Improvements in Rentokil Textiles & Hygiene Benelux controls

04 Mar '11

4 min read

RENTOKIL INITIAL PLC (RTO) presents preliminary results (unaudited) for year ended 31 December 2010.

2010 Full Year Highlights:
- 15% growth in adjusted profit before tax at £192.3m despite poor performance in City Link & Benelux
- Strong profit growth in Pest Control (+9.9%), Facilities Services (+21.6%), Asia Pacific (+40.3%) reflecting impact of new management, robust cost control and restructuring programmes
- City Link structural issues largely resolved but poor operational performance exacerbated by exceptionally challenging weather conditions during peak Christmas trading period
- Textiles & Hygiene Benelux impacted by weak operational control and severe price competition
- 18% growth in adjusted EPS to 7.81p
- Revenue down 1.4% though trend improving
- Cost savings of £60m in year, 2011 target £60m
- Continued excellent cash generation at 114% conversion4 from profit
- Net debt now below £1bn, in-year reduction of £154m to £954m
- Resumption of dividend remains under review pending turnaround of City Link and Textiles & Hygiene Benelux

Alan Brown, Chief Executive Officer of Rentokil Initial plc, said: “A little over half way in to our five-year turnaround plan the group has undergone considerable and, in most
cases, successful structural change. Good progress has been made in customer service evidenced by continued improvement in customer retention on our contract business. Cash delivery has also been excellent. Nevertheless, much remains to be done on customer care and on capability development.”

“In the coming year we anticipate continued good progress in Pest Control, Facilities Services, Asia Pacific and Ambius. City Link's operational inefficiencies are expected to be addressed by October 2011 but financial delivery will be weak until then. Textiles & Hygiene Benelux controls have improved and pricing pressures have reduced but the recovery plan is at an early stage of development.

“Programme Olympic is performing well, driving capability in growth, customer care and administration. We expect these initiatives to deliver organic revenue growth in our contract businesses during the second half of 2011.”

2010 FINANCIAL OVERVIEW
Full year revenue of £2,499.7m (at constant exchange rates) declined by 1.2% on 2009 (a decline of 1.4% at actual exchange rates). Revenue performance showed an improving trend during the year but was held back principally by Textiles & Hygiene in the Benelux and City Link, both of which suffered from a combination of difficult market conditions and issues arising from weak management. Facilities Services recorded revenue growth largely due to the contributions from Knightsbridge Guarding (acquired in June) and a new Transport for London cleaning contract. Pest Control revenue was broadly flat year on year, held back by a decline in the UK Hygiene business, but nevertheless reported good levels of growth in its UK,North American, Northern European and East Africa & Caribbean Pest Control businesses. While Ambius revenue declined 3.6% this represents a significant improvement on 2009's decline of 10.5% and reflects an easing of market conditions and improving retention.

RENTOKIL INITIAL PLC (RTO)

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