Profit hike puts 'Mr 20%' on track

THE rehabilitation of 'Mr 20%', Sir Clive Thompson, gathered pace as his pest control-to-security guards group Rentokil Initial posted a strong set of figures for last year. Earnings rose 13.6% to 13.3p a share thanks to a second-half acceleration in sales, and falling interest rates, which enhanced the share buyback policy.

Thompson, forced to abandon his 20% earnings growth target three years ago after hitting it for 17 years running, called the results very good and promised strong growth again this year.

The group was prepared to borrow up to £600m more for bolt-on acquisitions or more buybacks, which at current interest rates would be earnings enhancing at up to 411p per share. The shares were currently trading up 4p at 265p.

Parcels delivery, conferencing and pest control were the best performers last year. The troubled facilities management division saw its first sales growth in two years. Operating profits from continuing operations rose 6.3% to £437m on sales of £2.2bn, up 7.4%. Turnover growth picked up from 5.1% in the first half to 5.7% in the second.

Thompson said a Financial Services Authority inquiry into the timing of a buyback in May appeared to have gone cold: 'We've heard nothing from them for many months.'