Rentokil soothes the tax blow: Final dividend raised to cancel out effect of budget proposals

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RENTOKIL, the pest control and property services group, will spend pounds 1m increasing its final dividend to compensate non-taxpaying shareholders hit by Budget proposals to reduce credit on advance corporation tax, writes Topaz Amoore.

It is the first company to announce such a decision, although Unilever said yesterday it would consider adjusting the payment it announced last month. Rentokil's directors agreed to increase the net final dividend by 36.5 per cent to 1.67p, instead of the planned 30 per cent rise. The total for the year is 2.31p.

'We exist for our shareholders, and as far as possible we want to put the shareholders in the same position as they would have been had the Chancellor not changed the tax position,' Clive Thompson, chief executive, said.

Pre-tax profits continue to flourish. The 29 per cent rise to pounds 122m last year fulfilled Mr Thompson's pledge to achieve profits growth of 20 per cent 'for ever'. Turnover rose by 22 per cent at pounds 474.1m while earnings per share were 28 per cent up at 8.02p.

Mr Thompson said Rentokil had no plans to expand any further geographically. It was represented in every OECD country, with large markets in Western Europe, the US, Asia and, to a lesser extent, Africa.

Expansion into South America, Eastern Europe and India did not appeal, Mr Thompson said.

Profits in the UK rose just 12 per cent but there was a 64 per cent increase in the US.

It has net cash of pounds 60.2m and Mr Thompson said it was looking for acquisitions in pest control, healthcare or tropical plants.

The shares closed down 6p at 224p.