TaxPersonal TaxIn the spotlight: Cracks show at Rentokil

In the spotlight: Cracks show at Rentokil

Christopher Pearce, FD of Rentokil Initial, is under pressure over profit growth and late payment.

Rentokil Initial, the pest control giant, will publish its full-year results next week, after a bruising year which saw its growth rate slip and its controversial policy on payment of suppliers become the centre of a national debate.

Christopher Pearce, finance director of the company since 1987, will take centre stage. But at least he is used to the spotlight. As well as his corporate responsibilities, Pearce heads the influential 100 Group of Finance Directors.

BT Alex Brown, the investment bank, is predicting a pre-tax profit of #496m for the company, comfortably above last year’s #417m. The bank expects revenues to top #3bn for the full year.

The results will see Rentokil maintain its dominant position in the pest control and business services industry, but mask what has been a difficult year for the group.

Back in August, Rentokil’s interim results showed a rise in pre-tax profit of 18% – the first time in the 13 years the company had failed to meet its 20% growth-rate target.

According to one analyst, the seemingly modest fall in profit growth was a significant one for the industry, and even threatened the prized moniker of Sir Clive Thompson, Rentokil’s chief executive and CBI president. He had been nicknamed ‘Mr 20%’ for meeting the target year after year.

‘Rentokil is a bellwether company for the services industry,’ said the analyst.

He added that next week’s results will also be the first sign of how well Rentokil has integrated its 1996 acquisition of rival services company BET.

But it is Rentokil’s controversial policy on paying its suppliers which could draw further negative publicity. Last November, the company ignited the late payment debate when it issued a circular demanding that its suppliers exempt themselves from the 30-day payment protection of November’s Late Payment Act.

With Pearce’s FTSE-100 credentials, the company was soon under fire. For his part, Sir Clive soon faced calls to resign as CBI president.

This month, a survey by the Forum of Private Business showed 78% of its members calling for his resignation. The CBI belongs to the Better Payment Practice Group and Rentokil has signed up to its prompt payment code.

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