THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in anydoubt as to the action you should take, you are recommended to seek your own financial advice immediately fromyour stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised underthe Financial Services and Markets Act 2000 if you are resident in the United Kingdom or, if not, from anotherappropriately authorised independent financial adviser.

If you have sold or otherwise transferred all your Shares in Interserve, please send this document, together withthe accompanying Form of Proxy, as soon as possible, to the purchaser or transferee, or to the stockbroker, bankor other agent through whom the sale or transfer was effected for delivery to the purchaser or transferee. If youhave sold or otherwise transferred only part of your holding, you should retain these documents.

The distribution of this document and accompanying documents in or into jurisdictions other than the UnitedKingdom may be restricted by local law and therefore persons into whose possession this document comesshould inform themselves about and observe any such restrictions. Any failure to comply with any suchrestrictions may constitute a violation of the securities laws or regulations of such jurisdictions.

INTERSERVE PLC(Registered in England and Wales No. 00088456)

Proposed acquisition of the Initial Facilities Services Businessand

Notice of General Meeting

Your attention is drawn to the letter from the Chairman of Interserve which is set out on pages 4 to 9 of thisdocument which, amongst other matters, recommends you to vote in favour of the resolution to be proposed at theGeneral Meeting referred to below. You should and are advised to read the whole of this document in its entirety.

Notice of a General Meeting of Interserve Plc, to be held at 10 a.m. on 17 March 2014 at the offices ofAshurst LLP, Broadwalk House, 5 Appold Street, London EC2A 2HA, is set out at the end of this document.The Form of Proxy for use at the meeting accompanies this document and, to be valid, should be completed andreturned to the Company’s registrars, Capita Asset Services at The Registry, 34 Beckenham Road, Beckenham,Kent BR3 4TU as soon as possible and, in any event, so as to arrive by no later than 10 a.m. on 13 March 2014.Completion and return of the Form of Proxy will not preclude Shareholders from attending and voting in personat the General Meeting, should they wish to do so.

This document includes forward-looking statements concerning the Enlarged Group. Forward-lookingstatements are based on current expectations and projections about future events. These forward-lookingstatements are subject to risks, uncertainties, and assumptions about the Enlarged Group. Subject to theCompany’s continuing obligations under the Listing Rules, the DTRs and the Prospectus Rules, the EnlargedGroup undertakes no obligation to update publicly or revise any forward-looking statements, whether as a resultof new information, future events or otherwise.

J.P. Morgan Limited (which conducts its UK investment banking business as J.P. Morgan Cazenove), which isauthorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively asjoint sponsor and corporate broker to Interserve and no one else in connection with the Transaction and will notbe responsible to anyone other than Interserve for providing the protections afforded to its clients or for givingadvice in connection with the Transaction or any of the arrangements referred to or contained in this document.

Numis Securities Limited, which is authorised and regulated in the United Kingdom by the Financial ConductAuthority, is acting exclusively as joint sponsor and corporate broker to Interserve and no one else in connectionwith the Transaction and will not be responsible to anyone other than Interserve for providing the protectionsafforded to its clients or for giving advice in connection with the Transaction or any of the arrangements referredto or contained in this document.

Apart from the responsibilities and liabilities, if any, which may be imposed on either Numis Securities Limitedor J.P. Morgan Limited (which conducts its UK investment banking business as J.P. Morgan Cazenove) by theFSMA or the regulatory regime established thereunder, each of Numis Securities Limited and J.P. MorganLimited accept no responsibility or liability whatsoever for the contents of this document, including its accuracy,completeness or verification or for any other statement made or purported to be made in connection with theCompany or the Transaction, and nothing in this document is or shall be relied upon as a promise orrepresentation in this respect, whether as to the past or future. Each of Numis Securities Limited andJ.P. Morgan Limited accordingly disclaim all and any responsibility or liability whether arising in tort, contract orotherwise (save as referred to above) which they might otherwise have in respect of this document or any suchstatement.

CORPORATE DETAILS AND ADVISERS

Registered Office . . . . . . . . . . . . . . . Interserve HouseRuscombe ParkTwyfordReadingBerkshireRG10 9JU

Joint sponsor and corporate broker . . J.P. Morgan Limited (which conducts its UK investmentbanking business as J.P. Morgan Cazenove)25 Bank StreetLondonE14 5JP

Joint sponsor and corporate broker . . Numis Securities LimitedThe London Stock Exchange Building10 Paternoster SquareLondonEC4M 7LT

Solicitors to the Company . . . . . . . . . Ashurst LLPBroadwalk House5 Appold StreetLondonEC2A 2HA

Solicitors to the joint sponsors andcorporate brokers . . . . . . . . . . . . . . . Simmons & Simmons LLP

CityPointOne Ropemaker StreetLondonEC2Y 9SS

Auditors and reporting accountants . . Deloitte LLP2 New Street SquareLondonEC4A 3BZ

Registrars . . . . . . . . . . . . . . . . . . . . Capita Asset ServicesThe Registry34 Beckenham RoadBeckenhamKentBR3 4TU

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TABLE OF CONTENTS

Page

Expected timetable of principal events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Part I Letter from the Chairman of Interserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Part II Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Part III Presentation of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Part IV Financial Information relating to the Initial Facilities Services Business . . . . . . . . . 15

Part V Unaudited Pro Forma Statement of Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Part VI Principal Terms of the Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Part VII Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Part VIII Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Part IX Documents incorporated by reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Notice of General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

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EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Event Expected time/date

Latest time and date for receipt of Forms of Proxy . . . . . . . . . . . . . . . . . . 10 a.m. on 13 March 2014

General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 a.m. on 17 March 2014

Expected date for completion of the Transaction . . . . . . . . . . . . . . . . . . . 18 March 2014

Note: Future dates are indicative only and are subject to change by the Company, in which event details of the new times and dateswill be notified to the FCA and, where appropriate, to Shareholders.

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PART I

LETTER FROM THE CHAIRMAN OF INTERSERVE PLCIncorporated and registered in England and Wales, Registration No. 00088456

Directors: Registered Office:Lord Blackwell (Group Chairman) Interserve HouseAdrian Ringrose (Chief Executive Officer) Ruscombe ParkTim Haywood (Group Finance Director) TwyfordSteven Dance (Executive Director) ReadingBruce Melizan (Executive Director) BerkshireDougie Sutherland (Executive Director) RG10 9JULes Cullen (Senior Independent Director)Keith Ludeman (Non-Executive Director)David Thorpe (Non-Executive Director)Anne Fahy (Non-Executive Director)

28 February 2014

Dear Shareholder

Proposed acquisition of the Initial Facilities Services Businessand

Notice of General Meeting

Introduction

The Interserve board of directors announced today, 28 February 2014, that Interserve has entered into aconditional agreement with a subsidiary of Rentokil Initial plc, to acquire their facilities services businessfor a cash consideration of £250 million.

The Company also announced today its wish to and the results of its intention to raise up to £74.8 million(before expenses) by way of an equity placing of 12,897,771 shares at a price of 580 pence per new sharewith new and existing investors and that it has also negotiated a new £200 million term loan facility (as partof an extended, re-priced and expanded club facility agreement).

Due to the size of the Initial Facilities Services Business in relation to the size of Interserve, theTransaction constitutes a Class 1 transaction pursuant to the Listing Rules and is therefore both subject toand conditional upon the approval of Interserve’s Shareholders. A General Meeting is being convened forthis purpose and will be held at 10 a.m. on 17 March 2014 at the offices of Ashurst LLP, Broadwalk House,5 Appold Street, London EC2A 2HA. A notice of the General Meeting and of the Resolution to beproposed and considered at the General Meeting is set out at the end of this document.

The Board considers that the Transaction is in the best interests of Shareholders as a whole andrecommends that Shareholders vote in favour of the Resolution to be proposed at the General Meeting.

The purpose of this document is to: (i) explain the background to and reasons for the Transaction;(ii) explain why the Board considers the Transaction to be in the best interests of Shareholders as a whole;and (iii) convene a General Meeting to seek Shareholder approval for the Transaction.

Background to the Transaction and Information on Interserve

Interserve is a leading support services and construction company, operating in the public and privatesectors in the UK and internationally, offering advice, design, construction, equipment, facilitiesmanagement and front-line services. The Group employs some 50,000 people worldwide.

Since entering the market for support services some 15 years ago, and diversifying from its traditionalconstruction background, Interserve has pursued a strategy of organic growth and investment, growththrough a series of acquisitions and actions to restructure its balance sheet. Strong operationalmanagement has resulted in significant progress in the development of its Support Services Activities bothin terms of revenue growth and rising operating margins, such that Interserve is now one of the prominentproviders of facilities services to a wide variety of public sector organisations. Interserve has also beensteadily broadening its customer base within the private sector. Interserve’s Support Services Activities

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business now comprise some 28,000 employees and contracts with significant customers within both thepublic and private sectors. For the year ended 31 December 2013, the Support Services Activities businessof Interserve reported an operating profit of £60.1 million, revenue of £1,254.1 million and segment assetsof £324.3 million.

Information on the Initial Facilities Services Business

The Initial Facilities Services Business comprises the facilities services businesses of the Rentokil Groupwith operations in the UK, Ireland and Spain, with the UK and Ireland representing 92.2 per cent ofrevenue in the year ended 31 December 2013. It provides a comprehensive range of facilities services fromspecialist single services, including cleaning, catering, security, mechanical and electrical buildingmaintenance, energy management and statutory compliance, to fully integrated TFM. The Initial FacilitiesServices Business has a strong record in serving a broad customer base within the private sector,incorporating services to many professional service businesses, national retailers, transport operators and avariety of industrial businesses, including the London Underground which currently representsapproximately £50 million of revenue per annum. The Initial Facilities Services Business has over 22,000employees in the UK and Ireland and approximately 3,000 in Spain.

For the year ended 31 December 2013, the Initial Facilities Services Business reported an operating profitof £8.8 million, a profit before taxation of £8.4 million and gross assets of £229.6 million.

The trading results for the Initial Facilities Services Business for the three years ended 31 December 2013(which have been extracted from Part IV of this document) were as follows:

2011 2012 2013Year ended 31 December audited audited audited

£m £m £m

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 558.0 563.9 542.2Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3 15.9 8.8Operating profit before amortisation of intangible assets(1), reorganisation

costs, one-off items and Rentokil Initial plc management charge . . . . . . . . 26.7 29.5 25.6Reported profit before taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3 15.0 8.4Gross assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294.8 254.0 229.6

Note 1: excluding computer software

The Initial Facilities Services Business has undertaken a number of internal restructuring exercises torationalise its property portfolio, to exit lower margin business and to align its activities along customersector verticals rather than by service type. These restructuring exercises have resulted in a number ofnon-recurring costs which account for the lower reported profit before taxation as shown above and inPart IV of this document.

Part V of this document contains a pro forma statement of net assets for the Enlarged Group prepared onthe basis of the Initial Facilities Services Business’ balance sheet as at 31 December 2013 and Interserve’sbalance sheet as at 31 December 2013.

Reasons for the Transaction

The Board believes that the Transaction represents an excellent opportunity to enhance the growth ofInterserve’s Support Services Activities and assist it in implementing the future growth strategy of thebusiness, particularly in the private sector, and enable it to become one of the leading facilities servicesproviders in the UK.

The Board believes that the Initial Facilities Services Business complements the existing Interservebusiness, and that the core part of the Enlarged Group will be well placed to grow future revenues andmarket share, across both the public and private sector, benefitted by the associated synergies of being alarger single business. Additionally, the Board believes that Interserve’s management is well placed tobuild on its existing track record of successfully leading and developing large scale support servicesbusinesses.

Furthermore, the Board believes that the Transaction combines two strong businesses with a similar cultureand approach to customer service. This will not only aid the integration process but also underpin futurebusiness performance and assist in offering attractive propositions for customers, partners and employeesof both Interserve and the Initial Facilities Services Business as well as enhancing value for Shareholders.

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Specifically the Board believes that the Transaction will provide the following:

• Strengthened market position: The enhanced Support Services Activities that will result from theTransaction will position Interserve as one of the largest providers (top three by revenue) of SupportServices Activities in the UK. This will enhance Interserve’s ability to offer its customers a range ofservices from TFM on a national basis to more specialist single services either on a local or nationalbasis. Nonetheless, the Enlarged Group will have a market share of below five per cent, hence providingsignificant opportunity for further revenue growth within this £70 billion UK facilities managementmarket, of which £42 billion was outsourced in the UK in 2012 (source: Credo, 2013). The Boardbelieves that the total facilities market in the UK will grow at approximately three to four per cent perannum.

• Greater breadth of services and capabilities: The Initial Facilities Services Business possesses additionalcapability in its fire and water related maintenance services as well as a more defined energymanagement proposition which would be available to the whole customer base of the Enlarged Group.Enhancing the portfolio of services will enable the Enlarged Group to self-deliver certain services thatare currently subcontracted and also broaden the customer proposition.

• Greater breadth of customers: The Initial Facilities Services Business, with its greater proportion ofcontracts in the private sector, complements the current prominent position that Interserve has withinthe public sector. The Board believes that approximately 85 per cent of the Initial Facilities ServicesBusiness’ revenue is generated from the private sector, with the public sector representing the remaining15 per cent. The outsourced market for facilities services in the private sector is currently estimated tobe nearly twice that of the public sector (£25.2bn compared to £13.7bn, source: Credo, 2013) andInterserve’s experience and credentials within this sector create a significant opportunity for theEnlarged Group.

The Enlarged Group’s Support Services Activities would have a pro forma split of turnover of 48 percent public sector and 52 per cent private sector. This balanced portfolio, coupled with the smalleraverage size of contracts within the private sector will help ensure that the Enlarged Group will not beoverly exposed to any one sector or customer contract.

• Synergy opportunities: The additional scale that comes with acquiring the Initial Facilities ServicesBusiness will provide the Enlarged Group with further opportunity to leverage operational efficienciesas well as providing cost saving opportunities within areas such as corporate support and operationalmanagement functions. The Board believes that the Enlarged Group will have the ability to accessrevenue opportunities which are not otherwise currently available to the Company or the InitialFacilities Services Business.

• Additional management capability: Both Interserve and the Initial Facilities Services Business have anexcellent reputation in the marketplace. A broader pool of management talent will be a significant assetto the Enlarged Group as it continues to develop over time.

The Transaction

Transaction documents

Under the terms of the Acquisition Agreement, Interserve will acquire a number of target companies and,pursuant to the terms of the Irish Business Transfer Agreement and the Water Business TransferAgreement, certain additional businesses and assets of the Business that are not owned by the companiesto be purchased. The consideration for the Transaction comprises the payment by Interserve to the Sellerof £250 million in cash with an adjustment to deliver a normalised level of working capital and a neutralnet cash target.

Completion is conditional on the passing of the Resolution by Shareholders. Save where a TerminationEvent has occurred, in the event that the Resolution is not passed or the recommendation of the Board setout in this document is changed or adversely amended, Interserve will pay to the Seller a break fee of£3.5 million in cash upon the lapsing of the Transaction. A customary set of restrictive covenants andwarranties have been provided by the Seller in the Acquisition Agreement and the Business TransferAgreements, which will extend to cover each of the Irish Business and Water Business. The AcquisitionAgreement and the Business Transfer Agreements also contain ordinary course indemnities, includingrelating to taxation, TUPE and certain liabilities (including pensions) incurred prior to Completion.

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In addition, and to facilitate the operation of the Business, the Company and the Seller will enter into atransitional services agreement on Completion for the provision of certain services relating to informationtechnology and HR for a period of 12 months from Completion (or as otherwise extended at theagreement of both the Company and the Seller).

Further details of the Transaction and a summary of the principal terms of the Agreements are set out inPart VI of this document.

Directors, Managers and Employees of the Enlarged Group

Interserve currently employs more than 50,000 personnel throughout the Group and 28,000 within itsSupport Services Activities. The Enlarged Group will therefore consist of over 50,000 employees engagedin Support Services Activities. The management team of the Enlarged Group will ensure that it benefitsfrom the best skills and experience of both Interserve and the Initial Facilities Services Business to deliverbest practice and operational excellence across Support Services Activities throughout the EnlargedGroup.

Financing the Transaction

On 28 February 2014, Interserve entered into a £400 million club facility agreement with Barclays Bankplc, the Royal Bank of Scotland plc, HSBC Bank plc and Lloyds Bank plc. This new facility replaces andextends an existing bilateral facility with Barclays Bank plc and an existing club facility with the Royal Bankof Scotland plc, HSBC Bank plc and Lloyds Bank plc. The new facility includes a £200 million term loanfacility specifically for the purpose of financing the Transaction and related costs and expenses.

The Transaction will be funded through a combination of these funds together with the net proceeds of theEquity Placing. The Company entered into a Placing Agreement with JPMC, JPMS and Numis on28 February 2014 pursuant to which JPMS and Numis agreed to procure institutional placees for thePlacing Shares or failing which, to subscribe themselves for the Placing Shares, at the Placing Price. TheEquity Placing, which has been underwritten by JPMS and Numis, is expected to raise gross proceeds ofapproximately £74.8 million. Subject to the terms of the Placing Agreement, the Equity Placing is expectedto complete on 5 March 2014.

Further details of the principal terms of the Placing Agreement are set out in paragraph 5.1(b) of Part VIIof this document.

Synergies and integration

The Board believes that the Transaction presents opportunities for cost synergies. The Directors believethat the combination of Interserve and the Initial Facilities Services Business can be expected to achieverecurring annual pre-tax cost synergies of approximately £5 million. The synergies identified below reflectboth beneficial elements and relevant costs that arise as a result of the Transaction. These synergies arecontingent on the completion of the Transaction and could not be achieved by Interserve and the InitialFacilities Services Business operating independently.

Based on its current integration plan, cost savings are expected to arise in the following areas:

• the removal of duplicated functions within the Enlarged Group through combining corporate supportand operational management functions; and

• procurement savings arising from the increased size and purchasing power of the Enlarged Group, forexample in relation to fleet costs and insurance.

The Board expects to realise the above synergies on a phased basis as follows:

• approximately £1 million of pre-tax cost synergies in the financial year ending 31 December 2014; and

• approximately £5 million of pre-tax cost synergies in the financial year ending 31 December 2015,

in each case, when compared to £533.4 million of expenses (being the total operating expenses) and£2,134.6 million of expenses (being the cost of sales and total administration expenses) of the InitialFacilities Services Business and Interserve respectively, as shown in the audited historical financialaccounts relating to the Initial Facilities Services Business as set out in Part IV of this document andInterserve’s preliminary results for the year ended 31 December 2013.

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The Board also expects that the integration process and the realisation of these synergies will result inone-off exceptional costs of approximately £10 million in the year ended 31 December 2014.

Given its track record and the nature of the Business being acquired, the Board is confident that theintegration of the two businesses can be achieved without undue disruption to the underlying operations ofeach business and is committed to ensuring that the enhancement to customer service that is targetedthrough this process is fully delivered.

Effect of the Transaction

The Board believes that, taking into account the business and prospects of the Enlarged Group, theexpected synergy benefits and associated costs of achieving them and the impact of the Placing Sharesissued via the Equity Placing, the Transaction will be earnings enhancing in the year ending 31 December2014 and significantly earnings enhancing in the year ending 31 December 2015, being the first full yearfollowing Completion of the Transaction. This statement is not intended to be a profit forecast, and shouldnot be interpreted to mean that the earnings per share of Interserve following Completion of theTransaction will necessarily be above or below the historical published earnings per share.

Should Shareholders vote in favour of the Resolution and approve the Transaction, the RemunerationCommittee will increase the Normalised EPS growth required to achieve entry level and on-targetperformance for annual variable pay and the threshold and on-target performance for the earnings pershare element of awards to be made to the executive directors under the Performance Share Plan.

Current trading and future prospects

Interserve

Interserve’s preliminary results for the year ended 31 December 2013 were announced on 28 February2014 and contained the following statement in relation to the outlook for the Company:

‘‘The Group continues to focus on growth, whether organic or acquired, and now with markets showingsigns of broad improvement we are confident of delivering further growth in 2014.

Internationally, we expect to see further revenue growth as we look to exploit the opportunities of ourexpanded presence and broader offering.’’

The Initial Facilities Services Business

The Initial Facilities Services Business has had a good start to 2014 and is trading in line with theexpectations of the management of the Business.

Risk factors

Shareholders should consider fully the risk factors set out in Part II of this document.

General Meeting

A notice convening a general meeting of the Company, to be held 10 a.m. on 17 March 2014 at the officesof Ashurst LLP, Broadwalk House, 5 Appold Street, London EC2A 2HA, is set out at the end of thisdocument. A Form of Proxy to be used in connection with the General Meeting is enclosed. The purposeof the General Meeting is to seek Shareholders’ approval for the Transaction.

Action to be taken

You will find enclosed a Form of Proxy for use at the General Meeting. Whether or not you intend to bepresent at that meeting, you are requested to complete the Form of Proxy (in accordance with theinstructions printed thereon) and return it to the Company’s registrars, Capita Asset Services at TheRegistry, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as possible and, in any event, so as toarrive by 10 a.m. on 13 March 2014. Completion and return of a Form of Proxy will not preclude you fromattending that meeting and voting in person if you so wish.

Further information

Your attention is drawn to the further information contained in Parts III to VII of this document.

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You are advised to read the whole of this document and not to rely solely on the information contained inthis letter.

Recommendation

The Board considers the Transaction to be in the best interests of Shareholders as a whole. Accordingly, theBoard recommends that Shareholders vote in favour of the Resolution to be proposed at the GeneralMeeting, as the Directors intend to do in respect of their own beneficial holdings amounting (as at27 February 2014, being the latest practicable date prior to the posting of this document) to an aggregate of767,543 Shares, representing approximately 0.59 per cent of the Company’s current issued share capital.

Yours faithfully,

Lord BlackwellChairman

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PART II

RISK FACTORS

Prior to making any decision to vote in favour of the Resolution at the General Meeting, Shareholders shouldcarefully consider, together with all other information included or incorporated by reference into this document,the risks and uncertainties described below.

The risks and uncertainties described below represent those known to the Directors as at the date of thisdocument which the Directors consider to be material risks relating to the Transaction, as well as material risksto the Group which result from, or will be impacted by, the Transaction.

The occurrence of one or more risks may have an adverse effect on the business, financial position, results ofoperations or prospects of the Group. In such case, the market price of the Shares could decline and you maylose all or part of your investment.

The risks and uncertainties described below should not be regarded as a complete and comprehensive statementof all potential risks and uncertainties. Additional risks and uncertainties that are not presently known to theDirectors, or which they deem immaterial, or which the Directors consider to be material but which are notrelated to or will not result from or be impacted by the Transaction (certain of which are set out in the publishedconsolidated accounts of the Group for the financial year 2012), may also have an adverse effect on theGroup’s business, financial position, results of operations or prospects.

1. RISK FACTORS RELATING TO THE TRANSACTION

1.1 Failure to complete the Transaction

The Transaction is conditional upon the approval of Interserve’s Shareholders, which is to be sought at theGeneral Meeting. Failure to complete the Transaction may materially adversely affect the trading price ofthe Shares.

If the Transaction does not complete, the Company would nonetheless incur expenses, including advisoryfees, in connection with the Transaction. If, absent a Termination Event, either the Shareholders do notpass the Resolution by the Long Stop Date or the Board changes its recommendation that Shareholdersvote in favour of the Resolution (in which case the Acquisition Agreement terminates) the Company iscontractually obliged to pay to the Seller a break-fee of £3.5 million.

1.2 The Transaction may not be approved by the UK competition authorities or may be approvedsubject to conditions

The Transaction qualifies for investigation by the Office of Fair Trading as the UK turnover of the InitialFacilities Services Business exceeds £70m. There is no requirement to obtain OFT merger clearance priorto completion of the Transaction and Completion of the Transaction will not be conditional on prior OFTapproval. On the basis of the assessment it has undertaken, Interserve does not believe that there is arealistic prospect that the OFT will conclude that a substantial lessening of competition will arise.However, it cannot be ruled out entirely that a detailed investigation by the Competition Commission willbe required, during which time a ‘‘hold separate’’ undertaking or order preventing or pausing integrationmay be required (thereby delaying the synergistic benefits described earlier), and that conditions may beimposed as a consequence. Such conditions may relate to the future conduct of the Enlarged Group or,potentially, divestment of certain businesses or assets of the Enlarged Group which could have a materialadverse effect on the business and results of operations of the Enlarged Group.

1.3 Adverse change in the financial condition of the Initial Facilities Services Business

Pursuant to the terms of the Acquisition Agreement, the Company may only terminate the AcquisitionAgreement prior to Completion in certain circumstances (details of which are set out in paragraph 3 ofPart VI). Completion is expected to occur shortly following the passing of the Resolution by Shareholders.Until Completion, the Company will not own the Initial Facilities Services Business and it is possible thatthere could be an adverse event affecting the Initial Facilities Services Business which would not give riseto a right of the Company to terminate the Acquisition Agreement. In such an event, the value of theInitial Facilities Services Business may be less than the Consideration paid by the Company and,accordingly, the net assets of the Enlarged Group could be reduced. Whilst contractual protection fortrading is provided in the Acquisition Agreement through the working capital adjustment and against

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certain contingent liabilities through the repetition of certain warranties, this could still have an adverseeffect on the business, financial condition, operating results and prospects of the Enlarged Group.

1.4 Risk of disruptions in the businesses of the Group

Whether or not Completion of the Transaction occurs, the prospect of Completion of the Transaction andthe process of integrating the Business could cause disruptions in the businesses of the Group. Specifically,if Completion of the Transaction occurs, some current and prospective employees may experienceuncertainty about their future roles within the Enlarged Group, which may adversely affect the EnlargedGroup’s abilities to retain or recruit key managers and other employees.

If the Group fails to manage these risks effectively, the business and financial results of the Group and theEnlarged Group could be adversely affected.

1.5 The Group may incur higher than expected integration, transaction and transaction-related costs

Interserve expects to incur one-off expenses associated with combining the Support Services Activities ofthe Business with those of the Group, anticipated to be approximately £10 million all of which are expectedto be incurred by 31 December 2014. In addition, Interserve will incur legal, accounting and transactionfees and other costs related to the Transaction. Some of these costs are payable regardless of whether theTransaction is completed and such costs may be higher than anticipated.

Although Interserve believes that the elimination of costs, as well as the realisation of other efficienciesrelated to the integration of the Business, will offset these implementation and acquisition costs over time,this net benefit may not be achieved within the expected timetable. In addition, some of these costs couldbe higher than Interserve anticipates, which could reduce the net benefits of the Transaction and impactthe Group’s business, financial condition, operating results and prospects.

1.6 Synergy benefits may fail to materialise or be lower than have been estimated

Interserve believes the combination of the businesses of Interserve and the Initial Facilities ServicesBusiness will achieve recurring annual pre-tax cost synergies of approximately £5 million for the EnlargedGroup. However, there is a risk that the projected synergy benefits will fail to materialise, or that they maybe materially lower than have been estimated, which would have an impact on the profitability of theEnlarged Group in the future.

2. RISKS RELATING TO THE ENLARGED GROUP

2.1 If there are significant, unforeseen difficulties integrating the business operations of the InitialFacilities Services Business into the Group, they could adversely affect the business of theEnlarged Group

Interserve intends, to the extent possible, to integrate the operations of the Business following Completionof the Transaction. The integration process following the Completion of the Transaction may be complex.Interserve’s goal in integrating these operations is to increase revenues through enhanced growthopportunities and achieve cost efficiencies by taking advantage of the anticipated synergies ofconsolidation. However, Interserve may encounter difficulties integrating its operations with the Business’operations including if any significant contracts to the Business are terminated owing to the change ofcontrol of the Business, resulting in a delay or the failure to achieve the anticipated synergies and costsavings. If such difficulties are significant, this could adversely affect the business, financial condition,operating results and prospects of the Enlarged Group.

Successful integration will require a significant amount of management time and thus may affect or impairthe ability of the management team of the Enlarged Group to run the business effectively during theperiod of implementation. Furthermore, the Enlarged Group may not be able to retain personnel with theappropriate skill set for the tasks associated with the implementation programme. This could adverselyaffect the implementation of Interserve’s plans. In such circumstances, the profitability of the EnlargedGroup could be adversely affected, which could have a negative impact on the price of Shares.

2.2 Reliance on information systems

In the period immediately following Completion, the Enlarged Group will be dependent on the efficientand uninterrupted operation of the information technology and computer systems and of services from

11

third-party providers to the Initial Facilities Services Business under the terms of the Transitional ServicesAgreement. In the event that such systems and services are not provided in accordance with requiredtimescales, or successfully implemented at all, the ability of the Enlarged Group to operate effectively or tofulfil its contractual obligations may be affected or impaired during the period of implementation whichmay, in turn, affect the business, financial condition, operating results and prospects of the EnlargedGroup and lead to the Enlarged Group incurring significant consequential and remedial costs.

2.3 The Enlarged Group will be dependent upon its ability to attract, develop and retain appropriatelyskilled management or personnel

The success of the Enlarged Group will be dependent on retaining, recruiting, motivating and developingsufficient appropriately skilled and competent people at all levels of the organisation. The EnlargedGroup’s success will depend, to a significant extent, on the continued services of its senior managementteam including, but not limited to key members of the management team of the Initial Facilities ServicesBusiness, who have substantial knowledge of, and experience and expertise in, the industry. If the EnlargedGroup is unable successfully to retain and attract such personnel, it may not be able to maintain standardsof service or continue to grow its businesses as anticipated. The loss of such personnel, or the inability toattract and retain additional appropriately skilled employees required for its activities, could have anadverse effect on the Enlarged Group’s future prospects, financial condition or results of operations.

2.4 Failure to execute customer contracts in a timely and cost effective manner could adversely affectthe Enlarged Group’s business

As the Enlarged Group’s business will have grown, the size and scope of some of its contracts with itscustomers, as well as the number of contracts to be performed, will be increased. This increase in size andscope may translate into more technically challenging conditions or performance specifications for theEnlarged Group’s services. Contracts with customers generally specify performance criteria and penaltiesfor failure to perform. Any failure to execute such larger or additional projects in a timely and costeffective manner could have a material adverse effect on the business, financial condition and results ofoperations of the Enlarged Group.

2.5 The Enlarged Group will be subject to the increased complexity of running a business with anexpanded presence in Spain and Ireland

Whilst the Group currently has limited operations in Spain and Ireland, the Enlarged Group will have anenhanced international presence in these jurisdictions. As such the Enlarged Group will be subject toincreased risk from a number of legal, economic and market factors which could have an adverse effect onthe ability of the Enlarged Group to provide additional services in those areas. Such risks include:

• changes in and difficulties in complying with laws and regulations of different countries, including tax,environmental and labour laws;

• restrictive actions by local governments;

• unexpected changes in regulatory, legal, administrative or monetary environments;

• political instability;

• fraud conducted by the Enlarged Group’s employees, sub-contractors, service providers, clients’employees or those of third parties, or any persons unconnected with any of the foregoing;

• nullification, modification or renegotiation of contracts; and

• expropriation of assets.

The occurrence of any of these events could have a material adverse effect on the financial performanceand condition of the Enlarged Group.

2.6 Risk of reputational damage to the businesses of the Enlarged Group

Both Interserve and the Business operate services for clients where a shortfall in performance could leadto reputational damage, particularly where these relate to high profile public services. The Enlarged Groupcould therefore be exposed to greater financial risk if reputational damage caused by a service shortfall inone contract has an adverse effect on winning new customers or retaining existing customers across theEnlarged Group.

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PART III

PRESENTATION OF INFORMATION

1. Introduction

The contents of this document should not be construed as legal, financial or tax advice. Shareholdersshould consult their own solicitor, financial adviser or tax adviser for legal, financial or tax advice.

Certain information in relation to the Company is incorporated by reference into this document. Youshould refer to Part IX of this document for further details. Where the documents incorporated byreference themselves make reference to other documents, such other documents are not incorporated anddo not form part of this document.

2. Financial Information

Financial information relating to the Initial Facilities Services Business for the years ended 31 December2013, 2012 and 2011, has been prepared on a ‘‘carve out’’ basis from Rentokil Initial plc’s consolidatedfinancial information by combining the historical results, assets and liabilities attributable to the InitialFacilities Services Business, is set out on pages 15-49 of this document and is presented in sterling. IFRSsas adopted by the EU do not provide for the preparation of combined financial information, andaccordingly in preparing the combined financial information certain accounting conventions commonlyused for the preparation of historical financial information for inclusion in investment circulars asdescribed in the Annexure to SIR 2000 (Investment Reporting Standard applicable to public reportingengagements on historical financial information) issued by the UK Auditing Practices Board have beenapplied. The application of these conventions results in material departures from IFRSs as adopted by theEU and these are explained on pages 20-21. In other respects, IFRS, as adopted by the EU, has beenapplied and the financial information relating to the Initial Facilities Services Business has been preparedin a form that is consistent with the accounting policies adopted in Interserve’s latest annual accounts.

3. Information on Risk Factors

The risk factors set out in Part II of this document are those material risk factors of which the Directorsare aware. However, these should not be regarded as a complete and comprehensive statement of allpotential risks and uncertainties relating to the Transaction. Additional risks and uncertainties that are notat present known to the Directors, or that the Directors currently deem immaterial, may also have amaterial and adverse effect on the Enlarged Group’s business, financial condition and prospects.

4. No Profit Forecast

No statement in this document or incorporated by reference into this document is intended to constitute aprofit forecast or profit estimate for any period, nor should any statement be interpreted to mean thatearnings or earnings per share will necessarily be greater or lesser than those for the relevant precedingfinancial periods for any member of the Enlarged Group as appropriate.

5. Forward-Looking Statements

Certain statements contained in this document, including those in Part II: ‘‘Risk Factors’’ constitute‘‘forward-looking statements’’. In some cases, these forward-looking statements can be identified by theuse of forward-looking terminology, including the terms ‘‘believes’’, ‘‘estimates’’, ‘‘plans’’, ‘‘prepares’’,‘‘anticipates’’, ‘‘expects’’, ‘‘intends’’, ‘‘may’’, ‘‘will’’ or ‘‘should’’ or, in each case, their negative or othervariations or comparable terminology. Shareholders should specifically consider the factors identified inthis document, which could cause actual results to differ, before making any decision whether to vote infavour of the Resolution. Such forward-looking statements involve known and unknown risks, uncertaintiesand other factors which may cause the actual results, performance or achievements of the Enlarged Group,or industry results, to be materially different from any future results, performance or achievementsexpressed or implied by such forward-looking statements. Such forward-looking statements are based onnumerous assumptions regarding the Group’s present, and the Enlarged Group’s future, businessstrategies and the environment in which the Enlarged Group will operate in the future. Such risks,uncertainties and other factors include those set out more fully in Part II: ‘‘Risk Factors’’ and include,among others: general economic and business conditions, industry trends, competition, changes ingovernment regulation, economic downturn and the Enlarged Group’s ability to implement expansionplans. These forward-looking statements speak only as at the date of this document. Except as required by

13

the FCA, the Listing Rules, the Prospectus Rules, the Disclosure Rules and Transparency Rules, theLondon Stock Exchange, applicable law or relevant regulation, the Enlarged Group expressly disclaims anyobligation or undertaking to release publicly any updates or revisions to any forward-looking statementscontained in this document to reflect any change in the Company’s expectations with regard thereto or anychange in events, conditions or circumstances on which any such statement is based. This statement doesnot seek to qualify the working capital statements given at paragraph 6 of Part VII of this document.

6. Rounding

Certain figures included in this document and in the information incorporated by reference into thisdocument have been subject to rounding adjustments. Accordingly, discrepancies in tables between thetotals and the sums of the relevant amounts is due to rounding.

7. Time

All references in this document to time are to London time unless stated.

8. Definitions

Capitalised terms used in this document have the meanings ascribed to them in Part VIII of this document.

14

9JUN201203183087

PART IV

Financial Information on the Initial Facilities Services Business

(A) Accountant’s report on the historic financial information relating to the Initial Facilities ServicesBusiness

The Directors

Interserve plc

28 February 2014

Dear Sirs

Initial Facilities Services Business

We report on the financial information set out on pages 15 to 49. This financial information has beenprepared for inclusion in the Class 1 circular relating to the acquisition of Initial Facilities ServicesBusiness of Rentokil Initial plc by way of the purchase of Initial Facilities Services (UK) Limited and InitialFacilities Services S.A.U. together with the Irish and water businesses, dated 28 February 2014 byInterserve plc on the basis of the accounting policies set out on pages 20 to 21. This report is required byparagraph 13.5.21R of the Listing Rules and is given for the purpose of complying with that paragraph andfor no other purpose.

Responsibilities

The Directors of Interserve plc are responsible for preparing the financial information on the basis ofpreparation set out on pages 20 to 21 to the financial information.

It is our responsibility to form an opinion on the financial information and to report our opinion to you.

Save for any responsibility which we may have to those persons to whom this report is expressly addressedand which we may have to Shareholders as a result of the inclusion of this report in the Class 1 circular, tothe fullest extent permitted by law we do not assume any responsibility and will not accept any liability toany other person for any loss suffered by any such other person as a result of, arising out of, or inconnection with this report or our statement, required by and given solely for the purposes of complyingwith Listing Rule 13.4.1R(6), consenting to its inclusion in the Class 1 circular.

Basis of opinion

We conducted our work in accordance with Standards for Investment Reporting issued by the AuditingPractices Board in the United Kingdom. Our work included an assessment of evidence relevant to theamounts and disclosures in the financial information. It also included an assessment of the significantestimates and judgments made by those responsible for the preparation of the financial information andwhether the accounting policies are appropriate to the entity’s circumstances, consistently applied andadequately disclosed.

We planned and performed our work so as to obtain all the information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurance that thefinancial information is free from material misstatement whether caused by fraud or other irregularity orerror.

Opinion

In our opinion, the financial information gives, for the purposes of the Class 1 circular dated 28 February2014, a true and fair view of the state of affairs of Initial Facilities Services Business as at the dates statedand of its profits, cash flows and recognised gains and losses for the periods then ended in accordance withthe basis of preparation set out on pages 20 to 21 and has been prepared in a form that is consistent withthe accounting policies adopted in Interserve plc’s latest annual accounts.

Yours faithfully

KPMG LLP

15

(B) Historic financial information on the Initial Facilities Services Business

Combined Income StatementFor the year ended 31 December

Notes 2013 2012 2011

£m £m £m

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A1 542.2 563.9 558.0Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A7 (533.4) (548.0) (544.7)

Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8 15.9 13.3Analysed as:Operating profit before amortisation of intangible assets(1),

reorganisation costs, one-off items and Rentokil Initial plcmanagement charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.6 29.5 26.7

Reorganisation costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A2 (11.5) (8.5) (8.0)One-off items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A2 (0.5) (0.6) (0.8)Amortisation of intangible assets(1) . . . . . . . . . . . . . . . . . . . . . . . . . . B2 (3.4) (3.1) (3.2)Rentokil Initial plc management charge . . . . . . . . . . . . . . . . . . . . . . . (1.4) (1.4) (1.4)

Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8 15.9 13.3Interest payable and similar charges . . . . . . . . . . . . . . . . . . . . . . . . . C5 (0.5) (1.1) (0.6)Interest receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C6 0.1 0.2 0.6

Profit before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 15.0 13.3Income tax expense(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A12 (2.3) (5.3) (4.6)

Profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 9.7 8.7

Attributable to:Equity holders of the Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 9.7 8.5Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 0.2

6.1 9.7 8.7

(1) excluding computer software

(2) taxation includes £nil (2012: £0.2 million; 2011: £0.2 million) in respect of overseas taxation

The results for the year were wholly derived from continuing operations.

Statement of Comprehensive IncomeFor the year ended 31 December

2013 2012 2011

£m £m £m

Profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 9.7 8.7Other comprehensive income:Items that are not reclassified subsequently to the income statementRemeasurement of net defined benefit asset/liability . . . . . . . . . . . . . . . . . . . . . . . 0.6 (0.3) (0.7)Tax related to remeasurement of net defined benefit asset/liability . . . . . . . . . . . . . (0.2) 0.1 0.2Net profit/(loss) not recognised in income statement . . . . . . . . . . . . . . . . . . . . . . . 0.4 (0.2) (0.5)Total comprehensive income for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 9.5 8.2

Attributable to:Equity holders of the Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 9.5 8.0Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 0.2

6.5 9.5 8.2

16

Balance SheetAt 31 December

Notes 2013 2012 2011

£m £m £m

AssetsNon-current assetsIntangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B2 39.7 42.0 35.3Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3 6.6 9.1 11.4Retirement benefit assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A10 0.4 — —

46.7 51.1 46.7

Current assetsInventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A4 4.0 4.6 3.6Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A3 101.9 101.7 92.4Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C1 77.0 96.6 152.1

182.9 202.9 248.1

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229.6 254.0 294.8Invested capital and liabilitiesInvested capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81.1 86.8 72.3Current liabilitiesTrade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A5 93.4 126.1 115.3Current tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6 12.2 10.1Provisions for other liabilities and charges . . . . . . . . . . . . . . . . . . . . . . . A6 2.8 1.0 2.9Bank and other short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . C2 43.5 26.3 92.1

148.3 165.6 220.4

Non-current liabilitiesDeferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A13 0.2 1.4 2.1

Retirement benefit obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A10 — 0.2 —0.2 1.6 2.1

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148.5 167.2 222.5

Total liabilities and invested capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 229.6 254.0 294.8

The IFRS transition balance sheet as at 1 January 2011 is presented in note D1 of these financialstatements.

17

Statement of Changes in Invested CapitalFor the year ended 31 December

Owner’s Non- TotalInvested controlling InvestedCapital interests Capital

£m £m £m

At 1 January 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84.2 4.1 88.3

Profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5 0.2 8.7Other comprehensive income:Items that are not reclassified subsequently to the income statementRemeasurement of net defined benefit asset/liability . . . . . . . . . . . . . . . . (0.7) — (0.7)Tax related to remeasurement of net defined benefit asset/liability . . . . . . 0.2 — 0.2

Total comprehensive income for the year . . . . . . . . . . . . . . . . . . . . . . . . 8.0 0.2 8.2Transactions with owners:Invested capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15.3) — (15.3)Transactions with non-controlling interests:Acquisition of non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . (4.6) (0.4) (5.0)Dividends paid to non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . — (3.9) (3.9)

At 31 December 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72.3 — 72.3

At 1 January 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72.3 — 72.3

Profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.7 — 9.7Other comprehensive income:Items that are not reclassified subsequently to the income statementRemeasurement of net defined benefit asset/liability . . . . . . . . . . . . . . . . (0.3) — (0.3)Tax related to remeasurement of net defined benefit asset/liability . . . . . . 0.1 — 0.1

Total comprehensive income for the year . . . . . . . . . . . . . . . . . . . . . . . . 9.5 — 9.5Transactions with owners:Invested capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 — 5.0

At 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86.8 — 86.8

At 1 January 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86.8 — 86.8

Profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 — 6.1Other comprehensive income:Items that are not reclassified subsequently to the income statementRemeasurement of net defined benefit asset/liability . . . . . . . . . . . . . . . . 0.6 — 0.6Tax related to remeasurement of net defined benefit asset/liability . . . . . . (0.2) — (0.2)

Total comprehensive income for the year . . . . . . . . . . . . . . . . . . . . . . . . 6.5 — 6.5Transactions with owners:Invested capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12.2) — (12.2)

At 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81.1 — 81.1

18

Cash Flow StatementFor the year ended 31 December

Notes 2013 2012 2011

£m £m £m

Cash flows from operating activitiesCash generated from operating activities . . . . . . . . . . . . . . . . . . . . . . . . C7 (11.4) 21.8 28.4Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 0.4Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.4) (1.0) (0.5)Income tax paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5.6) (5.8) (4.8)

Net cash generated from operating activities . . . . . . . . . . . . . . . . . . . . . . (17.4) 15.0 23.5

Cash flows from investing activitiesPurchase of property, plant and equipment (PPE) . . . . . . . . . . . . . . . . . (2.6) (4.4) (3.5)Purchase of intangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.8) (1.6) (0.8)Proceeds from sale of PPE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C7 — 0.4 —Acquisition of companies and businesses, net of cash acquired . . . . . . . . . B1 (0.9) (5.3) (10.0)

Net cash flows from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . (5.3) (10.9) (14.3)

Cash flows from financing activitiesDividends paid to non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . — — (3.9)Acquisition of non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . — — (5.0)Repayment of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.5) (2.7) (0.4)Movement in invested capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13.8) 5.9 (15.1)

Net cash flows from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . (15.3) 3.2 (24.4)

Net (decrease)/increase in cash and bank overdrafts . . . . . . . . . . . . . . . . C8 (38.0) 7.3 (15.2)Cash and bank overdrafts at beginning of year . . . . . . . . . . . . . . . . . . . . C1 78.8 71.5 86.7

Cash and bank overdrafts at end of the financial year . . . . . . . . . . . . . . . C1 40.8 78.8 71.5

19

GENERAL

Accounting Policies

1. Basis of preparation

Financial information relating to the Initial Facilities Services Business for the years ended 31 December2013, 31 December 2012 and 31 December 2011, has been prepared on a ‘‘carve out’’ basis from RentokilInitial plc’s consolidated financial information by combining the historical results, assets and liabilitiesattributable to the Initial Facilities Services Business (Initial Facilities Services (UK) Limited and InitialFacilities Services S.A.U. together with the Irish and water businesses as defined in the relevant businesspurchase agreements). This combined financial information has been prepared in accordance with therequirements of the Listing Rules and in accordance with this basis of preparation.

The basis of preparation describes how the financial information has been prepared in compliance withInternational Financial Reporting Standards (‘‘IFRSs’’) and International Financial ReportingInterpretations Committee (‘‘IFRIC’’) interpretations as adopted by the European Union as at31 December 2013, except as described below.

IFRSs as adopted by the EU do not provide for the preparation of combined financial information, andaccordingly in preparing the combined financial information certain accounting conventions commonlyused for the preparation of historical financial information for inclusion in investment circulars asdescribed in the Annexure to SIR 2000 (Investment Reporting Standard applicable to public reportingengagements on historical financial information) issued by the UK Auditing Practices Board have beenapplied. The application of these conventions results in material departures from IFRSs as adopted by theEU and these are explained below. In other respects, IFRSs as adopted by the EU have been applied andthe financial information relating to the Initial Facilities Services Business has been prepared in a formthat is consistent with the accounting policies adopted in Interserve’s latest annual accounts.

• The separate legal entities and businesses carved out from other legal entities that constitute the InitialFacilities Services Business that is the subject of the proposed transaction did not constitute a separatelegal entity and did not have a common parent company other than their ultimate parent, RentokilInitial plc, during the periods presented in this financial information. The combined financialinformation, which has been prepared specifically for the purpose of this Circular, is therefore preparedon a basis that combines the historical results, assets and liabilities of the Initial Facilities ServicesBusiness by applying the principles underlying the consolidation procedures of IAS 27. The combinedfinancial information therefore does not apply the requirements of IAS 27 ‘‘Consolidated and SeparateFinancial Statements’’ to identify the scope of the combined financial information.

• The net assets of the Initial Facilities Services Business are represented by the cumulative investment ofRentokil Initial plc in the Initial Facilities Services Business (‘‘Invested Capital’’) and no analysis of thisamount into components of equity is presented. As further explained below, certain balances with otherRentokil Initial plc entities outside the Initial Facilities Services Business have been included withinInvested Capital and accordingly, the amount presented as Invested Capital includes both amounts thatwould be classified under IFRSs as equity and amounts that are financial liabilities of the entities thatare included in the combined financial information. In this respect the financial information is notprepared in accordance with IFRSs.

Post balance sheet events have been considered for the most recent balance sheet date 31 December 2013.The period during which post balance sheet events have been considered for the years ending31 December 2012 and 31 December 2011 were closed on the date that the individual entity statutoryaccounts were signed. The combined financial information is presented in pounds sterling (£) and allvalues are rounded to the nearest million (£m) except when otherwise indicated.

The following summarises the other principles applied in preparing the combined financial information:

• The combined financial information of the Initial Facilities Services Business has been prepared on agoing concern basis.

• Transactions and balances between separate entities included within the combined financial informationhave been eliminated. Transactions and balances with other entities within the Rentokil Group butoutside the Initial Facilities Services Business are shown as external transactions and balances and aredisclosed as related party transactions and balances. Certain financial liabilities to other Rentokil

20

Initial plc entities that are long-term and non-interest bearing in nature have been included in InvestedCapital.

• For the purposes of the preparation of the combined financial information, an approximation has beenmade for the amounts of shared corporate head office costs attributable to Initial Facilities ServicesBusiness. The amounts of allocated corporate head office costs are £1.4 million for the years ended31 December 2013, 2012 and 2011. These amounts are reflected in Invested Capital. These allocatedcorporate head office costs are not necessarily representative of the costs that would have been reportedhad the Initial Facilities Services Business been an independent legal entity. They are not necessarilyrepresentative of corporate head office costs that may arise in the future.

• Rentokil Initial plc has historically operated a central cash pooling arrangement whereby cash andoverdrafts relating to all the business units were settled centrally with the financial institutions with theexception of certain bank accounts which specifically relate to the Initial Facilities Services Business. Forthe purposes of presentation of this combined financial information, no centrally managed cash poolinghas been allocated to the Initial Facilities Services Business and the cash shown is the cash held in thespecific bank accounts. All other amounts are subsumed within the amount presented as balances withinthe wider Rentokil Group.

• Current tax charges in the income statement have been allocated on an appropriate basis to the InitialFacilities Services Business’ activities based on the tax charges recorded by the separate legal entities ofthe Initial Facilities Services Business. The tax recorded in the income statement has been affected bythe taxation arrangements within Rentokil Initial plc, such as group relief for which payments were madeand are not necessarily representative of the tax disclosures that would have been reported had theInitial Facilities Services Business been an independent company. They are not necessarilyrepresentative of the tax charges that may arise in the future.

• Interest income and expenses recorded in the income statement have been affected by the historicfinancing arrangements within Rentokil Initial plc, in particular, those relating to central cashmanagement. They are not necessarily representative of the interest income and expenses that wouldhave been reported had the Initial Facilities Services Business been an independent group. They are notnecessarily representative of the interest income and expense that may arise in the future.

• Directors’ remuneration has been presented for those individuals who are employed by the RentokilGroup in a capacity equivalent to that of a director of the Initial Facilities Services Business.

• The Initial Facilities Services Business’ participation in the Rentokil Initial plc Pension Scheme has beenaccounted for on a defined contribution basis as the Rentokil Group has not had a prior policy ofattribution of the pension scheme to individual entities within the group.

2. Critical accounting estimates and assumptions

Estimates and judgements are continually evaluated and are based on historical experience and otherfactors, including expectations of future events that are believed to be reasonable under the circumstances.

The Initial Facilities Services Business makes estimates and assumptions concerning the future. Theresulting accounting estimates will, by definition, seldom equal the related actual results. The estimatesand assumptions that have a significant risk of causing a material adjustment to the carrying amounts ofassets and liabilities within the next financial year are discussed below. Sensitivities to the estimates andassumptions are provided, where relevant, in the relevant notes to the accounts.

(a) Estimated impairment of goodwill (Note B2)

The Initial Facilities Services Business tests annually whether goodwill has suffered any impairment inaccordance with the accounting policy stated in Note B2. The recoverable amounts of cash-generatingunits have been determined based on value-in-use calculations. These calculations require the use ofestimates and assumptions consistent with the most up-to-date budgets and plans that have been formallyapproved by management.

(b) Valuation of acquired intangible assets (Note B1)

Acquisitions may result in customer relationships, brands, patents and reacquired franchise rights beingrecognised. These are valued using the excess earnings and relief from royalty methods. In applying these

21

methodologies certain key judgements and estimates are required to be made in respect of future cashflows.

(c) Provision for impairment of trade receivables (Note A3)

Provision is made against accounts that in the estimation of management may be impaired. Within each ofthe businesses, assessment is made locally of the recoverability of accounts receivable and thecreditworthiness of the customer. Determining the recoverability of an account involves estimation as tothe likely financial condition of the customer and their ability to subsequently make payment.

(d) Income taxes (Note A12)

The Initial Facilities Services Business is subject to income taxes in three jurisdictions. Significantjudgement is required in determining the provision for income taxes. There are many transactions andcalculations for which the ultimate tax determination is uncertain during the ordinary course of business.The Initial Facilities Services Business recognises liabilities for anticipated tax audit issues based onestimates of whether additional taxes will be due. Where the final tax outcome of these matters is differentfrom the amounts that were initially recorded, such differences will impact the income tax and deferred taxprovisions in the period in which such determination is made.

(e) Provision for vacant property (Note A6)

Significant judgement is required in determining the provision for vacant property. Vacant propertyprovisions tend to be long-term in nature and the required use of an appropriate market discount rate andforecast future utilisation based upon management’s best estimate determines the level of provisionrequired at the balance sheet date.

The phasing and actual cash spend may be different from the original forecast utilisation spend.

(f) Retirement benefits (Note A10)

Defined benefit schemes are reappraised annually by independent actuaries based upon actuarialassumptions. Significant judgement is required in determining these actuarial assumptions. Refer toNote A10 for the principal assumptions used for the Rentokil Initial Pension Scheme and Rentokil InitialHospital Services Pension Scheme in the UK.

3. Assets and liabilities not transferring as part of the proposed transaction

The proposed transaction is subject to a completion accounts mechanism with a defined working capitaltarget. Within these statements there are two significant items that will be excluded from the proposedtransaction: the defined benefit pension plan and provisions in relation to three vacant properties uponwhich Rentokil Initial plc will retain the leases and the associated liabilities.

4. Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of each of the Initial Facilities Services Business’ entities aremeasured using the currency of the primary economic environment in which the entity operates (‘thefunctional currency’). The consolidated financial statements are presented in sterling, which is the InitialFacilities Services Business’ presentational currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange ratesprevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlementof such transactions and from the translation at reporting period end exchange rates of monetary assetsand liabilities denominated in foreign currencies are recognised in the income statement. Other foreignexchange differences are taken to the income statement.

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(c) Initial Facilities Services Business companies

The results and financial position of all the Initial Facilities Services Business entities that have a functionalcurrency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date ofthe balance sheet;

(ii) income and expenses for each income statement are translated at average exchange rates; and

(iii) all resulting exchange differences are recognised in invested capital.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets andliabilities of the foreign entity and translated at period end exchange rates.

5. IFRS 8 ‘‘Operating Segments’’

The business applies IFRS 8 ‘‘Operating Segments’’. The business has a single reportable segment, beingFacility Services, providing a fully integrated Total Facilities Management (‘‘TFM’’) to government andcommercial sector organisations, with comprehensive service capabilities in catering, cleaning, security,buildings maintenance and engineering and statutory compliance.

6. Geographical information

In presenting information on the basis of geography, segment revenue is based on the geographicallocation of customers and segment assets are based on the geographical location of the assets.

2013 2012 2011

£m £m £m

Revenue

UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498.8 518.0 499.1Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.5 45.7 58.6Ireland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.9 0.2 0.3

542.2 563.9 558.0

2013 2012 2011

£m £m £m

Non-current assets

UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46.0 50.2 45.5Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7 0.9 1.2Ireland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —

46.7 51.1 46.7

7. Standards, amendments and interpretations to published standards that are not yet effective

The Initial Facilities Services Business has adopted the following new standards and amendments tostandards, including any consequential amendments to other standards, with a date of initial application of1 January 2013:

• Presentation of Items of Other Comprehensive Income—amendments to IAS 1

• Defined Benefit Plans—amendments to IAS 19

• Disclosures—Offsetting Financial Assets and Financial Liabilities—amendments to IFRS 7

• IFRS 13—Fair Value Measurement

• IAS 27—Separate Financial Statements (2011)

• IAS 28—Investments in Associates and Joint Ventures (2011)

• Improvements to IFRS: IAS 1, IAS 34, IAS 16, IAS 32

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The following new standards and amendments to standards have been endorsed by the European Unionand are applicable to the Initial Facilities Services Business for the financial year beginning 1 January 2014:

• Investment Entities—Amendments to IFRS 10, IFRS 12 and IAS 27

• Offsetting Financial Assets and Financial Liabilities—Amendments to IAS 32

• Recoverable amount disclosures for non-financial assets—Amendments to IAS 36

• Continuing hedge accounting after derivative novations—Amendments to IAS 39

A. Operating

A1. Revenue recognition

Revenue comprises the fair value of consideration received from the customer for the rendering ofservices, net of value-added tax (VAT) and other similar sales-based taxes, rebates and discounts and aftereliminating sales within the Initial Facilities Services Business. For non-contract-based business, revenuerepresents the value of goods delivered or services performed. For contract-based business, revenuerepresents the sales value of work carried out for customers during the period. Contract income isrecognised in accounting periods on a straight-line basis over the life of the contract. For long-termcontracts involving the installation of equipment, revenue is recognised using the percentage completionmethod and represents the sales value of work executed during the period.

The Initial Facilities Services Business provides an energy contract service which involves the InitialFacilities Services Business managing the client’s energy contract including making payments for energyprovision on behalf of the client. Energy contracts are treated as revenue where there is a risk and rewardfor offering the service. This involves the Initial Facilities Services Business having direct access to controlthe maintenance and engineering equipment, full responsibility for the provision of maintenance andengineering services, and the potential for variability of the margin over the life of the contract throughinitiatives instigated by the Initial Facilities Services Business.

A.2 Reorganisation costs and one-off items

Reorganisation costs and one-off items have been separately identified as they are not considered to be‘‘business as usual’’ expenses and have a varying impact on different businesses and reporting periods.These are separately identified and presented to give a clearer understanding of the performance of theBusiness. It also shows the information in the same way as it is presented and reviewed by management.

Reorganisation costs relate directly to the Initial Facilities Services Business’ major reorganisationprogramme and consist mainly of redundancy costs, consultancy and plant and office closure costs.

2013 2012 2011

£m £m £m

Reorganisation costs—UK reorganisation(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.7 7.7 8.0Reorganisation costs—Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8 0.8 —One-off items—other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 — 1.2Write down of property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0.2 —Acquisition costs—see Note B1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0.4 2.2Negative goodwill credit—see Note B1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (2.6)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.0 9.1 8.8

Classified as:Reorganisation costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5 8.5 8.0One-off items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 0.6 0.8Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.0 9.1 8.8

(1) reorganisation of the head office including redundancy costs and office closure costs

A3. Trade and other receivables

Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost usingthe effective interest method, less provision for impairment. A provision for impairment of trade

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receivables is established when there is objective evidence that the Initial Facilities Services Business willnot be able to collect all amounts due according to the original terms of the receivables. The amount of theprovision is recognised in the income statement.

2013 2012 2011

£m £m £m

Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67.7 74.0 70.3Less: provision for impairment of receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.5) (3.4) (2.4)Trade receivables—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65.2 70.6 67.9Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8 1.7 1.4Balances with Rentokil Initial plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 2.0 1.3Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.2 27.4 21.8

Total (all current) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.9 101.7 92.4

Book value approximates fair value because of the short-term nature of the receivable and the low interestenvironment in which they are held.

There is limited concentration of credit risk with respect to trade receivables due to the Initial FacilitiesServices Business’ customer base being large and diverse.

Analysis of the Initial Facilities Services Business’ provision for impairment of trade receivables:

2013 2012 2011

£m £m £m

At 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 2.4 2.2Acquisition of companies and businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0.3 0.7Additional provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0.8 —Receivables written off as uncollectable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.4) (0.1) (0.3)Unused amounts reversed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.5) — (0.2)At 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 3.4 2.4

The ageing of trade receivables is as follows:

2013 2012 2011

£m £m £m

Neither impaired nor past due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.7 9.7 22.3Not impaired but overdue by less than 1 month . . . . . . . . . . . . . . . . . . . . . . . . . . 24.3 29.6 25.0Not impaired but overdue by between 1 and 3 months . . . . . . . . . . . . . . . . . . . . . 14.7 15.8 14.1Not impaired but overdue by between 3 and 6 months . . . . . . . . . . . . . . . . . . . . . 3.1 4.4 1.5Not impaired but overdue by between 6 and 12 months . . . . . . . . . . . . . . . . . . . . . 0.9 1.9 0.7Not impaired but overdue by more than 12 months . . . . . . . . . . . . . . . . . . . . . . . . 0.6 0.5 1.2Impaired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4 12.1 5.5Allowance for doubtful debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.5) (3.4) (2.4)

65.2 70.6 67.9

The maximum amount of credit risk with respect to customers is represented by the carrying amount onthe balance sheet. Customer credit facilities for new customers are approved by designated managers atbusiness level. Credit limits are set with reference to trading history and reports from credit ratingagencies. Overdue accounts are regularly reviewed and impairment provisions are created where necessarywith due regard to the historical risk profile of the customer. There were no new customers in 2013 wherethe Initial Facilities Services Business considered there was a risk of significant credit default. There are notrade receivables that would otherwise be past due or impaired whose terms have been renegotiated.

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The carrying amounts of the Initial Facilities Services Business’ trade receivables are denominated in thefollowing currencies:

2013 2012 2011

£m £m £m

Pounds sterling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.0 62.4 53.5Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.7 11.6 16.8

67.7 74.0 70.3

The creation and release of provisions for impaired receivables have been included within operatingexpenses in the income statement. Amounts charged to the allowance account are generally written offwhen there is no expectation of recovering additional cash.

The other receivables and prepayments do not contain impaired assets.

A4. Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in,first-out (FIFO) method. The cost of finished goods and work in progress comprises design costs, rawmaterials, direct labour, other direct costs and related production overheads (based on normal operatingcapacity). It excludes borrowing costs. Net realisable value is the estimated selling price in the ordinarycourse of business, less applicable variable selling expenses.

2013 2012 2011

£m £m £m

Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 0.2 —Work in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 1.6 0.7Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 2.8 2.9

4.0 4.6 3.6

There were no material inventory impairment charges in 2013, 2012 or 2011.

Stock value using the weighted average method of measurement has been determined by management notto result in a material difference to the valuation using the FIFO measurement method as presentedabove.

A5. Trade and other payables

2013 2012 2011

£m £m £m

Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.5 29.9 31.4Social security and other taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.9 23.6 22.0Other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.0 23.4 20.4Balances with Rentokil Initial plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7 20.5 8.8Accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.3 26.1 26.7Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8 1.5 4.2Deferred and contingent consideration on acquisitions . . . . . . . . . . . . . . . . . . . . 0.2 1.1 1.8

Total (all current) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93.4 126.1 115.3

A6. Provisions for other liabilities and charges

Vacant property and other provisions are recognised when the Initial Facilities Services Business has apresent legal or constructive obligation as a result of past events and it is probable that an outflow ofresources will be required to settle the obligation; and if this 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.

Vacant property provision is made in respect of vacant and partly sub-let leasehold properties to the extentthat future rental payments are expected to exceed future rental income. Vacant property provisions alsoinclude all other related property costs such as dilapidations. A provision for restructuring is recognisedwhen the Initial Facilities Services Business has approved a detailed and formal restructuring plan, and therestructuring either has commenced or has been announced publicly. Other provisions are made for all

26

other known liabilities that exist at the year end based on management’s best estimate as to the cost ofsettling these liabilities. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required insettlement is determined by considering the class of obligations as a whole.

When the effect of the time value of money is material, provision amounts are calculated on the presentvalue of the expenditures expected to be required to settle the obligation. The present value is calculatedusing forward market interest rates, as measured at the balance sheet reporting date, which have beenadjusted for risks already reflected in future cash flow estimates.

Vacantproperties Other Total

£m £m £m

At 1 January 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0.2 0.2Additional provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 0.1 2.7At 31 December 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 0.3 2.9At 1 January 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 0.3 2.9Additional provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0.1 0.1Unused amounts reversed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.2) (0.3) (0.5)Used during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.5) — (1.5)At 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.9 0.1 1.0At 1 January 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.9 0.1 1.0Additional provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8 — 2.8Used during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.0) — (1.0)At 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 0.1 2.8

Vacant properties

The Initial Facilities Services Business has vacant and partly sub-let leasehold properties, with the majorityof the head leases expiring before 2020. Provision has been made for the residual lease commitmentstogether with other outgoings, after taking into account existing sub-tenant arrangements and assumptionsrelating to later periods of vacancy.

The lease on the Castlegate property in Dudley, to which the vacant property provision as at 31 December2013 relates, will not transfer with the Initial Facilities Services Business on completion of the proposedtransaction.

Other

Other provisions principally comprise amounts required to cover obligations arising, warranties given andcosts relating to disposed businesses together with amounts set aside to cover certain legal and regulatoryclaims. These provisions are expected to be substantially utilised within the next five years.

The above provisions have been discounted where appropriate using discount rates of 0.9 per cent to2.4 per cent (2012: 1.3 per cent, 2011: 0.3 per cent to 2.0 per cent).

A7. Operating expenses by nature

Operating expenses include the following items:2013 2012 2011

£m £m £m

Employee costs—see Note A8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337.1 355.3 373.0Depreciation—owned assets—see Note B3 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 5.6 4.6Amortisation—intangible assets(1)—see Note B2 . . . . . . . . . . . . . . . . . . . . . . . . 3.4 3.1 3.2

—computer software—see Note B2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7 0.5 0.5Cost of inventories expensed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 5.2 6.3Loss on disposal of PPE—see Note C7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.2) (0.5) —Hire of machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 0.1 0.2Reorganisation costs—see Note A2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5 8.5 8.0One-off items—see Note A2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 0.6 0.8Other operating lease rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 4.7 6.3

(1) excluding computer software

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A8. Employee benefit expense

(a) Termination benefits

Termination benefits are payable when an employment is terminated before the normal retirement date, orwhenever an employee accepts voluntary redundancy in exchange for these benefits. The Initial FacilitiesServices Business recognises termination benefits when it is demonstrably committed to either: terminatingthe employment of current employees according to a detailed formal plan without possibility ofwithdrawal; or providing termination benefits as a result of an offer made to encourage voluntaryredundancy. Benefits falling due more than 12 months after the balance sheet date are discounted topresent value.

(b) Profit-sharing and bonus plans

The Initial Facilities Services Business recognises a liability and an expense for bonuses and profit-sharing,based on a formula that takes into consideration the probability of certain performance criteria beingachieved. A provision is recognised where a contractual obligation exists or where past practice indicatesthat there is a constructive obligation to make such payments in the future.

(c) Holiday pay

Paid holidays are regarded as an employee benefit and as such are charged to the income statement as thebenefits are earned. An accrual is made at the balance sheet date to reflect the fair value of holidaysearned but not yet taken.

Total2013 2012 2011

£m £m £m

Wages and salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304.8 322.2 337.3Social security costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.3 30.7 33.5Share-based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 0.2 0.4Pension costs

defined contribution plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8 2.2 1.8

337.1 355.3 373.0

Average monthly numbers of people employed by the Initial Facilities Services Business during the year:

Number Number Number

Processing and service delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,014 27,470 34,530Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 157 166Administration and overheads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369 472 440

26,514 28,099 35,136

A9. Share-based payments

Share-based compensation

Rentokil Initial plc operates a number of equity-settled, share-based compensation plans in which theInitial Facilities Services Business participates. The economic cost of awarding shares and share options toemployees is recognised as an expense in the income statement equivalent to the fair value of the benefitawarded. The fair value is determined by reference to option pricing models, principally Monte Carlo andadjusted Black-Scholes models. The charge is recognised in the income statement over the vesting periodof the award. At each balance sheet date, the estimate of the number of options that are expected tobecome exercisable is revised. Any revision to the original estimates is reflected in the income statementwith a corresponding adjustment to Invested Capital immediately to the extent it relates to past service andthe remainder over the rest of the vesting period.

The Initial Facilities Services Business has share option schemes for approximately 50 senior executives.The exercise price for share options is the mid-market closing price immediately preceding the date ofgrant. Share options are equity-settled. The total net charge for the year relating to equity-settled share-based payment plans was £0.2 million (2012: £0.2 million; 2011: £0.4 million).

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Performance Share Plan

Rentokil Initial plc introduced a new share-based Performance Plan in 2006 and granted 1,132,384 sharesat various dates throughout 2013 (2012: 2,117,023 shares; 2011: 1,651,146 shares).

Schemeinterest Shares Shares Shares Shares Shares Shares

at awarded vested lapsed Outstanding exercisable exercised exercisableYear of Vesting 1 January during during during at 31 December at 1 January during at 31 Decembergrant year 2011 2011 2011 2011 2011 2011 2011 2011

2008 . . . . . 2011 658,791 — 276,478 382,313 — — 216,277 60,2012009 . . . . . 2012 877,732 — — 12,448 865,284 — — —2010 . . . . . 2013 943,036 — — 35,883 907,153 — — —2011 . . . . . 2014 — 1,651,146 — — 1,651,149 — — —

Scheme Shares Shares Shares Shares Shares Sharesinterest at awarded vested lapsed Outstanding exercisable exercised exercisable

Year of Vesting 1 January during during during at 31 December at 1 January during at 31 Decembergrant year 2012 2012 2012 2012 2012 2012 2012 2012

2008 . . . . . . 2011 — — — — — 60,201 45,225 14,9762009 . . . . . . 2012 865,284 — — 865,284 — — — —2010 . . . . . . 2013 907,153 — — 120,347 786,806 — — —2011 . . . . . . 2014 1,651,149 — — 285,797 1,365,352 — — —2012 . . . . . . 2015 — 2,117,023 — 49,660 2,067,363 — — —

Scheme Shares Shares Shares Shares Shares Sharesinterest at awarded vested lapsed Outstanding exercisable exercised exercisable

Year of Vesting 1 January during during during at 31 December at 1 January during at 31 Decembergrant year 2013 2013 2013 2013 2013 2013 2013 2013

2008 . . . . . . 2011 — — — — — 14,976 14,976 —2010 . . . . . . 2013 786,806 — — 786,806 — — — —2011 . . . . . . 2014 1,365,352 — — 219,191 1,146,161 — — —2012 . . . . . . 2015 2,067,363 — — 520,802 1,546,561 — — —2013 . . . . . . 2016 — 1,132,384 — 133,596 998,788 — — —

The performance conditions for the 2008 awards were share price and the financial performance (‘bonusmultiplier’) of the Rentokil Group, division or business whichever is applicable to the award holder. Theshare price condition was based on the highest average share price of Rentokil Initial plc over any 60consecutive dealing days during the initial three-year period. The performance period for the share priceelement of the award began on 1 April 2008 and ended 61 dealing days following the announcement ofRentokil Initial plc’s results for the financial year ended 31 December 2010. The annual bonus multipliermeasured the extent to which the annual bonus targets had been achieved in respect of each financial yearduring the performance period. The 2008 awards in the above table reflect that during the first half of 2010Rentokil Initial plc’s share price achieved a 60 day highest average price of 130.82p. Participants wereentitled to the value of dividends that were paid during the vesting period on the number of shares thatultimately vested, in the form of additional shares transferred at the end of the vesting period.

The performance conditions for the 2009, 2010, 2011, 2012 and 2013 awards are total shareholder return(‘TSR’) and the financial performance (‘bonus multiplier’) of the Rentokil Group, division or businesswhichever is applicable to the award holder. The TSR condition is measured relative to the TSR achievedby constituents of a comparator group, made up of the FTSE 350 companies at the date of grant butexcluding financial services and basic resources companies. The performance period for the share priceelement of the 2013 award began on 1 April 2013, running to 31 March 2016. The TSR performance ismeasured using a three-month average with the start period average being 1 January 2013 to 31 March2013 and the end period average being 1 January 2016 to 31 March 2016. The annual bonus multipliermeasures the extent to which the annual bonus targets have been achieved in respect of each financial yearduring the performance period. The 2009, 2010, 2011, 2012 and 2013 awards in the above table assume aTSR performance in the upper quartile or above is reached at the end of the vesting period and thatparticipants achieve their target bonus in each of the three years over the vesting period. For the 2009 and2010 awards no shares will vest if the share price does not reach median TSR performance at the end ofthe vesting period and 200 per cent will vest if the TSR performance is above the upper quartile and allparticipants attain maximum bonus targets. For the 2011, 2012 and 2013 awards no shares will vest if theshare price does not reach median TSR performance at the end of the vesting period and 150 per cent will

29

vest if the TSR performance is above the upper quartile and all participants attain maximum bonus targets.Participants are entitled to the value of dividends that are paid during the vesting period on the number ofshares that ultimately vest, in the form of additional shares transferred at the end of the vesting period.

The fair value of the 2013 awards made under the 2006 Performance Share Plan is charged to the incomestatement over the vesting period based on values derived from a model developed by Deloitte LLP. This isa closed-form solution (similar to a Monte Carlo simulation) which takes account of the correlationbetween share price performance and the likelihood of a TSR performance condition being met. For theshares awarded on 30 April 2013 (2012: 8 May; 2011: 22 June/1 August), the significant inputs into themodel were a share price of 96.0p (2012: 83.15p; 2011: 95.0p/91.8p), an expected share price volatility of30 per cent (2012: 32 per cent; 2011: 52 per cent /46 per cent), a share price correlation of the companies inthe comparator group of 26 per cent (2012: 28 per cent; 2011: 26 per cent) and an expected lifecommensurate with the performance/vesting period. The share price volatility assumption is based onanalysis of historical daily share prices. As the awards are nil-cost (i.e. there is no exercise price), theassumed risk-free rate of return has minimal impact on the fair value of the awards. Similarly, as dividendequivalents are paid on the vesting portion of awards, the fair value of these awards is not reduced toreflect dividends paid during the vesting period.

The fair value of shares granted during 2013 was £1.1 million (2012: £1.6 million; 2011: £1.1 million).

A10. Retirement benefit obligations

Employee benefits

A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee willreceive on retirement, usually dependent on one or more factors such as age, years of service andcompensation.

The asset or liability recognised in the balance sheet in respect of defined benefit pension plans is thepresent value of the defined benefit obligation at the balance sheet date less the fair value of plan assets.The defined benefit obligation is calculated annually by independent actuaries using the projected unitcredit method. The present value of the defined benefit obligation is determined by discounting theestimated future cash outflows using interest rates of high quality corporate bonds that are denominated inthe currency in which the benefits will be paid, and that have terms to maturity approximating to the termsof the related pension liability. A pension surplus is recognised as an asset where there is an unconditionalright to a refund or where there is a right to reduce future pension contributions.

Current and past service costs, to the extent they have vested, and curtailments are recognised as chargesor credits against operating profit in the income statement. Actuarial gains and losses arising fromexperience adjustments and changes in actuarial assumptions are charged or credited to the consolidatedstatement of comprehensive income.

A defined contribution plan is a pension plan under which the Initial Facilities Services Business pays fixedcontributions into a separate entity.

(a) Defined benefit pension plans—Rentokil Pension Scheme

The Initial Facilities Services Business participates in the Rentokil Pension Scheme in the UK which has anumber of defined benefit sections, which are now closed to new entrants, and a defined contributionsection.

The Initial Facilities Services Business’ participation in the Rentokil Pension Scheme has been accountedfor on a defined contribution basis as the Rentokil Group has not had a prior policy of attribution of thepension scheme to individual entities within the group. However, as the scheme is now closed to newentrants, no amounts were charged to the income statement.

The assets of the Rentokil Pension Scheme are legally separated from the Rentokil Group. The Trustee ofthe pension fund is Rentokil Initial Pension Trustee Limited. The board comprises six company nominateddirectors and three member nominated directors. The Trustee is required by law to act in the best interestsof the plan participants and is responsible for setting certain policies (e.g. investment, contribution andindexation policies) of the scheme.

Actuarial valuations of the scheme are usually carried out every three years. At 31 December 2013 thescheme was valued at an accounting surplus of £70.6 million on the Rentokil Group’s balance sheet. The

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Rentokil Group has recognised the pension surplus as an asset because it has a right to reduce futurepension contributions. The Trustee values the scheme on a different basis. The Trustee and RentokilInitial plc are in the process of finalising the 31 March 2013 valuation. The plan is 98.7% funded with anestimated deficit of £17.8 million. It has been agreed that this deficit will be met by annual contributions of£3.2 million per annum over the next six years with the first payment made by March 2014. Contributionswill be paid into a joint escrow account and credited back to Rentokil Initial plc’s account at such time asthe fund goes into surplus. No contributions are expected to be made by Initial Facilities Services Business.

Actuarial assumptions used to define the Rentokil Pension Scheme are consistent with the assumptions forthe Rentokil Hospital Services Pension Scheme disclosed further below.

(b) Defined contribution pension plans—Rentokil Pension Scheme

The Initial Facilities Services Business pays contributions to publicly or privately administered pensioninsurance plans on a mandatory, contractual or voluntary basis. The Initial Facilities Services Business hasno further payment obligations once the contributions have been paid. The contributions are recognised asemployee benefit expense when they are due. Prepaid contributions are recognised as an asset to theextent that a cash refund or a reduction in the future payments is available.

(c) Other post-employment obligations—Rentokil Hospital Services Pension Scheme

Employees of the Initial Facilities Services Business participate in the Rentokil Hospital Services No 1Pension Scheme which is a defined benefit scheme, providing benefits at retirement and ondeath-in-service. The most recent actuarial valuation of the scheme for accounting purposes was at 6 April2009. The scheme is now closed to future entrants. Future employer contributions are currently underreview.

The assumptions used for calculating the liabilities were as follows:

2013 2012 2011

£m £m £m

Inflation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7% 3.2% 3.3%Statutory revaluation in deferment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7% 2.2% 2.4%Discount rate (pre and post retirement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5% 4.2% 4.8%Life expectancy for 65 year old male . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 88 87

The scheme has a number of purchased annuities in respect of past retirements. These are understood tofully match the associated liabilities and so have been excluded from both the assets and liabilities at eachaccounting date.

Pension benefits

The amounts recognised in the balance sheet are determined as follows:

2013 2012 2011

£m £m £m

Present value of funded obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3.1) (3.3) (2.9)Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 3.1 2.9

0.4 (0.2) —Present value of unfunded obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Asset/(liability) in the balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.4 (0.2) —Presented on the balance sheet as:Retirement benefit assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.4 — —Retirement benefit obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (0.2) —

0.4 (0.2) —

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The amounts recognised in the income statement are as follows:

2013 2012 2011

£m £m £m

Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 0.2 0.2Interest cost on scheme liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.1) (0.1) (0.1)

Total pension income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0.1 0.1

The movement in the fair value of pension plan assets recognised in the balance sheet is as follows:

2013 2012 2011

£m £m £m

At 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 2.9 3.1Interest income on scheme assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 0.2 0.2Actuarial gains/(losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.4 0.1 (0.4)Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.1) (0.1) —

At 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 3.1 2.9

The fair value of plan assets at the balance sheet date is analysed as follows:

2013 2012 2011

£m £m £m

Equity instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.6 2.4Debt instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 0.3 0.2Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 0.1 0.1Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 0.1 0.2

Total plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 3.1 2.9

Where available, the bid value of assets has been used. In other cases the market value as provided by theinvestment managers has been used.

The movement in the present value of the defined benefit obligation recognised in the balance sheet is asfollows:

2013 2012 2011

£m £m £m

At 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 2.9 2.5Interest on DBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 0.1 0.1Actuarial gains/(losses) during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.2) 0.4 0.3Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.1) (0.1) —

At 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 3.3 2.9

A11.Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor areclassified as operating leases. Payments made under operating leases (net of any incentives received fromthe lessor) are charged to the income statement on a straight-line basis over the period of the lease.

The Initial Facilities Services Business leases properties, vehicles, plant and equipment undernon-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewalrights. The lease expenditure charged to the income statement during the year is disclosed in Note A7.

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

2013 2012 2011

£m £m £m

Not later than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 2.4 4.7Later than one year and not later than five years . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.9 5.9

5.3 5.3 10.6

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A12.Income tax expense

The tax expense for the period comprises current and deferred tax.

Tax is recognised in the income statement, except to the extent that it relates to items recognised directly inequity. In this case the tax is also recognised in equity.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted atthe balance sheet date in the countries where the Initial Facilities Services Business operates and generatestaxable income. Management periodically evaluates positions taken in tax returns with respect to situationsin which applicable tax regulation is subject to interpretation. It establishes provisions where appropriateon the basis of amounts expected to be paid to the tax authorities.

2013 2012 2011

£m £m £m

Analysis of charge in the yearUK Corporation tax at 23.25 per cent (2012: 24.5 per cent, 2011: 26.5 per cent) . . . . 3.3 4.5 4.0Overseas taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0.2 0.2Adjustment in respect of previous periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.4 1.8 1.0

Total current tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7 6.5 5.2

Deferred tax credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.3) (1.2) (0.5)Deferred tax adjustment in respect of previous periods . . . . . . . . . . . . . . . . . . . . . . (0.1) — (0.1)Total deferred tax* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.4) (1.2) (0.6)

Total income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 5.3 4.6

*The deferred tax credit comprises movements on the following major componentsof deferred tax assets and liabilities (Note A13):

Accelerated tax depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.5) (0.4) (0.1)Customer lists and other intangibles amortisation and impairment . . . . . . . . . . . . . . (0.9) (0.6) (0.4)Other temporary differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (0.2) (0.1)Deferred tax credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.4) (1.2) (0.6)

The 2013 Budget on 20 March 2013 announced that the UK corporation tax rate will reduce to 21%(effective from 1 April 2014) and 20% (effective from 1 April 2015) and both rate changes weresubstantively enacted on 2 July 2013. This will reduce the Initial Facilities Services Business’ future currenttax charge accordingly. The deferred tax liability at 31 December 2013 has been calculated based on therate of 20% substantively enacted at the balance sheet date.

The tax on the Initial Facilities Services Business’ profit before tax differs from the theoretical amount thatwould arise using the weighted average tax rate applicable to profits of the consolidated companies asfollows:

2013 2012 2011

£m £m £m

Profit before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6 16.2 13.5Tax calculated at domestic tax rates applicable to profits in the respective countries . 1.9 3.6 3.5Adjustment in respect of previous periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 1.8 1.0Expenses not deductible for tax purposes—reorganisation costs and one-off items . . — — 0.1Expenses not deductible for tax purposes—other . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 0.1 0.2Losses not relieved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 — —Other (deferred tax rate change) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.1) (0.2) (0.2)

Total tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 5.3 4.6

Adjustments in respect of previous periods represent the adjustment to group relief payments for prioraccounting periods.

A13.Deferred income tax

Deferred income tax is provided in full, using the liability method, on temporary differences arisingbetween the tax bases of assets and liabilities and their carrying amounts in the consolidated financialstatements. However, if the deferred income tax arises from initial recognition of an asset or liability in atransaction other than a business combination that at the time of the transaction affects neither the

33

accounting nor the taxable profit or loss, it is not accounted for. Deferred income tax is determined usingtax rates (and laws) that have been enacted (or substantively enacted) by the balance sheet date and areexpected to apply when the related deferred income tax asset is realised or the deferred income tax liabilityis settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will beavailable against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries andassociates, except where the timing of the reversal of the temporary difference is controlled by the InitialFacilities Services Business and it is probable that the temporary difference will not reverse in theforeseeable future.

Tax is recognised in the income statement except to the extent that it relates to items recognised directly inequity, in which case it is recognised in equity.

The movement on the deferred income tax account is as follows:

2013 2012 2011

£m £m £m

At 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 2.1 2.6Acquisition of companies and businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0.6 0.3Credited to the income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.4) (1.2) (0.6)(Charged)/credited to equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 (0.1) (0.2)

At 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 1.4 2.1

The major components of deferred tax assets and liabilities at the year end (without taking intoconsideration the offsetting of balances within the same tax jurisdiction) are as follows:

Customer Acceleratedlists/ tax Retirement

intangibles depreciation benefits Other Total

£m £m £m £m £m

At 31 December 2010 . . . . . . . . . . . . . . . . . . . . . . . . 2.8 — — (0.2) 2.6Recognised in income statement . . . . . . . . . . . . . . . . (0.4) (0.1) — (0.1) (0.6)Recognised directly in equity . . . . . . . . . . . . . . . . . . — — (0.2) — (0.2)Acquired in business combinations . . . . . . . . . . . . . . 0.3 — — — 0.3At 31 December 2011 . . . . . . . . . . . . . . . . . . . . . . . . 2.7 (0.1) (0.2) (0.3) 2.1Recognised in income statement . . . . . . . . . . . . . . . . (0.6) (0.4) — (0.2) (1.2)Recognised directly in equity . . . . . . . . . . . . . . . . . . — — (0.1) — (0.1)Acquired in business combinations . . . . . . . . . . . . . . 0.6 — — — 0.6At 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . 2.7 (0.5) (0.3) (0.5) 1.4Recognised in income statement . . . . . . . . . . . . . . . . (0.9) (0.5) — — (1.4)Recognised directly in equity . . . . . . . . . . . . . . . . . . — — 0.2 — 0.2At 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . 1.8 (1.0) (0.1) (0.5) 0.2

Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset andthere is an intention to settle the balances net.

B. Investing

B1. Business combinations

Under the requirements of IFRS 3, all business combinations are accounted for using the purchase method(‘‘acquisition accounting’’). The cost of a business combination is the aggregate of the fair values, at the dateof exchange, of assets given, liabilities incurred or assumed and equity instruments issued by the acquirer.The cost of a business combination is allocated at the acquisition date by recognising the acquiree’sidentifiable assets, liabilities and contingent liabilities that satisfy the recognition criteria, at their fairvalues at that date. The acquisition date is the date on which the acquirer effectively obtains control of theacquiree. An intangible asset, such as customer relationships, brands, patents and royalties, is recognised ifit meets the definition of an intangible asset in IAS 38, ‘‘Intangible Assets’’. The intangible assets identifiedin all acquisitions made since 1 January 1998 are goodwill, customer lists and relationships, reacquiredfranchise rights and contract portfolios. Goodwill represents the synergies, workforce and other benefitsexpected as a result of combining the respective businesses. None of the goodwill recognised is expected tobe deductible for tax purposes.

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Costs directly attributable to business combinations made after 1 January 2010 are charged to the incomestatement as incurred. Costs directly attributable to business combinations prior to this date were includedas part of the purchase price of the business combination. Contingent consideration is accounted for at fairvalue at the acquisition date with subsequent changes to the fair value being recognised in the consolidatedincome statement.

There were no acquisitions in 2013.

(a) 2012 Business Combinations

During 2012 the Initial Facilities Services Business acquired 100% of the share capital or trade and assetsof Modus FM (‘‘Modus’’) and Phoenix Fire Services Limited (‘‘Phoenix’’). These acquisitions took placeon 1 August 2012 and 31 May 2012 respectively. Modus is a London based specialist provider of hard andsoft facilities management services. Phoenix is a UK based fire services business. The total consideration inrespect of both acquisitions was £7.2 million and the cash outflow from acquisitions in 2012, net of cashacquired, was £4.2 million.

Modus Phoenix Total

£m £m £m

Purchase consideration:—Cash paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 1.4 5.5—Contingent and deferred consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 0.5 1.7

Total purchase consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 1.9 7.2Fair value of net (assets)/liabilities acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.4 (1.6) (1.2)Goodwill from current year acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 0.3 6.0

The fair value of assets and liabilities arising from acquisitions in 2012 are as follows:

Modus Phoenix Total

£m £m £m

Non-current assets—Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 1.2 2.3—Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —

Current assets(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 1.2 3.9Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3.9) (0.5) (4.4)Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.3) (0.3) (0.6)Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.4) 1.6 1.2

(1) includes trade and other receivables

Deferred contingent consideration up to a maximum of £1.7 million was payable over the 2 years afteracquisition date based on earn out conditions on revenue, profit and customer retention. The InitialFacilities Services Business has recognised the contingent and deferred consideration based on the fairvalue of consideration at the acquisition date.

The Initial Facilities Services Business incurred acquisition related costs of £0.4 million in respect of theabove acquisitions.

From the dates of acquisition to 31 December 2012, these acquisitions contributed £8.2 million to revenueand £0.5 million to operating profit.

If the acquisitions had occurred on 1 January 2012, the revenue and operating profit of the combinedentity would have amounted to £17.7 million and £0.9 million respectively.

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In 2012, the comparative information for 2011 was adjusted retrospectively to reflect changes in fair valueof acquired assets and liabilities and consideration in respect of provisional assets and liabilities recordedas at 31 December 2011 as follows:

MSS

£m

Purchase consideration:—Deferred contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.4)

Total purchase consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.4)Fair value of net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3

The adjustments to the provisional fair value of assets and liabilities arising from acquisitions in 2011 wereas follows:

MSS

£m

Non-current assetsProperty, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.3)

Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.2)Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.3)Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.7)

(b) 2011 Business Combinations

During 2011 the Initial Facilities Services Business acquired 100 per cent of the share capital or trade andassets of MSS Facilities Management (‘‘MSS’’) and the Santia Services Division (‘‘Santia’’). Theseacquisitions took place on 5 December 2011 and 14 February 2011 respectively. MSS was the buildingservices division of Managed Support Services plc and the Santia Services Division related to the watertreatment and hygiene and fire safety and prevention businesses. The total consideration in respect of bothacquisitions was £9.8 million and the cash outflow from acquisitions in 2011, net of cash acquired, was£7.9 million.

MSS Santina Total

£m £m £m

Purchase consideration:—Cash paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.3 8.3—Contingent and deferred consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 — 1.5

Total purchase consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5 4.3 9.8Fair value of net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.5) (6.9) (8.4)Goodwill from current year acquisitions/(Negative goodwill) . . . . . . . . . . . . . . . . 4.0 (2.6) 1.4

The fair value of assets and liabilities arising from acquisitions in 2011 were as follows:

MSS Santina Total

£m £m £m

Non-current assets—Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 4.3 5.6—Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.6 0.8 1.4

Current assets(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 4.5 9.5Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5.1) (2.7) (7.8)Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.3) — (0.3)Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 6.9 8.4

Deferred contingent consideration up to a maximum of £1.5 million was payable over the year afteracquisition based on earn out conditions on revenue, profit and customer retention. The Initial FacilitiesServices Business has recognised the contingent deferred consideration based on the fair value ofconsideration at the acquisition date.

From the dates of acquisition to 31 December 2011, these acquisitions contributed £17.5 million to revenueand £1.7 million to operating profit.

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If the acquisitions had occurred on 1 January 2011, the revenue and operating profit of the combinedentity would have amounted to £37.4 million and £1.1 million respectively.

The Initial Facilities Services Business incurred acquisition related costs of £2.2 million in respect of theabove acquisitions.

The minority interest acquisition related to the 25% minority interest in Rentokil Catering ServicesLimited, which was held by High Seas Investments (Bermuda) Limited as at 31 December 2010. This wasacquired by the Initial Facilities Services Business, in May 2011 for consideration of £5.0 million.

2013 2012 2011

£m £m £m

Total purchase consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 7.2 9.8Consideration payable in future periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (1.7) (1.5)Purchase consideration (paid in cash) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 5.5 8.3Cash and cash equivalents in acquired companies and businesses . . . . . . . . . . . — (1.3) (0.4)Cash outflow on current period acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . — 4.2 7.9Deferred consideration from prior periods paid . . . . . . . . . . . . . . . . . . . . . . . . 0.9 1.1 2.1Cash outflow on current and past acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . 0.9 5.3 10.0

B2. Intangible assets

Intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses,where applicable. The main categories of intangible assets are as follows:

Intangible assets—indefinite useful lives

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Initial FacilitiesServices Business’ share of the net identifiable assets of the acquired subsidiary/associate at the date ofacquisition. Goodwill in respect of business combinations made since 1 January 1998 is included inintangible assets. Goodwill on the acquisition of associates is included in investments in associates.Goodwill in respect of the acquisition of subsidiaries made prior to 1 January 1998 remains eliminatedagainst reserves.

Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses.Impairment losses previously recognised are not reversed. Goodwill is allocated to cash-generating unitsfor the purpose of impairment testing. Gains and losses on the disposal of an entity include the carryingamount of goodwill relating to the entity sold.

Intangible assets—finite useful lives

Intangible assets with finite useful lives are initially measured at either cost or fair value and amortised ona straight-line basis over their useful economic lives, which are reviewed on an annual basis. The fair valueattributable to intangible assets acquired through a business combination is determined by discounting theexpected future cash flows to be generated from that asset at the risk adjusted weighted average cost ofcapital for the Initial Facilities Services Business. The residual values of intangible assets are assumed to benil.

The estimated useful economic lives of intangible assets are as follows:

Customer lists and relationships: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 to 16 yearsBrands and patents: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 to 15 yearsComputer software: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 to 5 years

The following are the main categories of intangible assets:

(a) Customer lists and relationships

Customer lists and portfolios acquired as part of a business combination are initially measured at fair valueand amortised on a straight-line basis over their useful economic lives. Separate values are not attributedto internally generated customer lists or relationships.

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(b) Brands and patents

Brands and patents acquired as part of a business combination are initially measured at fair value andamortised on a straight-line basis over their useful economic lives. Expenditure incurred to develop,maintain and renew brands and patents internally is recognised as an expense in the period incurred.Separate values are not attributed to internally generated brands and patents.

(c) Computer software

Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bringinto use the specific software and are amortised over their estimated useful lives.

Costs associated with maintaining computer software programs are recognised as an expense as incurred.Costs that are directly associated with the production of identifiable and unique software productscontrolled by the Initial Facilities Services Business, and that will probably generate economic benefitsexceeding costs beyond one year, are recognised as intangible assets. Direct costs include the softwaredevelopment, employee costs and an appropriate portion of relevant overheads.

Computer software development costs recognised as assets are amortised over their estimated useful lives.

(d) Research and development

Research expenditure is recognised as an expense as incurred. Costs incurred on development projects(relating to the design and testing of new or improved products) are recognised as intangible assets when itis probable that the project will be a success considering its commercial and technological feasibility andonly if the cost can be measured reliably. Capitalised development expenditure is measured at cost lessaccumulated amortisation and any accumulated impairment losses.

Other development expenditure is recognised as an expense as incurred.

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Development costs previously recognised as an expense are not recognised as an asset in a subsequentperiod. Development costs that have been capitalised are amortised from the date the product is availablefor use on a straight-line basis over the period of its expected benefit.

Customerlists and Computer

Goodwill relationships Brands software Total

£m £m £m £m £m

CostAt 1 January 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . 18.3 16.1 3.3 1.8 39.5Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 0.8 0.8Disposals/retirements . . . . . . . . . . . . . . . . . . . . . . . . — — — (0.2) (0.2)Acquisition of companies and businesses . . . . . . . . . . 4.0 5.6 — — 9.6

At 31 December 2011 . . . . . . . . . . . . . . . . . . . . . . . . 22.3 21.7 3.3 2.4 49.7

At 1 January 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . 22.3 21.7 3.3 2.4 49.7Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 1.6 1.6Acquisition of companies and businesses . . . . . . . . . . 6.4 2.3 — — 8.7

At 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . 28.7 24.0 3.3 4.0 60.0

At 1 January 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . 28.7 24.0 3.3 4.0 60.0Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 0.4 1.4 1.8

At 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . 28.7 24.0 3.7 5.4 61.8

Accumulated amortisation and impairmentAt 1 January 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . — (8.8) (0.8) (1.2) (10.8)Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 0.1 0.1Amortisation charge . . . . . . . . . . . . . . . . . . . . . . . . . — (2.6) (0.6) (0.5) (3.7)

At 31 December 2011 . . . . . . . . . . . . . . . . . . . . . . . . — (11.4) (1.4) (1.6) (14.4)

At 1 January 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . — (11.4) (1.4) (1.6) (14.4)Amortisation charge . . . . . . . . . . . . . . . . . . . . . . . . . — (2.8) (0.3) (0.5) (3.6)

At 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . — (14.2) (1.7) (2.1) (18.0)

At 1 January 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . (14.2) (1.7) (2.1) (18.0)Amortisation charge . . . . . . . . . . . . . . . . . . . . . . . . . — (3.1) (0.3) (0.7) (4.1)

At 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . — (17.3) (2.0) (2.8) (22.1)

Net book valueAt 31 December 2011 . . . . . . . . . . . . . . . . . . . . . . . . 22.3 10.3 1.9 0.8 35.3At 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . 28.7 9.8 1.6 1.9 42.0At 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . 28.7 6.7 1.7 2.6 39.7

Amortisation of £4.1 million (2012: £3.6 million; 2011: £3.7 million) has been charged to operatingexpenses.

Impairment tests for goodwill

Goodwill is allocated to the group’s cash-generating units (‘‘CGUs’’) identified according to country ofoperation and reportable business unit. A summary of the goodwill allocation by CGU is shown below:

2013 2012 2011

£m £m £m

Knightsbridge Guarding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 4.6 4.6UK Facilities Management Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1 14.1 14.0Modus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 5.7 —MSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 4.0 3.7Fire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 0.3 —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.7 28.7 22.3

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Key assumptions

The recoverable amount of a CGU is determined based on the higher of value-in-use calculations usingcash flow projections and fair value less costs to sell if appropriate. The cash flow projections are based onfinancial budgets and long-range plans approved by management and the board covering a three-yearperiod which are prepared as part of the group’s normal planning process. Cash flows for years four andfive use management’s expectation of sales growth, operating costs and margin, based on past experienceand expectations regarding future performance and profitability for each CGU. Cash flows beyond thefive-year period are extrapolated using estimated long-term growth rates.

The key assumptions used by individual CGUs for value-in-use calculations were long-term growth rates ofbetween 2% (2012: 2%; 2011: 2%) and pre-tax discount rates of 10% (2012: 10%; 2011: 10%). The growthrates used by individual CGUs are based on the long-term growth rates predicted for the relevant sectorand country in which a business operates. They do not exceed the long-term average growth rate for thatindustry or country. The pre-tax discount rates are based on the Initial Facilities Services Business’weighted average cost of capital adjusted for specific risks relating to the relevant sector and country.

B3. Property, plant and equipment

Land and buildings comprise mainly factories and offices. Provision for depreciation of freehold buildingsis made in equal annual instalments of 1 per cent to 2 per cent of cost. Leasehold buildings classified asfinance leases are depreciated in equal annual instalments over the shorter of the lease term or estimateduseful life of the leased asset. No depreciation is charged on freehold land or fixed assets underconstruction. When properties are sold, the difference between sale proceeds and net book value is dealtwith in the income statement.

All other property, plant and equipment is stated at historical cost less depreciation. Historical costincludes expenditure that is directly attributable to the acquisition of the items. Depreciation on otherassets is calculated using the straight-line method to allocate the difference between their cost and theirresidual values over their estimated useful lives, as follows:

Vehicles: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 to 5 yearsPlant and equipment (including equipment for rental): . . . . . . . . . . . . . . . . . . . . . . . . . 3 to 10 yearsOffice equipment, furniture and fittings: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 to 10 years

Assets’ residual values and useful lives are reviewed annually and amended as necessary. Fixed assets arereviewed for impairment whenever events or changes in circumstances indicate that the carrying amount ofthe fixed asset may not be recoverable.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carryingamount exceeds the higher of the asset’s fair value less cost to sell or value-in-use.

For the purposes of assessing value-in-use, assets are grouped at the lowest levels for which there areseparately identifiable cash flows (cash-generating units) and cash flow forecasts are made usingassumptions consistent with the most up-to-date budgets and plans that have been formally approved by

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management. These cash flows are discounted using a pre-tax discount rate based on the weighted averagecost of capital, adjusted for the particular risks of the cash-generating unit being reviewed for impairment.

Service Other plant VehiclesLand and contract and and officebuildings equipment equipment equipment Total

£m £m £m £m £m

CostAt 1 January 2011 . . . . . . . . . . . . . . . . . . . . . . . . 1.5 3.6 27.4 9.7 42.2Exchange differences . . . . . . . . . . . . . . . . . . . . . . — — (0.1) — (0.1)Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 2.2 0.6 2.8Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.2) (3.6) (6.5) (2.4) (12.7)Acquisition of companies and businesses . . . . . . . . 0.8 — — 0.6 1.4

At 31 December 2011 . . . . . . . . . . . . . . . . . . . . . 2.1 — 23.0 8.5 33.6

At 1 January 2012 . . . . . . . . . . . . . . . . . . . . . . . . 2.1 — 23.0 8.5 33.6Exchange differences . . . . . . . . . . . . . . . . . . . . . . — — 0.1 — 0.1Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0.1 2.5 1.8 4.4Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.3) — (3.6) (0.6) (4.5)Acquisition of companies and businesses . . . . . . . . (0.2) — — (0.1) (0.3)

At 31 December 2012 . . . . . . . . . . . . . . . . . . . . . 1.6 0.1 22.0 9.6 33.3

At 1 January 2013 . . . . . . . . . . . . . . . . . . . . . . . . 1.6 0.1 22.0 9.6 33.3Exchange differences . . . . . . . . . . . . . . . . . . . . . . — — (0.1) — (0.1)Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 2.1 0.5 2.6Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.2) — (1.5) (0.9) (3.6)

At 31 December 2013 . . . . . . . . . . . . . . . . . . . . . 0.4 0.1 22.5 9.2 32.2

Accumulated depreciation and impairmentAt 1 January 2011 . . . . . . . . . . . . . . . . . . . . . . . . (0.6) (3.5) (19.0) (7.2) (30.3)Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 3.6 6.5 2.4 12.7Depreciation charge . . . . . . . . . . . . . . . . . . . . . . . (0.1) (0.1) (3.4) (1.0) (4.6)

At 31 December 2011 . . . . . . . . . . . . . . . . . . . . . (0.5) — (15.9) (5.8) (22.2)

At 1 January 2012 . . . . . . . . . . . . . . . . . . . . . . . . (0.5) — (15.9) (5.8) (22.2)Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 — 3.1 0.4 3.6Depreciation charge . . . . . . . . . . . . . . . . . . . . . . . (0.1) (0.1) (3.8) (1.6) (5.6)

At 31 December 2012 . . . . . . . . . . . . . . . . . . . . . (0.5) (0.1) (16.6) (7.0) (24.2)

At 1 January 2013 . . . . . . . . . . . . . . . . . . . . . . . . (0.5) (0.1) (16.6) (7.0) (24.2)Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 — 1.2 0.7 2.4Depreciation charge . . . . . . . . . . . . . . . . . . . . . . . (0.1) — (2.6) (1.1) (3.8)

At 31 December 2013 . . . . . . . . . . . . . . . . . . . . . (0.1) (0.1) (18.0) (7.4) (25.6)

Net book valueAt 31 December 2011 . . . . . . . . . . . . . . . . . . . . . 1.6 — 7.1 2.7 11.4At 31 December 2012 . . . . . . . . . . . . . . . . . . . . . 1.1 — 5.4 2.6 9.1

At 31 December 2013 . . . . . . . . . . . . . . . . . . . . . 0.3 — 4.5 1.8 6.6

Leases

No assets are held under finance leases.

The category of service contract equipment represents the pool of assets used by the Initial FacilitiesServices Business in delivering contracted services to customers.

41

B4. Capital commitments

Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:

2013 2012 2011

£m £m £m

Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 1.0 0.2Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 0.1 —

1.2 1.1 0.2

C. Financing

Financial instruments

Financial assets and financial liabilities are recognised when the Initial Facilities Services Businessbecomes a party to the contractual provisions of the relevant instrument and derecognised when it ceasesto be a party to such provisions.

Financial assets

The Initial Facilities Services Business classifies its financial assets in the following categories: financialassets at fair value through the income statement and loans and receivables. The classification depends onthe purpose for which the financial assets were acquired. Management determines the classification of itsinvestments at initial recognition and re-evaluates this designation at every reporting date. The InitialFacilities Services Business assesses at each balance sheet date whether there is objective evidence thatfinancial assets are impaired.

All financial assets are held at amortised cost.

(a) Financial assets at fair value through the income statement

Assets are classified as current if they are expected to be realised within 12 months of the balance sheetdate.

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are notquoted in an active market. They arise when the Initial Facilities Services Business provides money, goodsor services directly to a debtor with no intention of trading the receivable. They are included in currentassets, except for maturities greater than 12 months from the balance sheet date. These are classified asnon-current assets. Loans and receivables include trade and other receivables and cash and otherequivalents. Loans and receivables are measured at amortised cost using the effective interest rate method,subject to impairment.

Financial liabilities

All financial liabilities are stated at amortised cost using the effective interest rate and are held at fairvalue.

Financial liabilities held at amortised cost include trade payables, vacant property provisions, deferredconsideration and borrowings.

Fair value estimation

The fair value of any financial instruments traded in active markets is based on quoted market prices at thebalance sheet date. The quoted market price used for financial assets held by the Initial Facilities ServicesBusiness is the current bid price; the appropriate quoted market price for financial liabilities is the currentask price.

Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Othertechniques, such as estimated discounted cash flows, are used to determine fair value for the remainingfinancial instruments. The fair value of interest rate and currency swaps is calculated as the present valueof the estimated future cash flows.

42

The fair value of forward foreign exchange contracts is determined using forward exchange market rates atthe balance sheet date. The fair value of financial instruments that are not traded in an active market isdetermined by using valuation techniques. The Initial Facilities Services Business uses a variety of methodsand makes assumptions that are based on market conditions existing at each balance sheet date.

The nominal value less estimated credit adjustments of trade receivables and payables are assumed toapproximate to their fair values. The fair value of financial liabilities for disclosure purposes is estimatedby discounting the future contractual cash flows at the current market interest rate that is available to theInitial Facilities Services Business for similar financial instruments.

Financial risk factors

The Rentokil Group operates a central treasury function which manages cash and borrows on behalf of theInitial Facilities Services Business.

The main financial risks faced by the Initial Facilities Services Business relate to the availability of funds tomeet business needs, fluctuations in interest and foreign exchange rates, and credit risks relating to the riskof default by counterparties to financial transactions. The management of these risks is set out below.

(a) Capital risk

The Initial Facilities Services Business is committed to maintaining a debt/equity structure which allowscontinued access to a broad range of financing sources and sufficient flexibility to pursue commercialopportunities in a timely manner as they present themselves, without onerous financing terms andconditions.

The Initial Facilities Services Business’s policy is to maintain a strong capital base so as to maintaininvestor, creditor and market confidence and to sustain future development of the business. Capitalconsists of ordinary shares, retained earnings and non-controlling interests in the group. Managementmonitor the return on capital as well as the level of dividends to ordinary shareholders.

(b) Liquidity risk

The Initial Facilities Services Business is committed to ensuring it has sufficient liquidity to meet itspayables as they fall due. To achieve this, and in accordance with the liquidity ratio requirements of thecredit rating agency Standard & Poor’s, significant maturities are financed at least 12 months in advance,either through existing cash balances, forecast cash flows or new debt issuance. Management modelsfinancing requirements at least 12 months ahead.

(c) Market risk

Interest rate risk

Whilst the Initial Facilities Services Business currently has no significant exposure to changing interestrates, as the majority of funding is provided through the wider Rentokil Group and is presented in InvestedCapital.

Foreign exchange risk

The Initial Facilities Services Business’s primary exposure is to the sterling-euro exchange rate whichimpacts approximately 10% of the Initial Facilities Services Business’ revenue.

(d) Credit risk

The Initial Facilities Services Business has no significant concentration of credit risk. Policies are in placeto ensure that sales are only made to customers with an appropriate credit history.

(e) Treasury risk

The Initial Facilities Services Business utilises financial instruments to manage known financial exposuresin line with policies agreed by the board and outlined above.

The Initial Facilities Services Business does not enter into any speculative derivative contracts.

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C1. Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-termhighly liquid investments with original maturities of three months or less (and subject to insignificantchanges in value). In the cash flow statement, cash and cash equivalents are shown net of bank overdrafts.Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

2013 2012 2011

£m £m £m

Cash at bank and in hand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77.0 96.6 152.1

Cash and bank overdrafts include the following for the purposes of the cashflow statement:

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77.0 96.6 152.1Bank overdrafts (Note C2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (36.2) (17.8) (80.6)

40.8 78.8 71.5

Included within cash at bank and in hand is £16.5 million (2012: £15.7 million; 2011: £14.7 million) ofrestricted cash. This cash is held in respect of specific contracts and can only be utilised in line with termsunder the contractual arrangements.

C2. Bank and other borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings aresubsequently stated at amortised cost; any difference between the fair value (net of transaction costs) andthe redemption value is recognised in the income statement over the period of the borrowings using theeffective interest method.

Borrowings are classified as current liabilities unless the Initial Facilities Services Business has a continuingright to defer settlement of the liability for at least 12 months after the balance sheet date.

2013 2012 2011

£m £m £m

CurrentBank overdrafts (Note C1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.2 17.8 80.6Loans with Rentokil Initial plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 8.5 11.5

Total bank and other borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.5 26.3 92.1

The Initial Facilities Services Business’ bank borrowings are held at amortised cost.

The Initial Facilities Services Business considers the fair value of other current liabilities to be equal to thecarrying value.

The Initial Facilities Services Business considers the fair value of other current liabilities to be equal to thecarrying value. Initial Facilities Services Business considers that as the loans are at commercial floatingrates of interest the carrying value is not materially different to fair value.

44

C3. Financial liabilities

The table below analyses the undiscounted contractual cash flows of the Business’ financial liabilities,including interest payments.

Less Between Betweenthan 1 and 2 2 and 5 Over

1 year years years 5 years Total

£m £m £m £m £m

At 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . 71.5 — — — 71.5Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9 — — — 2.9

74.4 — — — 74.4

At 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . 99.8 — — — 99.8Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 — — — 2.0

101.8 — — — 101.8

At 31 December 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . 87.2 — — — 87.2Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 — — — 4.4

91.6 — — — 91.6

Other includes £2.7 million (2012: £0.9 million, 2011: £2.6 million) in respect of vacant property provisionsand £0.2 million (2012: £1.1 million, 2011: 1.8 million) in respect of deferred consideration.

The carrying amounts of the Initial Initial Facilities Business’ financial liabilities are denominated in thefollowing currencies (before the effect of any derivatives used to transform the currency of the cash flows):

Trade Trade Tradepayables payables payables

and other and other and other2013 2012 2011

£m £m £m

Pounds sterling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72.5 99.6 88.4Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9 2.2 3.2

74.4 101.8 91.6

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C4. Reconciliation of total financial instruments

The table below reconciles the Initial Facilities Business’ accounting categorisation of financial assets andliabilities (based on initial recognition) to the classes of assets and liabilities as shown on the face of thebalance sheet.

Financialliabilitiesheld at Not categorised

Loans and amortised as a financialreceivables cost instrument Total Non-current Current

£m £m £m £m £m £m

As at 31 December 2013AssetsTrade and other receivables . . . . . . 72.7 — 29.2 101.9 — 101.9Cash and cash equivalents . . . . . . . 77.0 — — 77.0 — 77.0LiabilitiesTrade and other payables . . . . . . . . — (71.7) (21.7) (93.4) — (93.4)Bank and other borrowings . . . . . . . — (36.2) — (36.2) — (36.2)

As at 31 December 2012AssetsTrade and other receivables . . . . . . 74.3 — 27.4 101.7 — 101.7Cash and cash equivalents . . . . . . . 96.6 — — 96.6 — 96.6LiabilitiesTrade and other payables . . . . . . . . — (101.0) (25.1) (126.1) — (126.1)Bank and other borrowings . . . . . . . — (17.8) — (17.8) — (17.8)

As at 31 December 2011AssetsTrade and other receivables . . . . . . 70.6 — 21.8 92.4 — 92.4Cash and cash equivalents . . . . . . . 152.1 — — 152.1 — 152.1LiabilitiesTrade and other payables . . . . . . . . — (89.1) (26.2) (115.3) — (115.3)Bank and other borrowings . . . . . . . — (80.6) — (80.6) — (80.6)

C5. Interest payable and similar charges

2013 2012 2011

£m £m £m

Interest payable on bank loans and overdrafts(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 0.9 0.3Interest on defined benefit plan liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 0.1 0.1Interest payable to Rentokil Initial plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 0.1 0.2

Total interest payable and similar charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 1.1 0.6

(1) Interest expense on financial liabilities held at amoritsed cost

C6. Interest receivable

Interest income is recognised on a time-apportioned basis using the effective interest method. When areceivable is impaired, the Initial Facilities Business reduces the carrying amount to its recoverableamount, being the estimated future cash flow discounted at the original effective interest rate of theinstrument, and continues unwinding the discount as interest income. Interest income on impaired loans isrecognised either as cash is collected or on a cost-recovery basis as conditions warrant.

2013 2012 2011

£m £m £m

Bank interest(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 0.4Return on defined benefit plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 0.2 0.2

Total interest receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 0.2 0.6

(1) Interest income on loans and receivables

46

C7. Cash generated from operating activities

2013 2012 2011

£m £m £m

Profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 9.7 8.7Adjustments for

Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 5.3 4.6Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.1) (0.2) (0.6)Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 1.1 0.6Depreciation of tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 5.6 4.6Amortisation of intangible assets(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 3.1 3.2Amortisation of computer software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7 0.5 0.5Share based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 0.2 0.4Loss on sale of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 0.5 —Loss on disposal/retirement of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . — — 0.1Negative goodwill credited to the income statement . . . . . . . . . . . . . . . . . . . . . — — (2.6)

Changes in working capital (excluding the effects of acquisitions and exchangedifferences on consolidation)Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7 (1.1) 0.1Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.2) (6.8) (1.9)Trade and other payables and provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13.2) (7.8) 5.9Trade and other payables and provisions—related parties . . . . . . . . . . . . . . . . . (16.8) 11.7 4.8

Cash generated from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11.4) 21.8 28.4

(1) excluding computer software

In the cash flow statement proceeds from sale of property and equipmentcomprise:

Net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 0.9 —Loss on sale of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.2) (0.5) —Proceeds from sale of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . — 0.4 —

C8. Reconciliation of net increase in cash and bank overdrafts to net debt

2013 2012 2011

£m £m £m

Net increase in cash and bank overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (38.0) 7.3 (15.2)Movement on loans with Rentokil Initial plc . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 2.7 0.4Decrease in debt resulting from cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . (36.5) 10.0 (14.8)Foreign exchange translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.3) 0.3 0.3Movement on net debt in the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (36.8) 10.3 (14.5)Opening net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70.3 60.0 74.5Closing net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.5 70.3 60.0Closing net debt comprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77.0 96.6 152.1Bank and other short term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (43.5) (26.3) (92.1)Total net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.5 70.3 60.0

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C9. Operating and free cash flow

2013 2012 2011

£m £m £m

Cash generated from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11.4) 21.8 28.4Purchase of property, plant and equipment (PPE)—see Note B3 . . . . . . . . . . . . . (2.6) (4.4) (3.5)Purchase of intangible fixed assets—see Note B2 . . . . . . . . . . . . . . . . . . . . . . . . . (1.8) (1.6) (0.8)Proceeds from sale of PPE—see Note C7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0.4 —

Operating cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15.8) 16.2 24.1Interest received—see Note C6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 0.4Interest paid—see Note C5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.4) (1.0) (0.5)Income tax paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5.6) (5.8) (4.8)Free cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21.8) 9.4 19.2

D. Other

D1. IFRS transition balance sheet as at 1 January 2011

1 January2011

£m

AssetsNon-current assetsIntangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.7Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.9Retirement benefit assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.6

41.2

Current assetsInventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86.1Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86.7

175.3

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216.5

Invested capital and liabilitiesInvested capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88.3

Current liabilitiesTrade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.9Current tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3Provisions for other liabilities and charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2Bank and other short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2

125.6

Non-current liabilitiesDeferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6Retirement benefit obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

2.6

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128.2

Total liabilities and invested capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216.5

D2. Contingent liabilities

The Initial Facilities Services Business has contingent liabilities relating to guarantees in respect ofpensions, third parties, environmental issues and tax and litigation, none of which are expected to give riseto any significant loss.

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D3. Related party transactions

The Initial Facilities Services Business’ key management personnel are considered to be the managingdirector and finance director. Their compensation is shown below:

2013 2012 2011

£000 £000 £000

Directors’ emoluments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 645 852 1,038Initial Facilities Services Business contributions to defined contribution pension

schemes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 64 42Share based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 — 112

807 916 1,192

Retirement benefits are accruing to two (2012: two; 2011: three) directors under a defined contributionpension scheme.

The aggregate of emoluments and amounts receivable of the highest paid director was £410,221 (2012:£556,706; 2011: £395,700) and Initial Facilities Services Business pension contributions of £46,359 (2012:£45,750; 2011: £42,300) were made to defined contribution schemes on their behalf.

Other related party transactions

The Initial Facilities Services Business is 100% owned by Rentokil Initial plc. Included in the incomestatement for the year ended 31 December 2013 there is £6.5 million (2012: £4.0 million; 2011:£3.5 million) of revenue received from Rentokil Initial plc, £0.1 million (2012: £0.1 million; 2011:£0.2 million) of interest paid to Rentokil Initial plc and central management fees of £1.4 million (2012:£1.4 million; 2011: £1.4 million) paid to Rentokil Initial plc.

At 31 December 2013 balances of £3.7 million (2012: £20.5 million; 2011: £8.8 million) were payable toRentokil Initial plc and balances of £2.7 million (2012: £2.0 million; 2011: £1.3 million) receivable fromRentokil Initial plc. The Initial Facilities Services Business has a loan balance with Rentokil Initial plc as at31 December 2013 of £7.3 million (2012: £8.5 million; 2011: £11.5 million).

D4. Post balance sheet events

There were no significant post balance sheet events affecting the Initial Facilities Services Business since31 December 2013.

49

PART V

Section A

Unaudited Pro Forma Financial Information

Pro forma financial information

The unaudited pro forma statement of net assets of the Group set out below has been prepared toillustrate the impact on the net assets of Interserve as at 31 December 2013, as if the Transaction andEquity Placing had occurred at that date. The unaudited pro forma statement of net assets has beenprepared for illustrative purposes only and, because of its nature, addresses a hypothetical situation and,therefore, does not represent the Group’s actual financial position or results.

Shareholders should read the whole of this document and not rely solely on the summarised financialinformation contained in this Part V. Deloitte LLP’s report on the unaudited pro forma statement of netassets is set out in Section B of this Part V.

Basis of preparation

The unaudited pro forma statement of net assets has been prepared on the basis set out in the notes below,in a manner that is consistent with the accounting policies adopted by Interserve.

50

Pro Forma Statement of Net Assets of the Group

InitialFacilitiesServices Adjustments:

Business as Acquisition of Pro formaGroup as at at Initial Facilities as at31 December 31 December Services Business 31 December

Description 2013 2013 and financing 2013

(Note 1) (Note 2) (Note 3) (Note 4)(£million)

Goodwill and other intangible assets . . . . . . . . 286.6 39.7 202.4 528.7Plant, property & equipment . . . . . . . . . . . . . . 155.9 6.6 — 162.5Interests in joint venture entities . . . . . . . . . . . 20.6 — — 20.6Interests in associated undertakings . . . . . . . . . 73.9 — — 73.9Retirement benefit assets . . . . . . . . . . . . . . . . . — 0.4 — 0.4Deferred tax asset . . . . . . . . . . . . . . . . . . . . . . 21.0 (0.2) — 20.8

Total Non-Current Assets . . . . . . . . . . . . . . . . 558.0 46.5 202.4 806.9

Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.7 4.0 — 34.7Trade and other receivables . . . . . . . . . . . . . . . 486.1 101.9 — 588.0Cash and deposits . . . . . . . . . . . . . . . . . . . . . . 79.7 77.0 (77.0) 79.7

Total Current Assets . . . . . . . . . . . . . . . . . . . . 596.5 182.9 (77.0) 702.4

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 1,154.5 229.4 125.4 1,509.3

Bank overdrafts . . . . . . . . . . . . . . . . . . . . . . . (27.4) (43.5) 43.5 (27.4)Trade and other payables . . . . . . . . . . . . . . . . . (592.3) (93.4) — (685.7)Current tax liabilities . . . . . . . . . . . . . . . . . . . . (5.3) (8.6) — (13.9)Short-term provisions . . . . . . . . . . . . . . . . . . . (18.1) (2.8) — (20.9)

Total Current Liabilities . . . . . . . . . . . . . . . . . (643.1) (148.3) 43.5 (747.9)

Net Current Assets . . . . . . . . . . . . . . . . . . . . . (46.6) 34.6 (33.5) (45.5)

Bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . (90.0) — (180.2) (270.2)Trade and other payables . . . . . . . . . . . . . . . . . (13.5) — — (13.5)Long term provisions . . . . . . . . . . . . . . . . . . . (29.9) — — (29.9)Retirement benefit obligations . . . . . . . . . . . . . (7.7) — — (7.7)

Total Non-Current Liabilities . . . . . . . . . . . . . (141.1) — (180.2) (321.3)

Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . (784.2) (148.3) (136.7) (1,069.2)

Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 370.3 81.1 (11.3) 440.1

Notes:

(1) The financial position of the Group has been extracted without material adjustment from the Group’s audited consolidatedfinancial statements for the period ended 31 December 2013.

(2) The financial position of the Initial Facilities Services Business as at 31 December 2013 has been extracted without materialadjustment from the historical financial information included in Part IV of this document.

(3) Acquisition adjustments:

The Transaction will be accounted for using the acquisition method of accounting. The excess of consideration over the value ofthe net assets acquired has been reflected as goodwill and other intangible assets. Under the acquisition method of accounting,the purchase price is allocated to the underlying Initial Facilities Services Business tangible and intangible assets acquired andliabilities assumed based on their respective fair market values with any excess purchase price allocated to goodwill. Noadjustments have been made to state the Initial Facilities Services Business’ assets and liabilities as of 31 December 2013 at fairvalue, including the tangible and intangible assets, because such purchase price adjustments cannot be accurately and reliablycalculated at this point in time. Accordingly, the entire excess preliminary purchase price over the net book value of the InitialFacilities Services Business’ net assets has been allocated to goodwill and intangibles as described above.

The Company has agreed to pay on a debt free/cash free basis a total of £250 million for the transfer of the Initial FacilitiesServices Business and accordingly the net assets of the Initial Facilities Services Business have been restated to remove cash anddeposits of £77.0 million and bank overdrafts of £43.5 million, a net adjustment of £33.5 million. Interserve is also expected topay £5 million of Transaction-related costs.

On 28 February 2014, the Company announced its wish to and the results of its intention to raise up to £74.8 million (beforeexpenses) by way of an equity placing of 12,897,771 shares at a price of 580 pence per new share. The net proceeds of the Equity

51

Placing will be used to partially fund the Transaction with the remainder of the consideration being funded from a new£200 million term loan facility (as part of an extended, re-priced and expanded club facility agreement).

£mTotal consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250.0Transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0

255.0

Financed by:Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180.2Net proceeds of the placing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74.8

Total proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255.0

Proceeds used for:Transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5.0)

Total consideration for Initial Facilities Services Business’ issued and to be issued share capital . . . . . . . . 250.0Rentokil net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (81.1)Rentokil net assets and liabilities not transferring (see above) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.5

Rentokil net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (47.6)

Goodwill and intangible assets adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202.4

(4) No adjustment has been made to reflect any trading or other transactions undertaken by Interserve or the Initial FacilitiesServices Business since 31 December 2013.

52

23JAN201215150645

Section B

Accountants’ Opinion on Pro Forma Financial Information

Deloitte LLPAbbots House

Abbey StreetReading

RG1 3BDThe Board of Directorson behalf of Interserve PLCInterserve HouseRuscombe ParkTwyfordReadingBerkshireRG10 9JU

J.P. Morgan Limited25 Bank StreetCanary WharfLondonE14 5JP

Numis Securities LimitedLondon Stock Exchange Building10 Paternoster SquareLondonEC4M 7LT

28 February 2014

Dear Sirs,

Interserve PLC (the ‘‘Company’’)

We report on the pro forma financial information (the ‘‘Pro forma financial information’’) set out in Part Vof the Class 1 circular dated 28 February 2014 (the ‘‘Investment Circular’’), which has been prepared onthe basis described in notes 1 to 4, for illustrative purposes only, to provide information about how thetransaction might have affected the financial information presented on the basis of the accounting policiesadopted by the Company in preparing the financial statements for the period ended 31 December 2013.This report is required by Annex I item 20.2 of Commission Regulation (EC) No 809/2004 (the‘‘Prospectus Directive Regulation’’) as applied by Listing Rule 13.3.3R and is given for the purpose ofcomplying with that requirement and for no other purpose.

Responsibilities

It is the responsibility of the directors of the Company (the ‘‘Directors’’) to prepare the Pro forma financialinformation in accordance with Annex I item 20.2 and Annex II items 1 to 6 of the Prospectus DirectiveRegulation as applied by Listing Rule 13.3.3R.

It is our responsibility to form an opinion, in accordance with Annex I item 20.2 of the ProspectusDirective Regulation, as to the proper compilation of the Pro forma financial information and to reportthat opinion to you in accordance with Annex II item 7 of the Prospectus Directive Regulation as appliedby Listing Rule 13.3.3R.

Save for any responsibility which we may have to those persons to whom this report is expressly addressedand which we may have to Ordinary shareholders as a result of the inclusion of this report in theInvestment Circular, to the fullest extent permitted by law we do not assume any responsibility and will notaccept any liability to any other person for any loss suffered by any such other person as a result of, arisingout of, or in connection with this report or our statement, required by and given solely for the purposes ofcomplying with Listing Rule 13.4.1R (6), consenting to its inclusion in the Investment Circular.

53

In providing this opinion we are not updating or refreshing any reports or opinions previously made by uson any financial information used in the compilation of the Pro forma financial information, nor do weaccept responsibility for such reports or opinions beyond that owed to those to whom those reports oropinions were addressed by us at the dates of their issue.

Basis of Opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the AuditingPractices Board in the United Kingdom. The work that we performed for the purpose of making thisreport, which involved no independent examination of any of the underlying financial information,consisted primarily of comparing the unadjusted financial information with the source documents,considering the evidence supporting the adjustments and discussing the Pro forma financial informationwith the Directors.

We planned and performed our work so as to obtain the information and explanations we considerednecessary in order to provide us with reasonable assurance that the Pro forma financial information hasbeen properly compiled on the basis stated and that such basis is consistent with the accounting policies ofthe Company.

Our work has not been carried out in accordance with auditing or other standards and practices generallyaccepted in jurisdictions outside the United Kingdom, including the United States of America, andaccordingly should not be relied upon as if it had been carried out in accordance with those standards orpractices.

Opinion

In our opinion:

(a) the Pro forma financial information has been properly compiled on the basis stated; and

(b) such basis is consistent with the accounting policies of the Company.

Yours faithfully

Deloitte LLPChartered Accountants

Deloitte LLP is a limited liability partnership registered in England and Wales with registered numberOC303675 and its registered office at 2 New Street Square, London EC4A 3BZ, United Kingdom. Deloitte LLPis the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (‘‘DTTL’’), a UK private companylimited by guarantee, whose member firms are legally separate and independent entities. Please seewww.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

54

PART VI

Principal Terms of the Agreements

1. Introduction

On 28 February 2014, the Acquisition Agreement between the Company and Rentokil Initial 1927 plc wasexecuted. Pursuant to the Acquisition Agreement, the Seller has conditionally agreed to transfer the InitialFacilities Services Business, which is comprised in a number of target companies and through the transferof certain business and assets (as set out below) which together comprise the Initial Facilities ServicesBusiness.

In addition, and to facilitate the operation of the Business, the Company and the Seller will enter into atransitional services agreement on Completion for the provision of certain services relating to informationtechnology and HR for a period of 12 months or as otherwise extended at the agreement of both theCompany and the Seller from Completion

The principal terms of the Agreements are set out in this Part VI.

2. Structure of the Transaction

Pursuant to the Acquisition Agreement, and two business purchase agreements to be executed uponCompletion, the Company will:

(a) acquire the shares of RIFS and the Spanish Shares;

(b) through the acquisition of RIFS and the Spanish Shares, acquire the Subsidiaries; and

(c) acquire certain businesses and assets that comprise the Business that are not owned by the companiesto be purchased above pursuant to the terms of the Irish Business Transfer Agreement and the WaterBusiness Transfer Agreement.

In addition, Rentokil Initial plc (the holding company of the Rentokil Group) executed an agreement on28 February 2014 (the ‘‘Guarantee Agreement’’) pursuant to which it provides a financial parent companyguarantee on customary terms for the Seller.

3. Condition to Completion and Break Fee

The transfer of the Initial Facilities Services Business is conditional upon approval of the Transaction byShareholders through the passing of the Resolution and Completion will occur as soon as practicablefollowing the satisfaction of the condition.

If the condition has not been satisfied on or before the Long Stop Date, unless the parties agree otherwise,the Acquisition Agreement will terminate and cease to have effect.

A break fee of £3.5 million will be payable by the Company to Rentokil Initial 1927 plc if, absent aTermination Event, either:

(a) the directors of the Company switch or adversely amend the recommendation to Shareholders set outin this circular (in which case the Acquisition Agreement terminates) or

(b) the Shareholders do not pass the Resolution put to them to approve the Transaction and theTransaction subsequently lapses.

Certain warranties relating to breaches of material contracts, contingent liabilities, claims andnon-compliance with laws and regulations are to be repeated immediately prior to the date of the proposedGeneral Meeting. If there is a breach of these warranties or there is any breach of title and capacitywarranties for an event that occurs following the signing of the Acquisition Agreement which in valueterms is in excess of £50 million, then the Company has the right to terminate the Transaction (a‘‘Termination Event’’) and, in such circumstances, the break fee set out above will not be payable. Inaddition, should the breach in value terms be more than £15 million but less than £50 million for the non-title and capital warranties and any value up to £50 million for title and capacity warranty breaches, theCompany will have the right to bring a damages claim for such breach.

55

Either party will also have the right to terminate the Transaction if certain delivery obligations required tofacilitate the Transaction are not undertaken, for example if appropriate transfer documentation is notdelivered by a party at Completion.

4. Consideration

The Company has agreed to pay a total of £250 million in consideration for the transfer of the InitialFacilities Services Business (the ‘‘Consideration’’).

The Consideration is adjusted on a pound for pound in either direction and subject to a post-Completionadjustment if an agreed level of working capital or net cash is not delivered at signing of the AcquisitionAgreement.

5. Pre-Completion covenants

The Seller has given covenants in relation to the period between signing of the Acquisition Agreement andCompletion to procure that the Seller shall operate its business and activities in its usual course and thatthere is no leakage of cash to the Rentokil Group.

6. Warranties and Indemnities

The Acquisition Agreement contains a set of warranties given by the Seller which are customary for atransaction of this nature. The warranties relate to, amongst other things, title, capacity, authority andsolvency matters, accounting and financial matters, trading, litigation and compliance with law and taxationin relation to the Initial Facilities Services Business, which includes the Irish Business and the WaterBusiness. In addition the Seller is providing indemnity and hold harmless protection in connection withcertain historic claims, pensions and TUPE liabilities and any pre-signing tax liabilities through a taxcovenant.

The Seller’s liability under the warranties (other than title and capacity warranties) are subject to thefollowing limitations:

(a) the Company’s right to bring a claim for a breach of warranty (other than tax warranties) will cease ifnotice of the claim has not been notified to the Seller within 18 months of Completion;

(b) any claims in relation to a breach of the warranties relating to tax shall expire 30 days after the expiryof the period specified by statute or, if there is no such period, seven years after Completion;

(c) a claim may only be brought if it exceeds £500,000;

(d) a claim may only be brought if the total of all potential claims exceeds £5 million, and Interserve willbe able to recover the excess of such claim over the £5 million threshold and the first £2.5 million ofthe original threshold; and

(e) the aggregate liability of the Seller in respect of all claims relating to warranties (other than title andcapacity warranties) and the tax covenant shall not exceed an amount equal to £130 million and forthese claims, title and capacity claims and any other indemnity claims (other than pensions) anamount of £250 million.

The Company has agreed to provide title and capacity warranties to the Seller and also indemnityprotection if the Rentokil Group incurs any loss in connection with certain performance guaranteesprovided by the Group which will remain in place post-Completion until the Seller has arranged forsubstitute arrangements to be put in place following Completion and for certain assumed liabilities underthe Business Purchase Agreements. The maximum liability of the Company for any such claims is£250 million.

Save as set out above, no time or quantum limitations are provided in the Acquisition Agreement on eitherparty with regard to the indemnity protection or other contractual claims being provided.

7. Non-Compete

The Seller has agreed to customary non-compete and solicitation of key employees provisions for periodsof three years and two years respectively from Completion.

8. Ancillary Agreements

The parties will, at Completion, enter into a Transitional Services Agreement, the Irish Business TransferAgreement and the Water Business Transfer Agreement. If the Acquisition Agreement is terminated, theseagreements will not be entered into and will therefore have no force and effect.

56

PART VII

ADDITIONAL INFORMATION

1. Responsibility

The Company and the Directors, whose names appear on page 4 of this document, accept responsibility forthe information contained in this document. To the best of the knowledge and belief of the Company andthe Directors (who have taken all reasonable care to ensure that such is the case) the informationcontained in this document is in accordance with the facts and does not omit anything likely to affect theimport of such information.

2. Company address

The registered office and the principal place of business in the UK of the Company is located at InterserveHouse, Ruscombe Park, Twyford, Reading, Berkshire, RG10 9JU (telephone number+44 (0)118 932 0123).

3. Directors’ interests

3.1 As at 27 February 2014 (being the latest practicable date prior to the posting of this document), theaggregate interests of each of the Directors in the share capital of the Company which have beennotified by each Director to the Company pursuant to DTRs 3.1.2R and 3.1.3R or the interests ofpersons connected with them which would, if the connected person were a Director, be required to bedisclosed under DTRs 3.1.2R and 3.1.3R and the existence of which is known to, or could withreasonable diligence be ascertained by, that Director) were as follows:

Percentage of issuedDirector Number of Shares share capital

Lord Blackwell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 0.01Adrian Ringrose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,848 0.31Tim Haywood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,390 0.02Steven Dance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,422 0.08Bruce Melizan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,183 0.08Dougie Sutherland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,907 0.08Les Cullen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 0.01Keith Ludeman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000 0.002David Thorpe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,793 0.01Anne Fahy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —

The above figures include shares held in trust pursuant to the Interserve Share Incentive Plan 2009.

3.2 The following options and awards over Shares have been granted to the Directors and are outstandingas at 27 February 2014 (being the latest practicable date prior to the posting of this document):

57

(a) Share Options

The number of options over Shares in the Company (pursuant to the 2002 Executive ShareOption Scheme) held by each Director of the Company is shown below. All options are fullyvested, having achieved the respective performance conditions.

Number of Shares Exercise priceName of Director under option (pence) Exercise period

Lord Blackwell . . . . . . . . . . . . . . . . . . . . — — —Adrian Ringrose . . . . . . . . . . . . . . . . . . . 150,280 359.33 14.03.08 - 13.03.15Tim Haywood . . . . . . . . . . . . . . . . . . . . . — — —Steven Dance . . . . . . . . . . . . . . . . . . . . . — — —Bruce Melizan . . . . . . . . . . . . . . . . . . . . 75,140 359.33 14.03.08 - 13.03.15Dougie Sutherland . . . . . . . . . . . . . . . . . — — —Les Cullen . . . . . . . . . . . . . . . . . . . . . . . — — —Keith Ludeman . . . . . . . . . . . . . . . . . . . . — — —David Thorpe . . . . . . . . . . . . . . . . . . . . . — — —Anne Fahy . . . . . . . . . . . . . . . . . . . . . . . — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 225,420

(b) Sharesave Scheme

The number of options over Shares in the Company (pursuant to the Interserve SharesaveScheme 2009) held by each Director of the Company is shown below:

Number of Shares Exercise priceName of Director under option (pence) Exercise period

Lord Blackwell . . . . . . . . . . . . . . . . . . . . — — —Adrian Ringrose . . . . . . . . . . . . . . . . . . . 378 238.00 01.07.15 - 31.12.15Tim Haywood . . . . . . . . . . . . . . . . . . . . . 390 231.00 01.07.14 - 31.12.14

378 238.00 01.07.15 - 31.12.15226 398.00 01.06.16 - 30.11.16

Steven Dance . . . . . . . . . . . . . . . . . . . . . 390 231.00 01.07.14 - 31.12.14378 238.00 01.07.15 - 31.12.15226 398.00 01.06.16 - 30.11.16

Bruce Melizan . . . . . . . . . . . . . . . . . . . . 390 231.00 01.07.14 - 31.12.14378 238.00 01.07.15 - 31.12.15226 398.00 01.06.16 - 30.11.16

Dougie Sutherland . . . . . . . . . . . . . . . . . 378 238.00 01.07.15 - 31.12.15226 398.00 01.06.16 - 30.11.16

Les Cullen . . . . . . . . . . . . . . . . . . . . . . . — — —Keith Ludeman . . . . . . . . . . . . . . . . . . . . — — —David Thorpe . . . . . . . . . . . . . . . . . . . . . — — —Anne Fahy . . . . . . . . . . . . . . . . . . . . . . . — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,964

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(c) Performance Share Plan

The number of awards over shares in the Company (pursuant to the Performance Share Plan)held by each Director of the Company is shown below:

Mid-marketNumber of price on

Shares awardDate of under date Performance Exercise

Name of Director award award (pence) period period

Lord Blackwell . . — — — — —Adrian Ringrose . 20.04.11 167,574 261.00 01.01.11 - 31.12.13 20.04.14 - 19.04.16

11.04.12 241,329 275.80 01.01.12 - 31.12.14 11.04.15 - 10.04.1709.04.13 144,094 466.10 01.01.13 - 31.12.15 09.04.16 - 08.04.18

Tim Haywood . . . 20.04.11 120,669 261.00 01.01.11 - 31.12.13 20.04.14 - 19.04.1611.04.12 173,779 275.80 01.01.12 - 31.12.14 11.04.15 - 10.04.1709.04.13 103,761 466.10 01.01.13 - 31.12.15 09.04.16 - 08.04.18

Steven Dance . . . 20.04.11 99,746 261.00 01.01.11 - 31.12.13 20.04.14 - 19.04.1611.04.12 143,648 275.80 01.01.12 - 31.12.14 11.04.15 - 10.04.1709.04.13 85,770 466.10 01.01.13 - 31.12.15 09.04.16 - 08.04.18

Bruce Melizan . . 20.04.11 99,746 261.00 01.01.11 - 31.12.13 20.04.14 - 19.04.1611.04.12 143,648 275.80 01.01.12 - 31.12.14 11.04.15 - 10.04.1709.04.13 85,770 466.10 01.01.13 - 31.12.15 09.04.16 - 08.04.18

DougieSutherland . . . 20.04.11 89,528 261.00 01.01.11 - 31.12.13 20.04.14 - 19.04.16

11.04.12 128,933 275.80 01.01.12 - 31.12.14 11.04.15 - 10.04.1709.04.13 85,770 466.10 01.01.13 - 31.12.15 09.04.16 - 08.04.18

Les Cullen . . . . . — — — — —Keith Ludeman . . — — — — —David Thorpe . . . — — — — —Anne Fahy . . . . . — — — — —

Total . . . . . . . . . 1,913,765

3.3 Save as disclosed in paragraphs 3.1 and 3.2 above, the Directors do not have any interest in the sharecapital of the Company.

3.4 So far as the Company is aware, as at 27 February 2014 (being the latest practicable date prior to thepublication of this document), the following persons (other than Directors) had notifiable interests inthree per cent or more of the entire issued share capital of the Company:

Percentage of theName Number of Shares issued share capital

Mondrian Investment Partners Limited . . . . . . . . . . . . . . . . . . 9,272,292 7.18%Henderson Global Investors Ltd . . . . . . . . . . . . . . . . . . . . . . . 8,541,009 6.62%Standard Life Investments Ltd . . . . . . . . . . . . . . . . . . . . . . . . 6,715,225 5.20%Norges Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,915,250 3.81%Prudential plc group of companies . . . . . . . . . . . . . . . . . . . . . 4,354,580 3.37%

4. Directors’ service agreements

The Company has entered into the following contracts or, as appropriate, a letter of appointment with itsDirectors.

4.1 Service Agreements of the Executive Directors

Details of the Executive Directors’ service contracts can be found on page 61 of the Company’s 2012Annual Report and Accounts in the section entitled ‘‘Directors’ Remuneration Report’’ and areincorporated herein by reference.

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The Executive Directors have entered into service agreements with the Company. Details of these serviceagreements are set out below.

Annualbonus

payment forthe financial

Basic year endedDate of service Commencement Expiry/Notice Annual 31 December

Director agreement date of office terms Salary 2013

(£) (£)

Adrian Ringrose . . . . . . 13 December 2001 1 January 2002 12 months 465,862 273,368Tim Haywood . . . . . . . 30 November 2010 30 November 2010 12 months 335,465 196,851Steven Dance . . . . . . . . 10 January 2008 10 January 2008 12 months 277,299 162,719Bruce Melizan . . . . . . . 10 January 2008 10 January 2008 12 months 277,299 162,719Dougie Sutherland . . . . 1 January 2011 1 January 2011 12 months 277,299 162,719

4.2 Contracts and Letters of Appointment of the Non-Executive Directors

A summary of the Non-Executive Directors’ letters of appointment can be found on page 61 of theCompany’s 2012 Annual Report and Accounts in the section entitled ‘‘Directors’ Remuneration Report’’and are incorporated herein by reference. The current annual fees payable to the Non-Executive Directorsare set out below. Save as disclosed in this paragraph 4.2 of this Part VII, there have been no changes tothe terms of the letters of appointment of the Non-Executive Directors since the publication of the 2012Annual Report and Accounts.

The Non-Executive Directors have entered into letters of appointment with the Company. Details of theseletters of appointment are set out below.

Effective date ofcurrent Date of first Expiry/Notice Annual

Director appointment appointment terms Fee

(£)

Lord Blackwell . . . . . . . . . . . . . . . . . . . . . 13 May 2013 1 September 2005 Six months 150,000Les Cullen . . . . . . . . . . . . . . . . . . . . . . . . 13 May 2013 1 October 2005 One month 52,100Keith Ludeman . . . . . . . . . . . . . . . . . . . . 13 May 2013 1 January 2011 One month 45,100David Thorpe . . . . . . . . . . . . . . . . . . . . . 13 May 2013 1 January 2009 One month 54,100Anne Fahy . . . . . . . . . . . . . . . . . . . . . . . . 13 May 2013 1 January 2013 One month 55,100

Save as disclosed above, there are no service agreements between any Director and any member of theGroup.

Save as mentioned above in this paragraph 4 of this Part VII, there are no existing or proposed serviceagreements between any Director and the Company or any of its subsidiaries providing for benefits upontermination of employment.

5. Material contracts

5.1 The following contracts (not being contracts entered into in the ordinary course of business) havebeen entered into by members of the Group (a) in the two years immediately preceding the date ofthis document and are, or may be, material to the Group or (b) contain provisions under which anymember of the Group has any obligation or entitlement which is material to the Group as at the dateof this document:

(a) The Acquisition Agreement, the Transitional Services Agreement, the Irish Business TransferAgreement and the Water Business Transfer Agreement and the Guarantee Agreement, theprincipals terms of which are set out in Part VI of this document;

(b) On the date of this document, the Company and the Joint Bookrunners entered into the PlacingAgreement pursuant to which (i) JPMC and Numis were appointed to act as joint sponsor to theCompany in connection with the applications for Admission of Placing Shares and theTransaction and (ii) the Joint Bookrunners were appointed to act as joint bookrunners to theCompany in connection with the Equity Placing. The Joint Bookrunners have agreed severally,subject to certain conditions, to use reasonable endeavours to procure Placees for the PlacingShares at the Issue Price. If and to the extent Placees cannot be so procured on the basis outlined

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above, the relevant Placing Shares will be acquired by the Joint Bookrunners as principal on andsubject to the terms of the Placing Agreement.

The Company has given certain customary undertakings, representations and warranties to theJoint Bookrunners, in relation to the issue and/or sale of Shares, including a 120 day lock-up onissues of new shares, and in relation to other matters relating to the Group and its business. Inaddition, the Company has given customary indemnities to the Joint Bookrunners and certainindemnified persons connected with each of them.

The obligations of the Joint Bookrunners under the Placing Agreement in relation to the EquityPlacing are subject to certain conditions including, amongst others:

(i) the Company having complied with and not being in breach of any its obligations under thePlacing Agreement at any time prior to Admission of the Placing Shares; and

(ii) Admission of Placing Shares becoming effective at or before 8.00 a.m. on 5 March 2014 orsuch later time and/or date (being not later than 3.00 p.m. on 12 March 2014) as theCompany and the Joint Bookrunners may agree.

If any of the conditions to the Placing Agreement are not satisfied (or waived by the JointBookrunners) or have become incapable of being satisfied by the required time and/or date, eachJoint Bookrunner may terminate the Placing Agreement in certain circumstances, but only priorto Admission of the Placing Shares.

(c) In connection with the Equity Placing, the Company, JPMS and Indigo (Jersey) Limited haveentered into several agreements, each dated the date of this document, in relation to thesubscription and transfer of ordinary shares and redeemable preference shares in Indigo (Jersey)Limited.

Under the terms of these agreements:

(i) the Company and JPMS will acquire ordinary shares in Indigo (Jersey) Limited and enterinto certain put and call options in respect of the ordinary shares in Indigo (Jersey) Limitedsubscribed for by JPMS that are exercisable if the Equity Placing does not proceed;

(ii) JPMS will apply monies received under the Equity Placing, and held by JPMS untilAdmission of Placing Shares, to subscribe for redeemable preference shares in Indigo(Jersey) Limited to an aggregate value equal to such monies, after deduction of the amountof certain commissions and expenses together with any relevant amounts in respect ofPlacing Shares acquired by the Joint Bookrunners for which the Joint Bookrunners haveprocured Placees pursuant to the Placing Agreement (after deducting relevant commissionsand expenses); and

(iii) the Company will allot and issue the Placing Shares to those persons entitled thereto inconsideration of JPMS transferring its holding of redeemable preference shares and ordinaryshares in Indigo (Jersey) Limited to the Company.

Accordingly, instead of receiving cash as consideration for the issue of Placing Shares, at theconclusion of the Equity Placing the Company will own the entire issued share capital of Indigo(Jersey) Limited whose only asset will be its cash reserves, which will represent an amountapproximately equal to the net proceeds of the Equity Placing.

Placees are not party to these arrangements and so will not acquire any direct right against JPMSpursuant to these arrangements. The Company will be responsible for enforcing the obligationsof JPMS and Indigo (Jersey) Limited thereunder;

(d) On 27 November 2012, a deed of transfer was entered into between Interserve InvestmentsLimited and Interserve Trustees Limited, the corporate trustee of the Interserve Pension Scheme,to transfer the entire issued share capital of Interserve PFI Holdings 2003 Limited, representingthe majority of the Company’s private finance initiative assets, to Interserve Trustees Limited;

(e) On 11 October 2012, a deed of transfer was entered into between Interserve PFI Holdings 2003Limited and Dalmore Capital (Para 1) Limited to transfer 49.9 per cent of Interserve PFIHoldings 2003 Limited’s shares and loan stock in PFI Para (Holdings) which indirectly ownedinterests in 19 PFI projects to Dalmore Capital (Para 1) Limited;

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(f) On 11 October 2012, a deed of transfer was entered into between Interserve PFI Holdings 2003Limited and Dalmore Capital (Para 2) Limited to transfer 49.9 per cent of Interserve PFIHoldings 2003 Limited’s shares and loan stock in PFI Custodial (Holdings) Limited (whichowned interests in two PFI projects) to Dalmore Capital (Para 2) Limited;

(g) On 28 February 2014 the Company (as guarantor) and Interserve Group Holdings Limited (asborrower) entered into a £400,000,000 facility agreement (the ‘‘New Club Facility Agreement’’)with Barclays Bank plc (‘‘Barclays’’), HSBC Bank plc, Lloyds Bank plc and The Royal Bank ofScotland plc as lenders (the ‘‘Club Banks’’). The New Club Facility Agreement records the termsof two facilities. The first is a £200,000,000 five year revolving credit facility made available by theClub Banks. The second is a two year £200,000,000 term loan facility made available by the ClubBanks (other than Barclays). The term facility is made available specifically for the purpose offunding part of the purchase price payable in respect of the Transaction and related costs andexpenses. The New Club Facility Agreement will replace and refinance an existing club facilityagreement with the Club Banks (other than Barclays) dated 28 February 2012 and a separatebilateral facility agreement with Barclays also dated 28 February 2012. The availability of the NewClub Facility Agreement is conditional upon, among other things, Interserve (Defence) Limited,Interserve (Facilities Management) Limited, Interserve Construction Limited, InterserveEngineering Services Limited, Interserve Finance Limited, Interserve Industrial Services Limited,MacLellan International Limited, RMD Kwikform Limited, Interserve Working Futures Limited,RMD Kwikform North America Inc, and Rapid Metal Developments (Australia) ProprietaryLimited (the ‘‘Subsidiary Guarantors’’) acceding as guarantors; and

(h) The Company (as guarantor), Interserve Group Holdings Limited (as borrower) and theSubsidiary Guarantors (as guarantors) are also party to a bilateral facility agreement dated28 February 2012 with Abbey National Treasury Services plc (‘‘ANTS’’) which has a maturity dateof 28 February 2016. This facility was amended by an agreement of 10 December 2013 to increasethe facility from £25,000,000 to £50,000,000. Conditional upon the Subsidiary Guarantorsconfirming their guarantees, the business undertakings in the ANTS facility will be amendedpursuant to an amendment and restatement agreement dated 28 February 2014 to bring theminto line with those negotiated in the New Club Facility Agreement.

5.2 No contracts (other than contracts entered into in the ordinary course of business) have been enteredinto by the Initial Facilities Services Business (a) in the two years immediately preceding the date ofthis document and are, or may be, material to Initial Facilities Services Business or (b) containprovisions under which the Initial Facilities Services Business has any obligation or entitlement whichis material to the Initial Facilities Services Business as at the date of this document.

6. Working capital of the Enlarged Group

The Company is of the opinion that taking into account the net proceeds of the Equity Placing and thebank and other facilities, the Enlarged Group has sufficient working capital for its present requirements,that is, for at least the next twelve months from the date of this document.

7. Litigation

7.1 There are no governmental, legal or arbitration proceedings (including any such proceedings whichare pending or threatened of which the Company is aware) which may or have had during the12 months prior to the date of this document a significant effect on the Company or the Group and/orthe Company’s or the Group’s financial position or profitably.

7.2 There are no governmental, legal or arbitration proceedings (including any such proceedings whichare pending or threatened of which the Company is aware) which may or have had during the12 months prior to the date of this document a significant effect on the Initial Facilities ServicesBusiness and/or the Initial Facilities Services Business’ financial position or profitably.

8. Significant change

8.1 There has been no significant change in the financial or trading position of the Group since31 December 2013, being the date of the last audited financial statements of the Company.

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8.2 There has been no significant change in the financial or trading position the Initial Facilities ServicesBusiness since 31 December 2013, being the date to which the financial information shown in Part IVhas been prepared.

9. Related Party Transactions

In respect of the periods for which historical financial information appears in this document and in respectof the periods from the end of such financial periods to 27 February 2014, being the latest practicable dateprior to the publication of this document, neither the Company nor any other member of the Group hasentered into any transactions with related parties.

10. Consent

10.1 Deloitte LLP (a member of the Institute of Chartered Accountants in England and Wales) has givenand not withdrawn its consent to the inclusion in this document of its report on proforma financialinformation set out in Section B of Part V in the form and context in which it appears.

10.2 KPMG LLP (a member of the Institute of Chartered Accountants in England and Wales) has givenand not withdrawn its consent to the inclusion in this document of its report on historic financialinformation relating to the Initial Facilities Services Business set out in Part IV in the form andcontext in which it appears.

11. Documents available for inspection and available information

Copies of the following documents will be available for inspection at the offices of Ashurst LLP, BroadwalkHouse, 5 Appold Street, London EC2A 2HA and at the registered office of the Company during normalbusiness hours on any weekday (Saturdays, Sundays and public holidays excepted) until the conclusion ofthe General Meeting:

(a) the articles of association of the Company;

(b) the published audited consolidated accounts of the Group for the two financial years ended31 December 2012 and 31 December 2011;

(c) the opinion by Deloitte LLP set out in Section B of Part V of this document;

(d) the Acquisition Agreement, the Transitional Services Agreement, the Irish Business TransferAgreement and the Water Business Transfer Agreement;

(e) the consent letters referred to in paragraph 10 of this Part VII; and

(f) this document.

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PART VIII

Definitions

The following definitions apply throughout this document and the accompanying Form of Proxy, unless thecontext otherwise requires:

‘‘Acquisition Agreement’’ . . . . . . the conditional agreement between the Company and the Sellerdated 28 February 2014 relating to the acquisition of the InitialFacilities Services Business, the principal terms of which are set outin Part VI of this document;

‘‘Admission’’ . . . . . . . . . . . . . . . . the proposed admission of the Placing Shares by the UKLA to listingon the premium segment of the Official List and by the LondonStock Exchange plc to trading on the main market of the LondonStock Exchange;

‘‘Agreements’’ . . . . . . . . . . . . . . the Acquisition Agreement, the Irish Business Transfer Agreement,the Water Business Transfer Agreement and the Transitional ServicesAgreement;

‘‘Business Transfer Agreements’’ . the Irish Business Transfer Agreement and the Water BusinessTransfer Agreement;

‘‘Board’’ or ‘‘Directors’’ . . . . . . . the directors of the Company as at the date of this document whosenames are set out on page 4 of this document;

‘‘Completion’’ . . . . . . . . . . . . . . completion of the Transaction in accordance with the AcquisitionAgreement;

‘‘Consideration’’ . . . . . . . . . . . . . has the meaning given to such term in paragraph 4 of Part VI;

‘‘DTRs’’ or ‘‘Disclosure Rulesand Transparency Rules’’ . . . . . the FCA’s Disclosure Rules and Transparency Rules;

‘‘Enlarged Group’’ . . . . . . . . . . . the Group as enlarged by the acquisition of the Initial FacilitiesServices Business;

‘‘Equity Placing’’ . . . . . . . . . . . . the placing of up to 12,897,771 new Shares, representingapproximately 9.99 per cent of Interserve’s issued ordinary sharecapital immediately before the placing, which was announced byInterserve on 28 February 2014;

‘‘Financial Conduct Authority’’ or‘‘FCA’’ . . . . . . . . . . . . . . . . . . the Financial Conduct Authority of the UK in its capacity as the

competent authority for the purposes of Part VI of FSMA and in theexercise of its functions in respect of admission to the Official Listotherwise than in accordance with Part VI of FSMA;

‘‘Form of Proxy’’ . . . . . . . . . . . . the form of proxy relating to the General Meeting being sent toShareholders with this document;

‘‘FSMA’’ . . . . . . . . . . . . . . . . . . the Financial Services and Markets Act 2000 of England and Wales,as amended;

‘‘General Meeting’’ . . . . . . . . . . the general meeting of the Company convened for 17 March 2014 (orany adjournment of it), notice of which is set out at the end of thisdocument;

‘‘Group’’ . . . . . . . . . . . . . . . . . . the Company and its existing subsidiary undertakings;

‘‘Guarantee Agreement’’ . . . . . . . has the meaning given to such term in paragraph 2 of Part VI;

‘‘Interserve’’ or the ‘‘Company’’ . Interserve Plc;

‘‘Irish Business TransferAgreement’’ . . . . . . . . . . . . . . the agreement to be entered into between the Company and the

Seller upon Completion of the Acquisition Agreement, relating tothe acquisition of the Irish Business;

64

‘‘Irish Business’’ . . . . . . . . . . . . . means certain assets, contracts and employees forming the Irishdivision of the Business;

‘‘Issue Price’’ . . . . . . . . . . . . . . . 580 pence per Placing Share;

‘‘Joint Bookrunners’’ . . . . . . . . . JPMS and Numis;

‘‘JPMC’’ . . . . . . . . . . . . . . . . . . J.P. Morgan Limited (which conducts its UK investment bankingbusiness as J.P. Morgan Cazenove);

‘‘JPMS’’ . . . . . . . . . . . . . . . . . . . J.P. Morgan Securities plc;

‘‘Listing Rules’’ . . . . . . . . . . . . . the listing rules made by the FCA under Part VI of FSMA (asamended from time to time);

‘‘London Stock Exchange’’ . . . . . London Stock Exchange plc;

‘‘Long Stop Date’’ . . . . . . . . . . . means the date falling two months from 28 February 2013, being thedate the Acquisition Agreement was executed;

‘‘Normalised EPS’’ . . . . . . . . . . . headline earnings per share adjusted to exclude IAS 36 (impairmentof assets) and IAS 39 (financial instruments) and any un-budgeted‘‘one-off’’ contributions to EPS which the Remuneration Committeeexercises its discretion to exclude;

‘‘Notice of General Meeting’’ or‘‘Notice’’ . . . . . . . . . . . . . . . . the notice of General Meeting set out at the end of this document;

‘‘Numis’’ . . . . . . . . . . . . . . . . . . Numis Securities Limited;

‘‘Official List’’ . . . . . . . . . . . . . . the Official List of the Financial Conduct Authority;

‘‘OFT’’ . . . . . . . . . . . . . . . . . . . Office of Fair Trading;

‘‘PFI’’ . . . . . . . . . . . . . . . . . . . . private finance initiative;

‘‘Placees’’ . . . . . . . . . . . . . . . . . those persons who have agreed to subscribe for the Placing Shares;

‘‘Placing Agreement’’ . . . . . . . . . the placing agreement dated 28 February 2014 between the Companyand JPMC, JPMS and Numis, details of which are set out inparagraph 5.1(b) of Part VII (Additional Information) of thisdocument;

‘‘Placing Price’’ . . . . . . . . . . . . . the higher of (i) the price per Placing Share as may be agreedbetween the Company, JPMS and Numis; and (ii) the floor price perPlacing Share pursuant to the Placing Agreement;

‘‘Placing Shares’’ . . . . . . . . . . . . 12,897,771 new Shares to be issued by the Company pursuant to theEquity Placing;

‘‘Prospectus Rules’’ . . . . . . . . . . the rules made by the FCA under Part VI of FSMA in relation tooffers of transferable securities to the public and admission oftransferable securities to trading on a regulated market (as amendedfrom time to time);

‘‘Initial Facilities ServicesBusiness’’ or the ‘‘Business’’ . . the companies comprising and the assets and certain liabilities of the

Seller’s facilities services business to be acquired by the Companyupon the terms set out in the Acquisition Agreement, the IrishBusiness Transfer Agreement and the Water Business TransferAgreement;

‘‘Rentokil Group’’ . . . . . . . . . . . Rentokil Initial plc and its subsidiary undertakings;

‘‘Resolution’’ . . . . . . . . . . . . . . . the ordinary resolution to be proposed at the General Meeting inconnection with the Transaction as set out in the Notice of GeneralMeeting;

‘‘RIFS’’ . . . . . . . . . . . . . . . . . . . Initial Facilities Services (UK) Limited;

‘‘RIFS Subsidiaries’’ . . . . . . . . . . the subsidiary undertakings of RIFS, being Initial Catering ServicesLimited, Initial Facilities Management Limited, Knightsbridge

65

Guarding Limited, Modus FM Limited, Phoenix Fire ServicesLimited, Perception UK LLP, Benchmark Carpet Care Limited,Central Window Cleaning Company Limited, Hi-Tech CleaningSolutions Limited, Initial Building Services Limited, Initial HospitalServices Limited, Initial Industrial Services Limited, Insitu CleaningCompany Limited, KGL Business Services Limited, KnightsbridgeGuarding Holdings Limited, Lancaster Office Cleaning CompanyLimited, Lancaster Employment Business Limited, Lancaster PayrollCompany Limited, MSS Facilities Management Limited, RentokilInitial Fire Services Limited, Retail Cleaning Services Limited andSt James Cleaning and Support Services Limited;

‘‘Seller’’ . . . . . . . . . . . . . . . . . . . Rentokil Initial 1927 plc;

‘‘Shares’’ . . . . . . . . . . . . . . . . . . the issued ordinary shares of 10 pence each in the capital of theCompany;

‘‘Shareholder(s)’’ . . . . . . . . . . . . holder(s) of Shares;

‘‘Spanish Shares’’ . . . . . . . . . . . . the entire issued share capital of Initial Facilities Services S.A.U.;

‘‘Spanish Subsidiaries’’ . . . . . . . . the subsidiary undertakings of Initial Facilities Services S.A.U., beingTranslimp Contract Services S.A.U. and IFS Centro Especial deEmpleo S.L.U.;

‘‘Subsidiaries’’ . . . . . . . . . . . . . . the RIFS Subsidiaries and the Spanish Subsidiaries;

‘‘Support Services Activities’’ . . . the provision of outsourced support services to public and privatesector clients;

‘‘Termination Event’’ . . . . . . . . . has the meaning given to such term in paragraph 3 of Part VI;

‘‘TFM’’ . . . . . . . . . . . . . . . . . . . total facilities management;

‘‘Transaction’’ . . . . . . . . . . . . . . . the proposed acquisition by the Company of the Initial FacilitiesServices Business pursuant to the Acquisition Agreement, the IrishBusiness Transfer Agreement and the Water Business TransferAgreement;

‘‘Transitional ServicesAgreement’’ . . . . . . . . . . . . . . the agreement to be entered into between the Company and the

Seller upon Completion of the Acquisition Agreement, pursuant towhich the Seller will provide certain transitional services to theEnlarged Group;

‘‘TUPE’’ . . . . . . . . . . . . . . . . . . the Transfer of Undertakings (Protection of Employment)Regulations 2006;

‘‘UK’’ or ‘‘United Kingdom’’ . . . . the United Kingdom of Great Britain and Northern Ireland;

‘‘Water Business’’ . . . . . . . . . . . . the business of (i) designing, building and installing a wide range ofwater pre-treatment plans including: softeners, dealkalisation,demineralisation, reverse osmosis, and iron, manganese and carbonfilters; (ii) designing, building and installing dosing equipment forboilers, cooling towers and other water process equipment;(iii) monitoring chlorine dioxide dosing systems for legionella controlin domestic hot and cold water systems; and (iv) the provision ofremedial solutions by designated water hygiene teams, including tankreplacement, water bank relining, insulation work, pipe workmodifications and upgrading to current Water SupplyRegulations 1999; and

‘‘Water Business TransferAgreement’’ . . . . . . . . . . . . . . the agreement to be entered into between the Company and the

Seller upon Completion of the Acquisition Agreement, relating tothe acquisition of the Water Business.

66

PART IX

DOCUMENTS INCORPORATED BY REFERENCE

1. Relevant documentation

The following documentation, which was sent to Shareholders at the relevant time and/or is available forinspection in accordance with paragraph 11 of Part VII of this document, contains information which isrelevant to this document.

2. Documentation incorporated by reference

The table below sets out the documentation incorporated by reference into this document to ensure thatShareholders and others are aware of all information which, according to the particular nature of theCompany, is necessary to enable Shareholders and others to make an informed assessment of the assetsand liabilities, financial position, profit and losses and prospects of the Company. For the avoidance of anydoubt, no information incorporated by reference in such documentation shall be incorporated by referenceinto this document.

This document should be read and construed in conjunction with these documents, each of which has beenpreviously published or are published simultaneously with this document and that have been filed with theNational Storage Mechanism. Those parts of these documents that are not incorporated by reference areeither not relevant for investors or covered elsewhere in this document.

Any information not listed below, but included in the documents incorporated by reference, is given forinformation purposes only.

Reference PageInformation incorporated by Document Page Reference in

Reference Document reference Reference this Document

2012 Interserve Annual Report andAccounts . . . . . . . . . . . . . . . . . . . . . Directors’ Remuneration Report 61 59-60

67

INTERSERVE PLC

Notice of General Meeting

NOTICE is hereby given that a General Meeting of Interserve Plc (the ‘‘Company’’) will be held at 10 a.m.on 17 March 2014 at the offices of Ashurst LLP, Broadwalk House, 5 Appold Street, London EC2A 2HAfor the purpose of considering and, if thought fit, passing the following resolution as an ordinaryresolution:

ORDINARY RESOLUTION

THAT the proposed acquisition by the Company of the facilities services business of Rentokil Initial plc(the ‘‘Acquisition’’), substantially on the terms and subject to the conditions of the acquisition agreementdated 28 February 2014 between Rentokil Initial 1927 plc and the Company (the ‘‘AcquisitionAgreement’’), and two business purchase agreements relating to the Irish facilities services business andwater business of Rentokil Initial plc to be executed upon completion (together, with the AcquisitionAgreement, the ‘‘Transaction Documents’’), as summarised in Part VI of the circular to shareholders of theCompany dated 28 February 2014, and all other agreements and ancillary agreements contemplated by theTransaction Documents be and are hereby approved and that each and any of the directors of theCompany be authorised to conclude and implement the Acquisition with such non-material or non-adverseamendments thereto as the directors of the Company (or any duly constituted committee thereof) mayconsider appropriate.

By order of the boardT. BradburySecretary

28 February 2014

Registered Office: Interserve House, Ruscombe Park, Twyford, Reading, Berkshire, RG10 9JURegistered in England and Wales No: 00088456

Notes:

1. Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifiesthat in order to have the right to attend and vote at the General Meeting (and also for the purpose ofdetermining how many votes a person entitled to attend and vote may cast), a person must be enteredon the register of members of the Company at 5.30 p.m. on 13 March 2014 or, in the event of anyadjournment, at 5.30 p.m. on the date which is two days (excluding non-working days) before the dayof the adjourned meeting. Changes to entries on the register of members after this time shall bedisregarded in determining the rights of any person to attend or vote at the meeting.

2. Only holders of ordinary shares are entitled to attend and vote at this meeting.

A member is entitled to appoint another person as his proxy to exercise all or any of his rights toattend, to speak and to vote at the General Meeting. A member may appoint more than one proxy inrelation to the meeting, provided that each proxy is appointed to exercise the rights attached to adifferent share or shares held by him. A proxy need not be a member of the Company. A form ofproxy for the meeting is enclosed.

To be valid any proxy form or other instrument appointing a proxy must be received by post or byhand (during normal business hours only) by our registrar Capita Asset Services at The Registry,34 Beckenham Road, Beckenham, Kent BR3 4TU or at the electronic address provided in the form ofproxy, in each case no later than 10 a.m. on 13 March 2014. If you are a CREST member, see note 3below.

Completion of a form of proxy, or other instrument appointing a proxy or any CREST ProxyInstruction will not preclude a member attending and voting in person at the meeting if he/she wishesto do so.

3. Alternatively, if you are a member of CREST, you may register the appointment of a proxy by usingthe CREST electronic proxy appointment service. Further details are contained below.

CREST members who wish to appoint a proxy or proxies through the CREST electronic proxyappointment service may do so for the General Meeting and any adjournment(s) thereof by using the

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procedures, and to the address, described in the CREST Manual subject to the provisions of theCompany’s articles of association. CREST personal members or other CREST sponsored members,and those CREST members who have appointed a voting service provider(s), should refer to theirCREST sponsor or voting service provider(s), who will be able to take the appropriate action on theirbehalf.

In order for a proxy appointment or instruction made using the CREST service to be valid, theappropriate CREST message (a ‘‘CREST Proxy Instruction’’) must be properly authenticated inaccordance with Euroclear UK and Ireland (formerly CRESTCo) specifications and must contain theinformation required for such instructions, as described in the CREST Manual (available viawww.euroclear.com/CREST). The message, regardless of whether it constitutes the appointment of aproxy or an amendment to the instruction given to a previously appointed proxy, must, in order to bevalid, be transmitted so as to be received by the issuer’s agent (ID RA10) by 10 a.m. on 13 March2014. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent is ableto retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time anychange of instructions to proxies appointed through CREST should be communicated to theappointee through other means.

CREST members and, where applicable, their CREST sponsors or voting service provider(s) shouldnote that Euroclear UK and Ireland (formerly CRESTCo) does not make available special proceduresin CREST for any particular messages. Normal system timings and limitations will therefore apply inrelation to the input of CREST Proxy Instructions. It is the responsibility of the CREST memberconcerned to take (or, if the CREST member is a CREST personal member or sponsored member orhas appointed a voting service provider(s), to procure that his CREST sponsor or voting serviceprovider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by meansof the CREST system by any particular time. In this connection, CREST members and, whereapplicable, their CREST sponsors or voting service provider(s) are referred, in particular, to thosesections of the CREST Manual concerning practical limitations of the CREST system and timings.

4. Any person to whom this notice is sent who is a person nominated under section 146 of theCompanies Act 2006 to enjoy information rights (a ‘‘Nominated Person’’) may have a right, under anagreement between him/her and the member by whom he/she was nominated, to be appointed (or tohave someone else appointed) as a proxy for the General Meeting. If a Nominated Person has no suchproxy appointment right or does not wish to exercise it, he/she may have a right, under such anagreement, to give instructions to the member as to the exercise of voting rights.

The statement of the above rights of the members in relation to the appointment of proxies does notapply to Nominated Persons. Those rights can only be exercised by members of the Company.

5. Any corporation which is a member can appoint one or more corporate representatives who mayexercise on its behalf all of its powers as a member provided that they do not do so in relation to thesame shares.

6. Any member attending the General Meeting has the right to ask questions. The Company must causeto be answered any such question relating to the business being dealt with at the meeting but no suchanswer need be given if (a) to do so would interfere unduly with the preparation for the meeting orinvolve the disclosure of confidential information, (b) the answer has already been given on a websitein the form of an answer to a question, or (c) it is undesirable in the interests of the Company or thegood order of the meeting that the question be answered.

7. A copy of this notice, and other information required by section 311A of the Companies Act 2006, canbe found at http://www.interserve.com/investors/shareholder-information/shareholder-circulars

8. As at 27 February 2014 (being the last practicable date prior to the publication of this notice) theCompany’s issued share capital consists of 129,106,815 ordinary shares, carrying one vote each.Therefore, the total voting rights in the Company as at that date are 129,106,815.

9. You may not use any electronic address (within the meaning of section 333(4) of the Companies Act2006) provided in this Notice of Meeting (or in any related documents including this Circular toShareholders and any proxy form) to communicate with the Company for any purposes other thanthose expressly stated.

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Merrill Corporation Ltd, London14ZAP74901