Reuters profit up to $143M

Press, 14 February 1986, Page 10

Reuters profit up to $143M

NZPA-Reuter London Reuters Holdings, PLC, unaudited pre-tax profit rose by 26.1 per cent to £93.6M ($NZ243.4M) in the year ended December 31, 1985 from £74.2M (SNZI92.9M) in 1984. Profit after tax rose by 29.5 per cent to £54.9M ($NZ142.72M) from £42.4M (SNZIIO.2M) in 1984. Revenue increased by 31.4 per cent to £434.1M (SNZI.IB) in 1985 from £330.3M (SNZBSB.BM) in 1984. The board has recommended a final dividend of 2p a share, making a total for the full year of 3.25 p, compared with 2.5 p in 1984, an increase of 30 per cent. The final dividend will be paid on May 2 to shareholders on the register on March 28. Mr Glen Renfrew, Reuters managing director and chief executive, said the increase in revenue reflected strong demand for the company’s major products and after-tax profits were helped by the downward trend in United Kingdom tax rates.

However, pre-tax profits were affected by losses on the news pictures product in its first year and by exceptional costs elsewhere. The pre-tax profit included a contribution of £4.IM from Rich, Inc., the Chicago-based

supplier of dealing room systems which became a wholly owned subsidiary of Reuters in April, 1985. In 1984, Rich broke even. Excluding Rich, the profit before tax was £89.5M, 20.6 per cent higher than in 1984. Revenue included £28.9M, contributed by Rich, compared with £17.3M in 1984. Revenue growth, excluding Rich, was 29.5 per cent. Earnings an ordinary share were 13.2 p, an increase of 25.7 per cent compared with 10.5 p in 1984. The 1985 figure is based on a weighted average of 410.7 M shares. The weighted average number of 394.2 M shares for 1984 reflected the issue of 32M B ordinary shares to the public by the company in June. These were on issue for only a little more than half the year. Mr Renfrew said that profits before tax grew more slowly than revenue, partly because of exceptional items, including the impact of losses on news pictures and various costs arising from Reuters new status and obligations as a public company. “These items, which in 1985 amounted to about £SM, are not expected to have a significant effect on profit growth in 1986. Additional costs were also incurred in gearing up for a heavy installation programme of Rich, Inc., systems in Europe and Asia in 1986.” Money markets — foreign exchange and money market instruments — continued to provide most of the growth in 1985.

Securities markets, though accounting for only 12 per cent of revenue in 1985, began to assume more importance for Reuters’ future.

“We broadened our range of products for the media markets with the addition of news pictures at the beginning of the year,” said Mr Renfrew. “In October we increased our shareholding to 55 from 33 per cent in Visnews, the leading international television news agency.

“Development spending rose from £I3M (SNZ33.BM) to £I7M (SNZ44.2M) in 1985, including £IM (SNZ2.6M), compared with £I.SM (SNZ3.9M) at Rich, Inc.” Mr Renfrew said that expenditure on fixed assets totalled £71.5M (SNZIBS.9M), compared with £59.8M ($NZ155.48M) in 1984. “The cash position remains strong, with no long-term debt, and net short-term funds at the end of the year of £UI.3M (SNZ293.BM), compared with £79.6M ($NZ206.96M) in 1984. Net interest income was £11.3M (JNZ29.3BM) in 1985, compared with £7M (SNZIB.2M) in 1984.” New business in recent months had been running at record levels.