Actions taken by management to mitigate the risk

·   HR development processes including leadership and development training, performance management, reward and incentives; introduction of Employer of Choice.

·   Regular tracking of customer satisfaction and the perception of both customers and non-customers of Rentokil Initial, benchmarked against competitors.

·   Dedicated Operational Excellence team to drive superior customer service, safe working practices and establish key metrics.

·   Incentives for sales and service staff aligned closely with strategic priorities, based on delivering improved customer service levels.

·   Oversight of key industrial relations matters by Group HR Director and regular review by the Chief Executive for countries where industrial relations risk is elevated.

·   In North America acceleration of IT replatforming and integration of apps to help drive visibility of performance, improve customer satisfaction and operating efficiency.

Changes in 2018 vs. 2017

·   U+ delivered 1.2m online learning views in 2018.

·   MyRentokil platform now available in 34 countries.

·   Better retention of sales and technical staff.

·   Employer of Choice being rolled out and gaining traction.

·   Very few days lost to industrial action, in line with prior years.

Actions taken by management to mitigate the risk

·   Regular review of our capital allocation model to ensure that scarce resources are directed to countries and businesses with the most attractive prospects.

·   Global Employer of Choice programme 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 on implementation of new regulations.

·   Monitoring of market pricing trends (where available) and individual customer profitability to minimise margin erosion; sales incentives increasingly prioritise margin and customer profitability.

·   International Key Accounts team developing business with multinational customers (18 at the end of 2018) across geographies to take advantage of the Company's unique global capabilities.

·   Stock building to mitigate potential disruption from Brexit.

·   Regular reviews of cost base and productivity programmes. Group Procurement team tasked to deliver economies of scale in IT, fleet, energy and logistics.

·   Use of robotics in back office functions to automate manual administrative tasks in a cost effective way.

·   Regular monitoring of debtor days outstanding with action taken against customers with overdue debts.

Changes in 2018 vs. 2017

·   Commodity prices remain volatile but no significant impact in 2018.

·   No significant regulatory changes in key markets.

·   Brexit uncertainty and weak property market in UK adversely impacted Property Care business.

·   Acquired Cannon Hygiene and Mitie Pest business in UK, being kept separate under order from the CMA.

·   North America business now accounts for 38% of Ongoing Revenue at CER.

·   France Workwear returned to profitable growth.

·   Buy-in of UK defined benefit pension scheme as pre-cursor to buy-out in 2020 to de-risk balance sheet.

Actions taken by management to mitigate the risk

·   Acquisition of targets with specific capabilities that address future changes in our markets.

·   Targeted investment in innovation to meet market and regulatory needs and defend against commoditisation.

·   Category Boards to oversee and roll out innovations across our regional businesses.

·   Establishment of the Power Centre to drive innovation in products and services and provide enhanced training facilities for the Group.

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

Changes in 2018 vs. 2017

·   Increased sales from innovations such as Lumnia, Agrilaser, Fruit Fly Ninja and Entotherm Compact.

·   Queen's Award for Enterprise - Innovation.

·   Roll out of digital tools accelerating across all regions. PestConnect in use in 18 countries.

Actions taken by management to mitigate the risk

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

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

·   Data encryption and implementation of AirWatch to mitigate potential loss of business data.

·   Penetration testing on all systems at least annually to test external firewalls and address any identified weaknesses.

·   Annual inspections of key sites by insurers, on a rotating basis, to identify potential risks.

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

·   Local plans to service customers from adjacent laundries/ branches if supply is interrupted.

·   Advancing shipments of goods from the UK to overseas businesses and holding additional stocks in border locations to mitigate any adverse impact of Brexit.

Changes in 2018 vs. 2017

·   Security governance framework and standards continue to improve. External consultants used to identify most significant business continuity risks and put in place additional measures where necessary.

·   New IT security protocols being implemented.

·   GDPR compliance programme enhances security including extended use of encryption and business process mapping.

·   New BCP model being rolled out.

·   Brexit risks assessed and plan put in place.

Actions taken by management to mitigate the risk

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

·   Monitoring of online U+ training completion rates.

·   Payroll audits carried out across all countries to ensure compliance with local employment and tax laws.

·   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 and/or laws to Group General Counsel and Head of Internal Audit.

·   Mandatory training on Code of Conduct and other core compliance topics, with annual refreshers, to instil a highly principled culture of ethical behaviour.

·   New Supplier Code of Conduct developed for roll out in 2019.

·   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.

Changes in 2018 vs. 2017

·   Significant long-standing litigations successfully resolved during 2018, reducing risk of fines or damages.

·   The level of tax provisions are considered appropriate and not materially changed from the level in prior year.

Actions taken by management to mitigate the risk

·   Ongoing programme to ensure all businesses are compliant with data privacy requirements including in Europe the General Data Protection Regulation (GDPR).

·   AirWatch and laptop encryption being implemented.

·   Mandatory online training by all senior employees for competition law, anti-bribery and corruption, information security and privacy, and conflicts of interest.

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

·   Standardised financial 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.

·   In most countries, card transactions are managed by regulated third parties to prevent data loss and ensure compliance with PCI-DSS regulations.

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

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

Changes in 2018 vs. 2017

·   GDPR compliance project included training across the Group: no significant uplift in data access requests; catalyst for linked IT security enhancements such as encryption and data loss prevention.

·   Review of key financial control framework, minor changes made.

·   No major frauds identified during 2018.

Actions taken by management to mitigate the risk

·   Robust health and safety (H&S) policies supplemented by the SHE Golden Rules and technical policies address higher risk and regulated activities, e.g. driving, working at height, fumigation or heat treatment. Group technical and safety standards often higher than regulatory requirements.

·   H&S officers appointed in all jurisdictions, supported by dedicated central team.

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

·   Focus on implementation of Group fumigation standards in all new acquisitions.

·   H&S considered as first item at all Board and senior management meetings; review of standardised H&S KPIs.

·   Formal review of accidents and circulation of lessons learned.

·   Monitoring energy-derived emissions and water usage including energy efficiency target of 20% reduction in energy intensity from 2016 baseline by 2020.

Changes in 2018 vs. 2017

·   Review of hazardous process rules issued, including new rules relating to use of drones and laser pointers.

·   New electrical safety guidance developed for roll out in 2019.

·   Safety Leadership Behaviours initiative for first level management.

Actions taken by management to mitigate the risk

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

·   Dedicated project teams established for largest acquisitions and demergers, e.g. PCI in India and ex- CWS business in Italy, with clear deliverables over three months, six months and one year. Additional resources provided to US to support integration and replatforming.

·   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 with acquisitions to drive integration plans and compliance with Group standards, especially when entering new geographies.

·   Post-completion governance: formal post-acquisition review (PAR) of every acquisition by Investment Committee against original business plan within 18-24 months; Board post-investment review of acquisitions in aggregate every six months; Internal Audit review of acquisitions in new geographies within 12 months.

Changes in 2018 vs. 2017

·   Successful carve out of Central and Eastern Europe Hygiene and Workwear business to Haniel JV.

·   Integration of Rentokil PCI business in India is complex and running slightly behind schedule.

·   Integration of ex-CWS Italy business on track, and performing well.

·   Acquisitions of Cannon UK and the former Mitie Pest businesses under investigation by the CMA and held separate pending final outcome.

Actions taken by management to mitigate the risk

·   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-GBP profits and net debt.

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

·   Revolving credit facility (RCF) increased to £600m to provide funding headroom for refinancing of 2019 bonds.

Changes in 2018 vs. 2017

·   Increasing interest rate environment and credit spreads, but still lower than coupons on part of the Group's debt.

·   Review of Group banks to ensure appropriate spread of risk.

·   BBB rating retained.