Its been a bad few days for Reuters Holdings Plc, the UK’s giant financial information group. While the evidence continues to mount that arch rival Bloomberg is running off with its market share, Reuters has taken cover from its unspectacular year end results behind the increasingly flimsy excuse of bad Asian markets and an over strong pound. Allegations of dirty tricks and stolen code engulfed Reuters Holdings Plc last week and analysts scrambled to downgrade their ratings from buy to hold, and worse, until the situation is clarified, wiping 1.6bn pounds off the group’s share price in the process. And on Tuesday, Reuters revealed that its net profits for the year to December 31 were down 12% at 390m pounds on revenue that fell 1.1% to 2.88bn pounds. The figures are at the low end of analysts expectations, but the shares, having already taken a beating, recovered slightly to close up nearly 2% at 572 pence. In constant currency terms, i.e. removing the detrimental effects of Sterling’s rise during 1997, revenues grew by 9% while pre-tax profits would have pushed up by 11%. The foreign currency impact isn’t a surprise, Reuters is a hugely international concern, and Asia/Pacific accounts for 16% of group revenues. But CEO Peter Job issued a stark warning that the same problems were likely to dog 1998’s results. Further financial grief was caused by the early adoption of the new financial reporting standard, FRS 10, which requires all purchased goodwill, generated by acquiring new companies, to be amortized as an expense against profits and not hidden from view via a reserve accounting maneuver, which for Reuters has reduced profits by 51m pounds. On Wednesday last week, the company issued a statement which confirmed the hiring of an agency to watch its competitor, Bloomberg, but denied the allegations of theft of vital computer code. Reuters refused to add any comments alongside its results, and refused to make any provisions for detrimental effects of the scandal on its business. Instead, the company said further comments would be made at the appropriate time. The final dividend was up 10% to 9.9 pence, bring the total for the year to 13 pence, up 10.6%.
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