The Player: Sir Clive Thompson, Chief Executive of Rentokil - The man who plans to clean up in the world of services

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The Independent Online
PERSONAL DETAILS: Aged 56. Lives in Kent. Drives a Bentley. He lists his interests as the stock market, golf, walking and his family. In 1998, Sir Clive was paid a total of pounds 1.4m including a basic pounds 890,000.

CHALLENGE: Rentokil Initial, the hygiene to security business services group, has to restore its City credibility after Sir Clive told the AGM in May that earnings this year will fail to meet the annual 20 per cent growth target shareholders have come to expect. The shares responded with a drop of 20 per cent to 291p. Over the last 10 years, the company's profits have grown by an average of 26 per cent per annum and earnings per share by 22 per cent per annum.

At the AGM, Sir Clive said profits were likely to rise by only 10 to 15 per cent this year. He says the challenge is "to deliver those figures in 1999". He does not perceive the growth forecast as a watershed or "in any way a failure" given lower inflation rates of 1 to 2 per cent around the world compared to the 6 to 7 per cent rate seen eight years ago. He says that in real terms the group's performance is "very comparable" with past years.

CORPORATE BACKGROUND: Sir Clive was appointed a director of Rentokil in 1982 and chief executive in 1983. He is the longest serving chief executive of a FTSE 100 company. Sir Clive had been an executive with Cadbury Schweppes, Boots and Royal Dutch Shell. He is also president of the Confederation of British Industry (CBI), a director of J Sainsbury, a member of the Financial Reporting Council and the British Overseas Trade Board.

STRATEGY: Remains the same, ie to develop a broadly based industrial and commercial service company in major developed world economies. The group's brands are Rentokil and Initial. Sir Clive says the group's core competence is the ability to recruit, train and motivate blue-collar staff to work on other people's premises with low levels of supervision.

Sir Clive says the drivers of the Rentokil market over the years were the "broadly based environmental movement", with people more concerned about their environment, and the growing trend in business towards outsourcing non-core activities. "We have always pitched at the quality end of the market and hope to get premium prices," says Sir Clive.

He recognises that many of the group's markets have quality and a commodity ends more concerned about price, but says: "Our particular skills are in delivering quality." Although many businesses are under pricing pressure, Sir Clive is confident that if Rentokil Initial continues to deliver technical competence using best modern practices, it will continue to command a price premium for its services. Rentokil Initial has six broad business service activities - hygiene, personnel, pest control, property, security and transport. Before acquiring BET in 1996, Rentokil was focused on hygiene and pest control.

Sir Clive says there is a need for the company to "readdress its objectives" to see whether slight amendments to strategy are appropriate. Future investment will be based on his examination of the businesses to check whether they were cyclical and how they can be differentiated from the competition in service delivery. The development of the security, pest control, hygiene and property businesses is "a major plank of our growth". Sir Clive sees scope for acquisitions in security and hygiene services. He says industrial and commercial companies are moving towards wanting "a totally managed service".

The hygiene services division offers a wide range, including high- specification cleaning for washrooms and the catering and food industries as well as the cleaning and disinfecting of water and ventilation systems and the maintenance of industrial drains.

MANAGEMENT STYLE: Sir Clive sees his role as setting targets and objectives and putting in place the strategy and management to ensure that those objectives are achieved. He says he is "a strong believer that collective commitment to achievement is important". He also says one "should not ever underestimate the power of communication".

MOST ADMIRES IN BUSINESS: Operationally, Sir Clive admires Harold Geneen, former head of ITT. For many years ITT had a consistent performance in profits and earnings. For strategic approach Sir Clive cites Coca-Cola and McDonald's for their sheer belief in their single brands that "provide the same proposition geographically", creating worldwide synergy benefits.

CITY VERDICT: Analysts at Goldman Sachs have a price target for Rentokil shares of 275p over the next 12 to 18 months. The shares have underperformed dramatically since the beginning of 1999, with the stock trading at a steep discount to its peers. In the medium term, Goldman Sachs expects Rentokil's share price to be driven by "a pick-up in organic revenue growth as the company completes trimming low margin revenue and as weaker economies improve".

Rentokil is thought to have the capacity to raise up to pounds 2bn without recourse to shareholders, making it well placed to purchase small and large companies.