Interim ResultsInterim Results

Chief Financial OfficerChief Financial Officer

David GrigsonDavid Grigson

23 July 200223 July 2002

Financial HighlightsFinancial Highlights

Financial headlinesFinancial headlines

Resilient financial performance in ReutersResilient financial performance in Reuters

• recurring revenue down 2.7%recurring revenue down 2.7%• previous cost saving initiatives delivering. Further actions taken in H1 previous cost saving initiatives delivering. Further actions taken in H1 • op margin increases to 12.6% (pre-charge)op margin increases to 12.6% (pre-charge)• tradition of strong cash conversion maintainedtradition of strong cash conversion maintained• dividend held at 3.85pdividend held at 3.85p

Good progress in InstinetGood progress in Instinet

• fixed costs down 23%fixed costs down 23%• Improvement in share of Nasdaq tradingImprovement in share of Nasdaq trading

*Numbers stated before amortisation and net gains/(losses) on investments*Numbers stated before amortisation and net gains/(losses) on investments

RevenueRevenue

Op costsOp costs

Op profit (ex restructuring)*Op profit (ex restructuring)*RestructuringRestructuring

Op profit*Op profit*Affiliates / Affiliates / iinvestment incomenvestment incomeNet interestNet interest

Profit before Taxation*Profit before Taxation*

Op margin (ex restructuring)*Op margin (ex restructuring)*

Tax Rate*Tax Rate*

EPS*EPS*

DividendDividend

Reuters - financial performanceReuters - financial performance

1,5421,542

(1,347(1,347))

195195(100(100))

9595(30(30))(1(188))

4477

12.612.6%%

3344%%

2.2p2.2p

3.85p3.85p

1,4631,463

(1,315(1,315))

148148--

148148(25(25))(11(11))

112112

1010.2.2%%

2727%%

6.4p6.4p

3.85p3.85p

5%5%

3%3%

32%32%

(36%(36%))

((5959%%))

H1H1 H1H1 ActualActual£m£m 20022002 20012001 GrowthGrowth

Affiliates / investment incomeAffiliates / investment income

Share of profit / (loss)Share of profit / (loss)

H1H1 H1H1£m£m 20022002 20012001

FactivaFactiva 2 2 2 2

RadianzRadianz (12)(12) (10)(10)

Tibco SoftwareTibco Software (21)(21) (10)(10)

Others /Investment incomeOthers /Investment income 1 1 (7)(7)

TotalTotal (30)(30) (25)(25)

• Recurring decline of 2.7% in line with previous guidanceRecurring decline of 2.7% in line with previous guidance

• High tier recurring revenues down 1%High tier recurring revenues down 1%

• Outright – better in Q2 but still impacted by cutbacks in IT spendOutright – better in Q2 but still impacted by cutbacks in IT spend

• Usage revenue – now including Bridge TradingUsage revenue – now including Bridge Trading

Reuters - revenue by typeReuters - revenue by type

Recurring 1,405 4% (3%)

Outright 71 (11%) (10%)

Usage 66 93% (4%)

Total 1,542 5% (3%)

H1 Growth2002 Actual Underlying

£m

Reuters - revenue by customer segmentReuters - revenue by customer segment

TreasuryTreasury 513513 (1%)(1%) (1%)(1%)

Investment Banking &Investment Banking &BrokerageBrokerage 447447 10%10% (10%)(10%)

Asset ManagementAsset Management 349349 13%13% (2%)(2%)

Corporates & MediaCorporates & Media 233233 0% 0% 2%2%

TotalTotal 1,5421,542 5%5% (3%)(3%)

H1 Growth2002 Actual Underlying

£m

• Recurring - good growth in information products offsets declineRecurring - good growth in information products offsets declinein conversational dealingin conversational dealing

• Outright - strong sales of trade and risk management solutionsOutright - strong sales of trade and risk management solutions

• Usage – matching revenue down in quiet Forex marketsUsage – matching revenue down in quiet Forex markets

RecurringRecurring 458458 (1%)(1%) (1%)(1%)

OutrightOutright 2727 2%2% 3% 3%

UsageUsage 2828 (2%)(2%) (2%)(2%)

TotalTotal 513513 (1%)(1%) (1%)(1%)

TreasuryTreasury

H1 Growth2002 Actual Underlying

£m

• Actual revenue up 10% due to inclusion of BridgeActual revenue up 10% due to inclusion of Bridge

• Underlying revenue declines reflect headcount reductionsUnderlying revenue declines reflect headcount reductionsand IT cutbacksand IT cutbacks

• Bridge Trading revenues up 52%Bridge Trading revenues up 52%

RecurringRecurring 393393 5%5% (9%)(9%)

OutrightOutright 2020 (33%)(33%) (32%)(32%)

UsageUsage 3434

TotalTotal 447447 10%10% (10%)(10%)

Investment banking & brokerageInvestment banking & brokerage

H1 Growth2002 Actual Underlying

n/an/a n/an/a

£m

• Actual revenue growth of 13% reflects inclusion of BridgeActual revenue growth of 13% reflects inclusion of Bridge

• Cancellations from traditional Fund Managers offset by growth in Cancellations from traditional Fund Managers offset by growth in Private Wealth Management sectorPrivate Wealth Management sector

• Usage revenue arises through use of Bridge trading technologiesUsage revenue arises through use of Bridge trading technologies

RRecurringecurring 334334 15%15% 0% 0%

OutrightOutright 1313 (28%)(28%) (27%)(27%)

UsageUsage 22

TotalTotal 349349 13%13% (2%)(2%)

Asset managementAsset management

n/an/a n/an/a

H1 Growth2002 Actual Underlying

£m

Media – good growth in traditional media partially offsets continuingdecline in online revenue

C&E – strong outright sales

Research – revenue declines mitigated by tight cost control

MediaMedia 7575 (5%)(5%) (5%)(5%)

Commodities & Energy / Commodities & Energy / CorporatesCorporates 120120 13%13% 10% 10%

Research / OtherResearch / Other 3838 (22%)(22%) (5%)(5%)

TotalTotal 233233 0%0% 2% 2%

Corporates & mediaCorporates & media

H1 Growth2002 Actual Underlying

£m

Reuters - operating costsReuters - operating costs

BSSBSS19%19%

CorpCorp13%13%

SegmentsSegments15%15%

BTG9%

Channels3%

Editorial0%

Percentages representPercentages representreduction in spendreduction in spend

in H1 2002in H1 2002

£m£m

H1 2001H1 2001 1,315 1,315

2001 initiatives2001 initiatives (65)(65)

Reduction in BT Reduction in BT costscosts (40)(40)

Operational gearingOperational gearing (7)(7)

New development spendNew development spend 1818

OtherOther net efficiencies net efficiencies (12)(12)

1,21,20909

BridgeBridge 131388

H1 2002H1 2002 1,347 1,347

7%7%

Reuters operating costs – looking aheadReuters operating costs – looking ahead

• Savings still to come from BT and other actions taken last Savings still to come from BT and other actions taken last yearyear

• £20m this year and additional £80m next year from recent £20m this year and additional £80m next year from recent headcount reductionsheadcount reductions

• BT costs continue to come downBT costs continue to come down

• Bridge integration benefitsBridge integration benefits

• Continuing to address the key drivers of costs:Continuing to address the key drivers of costs:

- Complexity and diversity of product architectureComplexity and diversity of product architecture

- Number of productsNumber of products

- Location and cost of development centresLocation and cost of development centres

Other factors - impact on ReutersOther factors - impact on Reuters

• Exchange rates impact on full yearExchange rates impact on full year- Small negative (c.2%) impact on revenueSmall negative (c.2%) impact on revenue- Very limited impact on profitsVery limited impact on profits

• FRS17 - minimal impactFRS17 - minimal impact

• Affiliates financingAffiliates financing- TIBCO and Radianz well fundedTIBCO and Radianz well funded

*Numbers stated before amortisation and net gains/(losses) on investments*Numbers stated before amortisation and net gains/(losses) on investments

Instinet - financial performanceInstinet - financial performance

RevenueRevenue 301301 482 482 (38%)(38%)

Op costsOp costs (306)(306) (374)(374) 18%18%

Op profit (ex restructuring)*Op profit (ex restructuring)* (5)(5) 108108

RestructuringRestructuring (56)(56) --

Op profit*Op profit* (61)(61) 108108 (15(1566%)%)

Net interestNet interest 44 77

Profit before Taxation*Profit before Taxation* (57)(57) 115115 (150%)(150%)

H1H1 H1H1 ActualActual£m£m 20022002 20012001 GrowthGrowth

Instinet Q2 highlightsInstinet Q2 highlights

• Share of Nasdaq trading up to 15.9% in JuneShare of Nasdaq trading up to 15.9% in June

• Fixed costs down 23% vs Q2 2001Fixed costs down 23% vs Q2 2001

• Headcount down 31% from a year agoHeadcount down 31% from a year ago

• Product rollouts on planProduct rollouts on plan

“… “… Instinet continued to position itself forInstinet continued to position itself for long term growth and profitability.” long term growth and profitability.”

* Numbers stated before amortisation and net gains/(losses) on investments* Numbers stated before amortisation and net gains/(losses) on investments

RevenueRevenue 1,838 1,838 1,940 1,940 (5%)(5%)

Op costsOp costs (1,648)(1,648) (1,684)(1,684) 2% 2%

Op profit (ex restructuring)*Op profit (ex restructuring)* 190 190 256 256 (2(266%)%)

RestructuringRestructuring (156)(156) - -

Op profit*Op profit* 34 34 256 256 (87%) (87%)

Affiliates / Investment incomeAffiliates / Investment income (30)(30) (25)(25)

Net interestNet interest (1(144)) (4)(4)

Profit before Tax*Profit before Tax* (1(100)) 227 227 (105%)(105%)

Reuters Group - financial performanceReuters Group - financial performance

H1H1 H1H1 ActualActual£m£m 20022002 20012001 GrowthGrowth

* Numbers stated before amortisation and net gains/(losses) on investments* Numbers stated before amortisation and net gains/(losses) on investments

Profit before Tax*Profit before Tax* (1(100)) 227 227 (105%)(105%)

AmortisationAmortisation (6(655)) (40)(40)

Net gains / (losses) on investmentsNet gains / (losses) on investments (13)(13) 170170

Reported Profit before TaxReported Profit before Tax (88)(88) 357 357 (125%)(125%)

Reuters Group - financial performanceReuters Group - financial performance

H1H1 H1H1ActualActual£m£m 20022002 20012001GrowthGrowth

Tax rate*Tax rate* 3388% % 35% 35%

EPS*EPS* (0.5p)(0.5p) 10.4p 10.4p

DividendDividend 3.85p 3.85p 3.85p 3.85p

Cash flow movementCash flow movement

Operating profitOperating profit/(loss)*/(loss)*DepreciationDepreciationCapexCapexWorking capitalWorking capitalOperating cash flowOperating cash flow(Acquisitions) / disposals (Acquisitions) / disposals Taxation / otherTaxation / otherDividendsDividends / share purchases / share purchasesMovementsMovements

Net (debt)/cashNet (debt)/cash

12 month rolling cash conversion12 month rolling cash conversion

* * Before amortisationBefore amortisation

£m£m

H1 2002H1 2002ReutersReuters

H1 2002H1 2002InstinetInstinet

H1 2002H1 2002ReutersReutersGroupGroup

95959090

(53)(53)(60)(60)

727299

(48)(48)(151)(151)(118)(118)

(820)(820)

132%132%

(61)(61)2323(9)(9)

(129)(129)(176)(176)

(8)(8)(39)(39)

- - (223)(223)

617617

3434113113(62)(62)

(189)(189)(104)(104)

11(87)(87)

(151)(151)(341)(341)

(203)(203)

SummarySummary

• Resilience in tough conditionsResilience in tough conditions

• Addressing the cost baseAddressing the cost base

• Unaffected by currency and FRS17 exposuresUnaffected by currency and FRS17 exposures

• Investing selectivelyInvesting selectively

• Protecting a strong balance sheetProtecting a strong balance sheet