Reuters Holdings Plc’s shares bounced 49 pence to 828 pence as the company announced pre-tax profit for the half-year to June 30 up 1.8% to UKP170.1m on revenue that grew by 2.5% to UKP705.3m, up from UKP167.1m and UKP688.3m respectively. The company says that the figures reflect a stronger sterling, lower sales revenue and a slowdown in the growth of recurring revenue. Net new orders continue lower than in 1990, and given the continuing problems and reorganisation in the financial sector, managing director and chief executive Peter Job does not see double-digit revenue growth either this year or next. The company says that cost reduction is a priority, and UKP10m has been set aside to fund redundancy programmes, with further provisions anticipated for the second half to maintain this rationalisation. Operating profit before interest dcelined to UKP148m, and the operating margin was 21% against 22% last time. Profit after tax grew by 5.7% to UKP114.8m, and Reuters says that this reflects a reduction in the effective tax rate to 32.5% compared with 35% a year ago, and this is a result of lower corporation tax. In terms of geo graphical areas, actual revenue from Reuters Asia remains virtually unchanged at UKP139.1m, although at comparable exchange rates, it grew by 6%. US revenue is down by 4% to UKP111.2m, but up by 7% in dollar terms. Reuters Europe, Middle East and Africa saw revenue grow by 5% to UKP455m and by 8% at comparable exchange rates. The company claims that revenue growth in all major markets was impeded by a general restructuring where mergers, closures and cost-cutting are combining to produce tougher conditions. On products, Reuters says that the Money 2000 service continues to sell well with 9,300 units installed at the end of June compared with 2,630 at the beginning of 1991. Dealing 2000 Phase 1 which provides dealing facilities for the foreign exhange market attracted a good order flow. The installed base rose to 4,870 and these terminals will be able to access the automated matching facility provided by Phase II which is still under development and Reuters is not prepared to comment on when it may be launched. New orders for equities products exceeded cancellations, but the commodities sector is said to remain beset with problems. Trading room system sales declined sharply as one-off sales fell, and this said to reflect the reluctance of banks and brokers to commit capital to the outright purchase of these systems. Capital spending fell by 11% to UKP66.7m and expenditure on subscriber equipment was UKP43.7m, a fall of 5%. Technical development costs rose by UKP1.6m to UKP31.5m, and this included the upgrade of the Reuter terminal to Microsoft Corp’s Windows 3 and a range of analytical packages for equities and money markets. The Globex automated financial futures prod uct is being tested and the company is considering an equipment upgrade since the volume of traffic is going to be larger than expected.
