Reuters sits on cash mountain

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The Independent Online
Reuters yesterday disapppointed the City by failing to deliver confirmation about the long-awaited return of surplus cash to shareholders. Sir Christopher Hogg, chairman, asked for "patience" while the board examined "all options" on the distribution of funds.

Speaking at the annual meeting, Sir Christopher said: "Be patient, it will come in one form or another." A spokesman for Reuters added that the company, which has more than pounds 850m cash, still hoped to resolve the issue by year-end.

Expectations of an announcement had been running high ahead of the group's first-quarter results which showed a 14 per cent increase in revenues to pounds 713m, helped by the advantageous dollar exchange rate. At constant exchange rates the increase fell short of expectations at only 9 per cent.

Peter Job, chief executive, said growth from information products was slowing, partly due to consolidation in the financial sector, but also "partly because we need our new 3000 product line [a replacement for the 2000 range of news and information screen-based products] to galvanise sales".

"This product line is now being tested with customers and is scheduled to be released prior to our half-year results announcement in July," he said.

Reuters shares fell 15p to 736p at one point, but rallied to close at 749p, a fall of 2p on the day. Michael Stranks, an analyst at Henderson Crosthwaite, said: "Revenues were one point or so below expectations; the market had been looking for 10 per cent at constant exchange rates. The fact that there was nothing new at the moment on any special dividend or share buy-back also disappointed some of the bulls."

Jason Crisp, of Societe Generale Strauss Turnbull, said the share price fall was "an over-reaction". The company had strongly indicated at the time of its results announcement in February that it would not see double- digit sales growth at constant exchange rates, and that there would be nothing new until the end of the year on plans to redistribute surplus cash to shareholders. He added, however, that there was likely to be disappointment in underlying sales growth.