Pest control and hygiene specialist Rentokil (RTO) hasn’t been left unscathed by the Covid-19 pandemic. While ‘ongoing’ revenue – which excludes the impact of disposals – rose by 7.2 per cent at constant currencies in the first quarter of 2020, this slowed to 4.4 per cent in March. Unsurprisingly, activity relating to hotels, restaurants and catering (‘Horeca’) and offices have been hit hardest. The group is guiding to a larger impact in the second quarter as global lockdown measures bite.
It’s not all bad news. The pandemic has seen Rentokil retrain 7,000 employees to perform disinfection and deep cleaning services, capitalising on strong demand in areas such as food retail. Moving forward, there is likely to be greater focus on hygiene standards globally, whether that be driven by societal expectations, regulation, or both. There is an opportunity for the group to increase the number of hygiene services it provides per customer, which has previously boosted margins, as well as cross-sell to its pest control client base.
Rentokil has access to £1.2bn of liquidity, having tapped the Bank of England’s Covid corporate financing facility and drawn £550m from its revolving credit facility. Analysts at Jefferies estimate this could fund the group for more than eight months even if it generated no revenue at all. While it has currently hit the pause button on merger and acquisition activity, the balance sheet looks able to support potential deal-making. Competitor weakness could throw up discounted opportunities and the ability to take market share in a downturn.
| Buys | ||||||
| Company | Director/PDMR | Date | No. of shares | Price (p) | Aggregate value (£) | Comments |
| 4imprint | Christina Southall | 19 May 20 | 2,000 | 2,045 | 40,900 | |
| Smart Metering Systems | Graeme Bissett | 19 May 20 | 3,016 | 662 | 19,966 | |
| Smart Metering Systems | Jamie Richards | 21 May 20 | 3,909 | 639.39 | 24,994 | |
| Ebiquity | Alan Newman | 20 May 20 | 100,000 | 30 | 30,000 | |
| Kenmare Resources | Steven McTiernan | 20 May 20 | 23,254 | 215 | 49,996 | |
| Kenmare Resources | Steven McTiernan | 21 May 20 | 23,254 | 214 | 49,764 | |
| Pets at Home | Peter Pritchard (ceo) | 21 May 20 | 49,114 | 203.6 | 99,996 | |
| Pets at Home | Peter Pritchard (ceo) | 21 May 20 | 24,099 | 203 | 48,921 | |
| Pets at Home | Peter Pritchard (ceo) | 21 May 20 | 23,891 | 204 | 48,738 | |
| Pets at Home | Peter Pritchard (ceo) | 21 May 20 | 24,528 | 203.8 | 49,988 | |
| Pets at Home | Michael Burke | 21 May 20 | 47,900 | 208.7 | 99,954 | |
| Equiniti | John Stier (cfo) | 21 May 20 | 10,000 | 139.8 | 13,980 | |
| ULS Technology | Oliver Scott | 22 May 20 | 50,000 | 47.3 | 23,650 | Purchased by PCA Kestrel |
| Belvoir Group | David Spackman | 22 May 20 | 26,166 | 128.2 | 33,545 | |
| 4imprint | Paul Moody | 22 May 20 | 4,500 | 2,170 | 97,650 | |
| McColl's Retail Group | Jens Hofma | 22 May 20 | 91,000 | 45 | 40,950 | |
| Phoenix Group Holdings | Nicholas Lyons (ch) | 22 May 20 | 20,000 | 584.98 | 116,980 | Purchased by PCA Felicity Lyons |
| finnCap | Richard Snow (cfo) | 26 May 20 | 233,333 | 15 | 35,000 | |
| Sells | ||||||
| Company | Director/PDMR | Date | No. of shares | Price (p) | Aggregate value (£) | Comments |
| Rentokil | Vanessa Evans | 20 May 20 | 115,890 | 499.08 | 578,384 | |
| AJ Bell | Fergus Lyons | 21 May 20 | 1,275,000 | 448.64 | 5,720,122 | Includes 25,000 shares sold by PCA. Residual interest 4.26% |
| AJ Bell | Michael Summersgill | 21 May 20 | 425,000 | 448.64 | 1,897,073 | Includes 420,000 shares sold by PCA. Res. interest 0.36% |
| AJ Bell | Simon Turner | 21 May 20 | 10,000 | 448.64 | 44,864 | Residual interest 0.07% |
