash. This cash is held in respect of specific contracts
and can only be utilised in line with terms under the contractual
arrangements.
11. Derivative financial instruments
All financial instruments held at fair value are classified by
reference to the source of inputs used to derive the fair value.
The following hierarchy is used:
|
Level 1 -
|
unadjusted quoted prices in active markets for identical assets or
liabilities;
|
|
Level 2 -
|
inputs other than quoted prices that are observable for the asset
or liability either directly as prices or indirectly through
modelling based on prices; and
|
|
Level 3 -
|
inputs for the asset or liability that are not based on observable
market data.
|
|
Financial instrument
|
Hierarchy level
|
Valuation method
|
|
Financial assets traded in active markets
|
1
|
Current bid price
|
|
Financial liabilities traded in active markets
|
1
|
Current ask price
|
|
Listed bonds
|
1
|
Quoted market prices
|
|
Money market funds
|
1
|
Quoted market prices
|
|
Interest rate/currency swaps
|
2
|
Discounted cash flow based on market swap rates
|
|
Forward foreign exchange contracts
|
2
|
Forward exchange market rates
|
|
Borrowings not traded in active markets (term loans and uncommitted
facilities)
|
2
|
Nominal value
|
|
Money market deposits
|
2
|
Nominal value
|
|
Trade payables and receivables
|
2
|
Nominal value less estimated credit adjustments
|
|
Contingent consideration (including put option
liability)
|
3
|
Discounted cash flow using WACC
|
|
|
Fair value assets
30 June 2025
$m
|
Fair value assets
31 December 2024
$m
|
Fair value liabilities
30 June 2025
$m
|
Fair value liabilities
31 December 2024
$m
|
|
Interest rate swaps (level 2):
|
|
|
|
|
|
- cash flow hedge
|
16
|
29
|
(22)
|
(24)
|
|
- net investment hedge
|
168
|
1
|
(6)
|
(34)
|
|
- fair value hedge
|
-
|
-
|
(25)
|
-
|
|
Foreign exchange swaps (level 2):
|
|
|
|
|
|
- non-hedge
|
8
|
-
|
(1)
|
(4)
|
|
|
192
|
30
|
(54)
|
(62)
|
|
Analysed as follows:
|
|
|
|
|
|
Current portion
|
71
|
-
|
(10)
|
(4)
|
|
Non-current portion
|
121
|
30
|
(44)
|
(58)
|
|
Derivative financial instruments
|
192
|
30
|
(54)
|
(62)
|
|
|
|
|
|
|
|
Contingent consideration (including put option liability) (level
3)1
|
(83)
|
(107)
|
||
|
Analysed as follows:
|
|
|
|
|
|
Current portion
|
|
|
(47)
|
(43)
|
|
Non-current portion
|
|
|
(36)
|
(64)
|
|
Other payables
|
|
|
(83)
|
(107)
|
1. Contingent consideration includes put option liability of $31m
(December 2024: $33m).
Certain interest rate swaps have been bifurcated to manage
different foreign exchange risks. The interest rate swaps are shown
on the balance sheet as net derivative assets of $181m (December
2024: $8m) and net derivative liabilities $43m (December 2024:
$40m).
Given the volume of acquisitions and the variety of inputs to the
valuation of contingent consideration (depending on each
transaction) there is not considered to be any change in input that
would have a material impact on the contingent consideration
liability.
|
|
Contingent
consideration
30 June 2025
$m
|
Contingent
consideration
30 June 2024
$m
|
|
At 1 January
|
94
|
97
|
|
Exchange differences
|
4
|
(2)
|
|
Acquisitions
|
7
|
32
|
|
Payments
|
(11)
|
(19)
|
|
Unused amounts reversed
|
(10)
|
-
|
|
Revaluation of put option through equity
|
(1)
|
(1)
|
|
|
83
|
107
|
Fair value is equal to carrying value for all other trade and other
payables.
12. Analysis of bank and bond debt
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are classified as current
liabilities unless the Group has a continuing right to defer
settlement of the liability for at least 12 months after the
balance sheet date.
The Group's bank debt comprises:
|
|
Facility amount at
30 June 2025
$m
|
Drawn at period end
at 30 June 2025
$m
|
Headroom
at 30 June 2025
$m
|
Interest rateat period end
at 30 June
2025%
|
|
Non-current
|
|
|
|
|
|
$1.0bn RCF due October 2029
|
1,000
|
-
|
1,000
|
0.14
|
|
|
Facility amount
at 31 December 2024
$m
|
Drawn at period end
at 31 December 2024
$m
|
Headroom
at 31 December 2024
$m
|
Interest rateat period end
at 31 December 2024
%
|
|
Current
|
|
|
|
|
|
$700m term loan due October 2025
|
700
|
700
|
-
|
5.94
|
|
Non-current
|
|
|
|
|
|
$1.0bn RCF due October 2029
|
1,000
|
-
|
1,000
|
0.14
|
The Group has a committed $1.0bn revolving credit facility (RCF)
which is available for cash drawings up to $1.0bn. The maturity
date is October 2029. As at 30 June 2025 the facility was undrawn
(2024: undrawn).
During April 2025, the Group issued new bonds totalling $1.25bn,
consisting of $750m due 2030 and $500m due 2035. Part of proceeds
was used to settle the $700m term loan.
Medium-term notes and bond debt comprises:
|
|
Bond interest
coupon
2025
|
Effective hedged
interest rate
2025
|
|
Current
|
|
|
|
€500m bond due May 2026
|
Fixed 0.875%
|
Fixed 2.73%
|
|
Non-current
|
|
|
|
€850m bond due June 2027
|
Fixed 3.875%
|
Fixed 4.74%
|
|
€600m bond due October 2028
|
Fixed 0.500%
|
Fixed 2.17%
|
|
$750m bond due April 2030
|
Fixed 5.000%
|
Fixed 5.20%
|
|
€600m bond due June 2030
|
Fixed 4.375%
|
Fixed 4.41%
|
|
£400m bond due June 2032
|
Fixed 5.000%
|
Fixed 5.19%
|
|
$500m bond due April 2035
|
Fixed 5.625%
|
Fixed 5.73%
|
|
Average cost of bond debt at period-end rates
|
|
4.33%
|
The effective hedged interest rate reflects the interest rate
payable after the impact of interest due from cross-currency and
interest-rate swaps. The Group's hedging strategy is to hold
foreign currency debt in proportion to foreign currency profit and
cash flows, which are mainly in US dollar and euro. As a result,
the Group has swapped a portion of the euro denominated bonds
issued into US dollars, thus increasing the effective hedged
interest rate.
The Group has no significant concentration of credit risk. At 30
June 2025 the Group had a total of $26m of cash held on bank
accounts with banks rated below A- by S&P (30 June 2024: $23m).
The highest concentration with any single bank rated below A- was
$5m (30 June 2024: $4m).
The Group considers the fair value of other current liabilities to
be equal to the carrying value.
13. Provisions for liabilities and charges
The Group has provisions for termite damage claims, self-insurance,
environmental, and other. Provisions are recognised when the Group
has a present obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the
obligation, and the amount is capable of being reliably estimated.
If such an obligation is not capable of being reliably estimated it
is classified as a contingent liability.
|
|
Termite damage claims
$m
|
Self insurance
$m
|
Environmental
$m
|
Other
$m
|
Total
$m
|
|
At 31 December 2024
|
266
|
231
|
17
|
11
|
525
|
|
|
|
|
|
|
|
|
At 1 January 2025
|
266
|
231
|
17
|
11
|
525
|
|
Exchange differences
|
-
|
1
|
1
|
1
|
3
|
|
Additional provisions
|
79
|
52
|
-
|
4
|
135
|
|
Used during the period
|
(52)
|
(37)
|
(1)
|
(5)
|
(95)
|
|
Unused amounts reversed
|
-
|
-
|
-
|
(1)
|
(1)
|
|
Unwinding of discount on provisions
|
6
|
-
|
-
|
-
|
6
|
|
Transferred to liabilities held for sale
|
-
|
-
|
(11)
|
-
|
(11)
|
|
At 30 June 2025
|
299
|
247
|
6
|
10
|
562
|
|
|
At 30June 2025
Total
$m
|
At 31 December 2024
Total
$m
|
|
Analysed as follows:
|
|
|
|
Non-current
|
404
|
381
|
|
Current
|
158
|
144
|
|
Total
|
562
|
525
|
Termite damage claims
The Group holds provisions for termite damage claims covered by
contractual warranties. Termite damage claim provisions are subject
to significant assumptions and estimation uncertainty. The
assumptions included in valuing termite provisions are based on an
estimate of the volume and value of future claims (based on
historical and forecast information), customer churn rates and
discount rates. These provisions are expected to be substantially
utilised within the next 16 years at a declining rate. The trend of
volume and value of claims is monitored and reviewed over time
(with the support of external advisers) and as such the value of
the provision is also likely to change.
The Group's provision relates to legacy claims (from the period
prior to the acquisition of Terminix), estimated at $276m (2024:
$246m) and new customer claims, estimated at $23m (2024: $20m). The
sensitivity of the legacy liability balance to changes in the
inputs is illustrated as follows:
|
●
|
Discount rate - The exposure to termite damage claims is largely
based within the United States, therefore measurement is based on a
seven-year US bond risk-free rate. During the period, interest
rates (and therefore discount rates) have decreased. Rates could
move in either direction and management has modelled that an
increase/decrease of 50bps in yields would decrease/increase the
provision by $7m (2024: $6m). Over the 6 months to 30 June 2025,
seven-year risk-free rate yields have decreased from 4.48% to
3.98%.
|
|
●
|
Claim value - Claim value forecasts have been based on the latest
available historical settled Terminix claims. Claims values are
dependent on a range of inputs including labour cost, materials
costs (e.g. timber), whether a claim becomes litigated or not, and
specific circumstances including contributory factors at the
premises. Management has used an average of claim costs for the
last 12 months for non-litigated claims and 24 months for litigated
claims, adjusted where necessary to account for ageing of claims,
to determine an estimate for costs per claim. Recent fluctuations
in input prices (e.g. timber prices) means that there is potential
for volatility in claim values and therefore future material
changes in provisions. Management has modelled that an
increase/decrease of 5% in litigated claim values would
increase/decrease the provision by c.$5m (2024: $4m) and an
increase/decrease of 5% in non-litigated claim values would
increase/decrease the provision by c.$8m (2024: $8m). Over the 6
months to 30 June 2025, costs per litigated claim rose by c.18%
(2024: 8%) and non-litigated costs rose by 13% (2024: 45%). Actual
value of claims settled in the period to June 2025 has been at a
combined cost per claim 9% higher than that seen throughout 2024.
This is not representative of management's expectation of future
costs as ageing of claims, which drives an increased cost per
claim, has reduced in recent months and is expected to continue to
improve.
|
|
●
|
Claim rate - Management has estimated claim rates based on
statistical historical incurred claims. Data has been captured, to
establish incidence curves that can be used to estimate likely
future cash outflows. Changes in rates of claim are largely outside
the Group's control and may depend on litigation trends within the
US, and other external factors such as how often customers move
property and how well they maintain those properties. This causes
estimation uncertainty that could lead to material changes in
provision measurement. Management has modelled that an
increase/decrease of 5% in litigated claim rates would
increase/decrease the provision by c.$5m (2024: $4m) and an
increase/decrease of 5% in non-litigated claim rates would
increase/decrease the provision by c.$8m (2024: $8m) accordingly.
Over the 6 months to 30 June 2025,the assumption for litigated
claim rates rose by 43% (2024: fell 52%) and non-litigated claim
rates fell by 5% (2024: rose 7%).
|
|
●
|
Customer churn rate - If customers choose not to renew their
contracts each year, then the assurance warranty falls away. As
such there is sensitivity to the assumption on how any customers
will churn out of the portfolio of customers each year. Data has
been captured and analysed to establish incidence curves for
customer churn, and forward-looking assumptions have been made
based on these curves. Changes in churn rates are subject to
macroeconomic factors and to the performance of the Group. A 1%
movement in customer churn rates, up or down, would change the
provision by c.$13m up or down (2024: $9m), accordingly. On average
over the last 10 years churn rates have moved by +/- c.2.0% per
annum.
|
Self-insurance
The Group purchases external insurance from a portfolio of
international insurers for its key insurable risks. In order to
help mitigate the cost of external insurance, the Group
self-insures a level of cover on its major insurance policies.
Self-insurance provisions represent obligations for open claims,
and also incurred but not reported (IBNR) losses. External
actuaries are used to help management estimate the provisions held
at the balance sheet date. Due to the nature of the claims, the
timing of utilisation of these provisions is
uncertain.
Self-insurance provisions are also subject to estimation
uncertainty based on volume and value of expected future claims and
discount rate assumptions; however, it is not expected that there
would be any change to assumptions that would cause a significant
adjustment to the carrying value in the next financial
year.
Environmental
The Group owns, or formerly owned, a number of properties in Europe
and the US where environmental contamination is being managed.
These issues tend to be complex to determine and resolve and may be
material, although it is often not possible to accurately predict
future costs of management or remediation reliably. Provisions are
held where liability is probable and costs can be reliably
estimated. Contingent liabilities exist where the conditions for
recognising a provision under IAS 37 have not been met. The Group
monitors such properties to determine whether further provisions
are necessary. The provisions that have been recognised are
expected to be substantially utilised within the next five years
with the exception of the $11m provision which was reclassified to
liabilities held for sale.
Other
Other provisions principally comprise amounts required to cover
obligations arising and costs relating to disposed businesses and
restructuring costs. Other provisions also includes costs relating
to onerous contracts and property dilapidations settlements.
Existing provisions are expected to be substantially utilised
within the next five years.
14. Post balance sheet events
There have been no significant post balance sheet events affecting
the Group since 30 June 2025.
Other information
Use of non-IFRS measures
The Group uses a number of non-IFRS measures to present the
financial performance of the business. These are not measures as
defined under IFRS, but management believe that these measures
provide valuable additional information for users of the Financial
Statements, in order to better understand the underlying trading
performance from activities that will contribute to future
performance. The Group's internal strategic planning process is
also based on these measures and they are used for management
incentive purposes. They should be viewed as complements to, and
not replacements for, the comparable IFRS measures. Other companies
may use similarly labelled measures which may be calculated
differently to the way the Group calculates them, which limits
their usefulness as comparative measures. Accordingly, investors
should not place undue reliance on these non-IFRS
measures.
The following sets out an explanation and the reconciliation to the
nearest IFRS measure for each non-IFRS measure. All non-IFRS
measures exclude discontinued operations unless explicitly stated
otherwise.
Constant exchange rates (CER)
Given the international nature of the Group's operations, foreign
exchange movements can have a significant impact on the reported
results of the Group when they are translated into US dollar (the
presentation currency of the Group).
In order to help understand the underlying trading performance of
the business, revenue and profit measures are often presented at
constant exchange rates. CER is calculated by translating
prior-year reported numbers at the average exchange rates for the
current year. This represents a change from prior periods in which
CER was calculated by a translation of current-year reported
numbers at the average exchange rates for the prior year. It is
used to give management and other users of the accounts clearer
comparability of underlying trading performance against the prior
period by removing the effects of changes in foreign exchange
rates. The major exchange rates used to calculate CER in 2025 are
$/€ 0.9183 and $/£ 0.7706.
Comparisons are to the six months ended 30 June 2024 (H1 2024)
unless otherwise stated.
Organic Revenue Growth
Acquisitions are a core part of the Group's growth strategy. The
Organic Revenue Growth measures (absolute and percentage) are used
to help investors and management understand the underlying
performance of the business, by identifying Organic Revenue Growth
separately from the impact of Acquired Revenue. This approach
isolates changes in performance of the Group that take place under
the Company's stewardship, and thereby reflects the potential
benefits and risks associated with owning and managing a
professional services business.
Organic Revenue Growth is calculated based on year-over-year
revenue growth at CER to eliminate the effects of movements in
foreign exchange rates.
Acquired Revenue represents a 12-month estimate of the increase in
Group revenue from each business acquired. Acquired Revenue is
calculated as: a) the revenue from the acquisition date to the year
end in the year of acquisition in line with IFRS 3; and b) the
pre-acquisition revenues from 1 January up to the acquisition date
in the year of acquisition. The pre-acquisition revenue is based on
the previously reported revenues of the acquired entity and is
considered to be an estimate.
In the year a business is acquired, all of its revenue reported
under a) above is classified as non-organic growth. In the
subsequent first full financial year after acquisition, Organic
Revenue Growth is calculated for each acquisition as the reported
revenue less Acquired Revenue.
At a Group level, calculating Organic Revenue Growth therefore
involves isolating and excluding from the total year-over-year
revenue change: i) the impacts from foreign exchange rate changes,
ii) the growth in revenues that have resulted from completed
acquisitions in the current period, and iii) the estimate of
pre-acquisition revenues from each business acquired. The sum of
ii) and iii) is equal to the total Acquired Revenues for all
acquisitions. The calculated Organic Revenue is expressed as a
percentage of prior year revenue. Prior year revenue is not
'pro-forma' adjusted in the calculation, as any such estimated
adjustments would have an immaterial impact.
If an acquisition is considered to be a material transaction, the
above calculation is amended in order to give a 'pro-forma' view of
any Organic Revenue Growth for the full financial year in the year
of acquisition, as if the acquisition had been part of the Group
from the beginning of the prior year. The pro-forma calculation is
completed using pre-acquisition revenues to normalise current and
prior periods as shown in the table below. These revenue
normalisations are considered estimates, and ensure that the
potentially larger Organic Revenue Growth is measured over a
denominator that includes the material acquisition.
While management believes that the methodology used in the
calculation of Organic Revenue is representative of the performance
of the Group, the calculations may not be comparable to similarly
labelled measures presented by other publicly traded companies in
similar or other industries.
|
Continuing operations
|
North America
$m
|
International
$m
|
Central
$m
|
Total
$m
|
|
2024 Revenue
|
2,067
|
1,192
|
7
|
3,266
|
|
2024 Exchange differences
|
(2)
|
(2)
|
-
|
(4)
|
|
2024 Revenue (at CER)
|
2,065
|
1,190
|
7
|
3,262
|
|
2024 Revenue from closed businesses1
|
(18)
|
-
|
-
|
(18)
|
|
Normalised 2024 Revenue (at CER) - base for Organic Revenue Growth
percentage
|
2,047
|
1,190
|
7
|
3,244
|
|
Revenue from 2025 acquisitions²
|
4
|
4
|
-
|
8
|
|
Revenue from 2024 acquisitions (at CER)³
|
33
|
26
|
-
|
59
|
|
Organic Revenue Growth 2025
|
22
|
31
|
-
|
53
|
|
2025 Revenue (at AER)
|
2,106
|
1,251
|
7
|
3,364
|
|
Organic Revenue Growth
%4
|
1.1%
|
2.7%
|
(9.2)%
|
1.6%
|
1. The adjustment removes revenue from 1 January 2024 to 31 March
2024 from the Paragon distribution business, closed with effect
from 1 April 2024.
2. Revenue from completed acquisitions in the current
period.
3. Estimate of revenue from each business acquired by the Group in
the previous financial year through to the 12-month anniversary of
the Group's ownership.
4. Organic Revenue Growth includes Organic Revenue Growth for all
entities in the Group's continuing operations as at 30 June
2024.
|
Continuing operations
|
North America
$m
|
International
$m
|
Central
$m
|
Total
$m
|
|
2023 Revenue
|
2,044
|
1,103
|
7
|
3,154
|
|
2023 Exchange differences
|
(2)
|
(10)
|
-
|
(12)
|
|
2023 Revenue (at CER)
|
2,042
|
1,093
|
7
|
3,142
|
|
2023 Revenue from closed businesses1
|
(17)
|
-
|
-
|
(17)
|
|
Normalised 2023 Revenue (at CER) - base for Organic Revenue Growth
percentage
|
2,025
|
1,093
|
7
|
3,125
|
|
Revenue from 2024 acquisitions²
|
2
|
19
|
-
|
21
|
|
Revenue from 2023 acquisitions (at CER)³
|
14
|
22
|
|
36
|
|
Organic Revenue Growth 2024
|
24
|
56
|
-
|
80
|
|
Exchange differences
|
2
|
2
|
-
|
4
|
|
2024 Revenue (at AER)
|
2,067
|
1,192
|
7
|
3,266
|
|
Organic Revenue Growth %4
|
1.3%
|
4.9%
|
8.0%
|
2.6%
|
1. The adjustment removes revenue from 1 April 2023 to 30 June 2023
from the Paragon distribution business, closed with effect from 1
April 2024.
2. Revenue from completed acquisitions in the current
period.
3. Estimate of revenue from each business acquired by the Group in
the previous financial year through to the 12-month anniversary of
the Group's ownership.
4. Organic Revenue Growth includes Organic Revenue Growth for all
entities in the Group's continuing operations as at 30 June
2023.
Adjusted expenses and profit measures
Adjusted expenses and profit measures are used to give investors
and management a further understanding of the underlying
profitability of the business over time by stripping out income and
expenses that can distort results due to their size and nature.
Adjusted profit measures are calculated by adding the following
items back to the equivalent IFRS profit measure:
● amortisation and impairment of intangible assets (excluding
computer software);
● one-off and adjusting items; and
● net interest adjustments.
Intangible assets (such as customer lists and brands) are
recognised on acquisition of businesses which, by their nature, can
vary by size and amount each year. Capitalisation of
innovation-related development costs will also vary from year to
year. As a result, amortisation of intangibles is added back to
assist with understanding the underlying trading performance of the
business and to allow comparability across regions and
categories.
One-off and adjusting items are significant expenses or income that
will have a distortive impact on the underlying profitability of
the Group. Typical examples are costs related to the acquisition of
businesses, gain or loss on disposal or closure of a business,
material gains or losses on disposal of fixed assets, adjustments
to legacy environmental and legacy termite liabilities, and
payments or receipts as a result of legal disputes. A summary of
one-off and adjusting items is set out below.
Net interest adjustments are other non-cash or one-off accounting
gains and losses that can cause material fluctuations and distort
understanding of the performance of the business, such as
amortisation of discount on legacy provisions and gains and losses
on hedge accounting.
Adjusted expenses are one-off and adjusting items, and Adjusted
Interest. Adjusted profit measures used are Adjusted Operating
Profit, Adjusted Profit Before and After Tax, and Adjusted EBITDA.
Adjusted Earnings Per Share is also reported, derived from Adjusted
Profit After Tax.
One-off and adjusting items
One-off and adjusting items of $110m (2024: $47m) includes an
increase to the provision for Termite Damage claims of $79m
(2024:$nil), $30m (2024: $39m) of integration costs related to the
Terminix acquisition and a net $1m (2024: $8m) of other M&A
costs.
Adjusted Interest
Adjusted Interest is calculated by adjusting the reported finance
income and costs by net interest adjustments (amortisation of
discount on legacy provisions and foreign exchange and hedge
accounting ineffectiveness).
|
Continuing operations
|
6 months to
30 June 2025
$m
|
6 months to
30 June 2024
$m
|
|
Finance cost
|
117
|
122
|
|
Finance income
|
(24)
|
(31)
|
|
Add back:
|
|
|
|
Amortisation on discount of legacy provisions
|
(6)
|
(5)
|
|
Foreign exchange and hedge accounting ineffectiveness
|
11
|
(3)
|
|
Adjusted Interest
|
98
|
83
|
Adjusted Operating Profit
Adjusted Operating Profit is calculated by adding back one-off and
adjusting items, and amortisation and impairment of intangible
assets excluding computer software to operating
profit.
|
Continuing operations
|
6 months to
30 June 2025
$m
|
6 months to
30 June 2024
$m
|
|
Operating profit
|
304
|
380
|
|
Add back:
|
|
|
|
One-off and adjusting items
|
110
|
47
|
|
Amortisation and impairment of intangible assets
|
97
|
110
|
|
Adjusted Operating Profit
|
511
|
537
|
Adjusted Profit Before and After Tax
Adjusted Profit Before Tax is calculated by adding back net
interest adjustments, one-off and adjusting items, and amortisation
and impairment of intangible assets to profit before tax. Adjusted
Profit After Tax is calculated by adding back net interest
adjustments, one-off and adjusting items, amortisation and
impairment of intangible assets excluding computer software, and
the tax effect on these adjustments to profit after
tax.
|
6 months to 30 June 2025
|
|
|||||
|
Continuing operations
|
IFRS measures
$m
|
Net interest adjustments
$m
|
One-off and adjusting
items
$m
|
Amortisation and impairment of intangibles
$m
|
Non-IFRS
measures
$m
|
|
|
Profit before income tax
|
216
|
(5)
|
110
|
97
|
418
|
Adjusted Profit Before Tax
|
|
Income tax expense
|
(52)
|
1
|
(28)
|
(25)
|
(104)
|
Tax on Adjusted Profit
|
|
Profit for the period
|
164
|
(4)
|
82
|
72
|
314
|
Adjusted Profit After Tax
|
|
6 months to 30 June 2024
|
|
|||||
|
Continuing operations
|
IFRSmeasures$m
|
Net interestadjustments$m
|
One-offandadjustingitems$m
|
Amortisationandimpairment ofintangibles$m
|
Non-IFRSmeasures$m
|
|
|
Profit before income tax
|
294
|
8
|
47
|
110
|
459
|
Adjusted Profit Before Tax
|
|
Income tax expense
|
(65)
|
(2)
|
(12)
|
(27)
|
(106)
|
Tax on Adjusted Profit
|
|
Profit for the period
|
229
|
6
|
35
|
83
|
353
|
Adjusted Profit After Tax
|
EBITDA and Adjusted EBITDA
EBITDA is calculated by adding back finance income, finance cost,
share of profit from associates net of tax, income tax expense,
depreciation, amortisation and impairment of intangible assets
excluding computer software and other non-cash expenses to profit
for the year. Adjusted EBITDA is calculated by adding back one-off
and adjusting items to EBITDA.
|
Continuing operations
|
6 months to
30 June 2025
$m
|
6 months to
30 June 2024
$m
|
|
Profit for the period
|
164
|
229
|
|
Add back:
|
|
|
|
Finance income
|
(24)
|
(31)
|
|
Finance cost
|
117
|
122
|
|
Share of profit from associates net of tax
|
(5)
|
(5)
|
|
Income tax expense
|
52
|
65
|
|
Depreciation
|
158
|
153
|
|
Other non-cash expenses
|
17
|
17
|
|
Amortisation and impairment of intangible assets
|
97
|
110
|
|
EBITDA
|
576
|
660
|
|
One-off and adjusting items
|
110
|
47
|
|
Adjusted EBITDA
|
686
|
707
|
|
|
|
|
|
EBITDA attributable to discontinued operations
|
70
|
67
|
|
EBITDA for the Group
|
646
|
727
|
|
|
|
|
|
Adjusted EBITDA attributable to discontinued
operations
|
70
|
67
|
|
Adjusted EBITDA for the Group
|
756
|
774
|
Adjusted Earnings Per Share
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the Company by the weighted
average number of shares in issue during the year, and is explained
in Note A2 to the Consolidated Financial Statements in the 2024
Annual Report. Adjusted Earnings Per Share is calculated by
dividing adjusted profit from continuing operations attributable to
equity holders of the Company by the weighted average number of
ordinary shares in issue and is shown below.
For Adjusted Diluted Earnings Per Share, the weighted average
number of ordinary shares in issue is adjusted to include all
potential dilutive ordinary shares. The Group's potentially
dilutive ordinary shares are explained in Note A2 to the
Consolidated Financial Statements in the 2024 Annual
Report.
|
Continuing operations
|
6 months to
30 June 2025
$m
|
6 months to
30 June 2024
$m
|
|
Profit attributable to equity holders of the Company
|
164
|
229
|
|
Add back:
|
|
|
|
Net interest adjustments
|
(5)
|
8
|
|
One-off and adjusting items
|
110
|
47
|
|
Amortisation and impairment of intangibles1
|
97
|
110
|
|
Tax on above items2
|
(51)
|
(41)
|
|
Adjusted profit attributable to equity holders of the
Company
|
315
|
353
|
|
|
|
|
|
Weighted average number of ordinary shares in issue
(million)
|
2,522
|
2,521
|
|
Adjustment for potentially dilutive shares (million)
|
9
|
9
|
|
Weighted average number of ordinary shares for diluted earnings per
share (million)
|
2,531
|
2,530
|
|
|
|
|
|
Basic Adjusted Earnings Per Share (cents)
|
12.46
|
14.00
|
|
Diluted Adjusted Earnings Per Share (cents)
|
12.41
|
13.95
|
1. Excluding computer software.
2. The tax effect on add-backs is as follows: one-off and adjusting
items $28m (2024: $12m); amortisation and impairment of intangibles
$25m (2024: $27m); and, net interest adjustments $(1)m (2024:
$2m).
Adjusted cash measures
The Group aims to generate sustainable cash flow in order to
support its acquisition programme and to fund dividend payments to
shareholders. Management considers that this is useful information
for investors. Adjusted cash measures in use are Free Cash Flow,
Adjusted Free Cash Flow, and Adjusted Free Cash Flow
Conversion.
Free Cash Flow
Free Cash Flow is measured as net cash flows from operating
activities, adjusted for cash flows related to the purchase and
sale of property, plant, equipment and intangible assets, cash
flows related to leased assets, cash flows related to one-off and
adjusting items and dividends received from associates. These items
are considered by management to be non-discretionary, as continued
investment in these assets is required to support the day-to-day
operations of the business. Free Cash Flow is used by management
for incentive purposes and is a measure shared with and used by
investors.
A reconciliation of net cash flows from operating activities in the
Consolidated Cash Flow Statement to Free Cash Flow is provided in
the table below.
|
Continuing operations
|
6 months to
30 June 2025
$m
|
6 months to
30 June 2024
$m
|
|
Net cash flows from operating activities
|
412
|
337
|
|
Purchase of property, plant, equipment
|
(62)
|
(62)
|
|
Purchase of intangible assets
|
(27)
|
(27)
|
|
Capital element of lease payments and initial direct costs
incurred
|
(90)
|
(87)
|
|
Proceeds from sale of property, plant, equipment and
software
|
1
|
2
|
|
Cash impact of one-off and adjusting items
|
48
|
52
|
|
Free Cash Flow
|
282
|
215
|
|
|
|
|
|
Free Cash flow attributable to discontinued operations
|
6
|
7
|
|
Free Cash Flow for the Group including discontinued
operations
|
288
|
222
|
Adjusted Free Cash Flow and Adjusted Free Cash Flow
Conversion
Adjusted Free Cash Flow Conversion is provided to demonstrate to
investors the proportion of Adjusted Profit After Tax that is
converted to cash. It is calculated by dividing Adjusted Free Cash
Flow by Adjusted Profit After Tax, expressed as a percentage.
Adjusted Free Cash Flow is measured as Free Cash Flow adjusted for
product development additions and net investment hedge cash
interest through Other Comprehensive Income. Product development
additions are adjusted due to their variable size and
non-underlying nature. Net investment hedge cash interest through
Other Comprehensive Income is adjusted because the cash relates to
an item that is not recognised in Adjusted Profit After
Tax.
|
Continuing operations
|
6 months to
30 June 2025
$m
|
6 months to
30 June 2024
$m
|
|
Free Cash Flow
|
282
|
215
|
|
Product development additions
|
6
|
6
|
|
Net investment hedge cash interest through Other Comprehensive
Income
|
3
|
8
|
|
Adjusted Free Cash Flow (a)
|
291
|
229
|
|
Adjusted Profit After Tax (b)
|
314
|
353
|
|
Free Cash Flow conversion (a/b)
|
92.6%
|
64.8%
|
|
|
|
|
|
Free Cash Flow conversion attributable to discontinued
operations
|
31.58%
|
35.00%
|
|
Free Cash Flow conversion for the Group
|
89.1%
|
63.2%
|
The nearest IFRS-based equivalent measure to Adjusted Free Cash
Flow Conversion would be Cash Conversion, which is shown in the
table below to provide a comparison in the calculation. Cash
Conversion is calculated as net cash flows from operating
activities divided by profit attributable to equity holders of the
Company, expressed as a percentage. Management considers that this
is useful information for investors as it gives an indication of
the quality of profits, and ability of the Group to turn profits
into cash flows.
|
Continuing operations
|
6 months to
30 June 2025
$m
|
6 months to
30 June2024
$m
|
|
Net cash flows from operating activities (a)
|
412
|
337
|
|
Profit attributable to equity holders of the Company
(b)
|
171
|
229
|
|
Cash Conversion (a/b)
|
240.94%
|
147.16%
|
|
|
|
|
|
Cash Conversion attributable to discontinued
operations
|
237.50%
|
289.47%
|
|
Cash Conversion for the Group
|
240.51%
|
157.00%
|
Adjusted Effective Tax Rate (Adjusted ETR)
Adjusted Effective Tax Rate is used to show investors and
management the rate of tax applied to the Group's Adjusted Profit
Before Tax. The measure is calculated by dividing Adjusted Income
Tax Expense by Adjusted Profit Before Tax, expressed as a
percentage.
|
Continuing operations
|
6 months to
30 June 2025
$m
|
6 months to
30 June 2024
$m
|
|
Income tax expense
|
52
|
65
|
|
Tax adjustments on:
|
|
|
|
Amortisation and impairment of intangible assets (excluding
computer software)
|
25
|
27
|
|
Net interest adjustments
|
(1)
|
2
|
|
One-off and adjusting items
|
28
|
12
|
|
Adjusted income tax expense (a)
|
104
|
106
|
|
Adjusted profit before tax (b)
|
418
|
459
|
|
Adjusted effective tax rate (a/b)
|
25.0%
|
23.1%
|
The Group's effective tax rate (ETR) for the period was 24.2% (June
2024: 22.0%). The Group's Adjusted ETR for continuing operations
before amortisation of intangible assets (excluding computer
software), one-off items and the net interest adjustments for the
period was 25.0% (June 2024: 23.1%). This compares with a blended
rate of tax for the countries in which the Group operates of 25.2%
(June 2024: 25.3%).
The Group's tax charge and Adjusted ETR will be influenced by the
global mix and level of profits, changes in future tax rates and
other tax legislation, foreign exchange rates, the utilisation of
brought-forward tax losses on which no deferred tax asset has been
recognised, the resolution of open issues with various tax
authorities, acquisitions and disposals.
Legal statements
The financial information for the six month period ended 30 June
2025 contained in this interim announcement has been approved by
the Board on 30 July 2025 and authorised for release on 31 July
2025.
These condensed interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the
Companies Act 2006. Statutory accounts for the year 31 December
2024 were approved by the Board of Directors and authorised for
release on 6 March 2025 and delivered to the Registrar of
Companies. The report of the auditors on those accounts was (i)
unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
The directors of Rentokil Initial plc are listed in the Rentokil
Initial plc Annual Report for 31 December 2024. A list of the
current directors is maintained on the Rentokil Initial website:
rentokil-initial.com.
Responsibility statement of the directors in respect of the 2025
interim statement
We confirm that to the best of our knowledge:
|
●
|
the condensed set of financial statements prepared in accordance
with IAS 34, 'Interim Financial Reporting', as adopted in the UK
(IAS 34), gives a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and its
subsidiaries included in the consolidation as a whole as required
by DTR 4.2.4R; and
|
|
●
|
the interim management report includes a fair review of the
information required by DTR 4.2.7R of the Disclosure Guidance and
Transparency Rules, being an indication of important events that
have occurred during the first six months of the financial year and
their impact on the condensed set of financial statements; and a
description of the principal risks and uncertainties for the
remaining six months of the year.
|
We have reviewed, and found that we have nothing to report in
relation to the requirements of DTR 4.2.8R of the Disclosure
Guidance and Transparency Rules, being related party transactions
that have taken place in the first six months of the current
financial year and that have materially affected the financial
position or performance of the entity during that period; and any
changes in the related party transactions described in the last
annual report that could do so.
By Order of the Board
Andy Ransom
Chief Executive
31 July 2025
Independent review report to Rentokil Initial plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Rentokil Initial plc's condensed consolidated
interim financial statements (the "interim financial statements")
in the 2025 Interim Results of Rentokil Initial plc for the 6 month
period ended 30 June 2025 (the "period").
Based on our review, nothing has come to our attention that causes
us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
● the Consolidated Balance Sheet as at
30 June 2025;
● the Consolidated Statement of Profit or Loss
and Other Comprehensive Income for the period then
ended;
● the Consolidated Statement of Changes in
Equity for the period then ended;
● the Consolidated Cash Flow Statement for the
period then ended; and
● the explanatory notes to the interim
financial statements.
The interim financial statements included in the 2025 Interim
Results of Rentokil Initial plc have been prepared in accordance
with UK adopted International Accounting Standard 34, 'Interim
Financial Reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
Basis for conclusion
We conducted our review in accordance with International Standard
on Review Engagements (UK) 2410, 'Review of Interim Financial
Information Performed by the Independent Auditor of the Entity'
issued by the Financial Reporting Council for use in the United
Kingdom ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures.
A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit
opinion.
We have read the other information contained in the 2025 Interim
Results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those
performed in an audit as described in the Basis for conclusion
section of this report, nothing has come to our attention to
suggest that the directors have inappropriately adopted the going
concern basis of accounting or that the directors have identified
material uncertainties relating to going concern that are not
appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However,
future events or conditions may cause the group to cease to
continue as a going concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The 2025 Interim Results, including the interim financial
statements, is the responsibility of, and has been approved by the
directors. The directors are responsible for preparing the 2025
Interim Results in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority. In preparing the 2025 Interim Results, including
the interim financial statements, the directors are responsible for
assessing the group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the group or to cease operations, or
have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the 2025 Interim Results based on our
review. Our conclusion, including our Conclusions relating to going
concern, is based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion paragraph of
this report. This report, including the conclusion, has been
prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other
purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
31 July 2025
Cautionary statement
In order to utilise the 'safe harbour' 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 statement:
This communication contains forward-looking statements within the
meaning of the PSLRA. Forward-looking statements can sometimes, but
not always, be identified by the use of forward- looking terms such
as "believes," "expects," "may," "will," "shall," "should,"
"would," "could," "potential," "seeks," "aims," "projects,"
"predicts," "is optimistic," "intends," "plans," "estimates,"
"targets," "anticipates," "continues" or other comparable terms or
negatives of these terms and include statements regarding Rentokil
Initial's intentions, beliefs or current expectations concerning,
amongst other things, the results of operations of the Company and
its consolidated entities ("Rentokil Initial" or "the Group"),
financial condition, liquidity, prospects, growth, strategies and
the economic and business circumstances occurring from time to time
in the countries and markets in which Rentokil Initial operates.
Forward- looking statements are based upon current plans, estimates
and expectations that are subject to risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties
materialise, or should underlying assumptions prove incorrect,
actual results may vary materially from those indicated or
anticipated by such forward-looking statements. The Company can
give no assurance that such plans, estimates or expectations will
be achieved and therefore, actual results may differ materially
from any plans, estimates or expectations in such forward-looking
statements. Important factors that could cause actual results to
differ materially from such plans, estimates or expectations
include: the Group's ability to integrate acquisitions
successfully, or any unexpected costs or liabilities from the
Group's disposals; difficulties in integrating, streamlining and
optimising the Group's IT systems, processes and technologies,
including artificial intelligence technologies; the Group's ability
to attract, retain and develop key personnel to lead the Group's
business; the availability of a suitably skilled and qualified
labour force to maintain the Group's business; cyber security
breaches, attacks and other similar incidents, as well as
disruptions or failures in the Group's IT systems or data security
procedures and those of the Group's third-party service providers;
weakening general economic conditions, including changes in the
global job market or decreased consumer confidence or spending
levels, especially as they may affect demand from the Group's
customers; inflationary pressures, such as increases in wages, fuel
prices and other operating costs; the Group's ability to implement
its business strategies successfully, including achieving its
growth objectives; the Group's ability to retain existing customers
and attract new customers; the highly competitive nature of the
Group's industries; extraordinary events that impact the Group's
ability to service customers without interruption, including a loss
of its third-party distributors; the impact of environmental,
social and governance ("ESG") matters, including those related to
climate change and sustainability, on the Group's business,
reputation, results of operations, financial condition and/or
prospects; supply chain issues, which may result in product
shortages or other disruptions to the Group's business; the Group's
ability to protect its intellectual property and other proprietary
rights that are material to the Group's business; the Group's
reliance on third parties, including third-party vendors for
business process outsourcing initiatives, investment
counterparties, and franchisees, and the risk of any termination or
disruption of such relationships or counterparty default or
litigation; the Group's ability to prevent or detect fraud by
third-party service providers, contractors, employees, franchisees
or any other third parties or counterparties; any future impairment
charges, asset revaluations or downgrades; failure to comply with
the many laws and governmental regulations to which the Group
is subject or the implementation of any new or revised laws
or regulations that alter the environment in which the Group does
business, as well as the costs to the Group of complying with
any such changes and the risk of related litigation; termite damage
claims and lawsuits related thereto and any associated impacts on
the termite provision; the Group's ability to comply with safety,
health and environmental policies, laws and regulations, including
laws pertaining to the use of pesticides; any actual or perceived
failure to comply with stringent, complex and evolving laws, rules,
regulations and standards in many jurisdictions, as well as
contractual obligations, including data privacy and security, and
any litigation (including class action claims and lawsuits) related
to such actual or perceived failures; the identification of
material weaknesses in the Group's internal control over financial
reporting within the meaning of Section 404 of the Sarbanes-Oxley
Act; changes in tax laws and any unanticipated tax liabilities;
adverse credit and financial market events and conditions, which
could, among other things, impede access to or increase the cost of
financing; the restrictions and limitations within the agreements
and instruments governing the Group's indebtedness; a lowering or
withdrawal of the ratings, outlook or watch assigned to the Group's
debt securities by rating agencies; an increase in interest rates
and the resulting increase in the cost of servicing the Group's
debt; and exchange rate fluctuations and the impact on the Group's
results or the foreign currency value of the Company's ADSs and any
dividends. The list of factors presented here is representative and
should not be considered to be a complete statement of all
potential risks and uncertainties. Unlisted factors may present
significant additional obstacles to the realisation of
forward-looking statements. The Company cautions you not to place
undue reliance on any of these forward-looking statements as they
are not guarantees of future performance or outcomes and that
actual performance and outcomes, including, without limitation, the
Group's actual results of operations, financial condition and
liquidity, and the development of new markets or market segments in
which the Group operates, may differ materially from those made in
or suggested by the forward-looking statements contained in this
communication. Except as required by law, Rentokil Initial assumes
no obligation to update or revise the information contained herein,
which speaks only as of the date hereof.
The Company makes no guarantee that trends in the management of
termite damage claims will continue. Additionally, the Company
makes no guarantee that its operational improvement plans will
mitigate against or reduce the number of termite damage claims
(litigated and non-litigated) against the Company nor that these
plans will reduce the ongoing cost to resolve such
claims.
Additional information concerning these and other factors can be
found in Rentokil Initial's filings with the U.S. Securities and
Exchange Commission ("SEC"), which may be obtained free of charge
at the SEC's website, http:// www.sec.gov, and Rentokil Initial's
Annual Reports, which may be obtained free of charge from the
Rentokil Initial website,
https://www.rentokil-initial.com
No statement in this communication is intended to be a profit
forecast and no statement in this communication should be
interpreted to mean that earnings per share of Rentokil Initial for
the current or future financial years would necessarily match or
exceed the historical published earnings per share of Rentokil
Initial.
This communication presents certain non-IFRS measures, which should
not be viewed in isolation as alternatives to the equivalent IFRS
measure; rather they should be viewed as complements to, and read
in conjunction with, the equivalent IFRS measure. Non-IFRS measures
presented also include Organic Revenue Growth, One-off and
adjusting items, Adjusted Interest, Adjusted Operating Profit,
Adjusted Profit Before and After Tax, Adjusted EBITDA, Adjusted
Earnings Per Share, Free Cash Flow, Adjusted Free Cash Flow,
Adjusted Free Cash Flow Conversion and Adjusted Effective Tax Rate.
Definitions for these measures can be found under the Use of
Non-IFRS measures section of the financial statements. The Group's
internal strategic planning process is also based on these
measures, and they are used for incentive purposes. These measures
may not be calculated in the same way as similarly named measures
reported by other companies.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
Date:
31 July 2025
|
RENTOKIL INITIAL PLC
|
|
|
/s/
Rachel Canham
|
|
|
Name:
Rachel Canham
|
|
|
Title:
Group General Counsel and Company Secretary
|
|
|
|
FAQ
How much revenue did Rentokil Initial (RTO) generate in H1 2025?
The company reported $3.36 bn of revenue from continuing operations, up 3.1 % year on year.
Why did Rentokil’s profit decline despite higher sales?
Margin pressure, particularly in North America, and a $79 m termite-claim provision cut adjusted operating profit by 4.5 %.
What is Rentokil Initial’s current leverage?
Net debt is $4.22 bn, equivalent to 2.8× adjusted EBITDA at 30 June 2025.
Did Rentokil change its dividend policy?
No. The interim dividend remains 4.15 c per share, payable 22 September 2025.
Is management guidance for FY 2025 still intact?
Yes. The board expects full-year 2025 results in line with market expectations and kept all technical guidance ranges unchanged.
What cost synergies are expected from the Terminix integration?
Management continues to target ~$100 m annual cost reductions and a North America margin above 20 % post-2026.
Rentokil Initial Plc