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July 28, 1994

SUPERB REUTERS SHOWS EVEN TELEVISION FEEDS MAKE SENSE IN ITS CORE MARKETS

By CBR Staff Writer

Reuters Financial Television from Reuters Holdings Plc has just come out of test and is up and running at 12 European sites, chief executive Peter Job said at the presentation of the firm’s six month results to June 30. The service, which is priced at around ?100 per month for each user, provides live coverage of conferences, summits and speeches relevant to the subscriber’s market on a small section of the user’s computer screen, along with immediate comment from analysts throughout the world, supplementing Reuter’s independent journalistic coverage. It offers about a 90-second lead on the market and enables subsribers to view a speech both in context and at greater length, a feature that is inevitably lost in written and summarised reported text. Peter Job could not say when the service would prove profitable. We are in the market build-up phase, he said, and are interested in revenue not profit, although he added that it is starting to make a long run profit. The company is not currently planning to go into any consumer interactive television ventures, remaining focused on its customer market. In terms of general Reuters television news services the company is interested in adding value to its basic television footage, focusing on Russia and the UK at present and is interested in building up experience and increasing television capacity in its worldwide news bureaux.

Quotron Systems

At the moment 65 of its 120 bureaux are able to produce video. Reuters saw pre-tax profits up 14% to ?245m on turnover up 22% to ?1,090m, excluding impact from exchange rate movements, but including income from the acquisition of the US provider of real-time equity quotes analytics, Quotron Systems Inc and Teknekron Software Systems Inc, the US software supplier and systems integrator. Both were completed in March this year and contributed ?55m between them. Without acquisitions, revenue was up 16%. Peter Job said the revenue growth in the first half was in line with its forecast of double digit revenue growth for the full year. He said that Europe and the Americas generated strong growth, with Asia held back by a lacklustre performance of the Japanese market. But added that sluggish conditions in Japan and Australia have not deterred the company from making big investments for future growth. He added that emerging markets continued to flourish. New orders were at record levels during the half. Despite lower levels of new orders in May and June, these were still comfortably ahead of last year. The foreign exchange matching system Dealing 2000 Phase 2 achieved its target of 5,000 trades a day in April and Job said that the company had set a new target of 10,000 trades a day. Operating profit increased 19% to ?218m, but investment in new acquisitions and new business investment programmes cut the operating margin – but only to 20% from 20.6%. Cash generation remained strong, but the group’s cash pile fell to ?428m compared to ?450m at the year end. Net interest received fell to ?27m from ?31m. Reuters paid out net cash of ?102m on its acquisitions. Capital spending was up 31% at ?138m, including ?14m to buy the Reuters’ headquarters building in Fleet Street, London. Earnings per share were up 21% to 10.4 pence in the half and the interim dividend has been increased by 23% to 1.9 pence.

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