• Letter from the Board
• Board Review
  • Our strategy
  • What we achieved in 2007
  • How we measure achievement
  • What we expect to achieve in 2008
  • Summary
  • Illustrative case studies
• Business Review
• Corporate Responsibility
• Board of Directors
• Senior Management
• Financial Statements
• Shareholder Services
• Download Centre

Board Review

Our strategy

Our goal is to create a group whose businesses are capable of sustainable profitable growth and thereby deliver value for our shareholders. This requires strong brands and our ambition is to be the brand of choice in every market that we serve and to be the trusted provider of services for our commercial and residential customers. We aim to be recognised as a leading international business, with a deserved reputation for outstanding customer service. Our group strategic objectives are to restart revenue growth, reshape the portfolio and to improve efficiency and productivity.

Building on the Momentum

2005 was focused on developing a detailed plan to redirect and re-energise Rentokil Initial and restore it to growth. During the last two years our objectives have focused on restarting revenue growth, reshaping the portfolio and improving efficiency and productivity. In 2007 we have continued to implement this plan, based on a number of key themes which are unchanged from 2006:

• Fixing deep seated operational problems in businesses such as UK Washroom and UK Pest Control;
• Improving the profitability of all of our businesses by driving revenue and seeking productivity and process improvements;
• Making acquisitions and disposals to reshape our portfolio of businesses; making acquisitions to build on strong market positions and selling businesses with either weaker positions or limited prospects for growth which are clearly worth more to others;
• Developing a more customer-focused outward-looking and dynamic culture – putting our customers and service excellence at the heart of everything we do; and
• Developing and retaining a talented and committed management team.

In general in all of our divisions apart from City Link we are in line with where we set out to be at this stage. At City Link we are now faced with a significant shortfall in performance for 2008 and possibly beyond. This is discussed later in this review.

Our Challenges

The principal risks and uncertainties relating to our strategy are summarised below. While some of these risks remain just that, others are now manifesting themselves, as noted overleaf:

• Our single most important risk is that we will not deliver improvements to the group in line with shareholders’ expectations. We warned the market in December 2007 that performance in City Link would fall short of our expectations and warned again that City Link may not trade better than breakeven in 2008 when we announced our preliminary results in February 2008. The first statement resulted in a 22% fall in the share price and the second, a further fall of 23%. This has been highly damaging to short-term value creation.
• Disruption in the businesses undergoing extensive organisational change. This risk is occurring at City Link but elsewhere in the group continues to be managed effectively.
• Ensuring acquisitions are integrated properly and meet their investment case. City Link’s poor performance is attributable to poor acquisition integration.
• Resolving the challenges in the Textiles and Washroom Services division in some of its continental European markets.
• Retaining the management team across the group as a whole.

The decline in City Link’s performance was substantial and unexpected, for reasons that are explained elsewhere in this review and in the Review of Performance. It has had a significant impact on our achievements in 2007 and on our outlook and prospects for 2008. However, before talking about City Link specifically, we would like to review the progress we have made in 2007 to fix our operational problems, reshape the business portfolio and improve profitability.