SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 6-K

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

February 12, 2002

REUTERS GROUP PLC
(Translation of registrant’s name into English)

85 FLEET STREET, LONDON EC4P 4AJ, ENGLAND
(Address of principal executive offices)

[Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.]

[Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.]

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

International News Release

Reuters Group PLC

Preliminary Statement

For the year ended 31 December 2001

Reuters Group PLC
85 Fleet Street
London EC4P 4AJ

Tel: 020 7250 1122

Reg. No 3296375

Contents

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REUTERS GROUP PLC - PRELIMINARY RESULTS

for the year to 31 December 2001

RESILIENT PERFORMANCE IN TOUGH TRADING ENVIRONMENT

GOOD MOMENTUM FROM BUSINESS TRANSFORMATION

Highlights

Tom Glocer, Reuters Chief Executive, said: “During 2001 we achieved a resilient operating performance in an environment of accelerating change. We undertook a sweeping reorganisation of the company into four customer segments and related global content, service and development units to serve our customers better. We completed the acquisition of Bridge and made good progress integrating its talented staff and capabilities with our own. We also floated a minority interest in Instinet, giving the Reuters Group additional options to participate in the development of the rapidly changing securities markets.

“As I outlined last October, we see the evolution of our business as a two-phase initiative that reshapes Reuters to deliver sustainable double-digit earnings growth. In this first phase, we are focused on improving margins by reducing the cost of doing business and transforming Reuters to drive longer-term growth. We have continued to make good progress on the Business Transformation programme and are ahead of previously announced targets for cost savings. In 2002 this will help us increase our operating margin from 7% to approximately 12% at Reuters.

“The current trading environment is difficult but we have gained confidence as our customer segments have begun to turn their strategies into more focused plans for second phase revenue growth. These draw upon Reuters unique brand, market position and global scale to deliver quality content via innovative technology.”

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Group review

Financials

Reuters Group (London Stock Exchange: RTR.L, NASDAQ: RTRSY.O) revenue for the year to 31 December 2001 rose 8% to £3,885 million (US$5,634 million). Underlying revenue, which excludes exchange rate movements and the impact of acquisitions and disposals, grew 2% for the year.

Divisional operating profit grew by 6% to £646 million (US$936 million) and by 7% on an underlying basis, reflecting tight control of costs in a weak trading environment.

Normalised operating profit, including Business Transformation costs and the additional restructuring charges incurred during 2001 as part of the Group’s cost savings programme, was £383 million (US$555 million) compared to £470 million (US$681 million) in 2000. Business Transformation costs totalled £164 million (US$238 million) compared to £139 million (US$202 million) in 2000. Other restructuring charges, related mainly to severance payments, amounted to £99m (US$143 million) of which £82 million (US$119 million) was in Reuters and £17 million (US$25 million) was in Instinet.

Normalised profit before tax, including Business Transformation costs and other restructuring charges but excluding amortisation of goodwill and other intangibles, impairment charges and gains on disposals of investments and subsidiaries, was £304 million (US$440 million), compared to £457 million (US$663 million) in 2000. The losses from joint ventures and associates increased to £70 million (US$101 million) from £16 million (US$23 million) in 2000, reflecting the inclusion of a full year’s losses from Radianz and other start-ups, as well as losses arising from restructuring costs at TIBCO Software.

Profit before tax was £158 million (US$229 million) compared to £657 million (US$952 million) in 2000. Net losses on investments amounted to £53 million (US$77 million), which included a book profit of £200 million (US$289 million) from the IPO of Instinet and impairment provisions from non-core investments totalling £253 million (US$367 million). Most significant of these was a net write-down of £145 million (US$210 million) in respect of investments within the Greenhouse Fund.

The Group also undertook a rigorous review of other fixed asset investments resulting in a further £98 million (US$142 million) of impairment provisions of which £85 million (US$123 million) was in Reuters and £13 million (US$19 million) was in Instinet. There were also write-downs of £10 million (US$15 million) in respect of assets lost as a result of the events of 11 September.

Normalised earnings per share were 13.6p (21.0p in 2000).

In October 2001, Reuters Group announced that it had reviewed its dividend policy and declared its intention to pay a total dividend for the year of 10.0p per share (16.0p in 2000). Accordingly, the Board is proposing a final dividend of 6.15p.

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The Group continued to generate significant amounts of cash during the year including £605 million (US$877 million) from operating cash flow and £339 million (US$492 million) from the IPO of Instinet At the end of 2001, the Group had net cash of £138m (US$201 million), with Reuters carrying £702 million (US$1,018 million) of net debt and Instinet holding £840 million (US$1,218 million) of net cash. Acquisitions made during the year by Reuters included Bridge for £255 million (US$370 million) and Diagram for £48 million (US$70 million). Instinet acquired ProTrader during the year. Total purchase consideration was £105 million (US$152 million), of which £34 million (US$50 million) was paid in Instinet shares, and the balance in cash.

Business Transformation Programme (BTP) and Cost Saving Programmes

The goal of the BTP is to meet rapidly evolving customer requirements by designing and delivering the next generation of products and services based on new IP technologies and ensuring Reuters has the optimal organisation, internal systems and commercial processes. In addition to job cuts linked to the BTP, Reuters implemented further headcount reductions during the second half of the year in response to market conditions.

In 2001, Reuters incurred £82 million (US$119 million) in restructuring charges, primarily severance, and £164 million (US$238 million) in BTP costs. In 2002 Reuters plans to invest a further £75 million (US$109 million) on BTP.

As a result of these programmes, Reuters has realised £65 million (US$94 million) in savings in 2001 and expects to save £185 million (US$268 million) in 2002 and £235 million (US$341 million) in 2003. These programmes will result in the elimination of 1,800 jobs, an increase over the target of 1,600 jobs, which was announced in October 2001.

Instinet reduced its headcount during 2001 by 237 at a cost of £17 million (US$25 million). It expects to take a further restructuring charge of £17 million (US$25 million) in the first half of 2002 in order to reduce its annual fixed cost run-rate by a further £41 million (US$60 million).

Acquisition of Bridge businesses

On 1 October 2001 Reuters announced the acquisition of certain assets of Bridge Information Systems Inc. The Bridge businesses complement Reuters existing products and services and will further strengthen the new Investment Banking & Brokerage and Asset Management customer segments. They bring to Reuters a large customer base among US institutional investors, leading trading and order routing technologies, and a team of highly skilled market professionals.

The integration of the businesses into Reuters is well advanced. Reuters News was delivered to Bridge users on the morning after the deal closed, and key Bridge product capabilities are expected to be integrated into Reuters 3000 Xtra and other services later this year. Integration costs were £17 million (US$24 million) in 2001 and are expected to be a further £38 million (US$55 million), principally in 2002. In addition to integration costs, operating losses on the Bridge businesses in the fourth quarter totalled £3 million (US$5 million), substantially less than originally expected.

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Significant rationalisation savings are planned with Reuters incorporating best practices from both organisations. Reuters aims to make £25 million (US$36 million) of annual cost savings this year and a further £23 million (US$33 million) in 2003. As forecast when the acquisition was completed, the transaction is expected to be earnings neutral, before goodwill, in 2003 and earnings enhancing on this basis in 2004.

Business impact of 11 September 2001

The estimated direct financial impact on the Group’s operating profit of the events of 11 September was limited to lost revenue of approximately £17 million (US$25 million), including £14 million (US$20 million) at Instinet, and incremental costs of £5 million (US$7 million). In addition, profit before tax was reduced by approximately £10 million (US$15 million) to reflect the loss of assets located in the World Trade Center.

Divisional review

New customer segments

In July, Reuters announced a reorganisation of the company to operate by four customer segments: Treasury, Investment Banking and Brokerage, Asset Management and Corporates and Media. The indicative 2001 revenues for the new segments are:

The following information is presented on a basis consistent with previous statements, since the new organisation only took effect at the start of 2002.

Reuters Financial

Revenue of Reuters Financial (RF) grew by 9% to £2,787 million (US$4,041 million), including the Bridge businesses. On an underlying basis, the division’s revenue increased by 4%.

Within RF, revenues from the subscription-based recurring services rose 8% to £2,491 million (US$3,612 million) and were up 4% on an underlying basis for the year. Reuters flagship information product, Reuters 3000 Xtra exceeded its 2001 sales target of 50,000 units. Over 56,000 units were sold by the end of 2001, with installations as a percentage of sales improving from 39% to 64%.

RF’s outright/solutions revenue was up 13% at £215 million (US$313 million) and on an underlying basis for the year by 7%. Revenues from Reuters Consulting grew 21%. Revenue from usage services increased 41% to £80 million (US$117 million), reflecting three months revenue from Bridge Trading, while on an underlying basis revenue declined by 2%.

RF’s operating profit increased 5% to £541 million (US$784 million) on an actual basis, including the losses and integration costs from the Bridge businesses, and by 9% on an underlying basis.

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Reuterspace

Reuterspace’s revenue increased 8% to £255 million (US$370 million) but declined 2% on an underlying basis, reflecting the downturn in the US online media and online research and advisory markets.

Operating losses were £60 million (US$87 million) compared to £67 million (US$97 million) in 2000, of which £38 million (US$55 million) was recorded in the first half of the year. In preparation for the migration of the Reuterspace businesses to the new Corporates and Media segment, Reuters took action to focus its investment and significantly reduced the amount of spending in the second half of the year.

Instinet

Instinet’s revenue increased by 6% to £854 million (US$1,238 million) and was flat on an underlying basis. Instinet’s operating profit, excluding restructuring costs, improved by 13% to £178 million (US$258 million) and by 4% on an underlying basis.

Instinet’s share of the Nasdaq market was 11.7% in the fourth quarter, down from 13.9% a year ago and 13.5% in the third quarter 2001. Nasdaq market makers, an important customer group for Instinet, experienced severe financial pressure in the second half of 2001. However, Instinet has a broad customer base and considerable depth in its Nasdaq liquidity pool. The company also provides a range of value-added products and services to sell-side customers, has a strong position with buy-side firms and has an important international presence. Instinet yesterday announced that it expects to introduce significant additions to its product offerings and trading functionality in 2002.

Reuters, through its 83% holding in Instinet, is well placed to participate in the next stage of the developments in the US equity markets.

Investments and Associates

As announced in October, Reuters is focusing on developing an integrated portfolio of companies in which all units are closely aligned to the Group strategy.

Reuters continues to work closely with TIBCO Software, in which it holds a 53% stake, (fully diluted 42%), to develop products and solutions that the four customer segments can incorporate into their offerings.

Radianz will continue to invest in 2002 as it develops its secure global extranet for the financial markets. In 2001 Reuters began to migrate its customers onto the Radianz IP network from Reuters proprietary networks. In due course this will benefit Reuters and its customers by delivering lower costs, global delivery of products and a faster time to market for new services.

Factiva made a positive contribution to Reuters and now has a presence on over 1.5 million desktops. It is making good progress with its migration of customers from the original Dow Jones and Reuters products to its new flagship service, Factiva.com.

Reuters restructured Greenhouse in 2001 into an independent management company (RVC), which is seeking third-party investors. Reuters objective is to retain access to emerging companies and technologies but at a lower capital commitment and call upon management time.

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Prospects for 2002

Reuters expects subscription-based revenues to grow in overall terms in 2002, driven by a full year contribution from the recently acquired Bridge businesses. Based on the current cyclical downturn Reuters is seeing in financial services markets, Reuters currently expects underlying subscription revenues to decline 2% to 3% in the first half of 2002. The lag effects inherent in subscription revenues will cause the rate of decline in the second half of the year to be slightly higher than in the first.

Solutions sales, which grew 7% on an underlying basis in 2001, are expected again to show good growth in 2002. The timing of these revenues is, as always, difficult to predict but Reuters has an encouraging pipeline of revenue prospects, weighted towards the second half.

Reuters currently anticipates that normalised operating margins, excluding Instinet, will improve from 7% in 2001 to approximately 12% in 2002 as a direct result of the cost savings measures taken in 2001 and reductions in Business Transformation and restructuring costs.

Reuters expects to make further progress in growing its normalised operating margins in 2003 as momentum from the benefits of the Business Transformation programme gathers pace and Bridge integration costs begin to decline.

END

7

Summary of Results

The following is a summary of the unaudited results of Reuters Group PLC for the year to 31 December 2001:

* Restated following adoption of FRS 19 (see note 1 on page 35)

Notes:

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9

Review of Year End Results

Under US law, all statements other than statements of historical fact included in this review are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Certain important factors that could cause actual results to differ materially from those discussed in such forward-looking statements are described under ‘Risk Factors’ on pages 36-39 as well as elsewhere in this review. All written and oral forward-looking statements made on or after the date hereof and attributable to Reuters are expressly qualified in their entirety by such factors.

As used in this report, ‘Reuters Group’ and ‘Group’ refer to Reuters Group PLC and its consolidated subsidiaries including Instinet. ‘Reuters’ refers to Reuters Group excluding Instinet.

1. SUMMARY OF KEY EVENTS OF 2001

Worldwide economic conditions and 11 September

The year 2001 was characterised by uncertain market conditions and a general economic slowdown, which has led to consolidation and cost reduction by many of our clients. The economic slowdown has become more pronounced as a result of the events of 11 September, though the direct financial impact of this on Reuters Group was limited. Further details are shown in the ‘Financial Review’ on page 13.

Instinet IPO

In May, Instinet completed an initial public offering selling 37 million shares at US$14.50 per share, raising net proceeds of £339 million. This resulted in a deemed disposal by Reuters of a 15.1% interest in Instinet, generating a book profit of £200 million. Reuters did not actually dispose of any Instinet shares as part of the IPO.

Bridge acquisition

In September, Reuters completed the acquisition of the core North American equities information business and certain other businesses of Bridge Information Systems Inc and its subsidiaries, which had been in bankruptcy proceedings since the beginning of 2001. The total purchase consideration, which included interim funding to Bridge and its network provider, SAVVIS Communications Corporation, was £256 million. The acquired Bridge businesses include content, analytics and trading applications primarily for financial institutions and their customers, as well as Bridge Trading, a licensed broker-dealer. The transaction is expected to greatly enhance Reuters presence in the US buy side market and allow Reuters to expand its product offering as well as connect its international customer base with Bridge’s largely-US clientele.

Other acquisitions and disposals

In March, Reuters acquired Diagram fip SA, a major European provider of financial software solutions for the capital markets, for a total purchase consideration of £48 million.

In June, Reuters outsourced the management of its corporate venture fund, the Greenhouse Fund, to RVC, a newly formed and independent fund management company.

In October, Reuters disposed of its majority stake in VentureOne Corporation, a provider of information and research for the venture capital investment industry, for a net consideration of £18 million.

Also in October, Instinet acquired approximately 92% of ProTrader Group, LP, a provider of advanced trading technologies and electronic brokerage services primarily for retail active traders and hedge funds and in January 2002, Instinet acquired the remaining 8%. The total purchase consideration was £105 million, which comprised £71 million in cash and £34 million of Instinet shares. The acquisition diluted Reuters holding in Instinet further to approximately 83%.

Cost savings programme accelerated

Expenditure relating to the Business Transformation programme continued with £164 million in 2001 compared to £139 million in 2000. In addition, in the light of market conditions, Reuters has accelerated its cost saving

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programmes by reducing its headcount by 1,800, exceeding our previously stated target by 200 staff. At the end of December 2001, over 1,000 staff had already left and the remainder will leave during 2002. Instinet also carried out similar cost saving measures and reduced its headcount by 237 by the end of December 2001. These additional measures resulted in a restructuring charge in 2001 of £82 million for Reuters and £17 million for Instinet.

Further details regarding the Business Transformation programme and the additional cost saving measures, including an explanation of associated charges and anticipated savings, are shown in the ‘Operating Review’ on page 16.

Dividend policy

Following a strategic review and the decision to reshape the organisation around customer segments, as described later within the ‘Operating Review’ on page 16, Reuters reviewed its dividend policy in the third quarter of 2001. Given the opportunities available for growth in the business, Reuters concluded that it should retain a higher proportion of its earnings and available cash flows. As a result, a final dividend of 6.15p per share (2000: 12.35p and 1999: 11.0p) is proposed thus making a total dividend for 2001 of 10.0p per share (2000: 16.0p and 1999: 14.65p). Under this new dividend policy, Reuters intends to increase the dividend progressively from this lower base as earnings recover, with a goal for dividend cover of at least two times the normalised earnings of Reuters. In connection with its IPO, Instinet stated its intention not to distribute dividends to its shareholders, including Reuters.

2. PERFORMANCE MEASUREMENT

Underlying growth, normalised profits and earnings and divisional operating profit, are measures used by the Group to enable period-to-period comparison on a like-for-like basis such that organic operational growth can be easily identified. This reflects the manner in which the Group is managed.

Underlying growth excludes acquisitions, disposals and significant once-off items in the period under review and excludes the impact of currency fluctuations. The significant acquisitions excluded are: in 2001, Bridge and Diagram (Reuters Financial) and ProTrader (Instinet); in 2000, Yankee and ORT (Reuterspace) and Lynch, Jones & Ryan (Instinet); and in 1999, Tower Group (Reuterspace) and Montag (Instinet). The disposal of VentureOne (Reuterspace) is excluded in 2001. The only significant once-off item excluded is the 1999 beneficial impact of a reversal of a £25 million data feed accrual. The 2000 and 2001 expenses of the Business Transformation programme and the 2001 restructuring charges relating to the headcount reductions described earlier are not excluded from underlying growth calculations.

Normalised profits and earnings exclude amortisation of goodwill and other intangible assets, impairment charges and gains and losses on the disposal of subsidiaries and fixed asset investments. This is done in order to give a clearer view of the operating performance of the business. A reconciliation between UK GAAP and normalised operating profit and profit before tax is shown in the ‘Financial Review’ on page 13.

Divisional operating profit is the normalised operating profit excluding Business Transformation and other restructuring costs. The divisions exclude joint ventures, associates and investments. This measure is used to reflect the fact that the Group is managed on a divisional basis and is used to give a clearer view of the operating performance of the divisions individually and collectively.

Margin

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Normalised operating profit margin for the Group decreased to 9.9%, compared to 13.1% in 2000 and 19.3% in 1999 and normalised operating profit margin for Reuters decreased to 7.3% compared to 11.2% in 2000 and 18.2% in 1999. The decline over the three years principally reflects the Business Transformation expenditure in 2000 and 2001 and the additional headcount related restructuring costs in 2001.

Earnings per share (EPS)

The 2000 and 1999 results have been restated to reflect the adoption of Financial Reporting Standard (FRS) 19 Deferred Tax. For further details, see ‘Accounting policy changes and US GAAP’ on page 34.

Basic earnings per share decreased by 91% in 2001, compared to an increase of 20% in 2000. Normalised earnings per share decreased 35% in 2001, compared to a 24% decrease in 2000. The decrease on a normalised basis was driven by increased business transformation costs, the other restructuring costs and net losses on associates and joint ventures. In addition, the basic earnings per share decrease reflects, in particular, net losses on investments of £53 million in 2001 compared to profits of £271 million in 2000 and £102 million in 1999.

Dividend per share

Following the review of dividend policy, the final dividend proposed was 6.15p which, when added to the interim dividend of 3.85p amounts to 10p per share, a decrease of 38% for the full year 2001 compared to 2000.

Shareholder value

Reuters Group aims to grow its value and outperform its peers. The Group believes that its mix of assets, some of which are unique to the Group, will help it to meet these aims. Reuters Group assets, not all of which are included in the consolidated balance sheet, include:

The Group uses a model for measuring and ranking its total shareholder return (TSR) compared with that of the other 99 companies in the FTSE 100 index at the start of each measurement period. This model is used to determine vesting of awards under performance-linked share plans.

Reuters Group rankings over recent three-year measurement periods and the short measurement periods to 31 December 2001 are set out below:

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Cash flow

Cash conversion is used to measure the conversion of operating profit into cash and is calculated by taking the net operating cash flow as a percentage of normalised operating profit. The 118% Reuters cash conversion for 2001 reflects the strong cash generative nature of Reuters core businesses. As in the prior year it was boosted by the high level of severance costs that had been provided for at the end of the year for staff leaving in the following year. Without this impact, the average cash conversion percentage for the past two years would have been 99%. The trend over three years shows the strong cash generative nature of Reuters.

3. FINANCIAL REVIEW

2001 results compared with 2000

During 2001, the Group continued to be managed and to report its results on a divisional basis. In 2002, the Group will be managed and its results presented under the new customer segment structure. For further details, see the ‘Operating Review’ on page 16.

Actual revenue increased 8% to £3,885 million and underlying revenues, driven primarily by Reuters Financial, increased 2%. The difference between actual and underlying growth reflected mainly the impact of currency movements and the Bridge acquisition.

Divisional operating profit increased 6% to £646 million. Underlying growth was 7%, underpinned by a combination of revenue growth in Reuters Financial and tighter cost control across Reuters and Instinet.

Divisional operating profit includes recognised net currency losses (including hedging losses) of £13 million in 2001, compared with gains of £2 million in 2000. Actual rates performance in 2001 was positively impacted by the relative strength of the US dollar and the euro against sterling.

Expenditure relating to the Business Transformation programme was £164 million in 2001 compared to £139 million in 2000. Other restructuring costs of £99 million in 2001 were also incurred. Further information on both Business Transformation and the other restructuring costs are shown in the ‘Operating Review’ on page 16.

As a result, normalised operating profit fell 19% in 2001, compared to a 22% fall in 2000.

Normalised operating profit margin was 9.9%, compared with 13.1% in 2000. Divisional operating profit margin was 16.6% in 2001, compared to 16.9% in 2000.

Reuters Group share of net operating losses (before amortisation) in associates, joint ventures and investment income rose from £16 million in 2000 to £70 million in 2001 reflecting the inclusion of a full year’s loss from Radianz Limited and other start-ups, as well as losses arising from significant costs in TIBCO Software Inc (“TSI”) as a result of restructuring activity. Income from fixed asset investments was £3 million, compared to £5 million in 2000.

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Reconciliation of UK GAAP Operating profit and profit before tax to normalised operating profit and normalised profit before tax

The £9 million net interest payable reflected £45 million of interest receivable, primarily relating to Instinet and also including £16 million from associates and joint ventures. This was more than offset by £54 million of interest payable, primarily related to Reuters, including £15 million interest relating to the payment of corporate taxes. This compared to a £3 million net interest receivable in 2000.

Normalised profit before tax fell by 34% to £304 million. The decline reflected increased Business Transformation costs, the other restructuring costs, increased losses in associates and joint ventures and increased interest payable, partly offset by higher divisional operating profit driven by the underlying growth in Reuters Financial and Instinet.

Total amortisation was £93 million (£71m in 2000), of which £12 million (£12m in 2000) related to associates and joint ventures. The significant increase related principally to the acquisitions of Bridge, Diagram and ProTrader.

Net losses on investments were £53 million, compared to net gains of £271 million in 2000 (which included a £160 million book profit relating to a TSI follow-on public offering; see “2000 results compared to 1999” below).

The most significant gain in 2001 was the deemed disposal of a 15.1% interest in Instinet, which resulted in a £200 million book profit taken in the first half of the year. The Greenhouse Fund saw a net loss of £145 million with impairments offsetting the gains on disposal. The impairments reflected the substantial reduction in the value of technology stocks as well as a prudent management view consistent with the Group’s position as a strategic rather than a venture capital investor.

This prudent view was also applied to the Group’s other investments with £108 million net losses (of which £13 million relate to writedowns by Instinet). This included full provisions against our investments in Sila Communications and Pedestal and also £10 million in respect of assets lost in the World Trade Center (that were insured through our captive insurance provider). Also included in the net writedowns was a gain of £16 million on the disposal of VentureOne.

As a result reported profit before tax was £158 million compared to £657 million in 2000.

The tax charge for 2001 resulted in an actual tax rate of 67% on profit before tax, compared with a rate of 21% in 2000 and the current UK corporate tax rate of 30%. The higher actual tax rate is due principally to the fact that the write down in investments and the amortisation charges are non-deductible. On a normalised basis, the actual tax rate for 2001 and 2000 was 35%.

Profit after tax in 2001 was £51 million compared to £521 million in 2000.

The impact of 11 September on 2001 results

The estimated direct impact of the events of 11 September on the Reuters Group operating profit was lost revenue of approximately £17 million (including £14 million at Instinet from the loss of four trading days) and incremental costs of £5 million (including £4m at Instinet). In addition, losses of approximately £10 million have been recognised in respect of communications equipment and other assets destroyed and £2m in respect of payments (net of insurance proceeds received) for Reuters Group staff lost in the World Trade Center.

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2000 results compared with 1999

Actual revenue in 2000 increased 15% to £3,592 million and underlying revenue, mainly driven by Instinet, increased 13%.

Divisional operating profit increased 1% in 2000 to £609 million. Underlying divisional operating profit growth was 11%. The difference between the actual and underlying operating profit growth reflects mainly the impact of currency movements and the exclusion of the beneficial impact of the reversal of the £25 million data feed accrual in 1999.

Divisional operating profit included recognised net currency gains of £2 million in 2000, compared with £6m in 1999. Actual rates performance in 2000 was adversely impacted by the strength of sterling against the euro, partially offset by sterling’s weakness against the US dollar and Japanese yen.

Normalised operating profit, which included Business Transformation costs, fell 21% in 2000.

Normalised operating profit margin in 2000 was 13.1%, compared with 19.3% in 1999. Divisional operating profit margin was 16.9% in 2000 compared with 18.9% in 1999.

Reuters Group share of net operating losses (before amortisation) in associates and joint ventures and investment income rose from £8 million in 1999 to £16 million in 2000. In 2000 a profit of £2 million from TSI was more than offset by losses reported from the new joint venture and associates Radianz, Sila Communications and Multex Investor Europe. TSI and Reuters Business Briefing (RBB, now part of Factiva) became associated companies in 1999. Income from fixed asset investments was £5 million compared to £2 million in 1999.

The £3 million net interest receivable in 2000 reflected £13 million of interest receivable from associates and joint ventures offset by £10 million of interest payable. This compared to £4 million net interest payable in 1999.

Normalised profit before tax fell by 23% in 2000 to £457 million. The decline reflected increased investment in new initiatives at Instinet and Reuterspace and business transformation costs, partly offset by higher underlying operating growth in Reuters Financial and Instinet’s equities business.

Total amortisation in 2000 was £71 million, of which £12 million related to associates and joint ventures. This compared to amortisation of £61 million in 1999 of which £14 million was in respect of associates and joint ventures.

Net gains on investments in 2000 were £271 million compared to £102 million in 1999. A follow-on public offering in March 2000 of 4.8 million TSI shares resulted in a book profit for Reuters of £160 million. This was subsequently reduced by £3 million as a result of the exercise of options held by TIBCO Finance employees. Reuters sold no shares in TSI other than to meet its obligations under an option plan of TIBCO Finance, a wholly owned Reuters subsidiary and received no proceeds from the sale of TSI shares other than the exercise price of such options.

Net gains on the Greenhouse Fund in 2000 were £53 million compared to £37 million in 1999. In 2000 profits on disposal more than offset impairments in the carrying value of the investments. The disposal of Reuters interest in Safetynet generated a further profit of £37 million in 2000.

Reported profit before tax grew by 4% to £657 million.

The tax charge for 2000 resulted in an actual tax rate of 21% on profit before tax, compared with a rate of 31% in 1999 and the then current UK corporate tax rate of 30%. The lower effective tax rate reflected the non-taxable nature of the book gain arising from the TSI follow-on share offer and tax deductions arising from the exercise of TSI stock options held by TIBCO Finance employees. On a normalised basis, the tax rate for 2000 was 35% compared to 32% in 1999.

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Profit after tax in 2000 was £521 million compared to £436 million in 1999.

Current trading and prospects for 2002

Reuters expects subscription-based revenues to grow in actual terms in 2002, driven by a full year contribution from the recently acquired Bridge businesses. Based on the current cyclical downturn Reuters is seeing in financial services markets, the company currently expects underlying subscription revenues to decline 2% to 3% in the first half of 2002. The lag effects inherent in subscription revenues will cause the rate of decline in the second half of the year to be slightly higher than in the first. Reuters believes that the second half of 2002 will represent the low point in the cycle.

Solutions sales, which grew 7% on an underlying basis in 2001, are expected again to show good growth in 2002. The timing of these revenues is, as always, difficult to predict but Reuters has an encouraging pipeline of revenue prospects, weighted towards the second half.

Reuters currently anticipates that normalised operating margins, excluding Instinet, will improve from 7% in 2001 to approximately 12% in 2002 as a direct result of the cost savings measures taken in 2001 and reductions in Business Transformation and restructuring costs.

Reuters expects to make further progress in growing its normalised operating margins in 2003 as momentum from the benefits of the Business Transformation programme gathers pace and Bridge integration costs begin to decline.

4. OPERATING REVIEW

Divisional performance

Underlying revenue growth was strong in the first half of the year across all divisions, particularly in Instinet. However, underlying revenue growth has fallen back in the second half, particularly in the fourth quarter. This reflected the impact of the economic slowdown which has become more pronounced as a result of the events of 11 September.

Reuters Financial

Reuters Financial comprises Reuters Information (RI), Reuters Trading Solutions (RTS) and, in the fourth quarter, the acquired businesses of Bridge. Although RI, RTS and Bridge revenues are separately discussed below, performance for the division is shown in total, reflecting the way the division is managed.

Underlying revenue increased by 4% (6% in 2000), mainly driven by Reuters Information and actual rates growth was 9% (7% in 2000) reflecting the impact of the Bridge acquisition, at the beginning of the fourth quarter and exchange rate movement.

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Underlying cost growth of 3% (3% in 2000) was lower than revenue growth and growth at actual rates was 10% (7% in 2000). The difference between the actual and underlying cost growth in 2001 is principally due to the acquisition of Bridge including integration costs, described under ‘Bridge’ below.

Accordingly, underlying operating profit increased by 9% (19% in 2000) and at actual rates increased by 5% (7% in 2000).

Excluding the impact of Bridge (including Bridge integration costs), the operating margin would have been 20.7%.

Reuters Information

RI provides information products for financial professionals. RI’s focus is on four main markets: equities; foreign exchange and money; commodities (including energy); and fixed income.

Underlying revenue growth was 5% (7% in 2000) driven by High Tier revenue growth. High Tier revenue growth continued to be driven by 3000 Xtra, our flagship information product, with over 35,000 accesses installed by the end of December 2001, compared with 10,800 as at 31 December 2000. Sales of 3000 Xtra progressed well with over 56,000 accesses sold by the end of December 2001 compared with 27,000 as at 31 December 2000.

Actual revenue decline of 7% in Middle Tier products reflected the re-classification of £14 million of site fees (£16 million in 2000 and 1999) from Middle Tier to Other Revenue in 2001. Underlying revenue growth, which for this purpose also excludes this re-classification, was 1% (17% in 2000) reflecting 3% growth in the US offset by a decline in the non-US markets. Installed accesses of ReutersPlus, our US domestic product, increased with approximately 64,000 accesses installed by the end of 2001 compared to 55,000 at the end of 2000.

Other Revenue includes additional information sets and add-on services. Approximately 40% of Other Revenue was recovery of exchange, installation and communication fees for which there was an almost equal and opposite cost. Other Revenue for 2000 and 1999 included £24 million and £12 million respectively for Lower Tier products (Reuters Markets Monitor, Reuters Markets View and Online Investor Services) which in 2001 were grouped in Reuters Trading Solutions – Retail Solutions (see below). Underlying revenue growth, which excludes the Lower Tier revenue products, but includes the underlying growth in the re-classified site fees, was 4% (11% in 2000) in line with RI underlying growth in 2001. The growth in 2000 reflected increased demand for broader information sets and add-on services.

Reuters Trading Solutions

RTS aims to meet the technology and transaction needs of clients in treasury and banking, corporate treasuries, securities broking and sales, asset management and personal financial services. RTS comprises three business groupings: Transactions; Applications and Enterprise Solutions; and Retail Solutions.

Overall RTS underlying revenue growth was 2% (4% in 2000), driven mainly by strong sales in Retail Solutions products offset by a decline in Transactions products. Actual rate growth was 7% (5% in 2000) reflecting the impact of the acquisition of Diagram.

Underlying revenue in Transactions fell 6% in 2001 (2% decrease in 2000), reflecting the continuing consolidation in the FX/Money markets Dealing

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community and the impact of global pricing agreements concluded with key customers. The rate of decline slowed significantly in the second half of the year reflecting the fact that the pressure from banking consolidation is easing slightly and Reuters is enjoying good growth in its forwards matching products.

The roll-out of Dealing 3000 continued with close to 13,000 accesses installed by the end of December 2001.

Underlying growth in Applications and Enterprise Solutions (AES) revenue was 3% (9% in 2000) reflecting growth in Trade & Risk Management products.

Retail Solutions products, aimed at providers of personal finance services, continue to be in strong demand and generated underlying growth of 39% (24% in 2000) partly driven by strong underlying revenue growth in Online Investor Services. Actual revenues for Retail Solutions in 2001 included £40 million from Lower Tier products formerly part of Reuters Information (2000: £24 million, 1999: £12 million) as discussed above. The underlying growth includes the re-classification of these revenues for all three years.

Reuters Consulting, which was formed in 2000, delivers integrated client solutions around a range of Reuters content and technology. Reuters Consulting revenue, which is distributed across the three RTS business lines, continued to grow during 2001 despite tough market conditions with consulting revenue growing to £74 million in 2001 from £61 million in 2000. Although the consulting business unit was only formed in 2000, Reuters had consulting activities prior to this. In 1999, revenues from these activities were £45 million. The 21% growth in 2001 (34% in 2000) was partly driven by the acquisition of Diagram and currency movements. Underlying growth was 10% (28% in 2000).

Bridge

Total post acquisition revenue for the acquired Bridge businesses from 1 October 2001 was £73 million. At the time of acquisition, Reuters announced anticipated revenue of US $100 million (£69 million) for the fourth quarter. Bridge Trading performed slightly better than expected due to higher fourth quarter NYSE trading volumes, offset by slightly weaker performance from the other Bridge businesses reflecting the deteriorating market conditions discussed earlier. Total post acquisition operating loss was £3 million.

Bridge integration costs of £17 million in 2001 represented mainly severance and retention payments to key staff impacted by integration activities and other third party costs associated with the integration. The Bridge integration programme, which is expected to continue into 2004, is forecast to cost £55 million in total, of which £31 million is expected in 2002, with the remaining £7 million to be incurred in 2003 and 2004.

Reuters intends to make £25 million of annual cost savings in 2002 and a further £23 million in 2003 as a result of the integration of Bridge.

Reuterspace

Reuterspace was formed in 2000 to utilise existing Reuters assets to exploit new market opportunities beyond the traditional wholesale financial market.

Actual revenue increased by 8% (50% in 2000), reflecting the full 2001 year impact of the acquisitions in 2000 of OR Telematique (ORT) in France and Yankee Group in the US. The underlying revenue declined by 2% (16% growth in 2000) reflecting the contracting customer demand for research products in the US telecoms sector as industry consolidation and rationalisation takes

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place and the discontinuation of software development activities.

Media underlying revenue growth was 2% (6% in 2000), reflecting the more challenging sales environment for online products, particularly in the US.

Investment in Reuters.com portal infrastructure, related activities and online media expansion has been reduced in the second half of the year, reflecting reduced market opportunities as a result of changing economic conditions and a reassessment of the scale of opportunities in the new organisation structure. As a result, levels of investment will be significantly lower in 2002 compared to 2001.

Greenhouse Fund

Effective from 14 June 2001, the Greenhouse portfolio is managed by RVC, an independent company established by the former Greenhouse Fund management, who were Reuters employees. The RVC management team are planning to commence a new fund in 2002 to invest in software infrastructure companies primarily in Europe. Reuters has committed to invest up to £17 million in this first fund along with other investors and has an option to invest in future funds.

At 31 December 2001 the Greenhouse portfolio had holdings in 18 quoted companies, 55 unlisted companies and 14 venture funds. Overall, Reuters has invested £283 million in the Greenhouse Fund and has subsequently realised cash of £249 million from initial public offerings, trade sales and distributions from these investments. Reuters has made available £17 million in ‘follow-on’ funding for investments in companies in this existing portfolio.

The net loss in 2001 stems from the impairment review which reflects the fact that the value of investments have fallen below their carrying value and the prudent management view referred to in the ‘Financial Review’ on page 13. The net gains in 2000 and 1999 arise from the significant number of disposals (IPO and trade sales) made in those years.

Instinet

Instinet, a US publicly traded company in which Reuters holds an 83.3% interest, provides global electronic equity and fixed income brokerage services to investment professionals.

Actual revenues in 2001 increased by 6% (53% in 2000) and underlying growth was flat (40% in 2000). The difference between the actual and underlying growth in 2001 reflected the acquisition of ProTrader and currency movements. The flat underlying growth in 2001 reflected growth in the US equities business offset by a decline in the International business, particularly in the second half due to weaker market conditions.

Revenue growth in 2001 has been weak as a result of lower Nasdaq market volumes in the second half of 2001. Trading in the latter part of the year has also been impacted considerably by the introduction of decimalisation, which has narrowed trading spreads thus putting pressure on execution costs. In addition there was increased activity on SuperSoes, Nasdaq’s execution platform and an intensification in the competitive landscape. This is reflected in the decline of Instinet’s Nasdaq market share from a high of 16.2% in April to a low of 10.7% in December. Instinet’s average share of the Nasdaq market was 14.0% for 2001 compared with 13.0% for 2000 and 1999. Although as indicated above, Instinet’s market share declined through the second half of 2001, it has increased in January 2002 from December 2001. In addition, Instinet lost four days of trading as a result of market losses following the events of 11 September.

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The gap between actual rates and underlying growth in 2000 was mainly due to the exclusion of Lynch, Jones & Ryan. The underlying growth in 2000 reflected strong market conditions in the year.

Instinet costs at actual rates increased by 4% (63% in 2000). Underlying costs fell by 1% (47% increase in 2000). The significant difference in cost growth rates from 2000 to 2001 is attributable to three factors. Firstly, a significant portion of the cost base is variable and is related to revenue, thus lower revenue growth has restricted cost growth. Secondly, 2000 also saw some significant investment in the Fixed Income and Retail products, the former going live in 2000 and the latter being terminated in the same year. Finally, costs fell in the second half of 2001 as a result of the reduction in headcount, most of which was completed by the end of the third quarter and other cost reduction initiatives.

As a result, operating margin increased to 20.8% compared to 19.5% in 2000 and 24.5% in 1999. The lower margin in 2001 compared to 1999 is a reflection of the changing market conditions in 2001. The decline in 2000 was primarily due to investment in the Retail and Fixed Income products, investment in trading capacity to accommodate increased volumes and the build up of corporate costs prior to the initial public offering.

Business Transformation and other restructuring costs

The Business Transformation programme initiatives continue to be categorised into two groups:

Firstly, the development of a new product architecture to create new tailored products for existing and new users along a continuum of price points that offer lower cost of ownership, segmented service and support and a customer-focused and rapid approach to product development.

Secondly, an organisation and process transformation to create an organisation structure that is aligned to the emerging opportunities in each of our different customer segments. The new organisation which came into effect at the start of 2002 is built around four customer segments: Treasury; Investment Banking and Brokerage; Asset Management; and Corporates and Media; and a number of global resource pools that support the segments and management.

These global resource pools are focused around: distribution channels such as Focus Group Accounts (servicing our global clients), Consultative channels (the three distinct regions dedicated to local customers) and Business Direct (smaller customers and online business); and Centres of Excellence such as the Business Technology Group (supplying high-quality, fit-for-purpose products and capabilities), Global Services (the Solutions and Consulting business) and Corporate Services encompassing elements such as Editorial, Business Development, Finance, Risk Management, Human Resources and the Chief Technology Office.

Business Transformation expenditure for 2001 for Reuters Group excluding Instinet was £164 million, of which £88 million related to new product architecture and £76 million related to organisation and process transformation. Business Transformation expenditure in 2000 was £139 million of which £88 million related to new product architecture and £51 million related to the organisation and process transformation.

Business Transformation expenditure is expected to fall significantly in 2002. Reuters estimates it will spend in the order of £75 million in 2002. The benefits of these initiatives are already coming through, with an estimated £55 million in cost savings in 2001 and Reuters estimates savings of £105 million in 2002 and £155 million in 2003. These savings are split as follows:

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In addition to the original Business Transformation programme, Reuters commenced a series of initiatives in the second half of 2001. Reuters aim is to achieve further cost savings in response to the continuing weak market conditions by reducing headcount beyond that resulting from the Business Transformation programme. The combined target was a total of 1,600 staff over a two-year period but has since been increased to 1,800 staff. These actions resulted in a restructuring cost of £82 million. At the end of December 2001, over 1,000 Reuters staff had already left. The remainder will leave during 2002.

These additional initiatives are estimated to have already realised benefits in 2001 of £10 million and are expected to yield additional annualised savings of £80 million.

Restructuring spend in Instinet for 2001 was £17 million reflecting similar cost saving initiatives. Instinet reduced its headcount by 237 staff by the end of December 2001. Instinet’s annualised fixed cost run rate in the fourth quarter of 2001 was over £100 million lower than in the first half of 2001, well ahead of the £50 million annualised savings goal Instinet set in July 2001.

Instinet expects to take a further restructuring charge of £17 million in the first half of 2002 in order to reduce the annual fixed cost run rate by a further £41 million.

The foregoing staff reduction numbers are without giving effect to other changes in staff numbers due to acquisitions, disposals or ordinary course employment activities. See the discussion of staff costs.

Revenue by type and geography - Reuters Group

Recurring revenue, which is principally derived from the sale of subscription services, increased by 7% at actual rates reflecting the impact of the Bridge acquisition and growth in Reuters Information.

Usage revenue is principally derived from Instinet, as well as Bridge Trading and Reuters Dealing products. The increase in usage mix from 1999 to 2001 reflects the growth of Instinet revenues. Usage revenue increased by 10% at actual rates reflecting the acquisition of Bridge Trading. Underlying revenue growth was flat in line with the performance of Instinet.

Outright revenue, which is principally derived from the sale of solutions including software, hardware and consultancy, increased by 13% at actual rates and 7% at underlying rates. The gap between actual and underlying growth reflected the acquisition of Diagram. The modest underlying growth reflected a strong first half 2001 performance of 20% growth offset by a second half 1% growth as a result of the worsening economic conditions in the second half of 2001, in particular in the last quarter.

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Revenue growth in Europe, Middle East and Africa (EMA) in 2001 was 9% at actual rates and 5% on an underlying basis (3% and 5% respectively in 2000). The gap between actual rate growth and underlying growth in 2001 reflects the exclusion of Diagram and currency movements. Reuters growth was boosted by strong solution sales while 3000 Xtra sales were particularly strong in the region. The main driver of growth in 2000 was Instinet’s International business.

The Americas (RAM) revenue in 2001 grew 12% at actual rates and was flat on an underlying basis (37% and 23% respectively in 2000). The gap between actual rate growth and underlying growth in 2001 reflects mainly the acquisitions of Bridge, ProTrader and Yankee and currency movements. The flat underlying performance in 2001 reflects the impact of the economic slowdown, in particular in the fourth quarter where underlying revenue declined by 19%. In 2000, there was strong underlying growth across the whole region, in particular in Instinet US which grew 34%.

Actual revenue in Asia/Pacific (AP) fell by 3% in 2001 and underlying revenue was flat (growth of 11% and 4% respectively in 2000). Underlying revenue performance in 2001 in Japan and Instinet’s Asian business was offset by a decline in Hong Kong. In 2000, underlying performance in most countries was relatively flat except for Japan, which grew by 10%.

Group costs

Cost by function

Group costs increased by 13% at actual rates (24% in 2000) and by 6% at underlying rates (19% in 2000). The gap between the actual and underlying growth in 2001 is mainly due to the Bridge acquisition and currency movements. The underlying growth is mainly driven by the additional Business Transformation and other restructuring costs, partly offset by the savings that they have generated.

Product and communications costs, which comprise costs involved in the development and delivery of Reuters products and content to its clients, increased by 6% at actual rates (11% in 2000) but decreased by 1% at underlying rates (6% in 2000) reflecting tighter cost control. The difference between 2000 actual and underlying growth primarily reflects the £25 million data feed accrual reversal in 1999.

Selling and marketing costs, which comprise sales, marketing and client support services increased by 14% at actual rates (21% in 2000) and underlying growth was 7% (19% in 2000) principally due to expansion in Reuters Financial. The growth in 2000 was largely due to a significant expansion of Instinet’s business.

Support services and administration, which represents the cost of maintaining the Group’s internal infrastructure, including internal systems, property and office costs, finance, legal and general management costs, increased by 10% (36% in 2000) and underlying costs increased by 3% (30% in 2000). The increase in 2000 was primarily due to

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an increase in support and management costs at Instinet together with costs associated with the acquisition of new subsidiaries.

Costs by type have been impacted by the transfer of network assets to Radianz in June 2000. Prior to this transfer, these costs were attributed to each type separately. Post transfer, the charge by Radianz for the use of the network is included in Communications.

Actual staff costs rose by 11% (19% in 2000). Part of this was attributable to acquisitions, most notably the full 2001 period impact of entities acquired in 2000, such as Yankee, ORT and LJR and the current year purchases of Bridge, Diagram and ProTrader. On an underlying basis, staff costs rose by 4% (10% in 2000), mainly reflecting salary rises offset by headcount reductions. The 2000 underlying increase reflected a combination of increased headcount and salary rises. Group headcount was 19,429 at the end of December 2001 compared to 18,082 at the end of December 2000. Acquisitions in 2001 accounted for approximately 1,900 additional headcount.

Actual service costs, which comprise mainly associated staff costs, consultancy and contractor costs and equipment, fell by 9% and underlying costs fell by 15% (26% and 22% increase respectively in 2000) reflecting tighter cost control across the Group as well as the impact of Radianz highlighted above. The 2000 growth reflected increased settlement and clearing costs at Instinet and higher levels of branding and consulting expenditure.

The actual depreciation charge declined by 11% and the underlying charge by 13% (11% and 14% in 2000) reflecting the continued benefit of reduced capital expenditure on subscriber equipment and the Radianz impact highlighted above.

Actual data costs increased 15% and underlying costs increased 6% (30% and 22% respectively in 2000) reflecting increased demand for third party data. These costs were generally recovered resulting in a similar growth in Other Revenue in Reuters Information. The actual growth in 2000 reflected partly the £25 million data feed accrual reversal in 1999 and also reflected the underlying growth in exchange fee costs and the demand for more third-party data.

Actual communication costs increased by 37% and underlying costs increased 25% (38% and 35% respectively in 2000) reflecting the impact of the transfer of network assets to Radianz in June 2000 described above.

Actual space costs increased 20% and underlying costs increased 13% (15% and 8% respectively in 2000) as a result of costs associated with various office moves, including the move to Reuters new flagship building at 3 Times Square in New York. The 2000 growth was mainly due to the expansion of Instinet and the impact of acquisitions.

Research and development

Research and development expenditure totalled £245 million in 2001 compared with £276 million in 2000 and £197 million in 1999. This expenditure excludes costs associated with Business Transformation. Of the total expenditure, £155 million related to Reuters Financial (2000: £152 million), £4 million to Reuterspace (2000: £27 million), £67 million to Instinet (2000: £81 million) and a further £19 million (2000: £16 million) related to the Chief Technology Office (CTO) and Corporate.

The decline in Reuterspace costs is mainly due to the high level of project start-up investment in 2000 and a significant reduction in Reuters Personal Finance development in 2001. The decline in Instinet costs is mainly due to a reduction in Fixed

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Income expenditure, following its product launch in 2000 and the termination of expenditure on the retail trading system project which was discontinued in the second half of 2000.

Significant activities in 2001 included development of a Lower Tier Dealing service, Reuters Dealing Link; further development of a standard desktop product, Reuters 3000Xtra, in a common Reuters/TIB infrastructure and in a new Numerical Data Architecture. The acquisition of Diagram in 2001 increased the product portfolio and development capacity.

Joint ventures and associates

Excluded from reported operating profit is the performance of a number of strategic alliances and joint ventures. The more significant of these are:

Radianz, a joint venture with Equant NV that became operational from 1 July 2000, was formed to develop the world’s largest secure Internet Protocol (IP) network for financial markets. Although Reuters owns 51% of the joint venture its control is limited to 50%. Reuters has contributed most of its network assets to Radianz. Reuters share of Radianz operating losses in 2001 was £27 million (2000: £9 million loss). The increased losses in 2001 reflect a full year of start-up costs compared to a half year in 2000 and a step up in development expenditure.

TIBCO Software Inc. (TSI), a US publicly traded company which enables businesses to integrate enterprise application and deliver personalised information through enterprise portals, was spun off by Reuters in 1999. Reuters has a 53% economic interest in TSI but its voting rights are restricted to 49% and accordingly TSI is accounted for as an associate. If all outstanding employee options over TSI shares were exercised, Reuters shareholding in TSI would be 42%. Reuters share of TSI’s losses in 2001 was £17 million (2000: £2 million profit; 1999: £3 million loss) reflecting restructuring costs and the full year amortisation of goodwill relating to the acquisition of Extensibility by TSI.

Factiva is a 50% owned joint venture with Dow Jones formed in 1999 to provide world-class global news and business information through its web sites and content integration solutions. Reuters share of Factiva’s profit in 2001 was £5 million, compared with £1 million loss in 2000 and a £4 million loss in 1999. The profit was driven by good revenue growth on the back of high net installations in 2000 and the first quarter of 2001 combined with tighter cost control in response to the slowdown in trading conditions during the latter part of 2001.

Other associates and joint ventures include Multex Investor Europe, Atriax and Sila Communications. Combined losses for these entities amounted to £23 million in 2001 compared to £11 million in 2000.

In addition, the following new joint ventures were set up in 2001:

As a result of various uncertainties, including the current economic conditions, it is considered difficult to forecast the level of losses for joint ventures and associates in 2002. A full year’s start-up losses are expected from Icor and Capco as these were only formed late in 2001. Radianz will continue to incur a similar level of losses as in 2001 as the migration of Reuters products and clients to RadianzNet picks up speed. Losses from some of the other joint ventures and associates should be reduced with Factiva expected to continue being profitable. The best estimate at present is that

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losses in 2002 will be at similar, or perhaps slightly reduced, levels as 2001.

For information regarding Reuters ability to influence these results, see ‘Risk Factors – Reuters does not have management control over some of its ventures’ on page 36.

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Consolidated Profit and Loss Account for the year to 31 December 2001 (unaudited)

* Restated following adoption of FRS 19 (see note 1 on page 35)

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Consolidated Statement of Total Recognised Gains and Losses for the year to 31 December 2001 (unaudited)

* Opening shareholders’ equity has been restated to reflect a change in the method of accounting for deferred taxation following early adoption of UK Financial Reporting Standard 19 (see note 1 on page 35). The cumulative effect of the restatement as at 31 December 2000 was to increase shareholders’ equity by £51 million.

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Consolidated Cash Flow Statement for the year to 31 December 2001 (unaudited)

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Reconciliation of Net Cash Flow to Movement in Net Funds (unaudited)

Net Cash Inflow from Operating Activities (unaudited)