Rentokil Initial plc

Good morning, ladies and gentlemen. Thank you all for joining us here today in person and online. In a few moments, Stuart's going to provide you with details of our strong start to the year with a group financial and regional performances. I'll then come back to provide an update on our businesses and on our Bolton M&A program. After that, I'll spend some time updating you on the very good progress that we've made in the first half on synergy delivery and the early stages of integration of our rent-a-kill and Terminex pest control operations in North America. At group level, we delivered a strong operational and financial performance in the half. Revenue increased by 65.3% to £2.7 billion, with organic growth of 5.9%. Adjusted operating profit grew by 81.7% to £434 million, and we delivered a group operating margin of 16.3%, which is an increase of 150 basis points. Through the acquisition programme, we acquired 24 businesses with annualised revenues of £79 million, predominantly in pest control. Diluted adjusted earnings per share grew by 20.7% to 11.4 pence. And we declared an interim dividend of 2.75 pence per share, which is an increase of 14.6%. Stuart's going to cover these results in more detail in a moment, but a strong start to the year. And if we drop down a level, you can see strong underlying revenue growth was delivered across all of our regions and our categories. Just to highlight two or three areas. Our North American region, which accounts for 62% of group revenues, increased by 127%, reflecting the addition of Terminex. Organic revenue growth was 4.1% in the half and increased by 4.8% within our core North American commercial, residential and termite operations. And we'll come back to this in a few minutes. The Europe and Latin America region, which accounts for 20% of group revenues, delivered revenue growth of 18.7%, of which 11.1% was organic. And in our emerging markets of Asia and Minas, we delivered revenue growth of almost 12% with 11.3% organic growth. Now looking at the revenue performance through a category lens, as you can see there on the right hand side of the chart, pest control, which accounted for 80% of group revenue in the first six months, grew by 91.5%, of which 5.6 was organic. Revenue in hygiene and well-being, excluding disinfection, increased by 7.2% and by 5.2% organically, while in France, our workwear business also had an excellent half, growing revenues organically by 16.3%. At our full year results, we spent some additional time to brief you on the outstanding opportunity in North America, and today I'll provide you with an update on the very good progress being made. The co-location phase for our branch network is now very much up and running, with 64 branches in total exited to date, 44 of which were in the first half. We've also focused on two preliminary integration pilots across 40 branches with multiple brands, pay plans, and systems. These have been successfully integrated into 23 branches with around 700 colleagues now working together under a single brand, single operating system, single pay plan, and a single set of service protocols. And I'll share with you more information on these two important parts of the plan in a few moments. At the same time, colleague retention materially improved, with Terminex colleague retention now up by 5.3% since the deal closed in October and 3.9% improvement in the first half, so a particularly encouraging sign, as is customer retention in North America, which improved by 20 basis points in the first half. and also a 12% reduction in the total number of filed termite warranty claims. We're firmly on track to achieve our net cost synergy targets, having delivered $37 million of P&L savings in the first half. By the end of this year, including the $13 million achieved last year, we will have delivered in total at least $73 million of the net cost synergies towards our target of at least $200 million. So an excellent first half. We're on track for the full integration program process, which starts next year. I'll be back in a few minutes to give you a lot more detail on that. But for now, let me hand over to Stuart.

Thank you, Andy, and good morning, everyone. I'll run through the financial highlights of what's been an excellent first half. I'll start with the group-level numbers, and then, as usual, I'll move through the regions and then look at the balance sheet. Unless I state to the contrary, all numbers are at constant rates of exchange. The business delivered strong top-line momentum in H1. Revenue was up 65.3% to £2,666,000,000, benefiting from good underlying growth and, of course, the Terminix acquisition. Organic revenue, which excludes disinfection, was up 5.9%. This translates to an adjusted operating profit of £434 million, a year-on-year increase of 81.7%. Adjusted PBT at AER was up 67.3%, despite a £6 million FX headwind in H1, contrasting with the circa 10 million tailwind, to which we indicated at the prelims. The strong profit conversion from the higher revenues, in addition to terminic synergies and IFRS accounting adjustments, has resulted in an improved group margin of 16.3%, a year-on-year 150 basis point improvement, and led to an improvement in EPS on a broader share base of 20.7%. There are a number of moving parts to H1 margin, including in our hygiene and wellbeing category, which I'll discuss shortly. Free cash flow in H123 resulting from the profit performance and was £229 million. This represents 83% cash conversion, excluding the impact of one-off cash flows, mostly related to the Terminix acquisition. These factors, combined with the continued success of our bolt-on M&A programme and the dividend payment, resulted in a pro forma net debt to adjusted EBITDA ratio at H1 2023 of circa 2.8 times. This is circa 3.4 times on an unadjusted basis, down from the circa 4.6 times at the year end. Based on our strong performance in H1 and our confidence of further progress in the remainder of the year, our board has approved an interim dividend of 2.75 pence per share, a nearly 15% rise year on year, and in line with our progressive dividend policy. Looking now at our performance by region, starting with North America, our core North American business grew by 127.3% in H1 2023, of which 4.1% was organic. This performance was delivered alongside the start of the Terminix integration pilot programme. As discussed at Q1, it also reflected the impact of softer demand in the products distribution business due to destocking. However, we saw that demand bounce back strongly in June, and it's expected to normalise in H2. In pest control services for commercial, residential and termite customers, the largest part of the North America business, organic revenue was up 4.8% in the first half, despite some adverse impact from lower industry-wide lead flow from residential and termite customers. The H1 organic performance also reflected a strong continued contribution from price rises to offset the expected inflationary pressures. Adjusted operating profit was up 163.2% and reflected the combined impact from stronger revenues and the Terminix acquisition. Adjusted operating margin increased 250 basis points to 18.5%. The uplift was enabled by a resilient underlying performance and driven by successful delivery on terminic synergies that provided a net benefit of 190 basis points. We remain on track to achieve our North America margin target of circa 19.5% in the full year. Despite the attention given to the Terminix transaction, we've had another excellent first half for Bolton M&A in North America, acquiring six businesses with combined annualised revenues around £37 million in the year prior to purchase. We're pleased to report further good progress on colleague retention, with Terminix colleague retention up by another 3.9 percentage points to 67.7%. Let's take a look now at our progress on delivering the Terminix deal synergies. This table shows the latest status for the year. We're very pleased with what's been achieved so far. As you can see, we've delivered net cost synergies of $37 million in the first half. We expect to deliver an incremental $23 million of net synergies in the second half. taking the year-over-year value to $60 million. You'll recall that we already delivered $13 million of net synergies in the final quarter of last year, so adding that to the $60 million, by the end of the year we will have delivered $73 million of cost synergies towards our target of at least $200 million. Turning now to the European region. Driven by both pricing and resilient demand, revenue rose by 18.7%. Organic revenue was up 11.1% in Europe. There was really good performance across the board here. All three business categories in Europe posted strong top-line numbers. Pest control revenue was up 30%. which included a strong contribution from our large markets like France and Benelux. Hygiene and well-being was up 6.2%, and France's workwear continued its strong run, delivering growth of 16.3%. Adjusted operating profit rose by 12.4%. Adjusted operating margin was at 18.2%. That's a 100 basis point reduction year on year. And it's explained by two particular factors. Firstly, as expected, we saw a continued decline in COVID disinfection business that benefited the same period last year. Secondly, there was a dilutive impact from M&A, about which we normally don't talk, but we did make two acquisitions in the region in Q4 2022. The acquisition of the Terminix business in Sweden, and IPM in Israel, but due to their size, had an impact of about circa 30 basis points on the region's margin performance. Neither of these factors will have a material impact on margins in the second half of the year. We will be lapping very limited disinfection revenue in H2, and as usual, integration activities will improve margins on the two acquisitions as we deliver operating synergies. Laid markets throughout the region remain tight in the first half. However, we've been very effective at managing pressures. Both sales and service quality retention has been good, leading to a slightly raised level of quality retention at 89.4%. The region completed eight acquisitions in the first half with annualised revenues of £7 million in the year prior to purchase. Turning to the UK and sub-Saharan Africa, the region delivered a resilient trading performance amid a challenging macro backdrop and against strong prior year comparators. Revenue for the region increased by 6.7%, with organic revenue up 3.9%. This was enabled by a positive contribution from both business categories. Pest control revenue was up 10.4%. Hygiene and wellbeing revenue was up 3.2%. This was achieved despite lapping COVID-boosted comparators in the medical waste business from the same period last year. Regional adjusted operating profit was down by 1.1% to £46 million, leading to a lower adjusted operating margin of 23.8%. The pest control category sustained strong margins. However, this was offset by COVID-related factors that adversely impacted hygiene and wellbeing in the current year, namely the anticipated reduction of COVID disinfection and related services and the non-repeat of UK COVID credit note releases. The impact of these factors will be much reduced in H2. Colleague retention has been strengthened up to 83.7% as we continue to invest in our people. The region continued to face well-publicised inflationary headwinds. However, significant cost increases have been well managed by our long-established pricing and margin management systems, processes and controls. Despite price increases, customer retention was stable at 86.7%. Looking briefly now at Asia and MENA, the region delivered another strong performance. Revenue increased by 11.9%, of which 11.3% was organic. Our largest markets in the region, Indonesia, Malaysia, and Singapore, led the way. The subdued economic environment in Hong Kong continued to hold that market back slightly, but we did see signs of improvement in China as it lessened its strict COVID regime. We continue to make good progress on price increases in a region where we've been historically less successful. Both volume and pricing helped deliver 6.4% growth in adjusted operating profit. Adjusted operating margin for the Asia and Mennat region was down slightly by 70 basis points to 13.4%, again due to lapping COVID disinfection revenues. This headwind again will significantly reduce in H2. Finally, turning to the Pacific region, another excellent trading performance here. Regional revenue increased by 16.5%, of which 7.4% was organic. Pest control was up 30.4%, with notable strength in commercial services. Hygiene and wellbeing was up by 5.2%, and we've had good demand in the region for ambient services. Regional adjusted operating profit was up by 22.3%, with an increase in adjusted operating margin of 110 basis points to 22.9%. And in the region, we acquired five businesses. So that's a rundown of our regions, which you can see performed very well overall in the first half. Across our geographies, with the persistence of inflationary cost pressures, most notably wage inflation, but we've continued to be very successful in mitigating increases through pricing. I want to briefly step back and look at our margin development in the first half, in particular in hygiene and well-being. I'd like to say a few words about the drivers to margin. You can see that year on year reported margin in H1 moved down from 19.5% to 16.4%. This was due to a number of non-systemic factors, the majority of which are not expected to repeat in the second half of the year. The largest headwind to a hygiene margin in the period, roughly 160 basis points, came from the anticipated reduction in COVID disinfection and related revenues and the non-repeat of UK credit note releases. Similarly, another 80 basis points were due to the non-repeat of COVID disinfection margin. A 50 basis point reduction was due to the transfer of management from North America pest control to the Ambius business. Of course, the impact of this is net neutral, both to North America and group margin. To put this in context, together, these headwinds amount to an aggregate value of £12 million, just to size that for you. The H2 impact of these headwinds to hygiene and well-being margin is expected to be circa 100 basis points or about one third of the H1 impact in H2. This is anticipated to be offset by underlying operational improvements, and that results in H2 margin forecast to be in excess of 19%. The confidence we've got in the resilience of our hygiene and well-being category, as well as the progress in pest control, means that we are reiterating our full year margin guidance of circa 16.5% for the group. So let me now say a few words on cash flow and debt. Adjusted cash flow of £401 million was up £202 million on H1 2022. Higher trading profits resulted from organic and acquisitive growth. Adjusted EBITDA was £602 million, up 72% from £350 million. One-off and adjusting items totaled £78 million, reflecting P&L items of £46 million and a net £32 million movement in one-off accruals since December 2022, in line with that which we presented at the preliminary results. The movement on provisions of £26 million included an outflow on the termite provision, which was in line with our expectations. capital expenditure of £102 million was incurred in the period reflecting the inclusion of Terminix CapEx. On the second cash flow slide, we see that the free cash flow was £229 million. Cash interest payments of £114 million were £95 million higher than in the prior year, reflecting the payment in arrears of coupon interest on 2022 bonds issued in relation to the Terminix transaction, effectively a full year's interest in one half. Cash tax payments for the period were £58 million, an increase of £26 million compared with the corresponding period last year, largely related to the inclusion of the Terminix trading results. Cash spend in H1 on current and prior year acquisitions was £175 million. Dividend payments were £131 million. And the cash impact of one-off and adjusting items was £78 million, again, largely related to the Terminix acquisition. Adjusted free cash flow was 83% for the first six months of the year. Our full year guidance for adjusted free cash flow conversion remains at between 80% and 90%. So let's take a look at debt. As a reminder, we were active in the debt market in the first half of 2022 to finance the Terminix acquisition. We issued three bonds, converting our short-term bridge facility into longer-term debt. These bonds, alongside the $700 million term loan, covered the cash consideration, transaction costs, and Terminix debt. The most material movement seen on the slide is for FX Translation. FX Translation, other items of £136 million, is primarily due to the weakening of the dollar against sterling. The overall change in net debt was £26 million, with a closing net debt of £3.27 billion. As at the end of June, our pro forma net debt to adjusted EBITDA ratio was 2.8 times. The unadjusted EBITDA ratio is 3.4 times. And it is this that we expect to be approximately three times by the end of 2023, one year ahead of schedule, reflecting the overall health of the business and the delivery of the deal synergies. The group has no debt maturities until November 2024. Note that the interest rate on about 81% of group debt, including leases, is fixed and therefore not subject to rate volatility. And last month, S&P Global reaffirmed the group's BBB investment grade rating. Moving to technical guidance on this slide, we update some technical guidance to help you with your models in relation to the full year. I'll let you read these in your own time, but we will draw your eye to a few items on the P&L. We've updated deal related costs. to between £80 and £100 million, which reflects the strong deal flow we delivered in the first half of the year. Our new full-year FX guidance reflects the strengthening of the pound against the dollar. This has moved considerably since the original guidance was issued in March and means at yesterday's prevailing rates, we now anticipate a headwind of between £15 million and £20 million. In cash flow, given our rate of M&A in the first half and the strength of our pipeline, anticipated spend on M&A is increased from £250 million to £300 million. Note that our leverage guidance includes this increased M&A spend. So overall, we've had a strong first half financial performance. 5.9% organic growth reflects growth in all regions and was achieved alongside our work on integrating Terminix. Despite the continuing evolution of our U.S. pest business, we expect to deliver organic revenue growth in North America broadly in line with our H1 performance in H2. Our group margin continues to move forward, up by 150 basis points in the half. We've seen an uplift from synergy benefits, together with a stable underlying margin performance in PEST and further margin improvement in French workwear. In hygiene and well-being, we expect the margin headwind in H2 to be approximately 100 basis points or one third of the H1 impact. We expect to fully offset this with underlying operational improvements, resulting in an H2 margin in excess of 19%. The profit performance in the first half led to an improvement in EPS of 20.7%. And finally, with the good progress already made on cost synergies in H1, we're on track to deliver total synergies of $73 million by the end of the year. And at this point, I'll hand back to Andy, who will take us through our ESG progress and the business category performance.

Thank you, Stuart. So over the next few minutes, I'm going to update you on the performance of our free businesses before turning to the exciting opportunities in North America pest control. However, let me start with a very brief update on our key ESG aspects of safety, people and the environment. In my view, there is typically a strong correlation between a company's safety and its financial performance. And pleasingly, this was our safest ever start to a year, with a world-class lost-time accident rate of just 0.29. accompanied by the associated reduction in working days lost. As you can see on the right-hand side, this long-term commitment to safety means that fewer colleagues are suffering from slips, trips, falls and accidents, and resulting in far fewer working days lost, with a working day loss rate around 51 days in 2008, falling to just 6.4 days in the first half. Colleague retention is, of course, one of our most important non-financial metrics, and so it was particularly pleasing to see six straight months of improvement in retention, with the group colleague retention rate improving by 2.6% to 82%. These numbers have obviously been rebased now to include Terminix, and I'll come back to its retention performance shortly. Taking action on the environment is important to all colleagues, customers, and shareholders, and we have a clear plan to reduce the impact of our operations and services on the planet. We now have around 1,600 lower-emission vehicles in operation, including 100% electric and plug-in hybrids, as we move towards a full transition of our fleet and net zero emissions by 2014. We're also supporting our customers on their journeys towards net zero with products such as Lumnia, which reduce electricity consumption by our customers. Since their launch, the Lumnia units have delivered a proven reduction in CO2 of an impressive 53,000 tonnes. So good continued progress with our ESG agenda. Let me turn now to pest control and our power brands of Rent-A-Kill, and Terminix. In the first half, we delivered revenue growth of 91.5%, of which organic was 5.6%, in line with our medium-term target of 4.5% to 6.5%. We doubled profits to £412 million and increased adjusted operating margins by 130 basis points to 19.2%. As Stuart has just covered, North American Pest Control achieved organic growth revenue of 4.1%, with our core commercial, residential and termite operations delivering growth of 4.8%. This was achieved despite lower inbound lead flow from residential and termite customers in the second quarter, which mirrored digital search trends observed for much of the U.S. pest control industry as a whole. During the quarter, our key focus was on margin expansion and on the successful integration pilot program. The impact of the pilots and our planned cessation of Terminix's unprofitable door-to-door sales operation in Canada reduced our first half organic performance by around 32 basis points. Overall, the numbers on this chart speak for themselves. This is a world-class business that's strongly positioned for future growth and with the magnificent Terminix opportunity ahead of us as well. So turning now to digital and innovation, We lead our industry in the use of digital technologies, and this slide demonstrates that we're continuing to build that competitive advantage. With around 319,000 PestConnect devices now in customer premises, and that's up by around 20% year on year. We now have six countries where connected devices account for more than 10%. of the commercial portfolio, including our business in Netherlands, which is fast now approaching 30%. PestConnect is typically sold on a three-year contract basis. It delivers higher customer retention, and most importantly, it's extremely effective. We've got new research from our operations in the Netherlands and the UK, which shows us that PestConnect can typically resolve rodent infestations twice as fast as traditional non-connected pest control services. At the heart of our PestConnect system has been our award-winning radar device, and that accounts for around two-thirds of connected units in customers' premises. Towards the end of this year, we'll be launching its replacement, which you can see on the screen. It's called RadarX. It's a new dual-catch unit, and it comes with many enhancements for operational efficiency, but also for sustainability. Clearly, our commitment to innovation is taking a further step forward in the coming months with the opening of our new dedicated pest control innovation center in Dallas. And that's going to focus on residential, on termite, on vector control and on sustainable fumigation, as well as providing a training center for our U.S. sales and service teams. So pest control has had a strong first half and we've got a lot happening in the digital and innovation space to continue to build our differentiation, to drive organic sales and to make our operations more sustainable and more efficient. Let me turn now to hygiene and well-being. In the first half, revenues increased by 7.2%, of which 5.2% was organic, very much in line with our medium-term target of between 4% and 6%. Organic revenue growth in core hygiene services, that's inside the washroom, grew by 6.1%, with enhanced environments, that's outside of the washroom, increasing by 5.8%. Premise hygiene delivered organic growth of around 1%, which reflects a reduction in services outside of the washroom, such as medical services, where the demand for COVID needle collections has obviously declined as the vaccination programs have been significantly scaled back. Inside the washroom, we offer two ranges of high-quality product signature. That's our core range and premium range reflection, each with in-cubicle, out-of-cubicle, and hand hygiene solutions. Around 120,000 signature units were installed in the first half, where we saw good progress in air care, with dispenser installs increasing by 11%, and with hand-dried unit sales also up by around 17% year-on-year. As more employers try now to enhance their office environment, To entice people back, we provide a range of services through the Ambious brand, and that includes plants, premium scenting, air quality monitoring, and green walls. Revenue grew by 12.4% in the half, and the business secured its first global premium scenting agreement across 21 countries. Turning now very briefly to French workwear, which I'm pleased to say had a very good start to the year. Revenues increased by 16.3% to £106 million, all of which was organic. Robust volumes were aided by ongoing market recovery in the hospitality sector and driven by strong new business sales and also by upselling. The business's performance was also supported by effective price progression in the half. Adjusted operating profits increased by 34.1% to £18 million, translating to a step up in adjusted operating margin of 220 basis points to 16.9%. Turning now to acquisitions, in the first half we acquired 24 businesses with annualised revenues of £79 million for a total consideration of £202 million. 19 of the deals were in pest control with annualised revenues of £54 million. In hygiene and wellbeing, we acquired five businesses with annualised revenues of £24 million, meaning that for the first time, we fully expect to exceed our medium-term target of adding around £25 million of M&A revenues in hygiene and wellbeing annually. The Europe and Latin America region completed eight highly targeted city-based deals, whilst the Pacific region acquired five new businesses, including investments two investments into an exciting new area for us, which is rural or non-urban pest control, to support the New Zealand Government's significant investment into its Predator Free 2050 campaign. The M&A programme continues to deliver revenue and profit ahead of our returns criteria, and with a very strong pipeline, we're increasing our target spend by £50 million to around £300 million for the full year. So good progress in the half, and let me now move on to talk about delivering the pest control powerhouse. Now, this slide really underscores the close alignment of Terminix to our existing investment case. We're building scale in the world's largest pest control market. We're combining Rent-A-Kill's traditional strength in commercial, with Terminix's strength in residential and termite, giving us not one, but two power brands. We're adopting the same proven low-cost business model, and we're expanding access to Rentakill's innovations and digital capabilities. Now you recognize this slide from our prelims in March and as Stuart just mentioned, net cost synergies in the first half came to $37 million, putting us firmly on track towards our full year target of $60 million of net synergies after investments. So let me now focus on SG&A, field operations, and the investments in a little bit more detail, and looking at the progress that we've made in the first half. We've broken SG&A into three main parts, that's sales, procurement, and support functions, and together these account for around $150 million of cost synergies by 2025. In the first half, we've made very good progress delivering $40 million of gross cost synergies. And in particular, these were delivered in procurement where we've negotiated a new combined safety and PPE supplier, single travel provider, a single fleet management company, as well as putting in place a number of improved supplier deals for pest control products, hardware, and for IT. Now let me move to field operations where we will fully utilize our shared integration experience in North America. Excuse me. to deliver around $125 million of cost synergies by the end of 2025. In the first half, we exited 44 individual branch sites, taking the total number of properties exited since closing the deal to 64. And by the end of the second half, we would expect this to exceed 100. As each site closes, the colleagues of that branch move to share location of a nearby branch. So we now have around 1,000 colleagues working together closely and successfully in co-located branches. Here, we've delivered $6 million of gross cost synergies in the first six months. But the branch co-location programme is merely the first step towards full branch integration, which we start next year. To get us to the best possible position to be ready for those integrations, We've already undertaken two preliminary integration pilots involving two parts of the Heritage Rent-A-Kill network with multiple properties, multiple systems, multiple BRATs. In the first pilot, we had 19 properties, 425 colleagues and revenues of $65 million operating across four different brands, four different operating systems, four different pay plans, and four different sets of service protocols. The second pilot, a slightly larger area, 21 properties with 411 colleagues, revenues of $97 million, five brands, pay plans, and sets of systems. So what did we learn? Well, first, our approach to these pilot integrations showed that the detailed migration processes, whilst undoubtedly demanding, were successful, integrating 40 properties down to 23, delivering one consistent brand, one pay plan, one set of systems. Secondly, the combined branch headcount was reduced from 836 to 709, and this was achieved mainly through natural attrition. Thirdly, whilst we saw an impact on organic performance, this was as expected and is fully expected to return to normal levels once the combined operations are fully bedded in. And fourthly, and most importantly in both pilots, we delivered a margin expansion in the region of five percentage points. So a really valuable set of co-locations and integration pilots to learn from. And within each pilot, we take the lessons learned, we apply them to the next pilot. So with each pilot should be improving on the pilot before, such that when we finally do go live, we can minimize disruption to the business. In the second half, we'll continue to run a series of pilots, all of which are designed to fully road test the branch operating model before we commence that full deployment next year. These include delivering a unified people management system, piloting a single pay plan for sales colleagues and technicians, testing technology applications, best of breed processes, which will be piloting and rolling out to users as each system becomes available. And before we move any customer and contract data onto the new systems and process stack, we'll parallel run the systems to ensure the accuracy of data mapping. Only having thoroughly tested and piloted each element will we then move to the full first migration of the region early next year. Now, we said in March that our aim is to move to around 400 larger branches by the end of 2025, each with typical revenues of between $8 and $10 million, building local density and expanding net operating margins. On the chart here you can see some of the detail that sits behind this plan. Today we have around 200 branches operating with revenues of less than $3 million, but we also have over 100 branches that are already operating above $8 million. From this, we can clearly see that those branches with revenues of more than $8 million deliver net operating margins in the region of 10 percentage points higher than the branches with revenues of less than $3 million. Whilst we can see the strong correlation between branch scale and profitability, we've seen no discernible correlation in our data between branch size and organic growth rates. To enable the success of the integration, we plan to make investments of around $75 million over the next three years into the future of the business in North America. And we made investments totaling $9 million in the first six months. During the half, we harmonized management pay. We've aligned on safety policy and operational equipment. We've invested in sales efficiency, as well as into SOX and into legal compliance. We've also identified our new innovation center. We finalized the brand strategy, which will be implemented as part of the integration process from next year. Now, having provided the termite teaching to you all last time, I'm not going to go through this slide in detail, but clearly you can see that we've continued to make solid progress with total filed warranty claims reducing by 12% year on year and by 47% since 2019. As you know, key enablers of our success will be the Employer of Choice programme and the IT Deployment programme, and both are making very good progress. Over the last six months, our HR team has harmonised benefits and paid time off. and supported the co-location and the pilot integration programs. And what's particularly pleasing from the first half is that as well as seeing a 2.6% increase in colleague retention across the rent-to-kill initial group as a whole, Terminix colleague retention increased by 3.9% in the first half, with retention in the critical frontline technician role improving for six consecutive months. Since the deal closed in October last year, colleague retention in Terminix has increased by an impressive 5.3%. So as you can see on the chart, we're making excellent progress in colleague retention, and we've delivered on our commitment to best the breed. We're also moving at pace in technology, with the North American IT organization appointed, the target IT operating model to enable branch co-locations successfully completed, and the 24 IT work streams all up and running, all on track, as you can see on the chart. So looking further ahead to the post-integration period, our medium-term target is to deliver organic growth at one and a half times the pest control industry rate in America. And we'll get there by targeting the drivers set out on this chart. The first is enhanced customer retention driven by outstanding service. And as I mentioned earlier, customer retention has increased by 20 basis points in the half. We also delivered strong tactical pricing in the first half. While innovation and digital, we've now started to introduce Rent-A-Kills innovations into Terminex, with Lumnia Innovative Flying Insect Control Unit being the first. And as I've just mentioned, our new U.S. Innovation Center will open later this year. Customer penetration with the upselling of additional services is also an important part of the future plan. And in the first half, the trusted advisor program continued to be rolled out. Our plan is to complete this first in Heritage Terminix and then across Heritage Rent-A-Kill networks over the coming months. And new customer acquisition will be driven through strong brands and through our highly targeted sales and marketing activities. So there you have it. In summary, in the first half, we've delivered a strong financial and operational performance with organic growth of almost 6%, margin expansion of 150 basis points, strong colleague retention, excellent M&A, and you can see all of that summarized on the chart. In North America, pest control, we're now nine months in post the deal. We remain on track. We're making good progress towards delivering the opportunities that we have to lead the pest control industry and to deliver the growth and margin expansion opportunities that are summarized on the screen. So thank you very much indeed. We'll now take any questions. We'll start with questions in the room and then if there are any additional questions from the online audience. Thank you.