Our ship is still sailing through stormy waters, we are not taking water aboard, the engines are functioning, the crew is in good spirits, we are still on course. This was the view of Reuters Holdings Plc chief executive Peter Job on the year-end results, which saw pre-tax profits up 6% at UKP340m on turnover 7% ahead at UKP1,467m. The growth in revenue and earnings occurred despite the continued weak business conditions in Reuters’ traditional markets, substantial rationalisation costs and higher depreciation charge to cover the cost of reducing the economic life of subscriber equipment, according to Job. During the year Reuters spent UKP23.5m on rationalisation in Europe and North America, UKP15m in Europe and UKP9m elsewhere, and Job says that the process is not yet complete, although he declined to talk numbers. The workforce has been reduced through redundancies and natural wastage from 10,810 to 10,335 worldwide. The reduction in the economic life of subscriber equipment resulted in a charge of UKP29.0m as the depreciation period has been reduced by one year to four years. On products, Reuters major market, money and foreign exchange, was lacklustre, but the Dealing 2000 foreign exchange product continued to sell well, says Job. In its second phase, which brings automatic matching to the foreign exchange market for the first time, the product has now been successfully tested by over 30 banks in London and New York.
Equities focus
Job says a decision on the long-awaited launch date will be taken shortly. Testing of Globex, a system for the automated trading of financial futures, produced satisfactory results subject to further review. In the equities sector, the Instinet screen-based international trading network designed for the professional equity trader, had another good year with revenues increasing by 29.8% to UKP38.3m. Job says that with fewer than 100 terminals yet installed for Reuters’ rival to the Topic corporate news service, Equities Focus, it would be premature to judge its performance. It is also early days for Decision 2000, rival to Bloomberg Financial News Service for traders, dubbed the ‘Bloomberg Killer’, which has started off in the US with test sites to follow in the UK, Germany and Asia. In terms of geographical areas, Europe, the Middle East and Africa’s contribution, after local trading and production costs, was down 2.2% at UKP305.0m, Asia/Pacific was up 12.9% at UKP124.2m, the Americas showed a UKP5.2m loss, down from losses of UKP7.7m last time. The Visnews contribution, stated separately, fell to UKP1.3m from UKP4.3m. Reuters remains committed to Visnews, citing the CBS and Sunrise ITV contracts as evidence of new business. Job stresses that the interactive nature of Reuters’ worldwide operations means that costs incurred in one part of the world often relate to revenues earned elsewhere. Development expenditure rose by 8.9% to UKP67.3m and represented 4.6% of revenue. Net cash balances at the December 31 year-end stood at UKP502.9m, a rise of 132%. Job does not rule out Reuters making acquisitions, although he is cautious, describing the acquisitions area as perilous. Capital expenditure declined by 18.6% to UKP159.1m. Finance director Rob Rowley sees lower levels of new orders in 1992, small price increases and a corresponding decrease in revenue growth.
