28th Feb 2019 08:41
LONDON (Alliance News) - Pest control firm Rentokil Initial PLC on Thursday said it swung to a loss in 2018 due to a hefty pension settlement charge in the recent year and gains on business disposals the year before.
Rentokil also appointed former InterContinental Hotels Group PLC chief executive Richard Solomons as chair.
Shares in Rentokil were up 4.4% at 343.70 pence on Thursday morning.
The company's annual pretax loss totalled GBP114.1 million, reversing its GBP713.6 million profit the year before.
A key factor in this was the transfer of its Hygiene and Workwear assets, as well as the divestment of the flat-linen laundries in France. These disposals gave a GBP449.0 million boost to profit in 2017 which did not repeat in 2018.
In addition, 2018 took a hit from Rentokil's agreement for a bulk annuity insurance buy-in for its UK pension scheme. The buy-in has taken place in preparation for a full buy-out and winding up of the scheme, due to complete in 2020.
Once the buy-out is complete, Rentokil will have a pre-tax cash surplus of between GBP20 million and GBP40 million, which will be returned to the company. However, the settlement did incur a GBP341.6 million one-off non-cash charge in 2018 compared to no such charge the year before.
Rentokil's adjusted pretax profit, which excludes these factors, rose 7.4% to GBP308.0 million from GBP286.9 million.
Revenue was GBP2.47 billion, an increase of 2.5% from GBP2.41 billion in 2017.
The company proposed a final dividend of 3.16 pence per share versus 2.74p per share in 2017, taking the total for the year to 4.471p per share, a 15% increase over its 2017 dividend.
Rentokil Chief Executive Andy Ransom said: "I am also delighted that we were able to secure a buy-in for our UK defined benefit pension scheme. This transaction is a fantastic outcome for our pensioners, the Company and our shareholders. While many other companies will have to continue investing into their pension schemes for years to come, we can focus our future investments on delivering profitable growth.
"2018 was a very good year for Rentokil Initial, and I am delighted that we have again exceeded our medium-term financial targets for revenue, profit and cash. We are confident of delivering further progress in 2019 and anticipate a slight increase in market expectations for 2019."
Looking ahead, the appointment of Solomons - currently senior independent director at Aston Martin Lagonda Global Holdings PLC - as chair, is to become effective on May 8 following a vote at Rentokil's annual general meeting.
On that date, the current chair, John McAdam, will retire after ten years.
On Friday, prior to being made chair, Solomons will join the board as a non-executive director.
Richard Burrows, currently senior independent director of Rentokil, will not stand for re-election at the May 8 AGM. He will be succeeded as senior independent director by current Non-Executive Director John Pettigrew.
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