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Reuters writes £30m off its Greenhouse Fund

The news and information service has been buoyed by the performance of its broking subsidiary Instinet but has had to write £30m off its Greenhouse Fund and cancel a planned IPO.

Reuters, the news and information service, has announced pre-tax profits of £657m (E1bn) in its annual results for 2000. This is a four per cent increase on last year’s results and is above analyst’s expectations. Revenues for the year to December 31 were £3.59bn, 15 per cent higher than the £3.13bn reported last year. However normalised pre-tax profit fell to £457m from £591m last year due to heavy investment in the Instinet and Reuterspace units, as well as business transformation costs.

Reuters'subsidiary Instinet, the broking agency, accounted for a quarter of divisional profit and recovered its US equities market share to 10 per cent by the end of the year. Last week, Reuters said it would go ahead with plans to float Instinet by mid-year and raise up to $450m. A 15 per cent float would value the brokerage at $3bn.

The group also reported that it had written £30m off in its Greenhouse Fund which has been investing in start-up businesses considered useful or relevant to Reuters' activities. In October last year, Reuters deferred the Greenhouse IPO because of instability in the stock market and slump in technology stocks but now it has said that the rescheduled listing will not go ahead. The company said it planned to go ahead with the floatation in the first quarter of 2001. The market value of the fund’s quoted investments stood at £99m at the end of 2000 compared to £438m at the end of 1999.

The company forecasts continuing growth at Reuters Financial, its core financial products division, and said it would maintain investment in Reuterspace, its media arm. Peter Job, chief executive of Reuters, said that Reuters would continue to move its core business to the internet. “The collapse of the valuation bubble around internet stocks has not affected our strategy, which goes forward as stated last year.”

That strategy is to spend £500m over 4 years on developing internet-based technologies to deliver lower-cost news and information services to a wider market, including retail investors. Job said a year ago that the internet had reached a point where services could be delivered to a market of 60 million semi-professional retail investors for up to $100 per month.

The company has pushed back its target date for full annual cost savings of £150m from 2002 to 2003 but said the majority of the target would still be met in 2002. Tom Glocer, who will take over as chief executive in July this year, said that “Its taking a bit longer to see the cost savings”.

Shares in Reuters rose to 1064 pence, up 4.3 per cent, following the announcement.