Rentokil Initial said it had no plans to break up as it revealed a ten per cent fall in half-year pre-tax profits to £180.4 million.

The pest control group, which recently ousted its chairman and chief executive, insisted its problems were operational rather than structural.

It said its parcels and conferencing operations, which have attracted most talk of a sell-off, were highly profitable and relatively trouble-free.

Chairman Brian McGowan said Rentokil did not suffer from the problem of a good core business being held back by underperforming peripheral businesses.

He said: "The key to Rentokil is not in divestment potential. It is in getting the operational businesses working more efficiently and effectively."

The statement yesterday, marking the end of a 14-week review of the business, allayed fears Mr McGowan was planning to sell the group's East Grinstead headquarters.

Rentokil parted with its last chairman, Sir Clive Thompson, in May after warning annual profits would be substantially down on last year.

Sir Clive became known as Mr 20 Per Cent for his earnings record after becoming the group's chief executive more than 20 years ago.

In July, Rentokil announced the departure of chief executive James Wilde.

Mr McGowan, who became interim executive chairman after Sir Clive's departure, said it had been clear the business needed a fresh perspective and new leadership.

He had talked to managers and staff at all levels and found problems including a stifling and bureaucratic culture which prevented effective decision-making.

Investors had expected Rentokil to sell parcels and conferencing, worth an estimated £600 million, to focus on its contract cleaning and pest control businesses.

Mr McGowan said the group had considered breaking itself up and had received a lot of interest in the conferencing operation, with lesser interest shown in parcels.

But he said: "These two are good, profitable, self-contained businesses. They don't cause any trouble or divert management attention and selling them would just be a sideshow."

Headhunters had been appointed and were well into the process of finding a new chief executive but Mr McGowan was unable to give a timescale for the appointment.

Friday August 27, 2004