Rentokil announces a loss on City Link impairments

Business services company Rentokil has this morning announced a 116.2m pound loss before tax for the fourth quarter of 2011, while for the full year the company's red ink comes to 50m pounds.

The main reason behind those losses is the goodwill write-downs incurred by Rentokil to reflect the poor financial performance of its City Link unit.

The performance of the company's parcels and courier franchise was sufficiently poor that management wrote off intangible assets, at the 2011 year end, relating to the unit, totalling £146m, of which £108m related to goodwill and £38m related to customer lists.

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City Link registered a £31.3m loss in 2011.

For the full year 2011 revenue at Rentokil rose by 1.2% on a constant currency basis, to £2,544m, while adjusted profit before tax (before amortisation and impairment of intangibles, reorganisation costs and one-off items) fell 6.1% to £184.4m.

Full year operating cash flow decreased 32.3% to £154.7m.

Lastly, the firm has decided to resume its dividend payments, and proposes a final dividend of 1.33p per share, reflecting progress in Pest, Hygiene, Textiles, Facilities Services and strong cash flow.

As of 08:21am shares of the firm are falling 3.9% to the 77.35p mark.

AB