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Rentokil Initial improves FY pretax profit, revenue

23 February 2017 07:54

Rentokil Initial has improved its FY pretax profit and revenue, stating that whilst conditions remain difficult in France the prospects in most of its markets are good.

The company booked FY pretax profit up 3.10% to £208.5m, with revenue up 24.2% to £2.16bn and total dividend up 15% to 3.37p a share.

"In 2016 we have continued to execute our strategy at pace," said CEO Andy Ransom in a statement.

Rentokil's Organic Revenue growth of 3.0% was at its highest level for 10 years, with accelerated growth in Pest Control and Hygiene showing continued performance momentum.

In addition, the company had exceeded its financial targets, growing Ongoing Revenues by 12.6%, Ongoing Operating Profit by 11.5% and delivering £156m in Free Cash Flow.

He said 2016 had also seen strong execution of M&A.

"We continue to migrate our revenues into Emerging and Growth markets and have acquired 41 companies in the year with combined annualised revenues of some £124m.

"We were delighted to enter into an agreement with Haniel at the end of the year to create a leading provider of Workwear & Hygiene services across Europe.

"The transaction fits well with our capital allocation model. Cash proceeds will be reinvested in Pest Control and Hygiene and we intend to increase our spend on M&A in 2017 to at least £150m as we continue to identify a particularly strong pipeline of value-enhancing opportunities."

Ransom said that, at the same time, Rentokil was creating value in its Protect & Enhance markets through retaining an 18% stake in the combined business.

"Prospects in the majority of our markets are good and, while conditions in France remain difficult, we are confident of making further progress in the coming year," he added.

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