The Company's three primary business categories (Pest Control, Hygiene and Protect & Enhance) operate in a global macro-economic environment that is subject to uncertainty and volatility. Examples include:

�� changes that impact on free movement of people such as Brexit and reduced appetite for immigration in the US which may make it more difficult to attract technicians in the Pest Control and Hygiene businesses and create wage inflation;

�� rises in commodity prices that could raise the cost of fuel and hence the cost of delivering our services;

�� re-emergence of global inflation;

�� low-growth economies with inherent cost inflation but where the Company has weak pricing power; and

�� changes to regulations that prevent or limit the use of certain products and chemicals used to deal with pests, e.g. rodents and mosquitos.

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Any significant change in macro-economic environment may impact the Company's ability to grow while maintaining or growing margins, and may have an adverse impact on cash flow.

��� Regular review of our capital allocation model to ensure that scarce resources are directed to countries and businesses that have the most attractive returns and future prospects.

��� Employer of Choice being rolled out across the Group to ensure focus on the key priorities of the organisation including recruiting and retaining critical talent and specialists in all markets.

��� Working with governments and regulators to set realistic timescales for implementation of new regulations.

��� Regular monitoring of market pricing trends (where available) and individual customer profitability to ensure that margin erosion is minimised; sales incentives increasingly prioritise margin and customer profitability.

��� Continuing focus on cost, with regular reviews of cost base and productivity programmes (KPI: Gross Margin). Group Procurement function with executive authority to deliver economies of scale in IT, fleet, energy and logistics (KPI: annual cost savings).

��� Regular monitoring of debtor days outstanding with action taken against customers with overdue debts (KPI: Days Sales Outstanding).

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Our business model depends on servicing the needs of our customers in line with internal high standards and to levels agreed in contracts. If our operatives are not sufficiently qualified, or do not have the right technical and inter-personal skills, or we fail to deliver successful innovations, this may negatively impact our ability to acquire new customers or retain existing customers, with the consequent impact on growth, profitability and cash flow.

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Industrial action in one or more of our key operations could result in diminished service levels to our customers and if prolonged could damage the Company's reputation and ability to secure new contracts or renew existing contracts.

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In markets where overall employment rates are high we may have difficulty attracting and retaining key personnel at all levels of the business.

��� Regular tracking of customer satisfaction and the perception of both customers and non-customers of Rentokil Initial, benchmarked against competitors (KPI: NPS scores through Customer Voice Counts exercise).

��� Dedicated Operational Excellence team to drive superior customer service and establish key metrics (KPI: State of Service; Customer retention).

��� Incentives for sales and service staff aligned closely with strategic targets and based on delivering and improving customer service levels.

��� International Key Accounts team developing business with multi-national customers across geographies to take advantage of the Company as the most international player in our markets.

��� HR development processes including leadership and development training, performance management, reward and incentives (KPI: sales and service colleague retention monitored).

��� Oversight of key industrial relations matters by Group HR Director and regular review by the Chief Executive for countries where risk of industrial action is considered high.

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We operate across markets that are at different stages in the economic cycle, which are at varying stages of market development and which have different levels of market attractiveness. Our Company must be sufficiently agile to develop and deliver products and services that meet local market needs, or we risk ceding advantage to our competitors and will fail to deliver against our targets of growth, profitability and cash conversion.

If we are not flexible, agile or innovative enough to adapt to local business and consumer needs our existing customers may choose not to renew contracts, or may look for reductions in prices which may have a negative impact on our ability to maintain or increase margins and cash flow.

·   Acquisition of targets that have a strong cultural fit with the brand and our service model whilst supporting growth.

·   Targeted investment in innovation to support value-added and innovative concepts to meet market and regulatory needs and defend against commoditisation.

·   Investing in new digital platforms to provide improved marketing channels and opportunities for customers to order or amend services.

·   Exit from unprofitable businesses with commodity characteristics, e.g. flat linen.

·  In North America consolidation onto one IT operating platform to help drive visibility of performance, and improve customer satisfaction and operating efficiency.

The Company has a strategy which includes growth by acquiring existing companies to extend its geographic footprint or to improve its market share in existing geographies. If the Company fails to successfully integrate these acquisitions into its existing organisation structures, the business may not achieve the expected financial and operational benefits which may have an adverse impact on growth, profitability and cash flow.

Since 2014 the Company has been successful in acquiring 135 businesses across all regions with the majority in North America.

In 2017 the Group transferred Rentokil Initial's Workwear and

Hygiene businesses in Benelux, Sweden and CEE to a new joint venture with Haniel, in which it retains a minority interest. If the

integration of the new JV with Haniel is not completed quickly the

JV may fail to deliver the expected financial returns.

In 2017 the business formed a joint venture with PCI in India. Failure to successfully integrate the PCI business with the Rentokil Initial India business may lead to loss of revenue, profit and cash flow.

·   Integration plans considered by Investment Committee as part of acquisition approval process. Material integration activities managed during relevant monthly performance reviews.

·   Dedicated project teams established for largest acquisitions and demergers, e.g. PCI and former CWS-boco business in Italy, with clear deliverables over three months, six months and one year. Additional resources provided to North America to support integration and re-platforming activities.

·   Tried and tested induction programme for first 100 days for all acquisitions.

·   Continuity of management/leadership in acquired companies, where possible.

·   Use of transaction structures including deferred consideration to mitigate deal risk.

·   Group departments, e.g. Health & Safety, Legal, Insurance, and IT, involved early with new acquisitions to drive compliance with Group standards, especially when entering new geographies.

·   Formal post-acquisition review (PAR) by Investment Committee of benefits delivered against original business plan within 18-24 months. The PAR is undertaken by the Investment Committee ahead of releasing any deferred payments.

·   Board review of acquisitions in aggregate every six months.

·  Internal Audit review within 12 months of businesses acquired in new geographies.

A significant cyber-attack or IT failure which cannot be recovered from in a short period of time could prevent normal business operations across one or more countries for a prolonged period and have an adverse impact on revenue, profitability or cash flow.

In our Workwear business, where deliveries to our customers are often daily, business could be adversely affected if access to the laundries and inventory is not possible due to incidents such as fire or flood.

Failure to service our customers may adversely affect our ability to retain those customers and may badly damage the Company's reputation. This may have a negative impact on growth, profitability and cash flow.

·   All countries and units maintain business continuity plans and (for IT) disaster recovery plans that are tested regularly.

·   Procedures in place to ensure that potential industrial disputes are escalated quickly to Group HR Director.

·   Local plans to service customers from adjacent laundries/branches where supply has been interrupted.

·   Ongoing programme to transfer key data and applications from local servers to regional data centres with higher levels of backup capability and resilience.

·   Security governance framework and standards established, including IT security management framework, incident management reporting, global standards for network segmentation and incident response protocols being reviewed.

·   IT self-assessment exercises carried out across the Group to assess the Company's resilience to cyber attack and remedial action to improve controls where necessary.

·  Penetration testing on all systems on at least an annual basis to test external firewalls with action to address any weakness identified.

Our business is exposed to foreign exchange risk, interest rate risk, liquidity risk, counterparty risk and settlement risk. The impact of

Brexit may make some of these risks more volatile and uncertain.

If any of these risks materialise, this may have a negative impact on profitability, cash flow and financial statements, and may have a negative impact on financial ratios, credit ratings or the ability to raise funds for acquisitions.

·   Financing policy in place to ensure that the Company has sufficient financial headroom to finance operations and bolt-on acquisitions. Commitment to target credit rating of BBB.

·   Treasury policies that limit the use of foreign exchange and interest rate derivatives, set limits for financial counterparty exposure, govern how financing is raised in bank and other debt capital markets and provide rules around treasury related matters at operating company level.

·   Monthly reporting and monitoring of financial covenants and rating agency metrics and compliance with treasury policies.

·   Monitoring of the impact of exchange rate movements on non-sterling profits and net debt.

·   Cash pooling and debt financing arrangement to match, as closely as possible, currency availability/demand across borders.

Loss of personal data of customers, suppliers or employees could, if significant, result in regulatory intervention which may result in substantial fines and damage to the Company's reputation.

Theft of Company assets including property, customer or employee

information, or misstatement of financial or other records via

deliberate action by employees or third parties may constitute

fraud and result in financial loss to the business, damage to the

Company's reputation or fines by regulators.

·   Programme to review and validate key applications for compliance with data privacy requirements including forthcoming EU General Data Protection Regulation (GDPR).

·   Code of Conduct refreshed in 2016 and circulated to all employees. Mandatory online training by all senior employees refreshed annually for competition law, anti-bribery and corruption, information security and privacy. Training was relaunched in Q4 2017 (KPI: % compliance with training).

·   Compliance with Code of Conduct and other key policies affirmed by annual Letter of Assurance by all senior management.

·   Standardised control framework operating in all locations with a focus on risk prevention and mitigation; framework defined centrally and independently assessed at all material business units every year.

·   Wherever possible credit card transactions are managed by regulated third parties who have robust controls in place to prevent loss of data.

·   Specific review of adequacy of controls in Group Treasury and remedial actions implemented.

·   International confidential 'Speak Up' hotline and email address, monitored by Internal Audit.

·   Significant frauds investigated by Internal Audit and lessons learned widely shared.

The Company operates in a number of hazardous environments and situations, for example:

·  the use of poisons and fumigation materials in Pest Control;

·  driving to customers across all our businesses;

·  working at height; and

·  exposure to needlestick injury/bio-hazards from dealing with medical waste.

Non-compliance with internal policies or industry regulations could lead to personal injury, substantial fines or penalties including withdrawal of licences to operate, and damage to the Company's reputation.

There could also be potential environmental risks associated with former activities at sites currently or previously operated by the Company.

·   Robust and up-to-date health and safety (H&S) policies supplemented by SHE Golden Rules re-issued in 2017 providing increased focus to higher risk and regulated activities, e.g. driving, working at height, fumigation or heat treatment.

·   H&S officers appointed in all jurisdictions.

·   Mandatory training of all relevant employees in safe working practices, including mandatory training for drivers and those working in hazardous environments, e.g. heat treatment or fumigation.

·   Safety Leadership Behaviours initiative for first level management.

·   H&S considered as first item on all Board and senior management meetings.

·   H&S KPIs discussed at all country and regional board meetings.

·   Formal review of accidents and lessons learned widely circulated.

·   Monitoring of energy-derived emissions and water usage including energy efficiency target of 20% reduction in energy costs/emissions by 2020.

·   Monitoring and remediation plans where required.

The Company is a multi-national business that operates in many jurisdictions and is increasing its business in emerging markets, including by acquisition and new country entry. Failure to

comply with local laws such as anti-bribery and corruption laws,

competition law, employment legislation, data protection and

privacy laws or financial and tax reporting requirements may result

in fines or withdrawal of licence to operate, which could have an adverse impact on growth, profitability and cash flow.

The Company operates across many different tax jurisdictions and is subject to periodic tax audits which sometimes challenge the basis on which local tax has been calculated or withheld.

Successful challenges by local tax authorities may have an adverse impact on profitability and cash flow.

·   Group Legal involvement in all acquisitions, including advising on risk and regulatory issues.

·   Regular compliance exercises, for example on anti-corruption and anti-bribery legislation, competition law, labour law and data protection; monitoring of online U+ training completion rates.

·   Tax policy re-issued and approved by Board. All significant tax planning opportunities have to be pre-agreed with the Group Tax Director and Chief Financial Officer with independent tax advice taken where necessary. Regular review of tax exposures.

·   Authority schedule in place and regularly reviewed.

·   Group and local policies in place and regularly reviewed.

·   Requirement to report breaches in controls or laws to Group General Counsel and Head of Internal Audit.

·   Mandatory training on Code of Conduct, competition, anti-bribery and corruption, IT security and privacy, seeking to instil a highly principled culture of ethical behaviour.

·   All major business transactions or internal reorganisations are subject to a rigorous internal and external review.

·   A dedicated and experienced central tax department is involved in all tax audits.