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Research evidence excerpt

Off the Call + Investor Feedback

IdeaMReinvestment priorities. Management said there is still further efficiency potential

in North America beyond the current c.$90m annualised run rate. Savings will be

reinvested across a broader range of capabilities rather than simply increasing paid

digital marketing. Rentokil has already shifted more spend towards organic search

and does not believe buying more keywords is an effective strategy. Future

investment will focus on strengthening core commercial and operational

capabilities, including frontline service delivery, sales execution and other areas

where returns are attractive. Total cash cost of restructuring was not quantified, as

it will depend on where savings are delivered. Restructuring is generally cheaper in

North America, while longer contracts and higher severance can increase costs

elsewhere. However, management expects strong returns, with an illustrative

payback of around 1y.

Residential lead flow weakness. Residential leads grew 6% in 1H, but softened in

late 2Q and into July, mainly due to weaker termite demand, possibly due to housing

markets under pressure. Weakness has been more evident in national brands, while

regional brands continue to perform well. RTO are not treating macro conditions as

an excuse however, and has identified several self-help execution improvements,

including increasing technician-generated leads, improving conversion, reducing

friction in inspections and scheduling, adding lead coordinators to clear backlogs,

and streamlining field sales entry. RTO has not seen a meaningful change in

competitive intensity.

Lower M&A spend target. The reduction in FY26 M&A guidance reflects greater

selectivity and discipline on acquisition quality and target IRRs, rather than any