Interserve Regulatory News (IRV)

THIS ANNOUNCEMENT, INCLUDING THE APPENDIX AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. PLEASE SEE IMPORTANT NOTICES AT THE END OF THIS ANNOUNCEMENT.

INTERSERVE PLC

PROPOSED PLACING OF UP TO 12,897,771 NEW ORDINARY SHARES TO FUND THE PROPOSED ACQUISITION OF INITIAL FACILITIES

28 February 2014

For immediate release

Interserve plc ("Interserve" or the "Company") today announces its intention to conduct a placing of up to 12,897,771 new ordinary shares in the Company (the "Placing Shares") representing, in aggregate, up to 9.99 per cent of the Company's existing issued ordinary share capital, with institutional investors (the "Placing"). The Placing is being conducted through an accelerated bookbuilding process (the "Bookbuild") which will be launched immediately following this announcement. J.P. Morgan Securities plc, which conducts its UK investment banking activities as J.P. Morgan Cazenove ("J.P. Morgan Cazenove") and Numis Securities Limited ("Numis"), are acting as joint bookrunners in connection with the Placing.

The Company has also announced today, in a separate announcement, that it has entered into a conditional agreement with a subsidiary of Rentokil Initial plc, to acquire its facilities service business (the "Initial Facilities"), for a cash consideration of £250 million (the "Acquisition"). Initial Facilities is of sufficient size relative to Interserve to constitute a Class 1 transaction under the Listing Rules of the Financial Conduct Authority and the Acquisition is therefore both subject to and conditional upon the approval of Interserve's shareholders.

Transaction highlights:

· Strengthened market position: The enhanced support services activities that will result from the Acquisition will position Interserve as one of the largest providers (top three by revenue) of support services activities in the UK. This will enhance Interserve's ability to offer its customers a range of services from Total Facilities Management ("TFM") on a national basis to more specialist single services either on a local or national basis. Nonetheless, the Company as enlarged by the acquisition of Initial Facilities (the "Enlarged Group") will have a market share of below five per cent, hence providing significant opportunity for further revenue growth within the £70 billion UK facilities management market, of which £42 billion was outsourced in the UK in 2012 (Source: Credo, 2013).

· Greater breadth of services and capabilities: Initial Facilities possesses additional capability in its fire and water related maintenance services as well as a more defined energy management 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 that are currently subcontracted and also broaden the customer proposition.

· Greater breadth of customers: Initial Facilities, with its greater proportion of contracts in the private sector, complements the current prominent position that Interserve has within the public sector. The Board believes that approximately 85 per cent. of Initial Facilities is generated from the private sector, with the public sector representing the 15 per cent. The outsourced market for facilities services in the private sector is currently estimated to be nearly twice that of the public sector (£25.2bn vs £13.7bn, source: Credo, 2013) and Interserve's experience and credentials within this sector create a significant opportunity for the Enlarged Group.

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

· Synergy opportunities: The additional scale that comes with acquiring Initial Facilities will provide the Enlarged Group with further opportunity to leverage operational efficiencies as well as providing cost saving opportunities within areas such as corporate support and operational management functions. The board of Interserve also believes that the Enlarged Group will have the ability to access revenue opportunities which are not otherwise currently available to either Interserve or Initial Facilities.

· Additional management capability: Both Interserve and Initial Facilities have an excellent reputation in the marketplace. A broader pool of management talent will be a significant asset to the Enlarged Group as it continues to develop over time.

Adrian Ringrose, Chief Executive of Interserve, said:

"We believe that this acquisition will deliver significant strategic progress in growing one of our core businesses and will make us a top three player by revenue in the UK facilities services market.

"The breadth and fit of the services we will now be able to offer, added to the advantages of increased scale and potential synergies, will create a compelling proposition, leaving us well placed for future growth. We look forward to bringing the enhanced capabilities of the enlarged Group to a wider addressable market of both new and existing customers, whilst providing more opportunity for our expanded employee base.

"I am pleased to be able to announce this acquisition today in parallel with Interserve's full year 2013 results, in which we report 12% year on year revenue growth."

Information on Initial Facilities

Initial Facilities comprises the facilities services businesses of the Rentokil Initial plc group with operations in the UK, Ireland and Spain, with the UK and Ireland representing 92.2 per cent of revenue in the year ended 31 December 2013. It provides a comprehensive range of facilities services from specialist single services, including cleaning, catering, security, mechanical and electrical building maintenance, energy management and statutory compliance, to fully integrated TFM. Initial Facilities 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 a variety of industrial businesses, including the London Underground which currently represents approximately £50 million of revenue per annum. Initial Facilities has over 22,000 employees in the UK and Ireland and approximately 3,000 in Spain.

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

Use of Proceeds

The net proceeds of the Placing are proposed to be used to fund part of the consideration for the Acquisition, with the balance being funded through new and existing debt facilities.

The Placing is not conditional upon completion of the Acquisition. In the event that the Acquisition does not complete, Interserve will retain the net proceeds of the Placing for potential investment opportunities and general corporate purposes.

The Placing

The Bookbuild will open with immediate effect following this announcement. The number of Placing Shares and the price at which the Placing Shares are to be placed (the "Placing Price") will be agreed by J.P. Morgan, Numis and Interserve at the close of the Bookbuild. The timing of the closing of the Bookbuild, pricing and allocations are at the discretion of J.P. Morgan Cazenove, Numis and Interserve. Details of the Placing Price and the number of Placing Shares will be announced as soon as practicable after the close of the Bookbuild.

The Placing has been fully underwritten by J.P. Morgan Cazenove and Numis subject to the conditions and termination rights set out in the placing agreement between the Company, J.P. Morgan Cazenove and Numis (the "Placing Agreement"). Further details of the Placing Agreement can be found in the terms and conditions contained in Appendix I to this announcement. The Placing is also subject to Appendix II (which forms part of this announcement, such announcement and Appendices I and II together being the "Announcement").

The Placing Shares, when issued, will be credited as fully paid and will rank pari passu in all respects with the existing ordinary shares of ten pence each in the capital of the Company, including the right to receive all dividends and other distribution declared, made or paid on or in respect of such shares after the date of issue. If all the Placing Shares are placed, the Company's total issued share capital following completion of the Placing will consist of 142,004,586 ordinary shares of ten pence each with one voting right per share.

Application will be made to the Financial Conduct Authority for the Placing Shares to be admitted to the premium listing segment of the Official List of the UK Listing Authority (the "Official List") and to the London Stock Exchange plc for admission to trading on the main market of its main market for listed securities (together, "Admission"). It is expected that Admission will become effective at 8.00 a.m. on 5 March 2014 and that dealings in the Placing Shares will commence at that time. The Placing is conditional upon, amongst other things, Admission becoming effective and upon the Placing Agreement not being terminated in accordance with its terms.

This Announcement should be read in its entirety. In particular, your attention is drawn to the "Important Notices" section of this Announcement, to the detailed terms and conditions of the Placing and further information relating to the Bookbuild described in Appendix I, and to the risk factors described in Appendix II. By choosing to participate in the Placing and by making an oral and legally binding offer to acquire Placing Shares, investors will be deemed to have read and understood this Announcement in its entirely and to be making such offer on the terms and subject to the conditions in it, and to be providing the representations, warranties and acknowledgements contained Appendix I.

Enquiries

Interserve plc

Adrian Ringrose, Chief Executive Officer +44 (0) 118 932 0123

Tim Haywood, Group Finance Director

J.P. Morgan Cazenove

Guy Marks +44 (0) 207 742 4000

Nicholas Hall

Numis

Heraclis Economides +44 (0) 207 260 1000

Ben Stoop

Chris Wilkinson

IMPORTANT NOTICES

THE MATERIAL SET FORTH HEREIN IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INTENDED, AND SHOULD NOT BE CONSTRUED, AS AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES OR ANY OTHER JURISDICTION. SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION. THE SECURITIES OF THE COMPANY DESCRIBED HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE LAWS OF ANY STATE OF THE UNITED STATES OR ANY JURISDICTION THEREOF, AND MAY NOT BE OFFERED, SOLD, RE-SOLD, TRANSFERRED OR DELIVERED, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, ABSENT REGISTRATION OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION IN THE UNITED STATES.

The distribution of this Announcement and the Placing of the Placing Shares as set out in this Announcement in certain jurisdictions may be restricted by law. No action has been taken that would permit an offering of such shares or possession or distribution of this Announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required to inform themselves about, and to observe, such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This communication does not constitute an offer of securities to the public in the United States, the United Kingdom or in any other jurisdiction. There will be no public offer of securities in the United States, United Kingdom or in any other jurisdiction. This communication is directed only at persons (i) having professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), (ii) who are high net worth companies, unincorporated associations and other persons to whom it may lawfully be communicated in accordance with Article 49(2)(a) to (d) of the Order, or (iii) other persons to whom it may lawfully be communicated (all such persons together being referred to as "relevant persons"). Any investment activity in connection with the Placing will only be available to, and will only be engaged with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

In member states of the European Economic Area, this Announcement is only addressed to and directed at persons who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in each Relevant Member State).

This document includes statements that are, or may be deemed to be, "forward-looking statements", including within the meaning of Section 27A of the Securities Act and Section 21E of the U.S. Securities Exchange Act of 1934. These forward-looking statements are based on current expectations and projections about future events and can be identified by the use of a date in the future or forward-looking terminology, including, but not limited to, the terms "may", "believes", "estimates", "plans", "aims", "targets", "projects", "anticipates", "expects", "intends", "will", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not historical facts and include statements regarding the Company's intentions, beliefs or current expectations. They are not guarantees of future performance. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements. Any forward-looking statements in this document reflect the Company's view with respect to future events as at the date of this document and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the conditions to the acquisition being satisfied, the Enlarged Group's ability to integrate their businesses and personnel, the successful retention and motivation of the Enlarged Group's key management, the increased regulatory burden facing the Enlarged Group and the Company's operations, results of operations, financial condition, growth, strategy, liquidity and the industry in which the Company operates. No assurances can be given that the forward-looking statements in this document will be realised. Neither the Company nor the Bookrunners undertake any obligation nor do they intend to revise or update any forward-looking statements in this document to reflect events or circumstances after the date of this document (except, in the case of the Company, to the extent required by the Financial Conduct Authority (the "FCA"), the London Stock Exchange or by applicable law, the Listing Rules or the Disclosure Rules and Transparency Rules). None of the future projections, expectations, estimates or prospects in this document should be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects have been prepared are correct or exhaustive or, in the case of the assumptions, fully stated in the document. As a result of these risks, uncertainties and assumptions, the recipient should not place undue reliance on these forward-looking statements as a prediction of actual results or otherwise. For a more detailed description of the risks and uncertainties, please see the risk factors discussed attached as Appendix II hereto. The Company undertakes no obligation to update the forward-looking statements in this Announcement or any other forward-looking statements it may make. Forward-looking statements in this Announcement are current only as of the date on which such statements are made.

This Announcement (including the Appendices) has been issued by, and is the sole responsibility of, the Company. This announcement is for information only and does not constitute an offer or invitation to underwrite, subscribe for or otherwise acquire or dispose of any securities or investment advice in any jurisdiction in which such an offer or solicitation is unlawful, including without limitation, the United States, Australia, Canada, South Africa or Japan. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdictions. No prospectus will be made available in connection with the matters contained in this Announcement and no such prospectus is required (in accordance with the Prospectus Directive) to be published. Persons needing advice should consult an independent financial adviser.

Neither J.P. Morgan Securities plc, Numis Securities Limited nor any of their respective affiliates, parent undertakings, subsidiary undertakings or subsidiaries of their parent undertakings or any of their respective directors, officers, employees or advisers or any other person accepts any responsibility whatsoever and makes no representation or warranty, express or implied, for or in respect of the contents of this Announcement and, without prejudice to the generality of the foregoing, no responsibility or liability is accepted by any of them for any such information or opinions or for any errors or omissions.

J.P. Morgan Securities plc, which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the FCA and the Prudential Regulation Authority, is acting exclusively for the Company and no one else in connection with the Placing and Admission and will not regard any other person (whether or not a recipient of this document) as a client in relation to the Placing and the Admission and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing and the Admission or any transaction, arrangement or other matter referred to in this document.

Numis Securities Limited, which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for the Company and no one else in connection with the Acquisition, the Placing and Admission and will not regard any other person (whether or not a recipient of this document) as a client in relation to the Acquisition, the Placing and Admission and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing and the Admission or any transaction, arrangement or other matter referred to in this document.

Any indication in this Announcement of the price at which Placing Shares have been bought or sold in the past cannot be relied upon as a guide to future performance. No statement in this Announcement is intended to be a profit forecast and no statement in this Announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company. The price of Placing Shares and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of the Placing Shares.

Neither the content of the Company's website (or any other website) nor any website accessible by hyperlinks to the Company's website is incorporated in, or forms part of, this Announcement.

APPENDIX I: TERMS AND CONDITIONS OF THE PLACING

IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY.

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT (WHICH IS FOR INFORMATION PURPOSES ONLY) AND THE TERMS AND CONDITIONS SET OUT IN THIS APPENDIX ARE DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA ("EEA") WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE EU PROSPECTUS DIRECTIVE (WHICH MEANS DIRECTIVE 2003/71/EC, AS AMENDED FROM TIME TO TIME, AND INCLUDES ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE "PROSPECTUS DIRECTIVE") ("QUALIFIED INVESTORS"); AND (B) IN THE UNITED KINGDOM, QUALIFIED INVESTORS WHO ARE PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(1) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"); (II) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER; OR (III) ARE PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS APPENDIX DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.

THE SECURITIES MENTIONED HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR UNDER ANY SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, RESOLD, TRANSFERRED OR DELIVERED, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THERE WILL BE NO PUBLIC OFFER OF THE SECURITIES MENTIONED HEREIN IN THE UNITED STATES.

THE SECURITIES MENTIONED HEREIN WILL HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE US SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY IN THE UNITED STATES, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE PLACING OR THE ACCURACY OR ADEQUACY OF THIS ANNOUNCEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE IN THE UNITED STATES.

EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN ACQUISITION OF PLACING SHARES.

Persons who are invited to and who choose to participate in the placing (the "Placing") of up to 12,897,771 new ordinary shares (the "Placing Shares") in Interserve plc (the "Company"), by making an oral or written offer to acquire Placing Shares, including any individuals, funds or others on whose behalf a commitment to acquire Placing Shares is given (the "Placees"), will (i) be deemed to have read and understood this Announcement, including Appendices I and II , in its entirety; and (ii) be making such offer on the terms and conditions contained in Appendices I and II, including being deemed to be providing (and shall only be permitted to participate in the Placing on the basis that they have provided) the representations, warranties, acknowledgements and undertakings set out herein.

In particular each such Placee represents, warrants and acknowledges that:

(a) it is a Relevant Person and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business;

(b) it is and, at the time the Placing Shares are acquired, will be outside the United States and is acquiring the Placing Shares in an "offshore transaction" in accordance with Rule 903 or Rule 904 of Regulation S under the Securities Act ("Regulation S") and is acquiring beneficial interests in the Placing Shares for its own account; if acquiring the Shares for the account of one or more other persons, it has full power and authority to make the representations, warranties, agreements and acknowledgements herein on behalf of each such account; and

(c) if it is a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, that any Placing Shares acquired by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of securities to the public other than an offer or resale in a member state of the EEA which has implemented the Prospectus Directive to Qualified Investors, or in circumstances in which the prior consent of the Bookrunners (as defined below) has been given to each such proposed offer or resale.

The Placing Shares are being offered and sold outside the United States in accordance with Regulation S. Any offering to be made in the United States will be made to a limited number of QIBs pursuant to an exemption from registration under the Securities Act in a transaction not involving any public offering.

Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of Appendices I and II or the Announcement of which it forms part should seek appropriate advice before taking any action.

Details of the Placing Agreement and the Placing Shares

J.P. Morgan Securities plc ("JPM") and Numis Securities Limited ("Numis") are acting as bookrunners in connection with the Placing (together, the "Bookrunners") and have entered into a placing agreement (the "Placing Agreement") with the Company under which they have agreed to use their respective reasonable endeavours to procure Placees to take up the Placing Shares, on the terms and subject to the conditions set out therein. Subject to the execution of a terms of subscription document setting out the final number of Placing Shares and a final Placing Price (as defined below) following completion of the Bookbuild (as defined below) (the "Terms of Subscription"), if any such Placee defaults in paying the Placing Price in respect of any Placing Shares allotted to it, the Bookrunners have severally (and not jointly or jointly and severally) agreed to acquire such shares, and the Company has agreed to allot or issue, as applicable, such shares to the Bookrunners at the Placing Price, on and subject to the terms set out in the Placing Agreement. Each of the Bookrunners further has agreed, severally (and not jointly or jointly and severally) with the Company to underwrite the Placing at a certain price (the "Floor Price") and to subscribe on the Closing Date such Placing Shares as the Bookrunners have been unable to procure Placees for at or above the Floor Price in the agreed proportions as set out in the Placing Agreement. In accordance with the terms of the Placing Agreement and a subscription and transfer agreement between the Company, JPM and a Jersey incorporated subsidiary of the Company (the "Subscription and Transfer Agreement"), the allotment and issue of the Placing Shares will be made by the Company to Placees in consideration for the transfer of the Company of certain shares in a Jersey incorporated subsidiary of the Company by JPM (acting on behalf of itself and Numis).

The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing ordinary shares of 10 pence per share in the capital of the Company (the "Ordinary Shares"), including the right to receive all dividends and other distributions declared, made or paid on or in respect of the Ordinary Shares after the date of issue of the Placing Shares, and will on issue be free of all claims, liens, charges, encumbrances and equities.

Application for listing and admission to trading

Application will be made to the Financial Conduct Authority (the "FCA") for admission of the Placing Shares to the premium listing segment of the Official List of the UK Listing Authority (the "Official List") and to the London Stock Exchange plc (the "London Stock Exchange") for admission to trading of the Placing Shares on its main market for listed securities (together, "Admission").

It is expected that Admission of the Placing Shares will become effective at or around 8.00 a.m. (London time) on 5 March 2014 (or such later time and/or date as the Bookrunners may agree with the Company) (the "Closing Date") and that dealings in the Placing Shares will commence at that time.

Bookbuild

The Bookrunners will today commence the bookbuilding process in respect of the Placing (the "Bookbuild") to determine demand for participation in the Placing by Placees. This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Placing. No commissions will be paid to Placees in respect of any Placing Shares.

Participation in, and principal terms of, the Placing

1. The Bookrunners are arranging the Placing severally, and not jointly, nor jointly and severally, as Bookrunners and agents of the Company. Participation in the Placing will only be available to persons who may lawfully be, and are, invited to participate by any of the Bookrunners. Each of the Bookrunners and their respective affiliates are entitled to enter bids as principal in the Bookbuild.

2. The allotment and issue of the Placing Shares to Placees by the Company will be in consideration of the transfer to the Company by JPM of shares in a Jersey incorporated company, pursuant to a subscription and transfer agreement entered into between JPM, the Company and such Jersey incorporated company. The consideration from the Company for the transfer of the shares in such Jersey incorporated company will be a price equal to the product of the Placing Price (as defined below) and the number of Placing Shares, which price will be satisfied by the issue of the Placing Shares by the Company to the Placees.

3. The Bookbuild, if successful, will establish a single price payable in respect of the Placing Shares (the "Placing Price") to the Bookrunners by all Placees whose bids are successful. The Placing Price and the number of Placing Shares will be agreed between the Bookrunners and the Company following completion of the Bookbuild and any discount to the market price of the Ordinary Shares will be determined in accordance with the listing rules of the FCA. The Placing Price and the number of Placing Shares to be issued will be announced on a Regulatory Information Service following the completion of the Bookbuild.

4. To bid in the Bookbuild, Placees should communicate their bid by telephone to their usual sales contact at one of the Bookrunners. Each bid should state the number of Placing Shares which the prospective Placee wishes to acquire at the Placing Price which is ultimately established by the Company and the Bookrunners or at prices up to a price limit specified in its bid. Bids may be scaled down by the Bookrunners on the basis referred to in paragraph 7 below.

5. The Bookbuild is expected to close no later than 4:30 p.m. (London time) on 28 February 2014, but may be closed earlier or later, at the discretion of the Bookrunners. The Bookrunners may, in agreement with the Company, accept bids that are received after the Bookbuild has closed.

6. Each prospective Placee's allocation will be agreed between the Bookrunners (in consultation with the Company) and will be confirmed to Placees orally by the relevant Bookrunner following the close of the Bookbuild, and a trade confirmation will be dispatched as soon as possible thereafter. The relevant Bookrunner's oral confirmation to such Placee will constitute an irrevocable legally binding commitment upon such person (who will at that point become a Placee) in favour of such Bookrunner and the Company, to acquire the number of Placing Shares allocated to it and to pay the relevant Placing Price on the terms and conditions set out in this Appendix I and Appendix II and in accordance with the Company's articles of association. All obligations under the Bookbuild and Placing will be subject to fulfilment of the conditions referred to below under "Conditions of the Placing" and to the Placing not being terminated on the basis referred to below under "Right to terminate under the Placing Agreement". By participating in the Bookbuild, each Placee will agree that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee.

7. The Bookrunners may choose to accept bids, either in whole or in part, on the basis of allocations determined in agreement with the Company and may scale down any bids for this purpose on such basis as they may determine. The Bookrunners may also, notwithstanding paragraphs 4 and 6 above and subject to prior consent of the Company (i) allocate Placing Shares after the time of any initial allocation to any person submitting a bid after that time and (ii) allocate Placing Shares after the Bookbuild has closed to any person submitting a bid after that time.

8. A bid in the Bookbuild will be made on the terms and subject to the conditions in this Appendix I and Appendix II and will be legally binding on the Placee on behalf of which it is made and except with the relevant Bookrunner's consent will not be capable of variation or revocation after the time at which it is submitted. Each Placee will also have an immediate, separate, irrevocable and binding obligation, owed to the relevant Bookrunner, to pay it (or as it may direct) in cleared funds an amount equal to the product of the Placing Price and the number of Placing Shares that such Placee has agreed to acquire. Each Placee's obligations will be owed to the relevant Bookrunner.

9. Except as required by law or regulation, no press release or other announcement will be made by the Bookrunners or the Company using the name of any Placee (or its agent), in its capacity as Placee (or agent), other than with such Placee's prior written consent.

10. Irrespective of the time at which a Placee's allocation pursuant to the Placing is confirmed, settlement for all Placing Shares to be acquired pursuant to the Placing will be required to be made at the same time, on the basis explained below under "Registration and Settlement".

11. All obligations under the Bookbuild and Placing will be subject to fulfilment or (where applicable) waiver of the conditions referred to below under "Conditions of the Placing" and to the Placing not being terminated on the basis referred to below under "Right to terminate under the Placing Agreement".

12. By participating in the Bookbuild, each Placee agrees that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee.

13. To the fullest extent permissible by law, neither the Bookrunners, the Company nor any of their respective affiliates, agents, directors, officers or employees shall have any responsibility or liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, neither of the Bookrunners, nor the Company, nor any of their respective affiliates, agents, directors, officers or employees shall have any responsibility or liability (including to the extent permissible by law, any fiduciary duties) in respect of the Bookrunners' conduct of the Bookbuild or of such alternative method of effecting the Placing as the Bookrunners and the Company may agree.

Conditions of the Placing

The Placing is conditional upon the Placing Agreement becoming unconditional and not having been terminated in accordance with its terms. The Bookrunners' obligations under the Placing Agreement are conditional on, inter alia:

(a) Admission of the Placing Shares occurring at or before 8:00 a.m. (London time) on the Closing Date (or such later time and/or date as the Company and the Bookrunners may otherwise agree);

(b) none of the representations, warranties and agreements of the Company contained in the Placing Agreement being untrue, inaccurate or misleading on and as at the date of the Placing Agreement or at any time between the date of the Placing Agreement and the Closing Date;

(c) the Company having complied with all of the agreements and undertakings and satisfied or performed all of the conditions and obligations on its part to be performed or satisfied under the Placing Agreement on or before the Closing Date;

(d) in the good faith opinion of either Bookrunner, there not having occurred a material adverse change in, or any development reasonably likely to result in a prospective material adverse change in or affecting the operations, condition (financial, operational, legal or otherwise) or the trading position, earnings, management, business affairs, solvency or prospects of the Company or the Company and its subsidiaries (the "Group") taken as a whole or of the facilities management business of Rentokil Initial plc, comprising the entire issued share capital of Rentokil Initial Facilities Services (UK) Limited and Initial Facilities Services S.A.U. together with the Irish facilities services business and the water business (the "Target") taken as a whole at any time prior to Admission;

(e) the agreement in relation to the proposed acquisition of the facilities management business of Rentokil Initial plc (the "Acquisition") having not been breached by the Company and all events and conditions contemplated in such agreement as having occurred or been satisfied by Admission having occurred or been satisfied and no event having arisen at any time prior to Admission which gives the vendor a right to terminate such agreement, and such agreement not having been terminated by the Company prior to Admission;

(f) the publication by the Company of the results of the Placing on a Regulatory Information Service;

(f) the Company allotting, subject only to Admission, the relevant Placing Shares in accordance with the Placing Agreement.

If: (i) any of the conditions contained in the Placing Agreement, including those described above, are not fulfilled or (where permitted) waived by the Bookrunners by the relevant time or date specified (or such later time or date as the Company and the Bookrunners may agree); or (ii) the Placing Agreement is terminated in the circumstances specified below, the Placing will lapse and the Placees' rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by it in respect thereof.

The Bookrunners may, at their discretion and upon such terms as they think fit, waive compliance by the Company with the whole or any part of any of the Company's obligations in relation to the conditions in the Placing Agreement save that the above conditions relating, inter alia, to Admission taking place may not be waived. Any such extension or waiver will not affect Placees' commitments as set out in this Announcement.

None of the Bookrunners shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision it may make as to whether or not to waive or to extend the time and/or date for the satisfaction of any condition to the Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing generally and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of the Bookrunners.

Right to terminate under the Placing Agreement

The Bookrunners are entitled, at any time before Admission, to terminate the Placing Agreement in accordance with its terms in certain circumstances, including, inter alia: (i) any breach of the warranties given by the Company in the Placing Agreement or any statement in the Placing Agreement becoming untrue, incorrect or misleading; (ii) any material adverse change in or any development reasonably likely to result in a prospective material adverse change in or affecting the operations, condition (financial, operational, legal or otherwise) or the trading position, earnings, management, business affairs, solvency or prospects of the Company or the Group taken as a whole or the Target taken as a whole, at any time since the date of the Placing Agreement; or (iii) the occurrence of an adverse macro-economic change, suspension or limitation in the trading in any securities of the Company or a moratorium of banking activities which, in the good faith opinion of a Bookrunner, would make it impracticable or inadvisable to proceed with the Placing or market the Placing Shares.

By participating in the Placing, Placees agree that the exercise by either Bookrunner of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of such Bookrunner and that it need not make any reference to, or consult with, Placees and that it shall have no liability to Placees whatsoever in connection with any such exercise.

Lock-up

The Company has undertaken to the Bookrunners that, between the date of the Placing Agreement and 120 days after Admission, it will not, without the prior written consent of the Bookrunners (acting in good faith) enter into certain transactions involving or relating to the Ordinary Shares, subject to certain carve-outs agreed between the Bookrunners and the Company.

By participating in the Placing, Placees agree that the exercise by any Bookrunner of any power to grant consent to the undertaking by the Company of a transaction which would otherwise be subject to the lock-up under the Placing Agreement shall be within the absolute discretion of such Bookrunner and that it need not make any reference to, or consult with, Placees and that it shall have no liability to Placees whatsoever in connection with any such exercise of the power to grant consent.

No Prospectus

No offering document or prospectus has been or will be submitted to be approved by the FCA or submitted to the London Stock Exchange in relation to the Placing.

Placees' commitments will be made solely on the basis of the information contained in this Announcement (including this Appendix) released by the Company today and subject to the further terms set forth in the contract note to be provided to individual prospective Placees. Each Placee, by accepting a participation in the Placing, agrees that the content of this Announcement (including this Appendix) and all other publicly available information previously published by the Company by notification to a Regulatory Information Service or otherwise filed by the Company is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any other information, representation, warranty, or statement made by or on behalf of the Company or the Bookrunners or any other person and none of the Company or the Bookrunners nor any other person will be liable for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement which the Placees may have obtained or received. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation by that person.

Registration and Settlement

Settlement of transactions in the Placing Shares (ISIN: GB0001528156) following Admission will take place within the system administered by Euroclear UK & Ireland Limited ("CREST"). Subject to certain exceptions, the Bookrunners and the Company reserve the right to require settlement for, and delivery of, the Placing Shares (or any part thereof) to Placees by such other means that they deem necessary if delivery or settlement is not possible or practicable within the CREST system within the timetable set out in this Announcement or would not be consistent with the regulatory requirements in the Placee's jurisdiction.

Following the closing of the Bookbuild for the Placing, each Placee allocated Placing Shares in the Placing will be sent a trade confirmation in accordance with the standing arrangements in place with the relevant Bookrunner stating the number of Placing Shares allocated to it at the Placing Price, the aggregate amount owed by such Placee to the Bookrunner and settlement instructions. Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with the standing CREST or certificated settlement instructions in respect of the Placing Shares that it has in place with the relevant Bookrunner.

It is expected that settlement will be on 5 March 2014 in accordance with the instructions set out in the trade confirmation.

Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of two percentage points above LIBOR as determined by the Bookrunners.

Each Placee is deemed to agree that, if it does not comply with these obligations, the Bookrunners may sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for the Bookrunners' account and benefit, an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) or other similar taxes imposed in any jurisdiction which may arise upon the sale of such Placing Shares on such Placee's behalf.

If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the trade confirmation is copied and delivered immediately to the relevant person within that organisation.

Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax.

Representations, Warranties and Further Terms

By participating in the Placing each Placee (and any person acting on such Placee's behalf) irrevocably:

1 represents and warrants that it has read and understood the Announcement, including this Appendix, in its entirety and that its acquisition of Placing Shares is subject to and based upon all the terms, conditions, representations, warranties, acknowledgements, agreements and undertakings and other information contained herein and undertakes not to redistribute or duplicate this Announcement;

2 acknowledges that no offering document or prospectus has been or will be prepared in connection with the Placing and represents and warrants that it has not received and will not receive a prospectus or other offering document in connection with the Bookbuild, the Placing or the Placing Shares;

3 acknowledges that none of the Bookrunners, the Company, any of their respective affiliates, agents, directors, officers or employees or any person acting on behalf of any of them has provided, nor will provide, it with any material regarding the Placing Shares or the Company other than this Announcement; nor has it requested any of the Bookrunners, the Company, any of their respective affiliates or any person acting on behalf of any of them to provide it with any such information;

4 acknowledges that the Company's Ordinary Shares are listed on the premium segment of the Official List and are admitted to trading on the main market of the London Stock Exchange plc (the "Exchange") and that the Company is therefore required to publish certain business and financial information in accordance with the rules and practices of the FCA , which includes a description of the Company's business and the Company's financial information, including balance sheets and income statements, and that it is able to obtain or access to such information, or comparable information concerning other publicly traded companies, in each case without undue difficulty;

5 acknowledges that the Placing is not conditional on completion of the Acquisition and that although Company anticipates using the proceeds raised through the Placing for the Acquisition, that the Acquisition is dependent upon certain conditions being satisfied and that accordingly neither the Company nor the Bookrunners warrant or represent that the Acquisition will take place;

6 acknowledges that the content of this Announcement is exclusively the responsibility of the Company and that none of the Bookrunners, nor their respective affiliates or any person acting on behalf of any of them has or shall have any liability for any information, representation or statement contained in, or omission from, this Announcement or any information previously published by or on behalf of the Company, pursuant to applicable laws, and will not be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this Announcement or otherwise. Each Placee further represents, warrants and agrees that the only information on which it is entitled to rely and on which such Placee has relied in committing itself to acquire Placing Shares is contained in this Announcement and any information previously published by the Company by notification to a Regulatory Information Service, such information being all that such Placee deems necessary or appropriate and sufficient to make an investment decision in respect of the Placing Shares and that it has neither received nor relied on any other information given, or representations, warranties or statements made, by any of the Bookrunners or the Company nor any of their respective affiliates and none of the Bookrunners or the Company will be liable for any Placee's decision to accept an invitation to participate in the Placing based on any other information, representation, warranty or statement, provided that nothing in this paragraph excludes the liability of any person for fraudulent misrepresentation made by that person;

7 acknowledges and agrees that it may not rely, and has not relied, on any investigation that the Bookrunners, any of their affiliates or any person acting on their behalf, may have conducted with respect to the Placing Shares or the Company, and none of such persons has made any representation, express or implied, with respect to the Company, the Placing Shares or the accuracy, completeness or adequacy of the Exchange Information or any other information; each Placee further acknowledges that it has conducted its own investigation of the Company and the Placing Shares and has received all information it believes necessary or appropriate in connection with its investment in the Placing Shares;

8 acknowledges that it has made its own assessment and has satisfied itself concerning the relevant tax, legal, currency and other economic considerations relevant to its investment in the Placing Shares;

9 acknowledges that none of the Bookrunners, their respective affiliates or any person acting on behalf of any of them has or shall have any liability for any information made publicly available by or in relation to the Company or any representation, warranty or statement relating to the Company or the Group contained therein or otherwise, provided that nothing in this paragraph excludes the liability of any person for fraudulent misrepresentation made by that person;

10 represents and warrants that it is and, at the time the Placing Shares are acquired, will be either (i) outside the United States and is acquiring the Placing Shares in an "offshore transaction" in accordance with Rule 903 or Rule 904 of Regulation S; or (ii) a QIB, which is acquiring the Placing Shares for its own account or for the account of one or more QIBs, each of which is acquiring beneficial interests in the Placing Shares for its own account; if acquiring the Shares for the account of one or more other persons, it has full power and authority to make the representations, warranties, agreements and acknowledgements herein on behalf of each such account;

11 acknowledges that in making any decision to acquire Placing Shares it (i) has such knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of subscribing for or purchasing the Placing Shares, (ii) will not look to the Bookrunners for all or part of any such loss it may suffer, (iii) is experienced in investing in securities of this nature in this sector and is aware that it may be required to bear, and is able to bear, the economic risk of an investment in the Placing Shares, (iv) is able to sustain a complete loss of an investment in the Placing Shares and (v) has no need for liquidity with respect to its investment in the Placing Shares;

12 undertakes, unless otherwise specifically agreed with the Bookrunners, that it is not and at the time the Placing Shares are acquired, neither it nor the beneficial owner of the Placing Shares will be, a resident of Australia, Canada, Japan, Jersey or South Africa and further acknowledges that the Placing Shares have not been and will not be registered under the securities legislation of the United States, Australia, Canada, Japan, Jersey or South Africa and, subject to certain exceptions, may not be offered, sold, transferred, delivered or distributed, directly or indirectly, in or into those jurisdictions;

13. acknowledges that the Placing Shares have not been and will not be registered and that a prospectus will not be cleared in respect of any of the Placing Shares under the securities laws or legislation of the United States or any state or jurisdiction thereof, Australia, Canada, Japan or South Africa and, subject to certain exceptions, may not be offered, sold, or delivered or transferred, directly or indirectly, in or into those jurisdictions;

14 acknowledges that the Placing Shares are being subscribed for investment purposes, and not with a view to offer, resell or distribute within the meaning of the United States securities laws;

15 acknowledges that it is not acquiring any of the Placing Shares as a result of any form of general solicitation or general advertising (within the meaning of Rule 502(c) of Regulation D under the Securities Act) or directed selling efforts (as defined in Regulation S);

16 acknowledges that no representation has been made as to the availability of any exemption under the Securities Act for the reoffer, resale, pledge or transfer of the Placing Shares;

17 represents and warrants that the issue to it, or the person specified by it for registration as holder, of Placing Shares will not give rise to a liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depositary receipts and clearance services) and that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to issue or transfer Placing Shares into a clearance service;

18 represents and warrants that it has complied with its obligations under the Criminal Justice Act 1993, section 118 of the Financial Services and Markets Act 2000 (the "FSMA") and in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002 (as amended), the Terrorism Act 2000, the Terrorism Act 2006 and the Money Laundering Regulations 2007 and any related or similar rules, regulations or guidelines, issued, administered or enforced by any government agency having jurisdiction in respect thereof (the "Regulations") and the Money Laundering Sourcebook of the FCA and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations;

19 represents and warrants that it is acting as principal only in respect of the Placing or, if it is acting for any other person: (i) it is duly authorised to do so and has full power to make the acknowledgments, representations and agreements herein on behalf of each such person; and (ii) it is and will remain liable to the Company and/or the Bookrunners for the performance of all its obligations as a Placee in respect of the Placing (regardless of the fact that it is acting for another person);

20. if a financial intermediary, as that term is used in Article 3(2) of the EU Prospectus Directive, represents and warrants that the Placing Shares purchased by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a Member State of the EEA which has implemented the Prospectus Directive other than Qualified Investors, or in circumstances in which the prior consent of the Bookrunners has been given to the offer or resale;

21 represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and which will not result in an offer to the public in the United Kingdom within the meaning of section 85(1) of the FSMA;

22 represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to persons in the EEA prior to Admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in any member state of the EEA within the meaning of the Prospectus Directive;

23 represents and warrants that it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) relating to the Placing Shares in circumstances in which section 21(1) of the FSMA does not require approval of the communication by an authorised person;

24 represents and warrants that it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving, the United Kingdom;

25. represents and warrants, if in a Member State of the European Economic Area, unless otherwise specifically agreed with the Bookrunners in writing, that it is a "qualified investor" within the meaning of Article 2(1)(e) of the Prospectus Directive;

26. represents and warrants, if in the United Kingdom, that it is a person (i) having professional experience in matters relating to investments who falls within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (ii) who falls within Article 49(2)(a) to (d) ("High Net Worth Companies, Unincorporated Associations, etc") of the Order, or (iii) to whom this Announcement may otherwise lawfully be communicated;

27. acknowledges and agrees that no action has been or will be taken by either the Company or the Bookrunners or any person acting on behalf of the Company or the Bookrunners that would, or is intended to, permit a public offer of the Placing Shares in any country or jurisdiction where any such action for that purpose is required;

28 represents and warrants that it and any person acting on its behalf is entitled to acquire the Placing Shares under the laws of all relevant jurisdictions and that it has fully observed such laws and obtained all such governmental and other guarantees, permits, authorisations, approvals and consents which may be required thereunderand complied with all necessary formalities to enable it to commit to this participation in the Placing and to perform its obligations in relation thereto (including, without limitation, in the case of any person on whose behalf it is acting, all necessary consents and authorities to agree to the terms set out or referred to in this Appendix I and Appendix II) and will honour such obligations and that it has not taken any action or omitted to take any action which will or may result in the Bookrunners, the Company or any of their respective directors, officers, agents, employees or advisers acting in breach of the legal or regulatory requirements of any jurisdiction in connection with the Placing;

29 undertakes that it (and any person acting on its behalf) will make payment in respect of the Placing Shares allocated to it in accordance with this Appendix on the due time and date set out herein, failing which the relevant Placing Shares may be placed with other acquirers or sold as the Bookrunners may in their sole discretion determine and without liability to such Placee, who will remain liable for any amount by which the net proceeds of such sale falls short of the product of the relevant Placing Price and the number of Placing Shares allocated to it and may be required to bear any stamp duty, stamp duty reserve tax or other similar taxes (together with any interest or penalties) which may arise upon the sale of such Placee's Placing Shares;

30. that its allocation (if any) of Placing Shares will represent a maximum number of Placing Shares which it will be entitled, and required, to acquire, and that the Bookrunners or the Company may call upon it to acquire a lower number of Placing Shares (if any), but in no event in aggregate more than the aforementioned maximum;

31 acknowledges that none of the Bookrunners, nor any of their respective affiliates, nor any person acting on behalf of them, is making any recommendations to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing and that its participation in the Placing is on the basis that it is not and will not be a client of any Bookrunner in connection with its participation in the Placing and that the Bookrunners have no duties or responsibilities to it for providing the protections afforded to their respective clients or customers or for providing advice in relation to the Placing nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement nor for the exercise or performance of any of their respective rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right;

32 undertakes that the person whom it specifies for registration as holder of the Placing Shares will be (i) itself or (ii) its nominee, as the case may be. None of the Bookrunners nor the Company will be responsible for any liability to stamp duty or stamp duty reserve tax or other similar taxes resulting from a failure to observe this requirement ("Indemnified Taxes"). Each Placee and any person acting on behalf of such Placee agrees to participate in the Placing and it agrees to indemnify the Company and the Bookrunners on an after-tax basis in respect of any Indemnified Taxes;

33 acknowledges that these terms and conditions and any agreements entered into by it pursuant to these terms and conditions set out in this Appendix I and Appendix II, and all non-contractual or other obligations arising out of or in connection with them, shall be governed by and construed in accordance with the laws of England and Wales and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter arising out of any such contract (including any dispute regarding the existence, validity or termination of such contract or relating to any non-contractual or other obligation arising out of or in connection with such contract), except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by either the Company or the Bookrunners in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange;

34 agrees to indemnify on an after tax basis and hold the Company, the Bookrunners and their respective affiliates harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this Appendix I and Appendix II and further agrees that the provisions of this Appendix I and Appendix II shall survive after completion of the Placing;

35 represents and warrants that it has neither received nor relied on any inside information concerning the Company prior to or in connection with accepting this invitation to participate in the Placing and is not purchasing Placing Shares on the basis of material non-public information;

36 if it is a pension fund or investment company, its purchase of Placing Shares is in full compliance with applicable laws and regulations; and

37 agrees that the Company, the Bookrunners and their respective affiliates and others will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgements and undertakings which are given to the Bookrunners on their own behalf and on behalf of the Company and are irrevocable and it a irrevocably authorises the Company and the Bookrunners to produce this Announcement, pursuant to, in connection with, or as may be required by any applicable law or regulation, administrative or legal proceeding or official inquiry with respect to the matters set forth herein.

The foregoing representations, warranties and confirmations are given for the benefit of the Company as well as each of the Bookrunners and are irrevocable. Each Placee, and any person acting on behalf of the Placee, acknowledges that neither the Company nor either of the Bookrunners owes any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings or indemnities in the Placing Agreement.

The agreement to allot and issue Placing Shares to Placees (and/or to persons for whom such Placee is contracting as agent) free of stamp duty and stamp duty reserve tax relates only to their allotment and issue to Placees, or such persons as they nominate as their agents, direct from the Company for the Placing Shares in question. Such agreement also assumes that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to issue or transfer the Placing Shares into a clearance service. If there are any such arrangements, or the settlement relates to any other dealing in the Placing Shares, stamp duty or stamp duty reserve tax or other similar taxes may be payable, for which neither the Company nor the Bookrunners will be responsible and the Placees shall indemnify the Company and the Bookrunners on an after-tax basis for any stamp duty or stamp duty reserve tax paid by them in respect of any such arrangements or dealings. If this is the case, each Placee should seek its own advice and notify the Bookrunners accordingly.

The Company and the Bookrunners are not liable to bear any transfer taxes that arise on a sale of Placing Shares subsequent to their acquisition by Placees or for transfer taxes arising otherwise than under the laws of the United Kingdom. Each Placee should, therefore, take its own advice as to whether any such transfer tax liability arises and notify the Bookrunners accordingly. Furthermore, each Placee agrees to indemnify on an after-tax basis and hold each of the Bookrunners and/or the Company and their respective affiliates harmless from any and all interest, fines or penalties in relation to stamp duty, stamp duty reserve tax and all other similar duties or taxes to the extent that such interest, fines or penalties arise from the unreasonable default or delay of that Placee or its agent.

In addition, Placees should note that they will be liable for any stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the UK by them or any other person on the acquisition by them of any Placing Shares or the agreement by them to acquire any Placing Shares.

Each Placee, and any person acting on behalf of the Placee, acknowledges that the Bookrunners do not owe any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings or indemnities in the Placing Agreement.

Each Placee and any person acting on behalf of the Placee acknowledges and agrees that any Bookrunner or any of its affiliates may, at its absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares.

When a Placee or person acting on behalf of the Placee is dealing with a Bookrunner, any money held in an account with such Bookrunner on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and regulations of the FCA made under the FSMA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from such Bookrunner's money in accordance with the client money rules and will be used by such Bookrunner in the course of its own business and the Placee will rank only as a general creditor of such Bookrunner.

All times and dates in this Announcement may be subject to amendment. The Bookrunners shall notify the Placees and any person acting on behalf of the Placees of any changes.

APPENDIX II: RISK FACTORS

Each Placee should read the entirety of this Announcement, including this Appendix II and the Terms and Conditions of the Placing attached to this Announcement as Appendix I, as well as the risks disclosed under the heading "Principal risks and uncertainties" of the Company's Annual Report and Accounts 2013. The Company believes that the risk factors described below represent the principal material risks inherent in investing in the Placing Shares. The Company makes no representation that the following statements are exhaustive and therefore the risks and uncertainties described below should not be regarded as a complete and comprehensive set of all potential risks and uncertainties. Each Placee should consider these risk factors before deciding to purchase the Placing Shares. In addition, each Placee should be aware that the risks described may combine and thus intensify one another. The occurrence of one or more risks may have a material adverse effect on the business, prospects, financial condition or results of operations of the Company, its subsidiaries and affiliates (the "Group").

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 the General Meeting. Failure to complete the Transaction may materially adversely affect the trading price of the Shares.

If the Transaction does not complete, the Company would nonetheless incur expenses, including advisory fees, in connection with the Transaction. If, absent a Termination Event, either the Shareholders do not pass the Resolution by the Long Stop Date or the Board changes its recommendation that Shareholders vote in favour of the Resolution (in which case the Acquisition Agreement terminates), the Company is contractually 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 approved subject to conditions

The Transaction qualifies for investigation by the Office of Fair Trading as the UK turnover of Initial Facilities exceeds £70m. There is no requirement to obtain OFT merger clearance prior to completion of the Transaction and Completion of the Transaction will not be conditional on prior OFT approval. On the basis of the assessment it has undertaken, Interserve does not believe that there is a realistic 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 will be required, during which time a ''hold separate'' undertaking or order preventing or pausing integration may be required (thereby delaying the synergistic benefits described earlier), and that conditions may be imposed 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 material adverse effect on the business and results of operations of the Enlarged Group.

1.3 Adverse change in the financial condition of Initial Facilities

Pursuant to the terms of the Acquisition Agreement, the Company may only terminate the Acquisition Agreement prior to Completion in certain circumstances (details of which are set out in paragraph 3 of Part VI). Completion is expected to occur shortly following the passing of the Resolution by Shareholders. Until Completion, the Company will not own Initial Facilities and it is possible that there could be an adverse event affecting Initial Facilities which would not give rise to a right of the Company to terminate the Acquisition Agreement. In such an event, the value of Initial Facilities 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 for trading is provided in the Acquisition Agreement through the working capital adjustment and against certain contingent liabilities through the repetition of certain warranties, this could still have an adverse effect 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 and the 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 experience uncertainty about their future roles within the Enlarged Group, which may adversely affect the Enlarged Group'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 the Enlarged 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 of the Business with those of the Group, anticipated to be approximately £10 million all of which are expected to be incurred by 31 December 2014. In addition, Interserve will incur legal, accounting and transaction fees and other costs related to the Transaction. Some of these costs are payable regardless of whether the Transaction 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 efficiencies related 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 could be higher than Interserve anticipates, which could reduce the net benefits of the Transaction and impact the 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 Initial Facilities will achieve recurring annual pre-tax cost synergies of approximately £5 million for the Enlarged Group. However, there is a risk that the projected synergy benefits will fail to materialise, or that they may be materially lower than have been estimated, which would have an impact on the profitability of the Enlarged Group in the future.

2 RISKS RELATING TO THE ENLARGED GROUP

2.1 If there are significant, unforeseen difficulties integrating the business operations of Initial Facilities into the Group, they could adversely affect the business of the Enlarged Group

Interserve intends, to the extent possible, to integrate the operations of the Business following Completion of 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 growth opportunities and achieve cost efficiencies by taking advantage of the anticipated synergies of consolidation. 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 of control of the Business, resulting in a delay or the failure to achieve the anticipated synergies and cost savings. 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 impair the ability of the management team of the Enlarged Group to run the business effectively during the period of implementation. Furthermore, the Enlarged Group may not be able to retain personnel with the appropriate skill set for the tasks associated with the implementation programme. This could adversely affect the implementation of Interserve's plans. In such circumstances, the profitability of the Enlarged Group 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 efficient and uninterrupted operation of the information technology and computer systems and of services from third-party providers to Initial Facilities under the terms of the Transitional Services Agreement. In the event that such systems and services are not provided in accordance with required timescales, or successfully implemented at all, the ability of the Enlarged Group to operate effectively or to fulfil its contractual obligations may be affected or impaired during the period of implementation which may, in turn, affect the business, financial condition, operating results and prospects of the Enlarged Group 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 appropriately skilled management or personnel

The success of the Enlarged Group will be dependent on retaining, recruiting, motivating and developing sufficient appropriately skilled and competent people at all levels of the organisation. The Enlarged Group's success will depend, to a significant extent, on the continued services of its senior management team including, but not limited to key members of the management team of Initial Facilities, who have substantial knowledge of, and experience and expertise in, the industry. If the Enlarged Group is unable successfully to retain and attract such personnel, it may not be able to maintain standards of service or continue to grow its businesses as anticipated. The loss of such personnel, or the inability to attract and retain additional appropriately skilled employees required for its activities, could have an adverse 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 affect the Enlarged Group's business

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

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

Whilst the Group currently has limited operations in Spain and Ireland, the Enlarged Group will have an enhanced international presence in these jurisdictions. As such the Enlarged Group will be subject to increased risk from a number of legal, economic and market factors which could have an adverse effect on the 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 performance and 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 lead to reputational damage, particularly where these relate to high profile public services. The Enlarged Group could therefore be exposed to greater financial risk if reputational damage caused by a service shortfall in one contract has an adverse effect on winning new customers or retaining existing customers across the Enlarged Group.