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

For the six months ended June 30, 2000

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.]

Form 20-F __X__          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.]

Yes _____          No __X__

THIS REPORT IS INCORPORATED BY REFERENCE IN THE PROSPECUTSES CONTAINED IN POST EFFECTIVE AMENDMENT NO. 2 TO REGISTRATION STATEMENT NO. 33-16927 ON FORM S-8, POST-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT NO. 33-90398 ON FORM S-8, POST-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT NO. 333-7374 ON FORM F-3 AND REGISTRATION STATEMENT NO. 333-5998 ON FORM S-8 FILED BY THE REGISTRANT UNDER THE SECURITIES ACT OF 1933.

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.

REUTERS [LOGO]

International News Release

Reuters Group PLC

Interim Statement

For the six months ended 30 June 2000

Reuters Group PLC
85 Fleet Street
London EC4P 4AJ

Tel: 020 7250 1122

Reg. No 3296375

Contents

1

Reuters Group PLC
Highlights of the Interim Results
for the six months to 30 June 2000

25 July 2000

No. 19/00

• Revenue up 9% to £1.7 billion.
  
  
• Operating profit before business transformation costs up 3% to £285 million.
  
  
• Increased expenditure on new initiatives at Instinet and Reuterspace.
  
  
• Interim dividend of 3.65p, in line with prior year.
  
  
• Greenhouse Fund makes gains on disposals of £42 million.
  
  
• Three new ventures launched.
  
  
• Peter Job said: "Our strategy to make Reuters fully internet ready is gaining great momentum."

2

The following is a summary of the unaudited results of Reuters Group PLC (NASDAQ symbol: RTRSY) for the six months to 30 June 2000:

Group revenue

1,696

1,562

 9%         

 9%           

2,561  

2,360  

Operating costs

1,452

1,284

13%         

13%           

2,192  

1,940  

Operating profit

244

278

 (12%)        

 (8%)          

369  

420  

Profit before taxation

 450

300

 50%         

679  

453  

Basic earnings per ordinary share

25.2p

14.3p

76%         

Earnings per ADS

US$2.28

US$1.30

76%         

Dividend per ordinary share: Interim

Notes:

• This summary is taken from, and should be read in conjunction with, the full attached statement and notes.
  


• For convenience the US dollar equivalents for both years have been converted throughout this news release at US$1.51 = £1, a rate prevailing on 30 June 2000.
  


• The Interim dividend is payable on 6 September 2000 to ordinary shareholders on the register at 4 August 2000 and on 13 September 2000 to ADS holders on the register at 4 August 2000.
  


• This news release includes forward-looking statements within the meaning of the US securities laws. For a discussion of factors that could affect future results, reference should be made to the forward-looking statements discussion and Cautionary Statements included on pages 36-38.
  


• Reuters and the sphere logo are the trademarks of the Reuters Group of Companies.

3

Good first half progress

Reuters revenue for the first half of the year rose by 9% to £1,696 million (US$2,561 million). Revenue at comparable rates also rose by 9%. Adjusting for the net effect of acquisitions and disposals, revenue rose by 11% at comparable rates.

Operating profit was £285 million (US$431 million) before business transformation costs of £41 million to move the business of Reuters Financial to internet technology. This rise of 3% was after the increased levels of ongoing new business investment at Instinet and Reuterspace. These figures are after goodwill amortisation of £27 million (US$41 million).

Profit before tax rose 50% to £450 million (US$679 million). This includes gains on disposals by the Greenhouse Fund of £42 million (US$63 million). These offset the £41 million of business transformation costs. These costs are expected to be £150 million for the full year. A follow-on issue of TIBCO Software Inc. shares earlier this year (in which Reuters did not participate) caused Reuters to book a profit of £160 million (US$242 million).

Earnings per share grew 76% to 25.2p. Reflecting the dividend policy announced in February, the interim dividend is based on the results of Reuters Financial and is unchanged from last year at 3.65p per share.

During the first half of the year the company moved from net cash of £41 million (US$62 million) at the end of 1999 to net debt of £92 million (US$139 million). This reflects higher levels of investment in the core business and the Greenhouse Fund, a number of acquisitions, including the Yankee Group, and the costs of the business transformation programme.

Peter Job, chief executive, said: "Our strategy to make Reuters fully internet-ready, both technically and organisationally, is gaining great momentum. Reuters product offerings in the financial markets are strong across the price range and demand has held up well. Areas of opportunity, such as the competitive US markets, are producing further sales success.

"Sales of our information to sites on the public Internet are going well. Our acquisitions programme is steadily enriching our content assets, particularly in the area of respected research. Other new ventures and partnerships such as Radianz (global financial communications network) and Sila (enabling products for mobile devices in Europe) are either on schedule or ahead of it.

"We are showing more good results at the half year from crystallising well-chosen internet investments. Despite more difficult markets we are still showing we can pick winners that go to IPO. TIBCO Software, which we spun off last year, is establishing a consistent record of fast revenue growth to justify its premium market value. We have reached agreement in principle with TIBCO Software Inc. in its role as an internet infrastructure company; Equant, the data networking service

4

provider; and Yahoo! Inc. to sell a compelling package of software, content and communications offerings to service the growing demand for enterprise information portals. We shall be providing details of this interesting opportunity when they are finalised."

New Ventures

In February Reuters announced three new ventures as part of its strategy to accelerate its use of internet technologies, open new retail markets and migrate its core business to an internet-based model. Significant progress has been made.

• Radianz, the joint venture with Equant to build a global financial market extranet, has been launched.
  


• Multex Investor Europe, providing internet-based research on companies, is now operational. Deutsche Bank is an initial sponsor.
  


• Sila Communications, an investment with Aether for mobile applications in Europe, is now launched.

Losses from these ventures were minimal in the first half of the year and are likely to be higher in the second half as these businesses continue to implement their launch strategies.

Reuters Financial

Reuters Information – Revenue rose 5% at actual rates and 7% at comparable rates. Contribution rose 29% to £147 million (US$223 million). Margins in the first half of 2000 and second half of 1999 increased partly as a result of the ongoing reduced level of data costs.

New order levels for domestic and lower-tier products continue to be good especially in the US and Europe. Over 55,000 accesses of Reuters Plus, the US equity product, have been sold and a new higher-tier offering for the institutional buy side, Reuters Pro, has recently been launched. Reuters flagship information product, 3000Xtra, is making good progress and a number of significant orders have been taken, including the recently announced sale of 1,200 positions to Merrill Lynch in London. Increased investment is being made in editorial content, especially in the US.

Reuters Trading Solutions – Revenue declined 2% at actual rates and 1% at comparable rates. Contribution declined 14% to £101 million (US$153 million) reflecting in part the increased investment in infrastructure for Reuters InterTrade Direct (RITD), Reuters new securities transaction product.

Transaction products improved with good growth for Dealing 2000-2, the foreign exchange matching service, and the cancellation rate for Dealing 2000-1 accesses slowing. RITD saw revenue growth of 130% against the background of high demand for electronic order routing. Installations of new systems were lower in the first half, as expected, due to the millennium changeover. Systems sales

5

are starting to show good signs of improvement with a number of significant orders now in negotiation. Sales of software connecting financial institutions to their clients are particularly strong, with the help of internet technology.

Instinet

Instinet’s revenue grew 50% at actual rates and 47% at comparable rates. Revenue in the US grew 41% at actual rates and 37% at comparable rates. International revenue, which now represents 25% of the total, increased 80% at actual rates and 86% at comparable rates. Contribution grew 7% to £84 million (US$127 million). Costs rose £122 million (US$183 million), 69% over the first half of last year, of which £21 million (US$32 million) went on investment in products for the fixed income and retail equities markets. The former has been launched and the latter is planned to be launched in the fourth quarter. Other major spending was associated with gearing up for higher volumes. Improvements were made to the organisational infrastructure, as well as increasing technical capacity ahead of the further boost to volumes expected from decimalisation in the US.

An IPO is still under consideration.

Reuterspace

Reuterspace was formed this year to exploit opportunities outside the core financial markets.

Reuterspace revenue increased 30% at both actual rates and comparable rates. The division made a loss of £23 million (US$36 million) as investment increased in a number of projects including the retail portal. Media revenue increased 5% at both actual rates and comparable rates. Within these figures traditional media revenue declined 9% as the television business is reshaped and internet-based new media revenue rose 250%.

Reuters Enterprise increased revenue due to recent acquisitions including the Yankee Group and the Tower Group in the field of research and ORT in company information. The strategy of building a market presence in a number of vertical market segments by acquisition will continue.

The Greenhouse Fund, which generated £42 million from disposals, still had publicly quoted holdings valued at £243 million on 30 June this year. The number of investments has increased from 38 to 60 this year with three IPO’s of companies held. We continue to work towards an IPO for this business. Timing will be determined by market conditions. In the meantime, the Fund has ample capacity for investment focusing on e-commerce.

Reuters share of revenue generated by Factiva, the joint venture with Dow Jones, was £38 million (US$57 million), up 8% compared to proforma revenue of £33 million (US$50 million) in the first half of last year.

6

TIBCO Software Inc.

TIBCO Software, the Reuters associate which is a leading provider of real-time e-business infrastructure software, completed a follow-on offering of 4.8 million shares on 27 March at US$106 per share. This offering reduced Reuters stake in TIBCO Software to 44% on a fully diluted basis from 47%, and Reuters booked a profit of £160 million (US$242 million). TIBCO Software reported net income of US$9.7 million, excluding non-cash charges relating to stock compensation and goodwill, for the first half of this year. Reuters has sold no stock in TIBCO Software other than to meet its obligations under staff option plans.

Organisational changes

As previously announced, Philip Green and Tom Glocer have joined the Reuters Board. David Grigson will join the board on 1 August this year as Finance Director replacing Rob Rowley, who remains on the Reuters Board as Chief Executive, Reuterspace. David Ure is leaving the Board to concentrate on his role as Chairman of Radianz. He will remain with Reuters as Strategic Adviser to the Reuters Board and will continue on the company’s senior management committee.

END

7

Revenue Analysis – Six Months to 30 June 2000

Six months to
30 June

% change

2000
£m

1999
£m

2000
US$m

1999
US$m

1999
£m

1999
US$m

Revenue analysis
by division

Reuters Information

849   

808   

 5%     

 7%     

1,282   

1,220   

1,619   

2,444   

Reuters Trading Solutions

372   

379   

 (2%)    

 (1%)    

562   

572   

780   

1,178   

Reuters Financial

1,221   

1,187   

 3%     

 4%     

1,844   

1,792   

2,399   

3,622   

Instinet

 381   

255   

 50%     

 47%     

575   

385   

525   

793   

Reuterspace

97   

74   

 30%     

 30%     

146   

112   

157   

237   

Divisional revenue

1,699   

1,516   

 12%     

 13%     

2,565   

2,289   

3,081   

4,652   

TIBCO Software

-   

21   

-       

-       

-   

32   

21   

32   

Reuters Business Briefing

-   

31   

-       

-       

-   

47   

31   

47   

Share of
joint ventures revenue

38   

-   

-       

-       

57   

-   

35   

53   

Intra group revenue

(3)  

(6)  

 56%     

 54%     

(4)  

(8)  

(8)  

(12)  

Gross revenue

1,734   

1,562   

 11%     

 12%     

2,618   

2,360   

3,160   

4,772   

Less share of
joint ventures revenue

(38)  

-   

-       

-       

(57)  

-   

(35)  

(53)  

Net revenue   

1,696   

1,562   

 9%     

 9%     

2,561   

2,360   

3,125   

4,719   

Revenue analysis
by geography

Europe, Middle
East and Africa

821   

835   

 (2%)    

 4%     

1,240   

1,260   

1,643   

2,482   

Asia/Pacific

260   

249   

 4%     

 (2%)    

393   

377   

503   

759   

The Americas

615   

478   

 28%     

 25%     

928   

723   

979   

1,478   

Total

1,696   

1,562   

 9%     

 9%     

2,561   

2,360   

3,125   

4,719   

Revenue analysis
by type

Recurring

1,223   

1,163   

 5%     

 7%     

1,846   

1,756   

2,338   

3,531   

Usage

411   

309   

 33%     

 31%     

621   

467   

609   

920   

Outright

62   

90   

 (30%)    

 (30%)    

94   

137   

178   

268   

Total

1,696   

1,562   

 9%     

 9%   

2,561   

2,360   

3,125   

4,719   

8

Revenue Analysis – Second Quarter 2000

Revenue analysis
by division

Reuters Information

432    

403    

 7%   

 8%   

652   

609   

Reuters Trading Solutions

196    

194    

 1%   

 0%   

296   

293   

Reuters Financial

628    

597    

 5%   

 5%   

948   

902   

Instinet

184    

130    

 42%   

 37%   

278   

196   

Reuterspace

54    

37    

 46%   

 43%   

82   

56   

Divisional revenue

866    

764    

 13%   

 12%   

1,308   

1,154   

TIBCO Software

-    

13    

-     

-     

-   

20   

Reuters Business Briefing

-    

16    

-     

-     

-   

24   

Share of joint ventures revenue

20    

-    

-     

-     

30   

-   

Intra group revenue

(2)   

(2)   

 25%   

 4%   

(3)  

(3)  

Gross revenue

884    

791    

 12%   

 11%   

1,335   

1,195   

Less share of
joint ventures revenue

(20)   

-    

-     

-     

(30)  

-   

Net revenue

864    

791    

 9%   

 8%   

1,305   

1,195   

Revenue analysis
by geography

Europe, Middle East and Africa

413    

416    

 (1%)  

 4%   

624   

628   

Asia/Pacific

134    

125    

 7%   

 (1%)  

202   

189   

The Americas

317    

250    

 27%   

 21%   

479   

378   

Total

864    

791    

 9%   

 8%   

1,305   

1,195   

Revenue analysis
by type

Recurring

621    

577    

 8%   

 8%   

938   

871   

Usage

200    

158    

 25%   

 22%   

302   

239   

Outright

43    

56    

 (23%)  

 (23%)  

65   

85   

Total

864    

791    

 9%   

 8%   

1,305   

1,195   

9

Review of Interim Results

The following review has been prepared in accordance with both the recommendations of the UK Accounting Standards Board in their statement entitled ‘Operating and Financial Review’, and the US requirement for a ‘Management’s Discussion and Analysis of Financial Condition and Results of Operations.’

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 and 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 ‘Cautionary Statements’ on page 36 to 38 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 Cautionary Statements.

1.  Financial summary

Divisional contribution

309  

306  

Business transformation

(41) 

-  

Goodwill/currency

(24) 

(21) 

Other

-  

(7) 

Operating profit

244  

278  

Joint ventures/
associates

(3) 

(1) 

Disposals

     - investments

202  

29  

     - subsidiaries

8  

-  

Other

(1) 

(6) 

PBT

450  

300  

EPS

25.2p  

14.3p  

Revenue increased 9% at both actual and comparable rates to £1,696 million in the six months to 30 June 2000.

Revenue growth excluding the impact of acquisitions and disposals increased 10% at actual rates to £1,663 million in the six months to 30 June 2000. At comparable rates the increase was 11%.

Divisional contribution before business transformation costs grew by 1% at actual rates and 6% at comparable rates in the first six months of 2000. Divisional performance is discussed in section 2.

Total goodwill in the six months to 30 June 2000 was £33 million, of which £6 million was charged to associated companies. This compares to goodwill of £27 million in the first half of 1999 of which £3 million was charged to associated companies.

Recognised currency hedging gains in the six months to 30 June 2000 were £3 million, the same as the first half of 1999. Actual rates performance was adversely impacted by the strength of sterling against the euro, partially offset by sterling weakening against the US dollar and Japanese yen.

Operating profit margin in the six months to 30 June 2000 was 14.4%, compared with a 17.8% margin in the first half of 1999. Excluding business transformation costs the operating profit margin was 16.8%.

Disposal of fixed asset investments in the first six months resulted in a profit of £42 million, compared to £29 million in the first half of 1999, mainly relating to Greenhouse Fund disposals.

The follow-on public issue in March 2000 of 4.8 million TIBCO Software Inc. shares generated a book profit for Reuters of £160 million. Reuters has sold no stock in TIBCO Software Inc. other than to meet its obligations under staff option plans.

Earnings before interest, tax, depreciation and amortisation (EBITDA), which includes the profit on the follow-on public issue by TIBCO Software Inc., increased 27% at actual rates

10

and 31% at comparable rates to £624 million, in the six months to 30 June 2000. This compares with an increase of 5% at actual rates in the first half of 1999.

Profit before tax increased 50% to £450 million in the first six months to 30 June 2000, compared with an increase of 2% in the first half of 1999 at actual rates.

The tax charge for the six months to 30 June 2000 is based on an effective tax rate of 20% on profit before goodwill amortisation compared with a rate of 30% in the first half of 1999 and the current UK corporate tax rate of 30%. The lower effective tax rate is due to the fact that only £290 million of profit before tax is subject to tax; the remaining £160 million results from the booked profit on the follow-on public issue in TIBCO Software Inc.

Earnings per share increased 76% in the six months to 30 June 2000 ahead of the growth in profit before tax, reflecting the reduction in tax rate.

Free cash flow per share was 16.9p, up 2% from 16.6p in 1999. This excludes the profit from the follow-on public offering by TIBCO Software Inc. which is not cash generative.

Investment in the business continued with £120 million of fixed asset additions, £146 million of development expenditure and £250 million of acquisitions and investments net of disposal proceeds.

2. Operating performance

Recurring

1,223  

1,163  

Usage

411  

309  

Outright

62  

90  

Total

1,696  

1,562  

Recurring revenue, which is principally derived from the sale of subscription services, represented 72% of group revenue in the six months to 30 June 2000 compared with 75% in the six months to 30 June 1999.

Usage-based revenue, principally derived from Instinet and Dealing 2000-2, represented 24% of total revenue in the six months to 30 June 2000 compared with 20% of total revenue in the six months to 30 June 1999.

Outright revenue, which comprises once-off sales of information management systems and risk management software, represented 4% of group revenue in the six months to the 30 June 2000 and 5% in six months to 30 June 1999.

Revenue by geography

Revenue in Europe, Middle East and Africa (EMA) fell by 2% at actual rates and increased 4% at comparable rates in the first half of 2000. Revenue grew 5% at actual rates and 3% at comparable rates in the same period in 1999.

The Americas saw revenue growth of 28% at actual rates and 25% at comparable rates in the six months to 30 June 2000, compared to 16% at actual rates and 13% at comparable rates in the same period in 1999.

Revenue in Asia/Pacific grew 4% at actual rates and fell 2% at comparable rates in the first half of 2000, having increased 3% at actual rates and remained flat at comparable rates in the first half of 1999.

11

Reuters Information

Reuters Information (RI) provides financial information products to financial professionals and their clients. Its aim is to produce its own differentiated content and features while aggregating key third party products in a convenient way.

Revenue

849    

808    

Costs

(702)   

(694)   

Contribution

147    

114    

Contribution
growth %

Actual

 29%  

Comparable

 44%  

Margin %

 17%  

 14%  

RI revenue for the first half of 2000 grew 5% at actual rates and 7% at comparable rates.

Contribution margin increased from 14% to 17%, through a combination of increased revenue and tight control over costs.

Revenue

EMA

491     

490     

The Americas

194     

170     

Asia/Pacific

164     

148     

Total

849     

808     

% change

    Actual
    rates

    Comparable
    rates

EMA

 0%   

 7%   

The Americas

 14%   

 11%   

Asia/Pacific

 10%   

 3%   

Total

 5%   

 7%   

EMA revenue growth was driven by double-digit growth in Italy and Benelux, and good growth in the UK and Ireland and France.

Revenue growth in the Americas was largely the result of good sales of Reuters Plus, Reuters US domestic product.

Revenue growth in Japan of 7% and 10% growth in South Asia offset revenue declines in Hong Kong, Indonesia and China.

Accesses (000’s)

3000 Products

79  

56   

Other Upper Tier

137  

154   

Total Upper Tier

216  

210   

Off Trading Floor

52  

22   

Other (including
domestic equities)

192  

169   

Mobile

40  

55   

Total

500  

456   

Revenue
per access (£000)

Total Upper Tier

3.1

3.0

Total RI accesses grew 10% to 500,000 at 30 June 2000. Total Upper Tier accesses grew by 3% in the first half of 2000. Installed 3000 accesses, including 3000Xtra, increased from 71,000 at the end of 1999 to 79,000 at 30 June 2000.

Off Trading Floor (OTF) accesses aimed at users of financial information outside the dealing room grew by 139% in the first half of 2000.

The decline in mobile access is due to the discontinuation of the short messaging service product line.

Reuters Trading Solutions

Reuters Trading Solutions (RTS) provides financial customers worldwide with industry standards, scaleable solutions and technology, to improve operating efficiency and facilitate trading throughout the enterprise. To this end it develops infrastructure applications and trade execution facilities that enable connectivity to a variety of information sources, either internally or externally via the Internet.

Revenue

372

379

Costs

(271)

(262)

Contribution

101

117

Contribution
growth %

Actual

 (14%)

Comparable

 (13%)

Margin %

 27%

 31%

RTS revenue declined by 2% at actual rates and 1% at comparable rates in the first half of 2000.

Margin has declined as RTS continued to invest in new business opportunities, most notably in Reuters InterTrade Direct, its securities order management product.

12

RTS encompasses three business groupings, Transactions, Applications and Enterprise Solutions and Retail Solutions.

Revenue

203

202

% change

Actual

1%

Comparable

0%

The Transactions business develops financial communities through the provision of managed transaction services across a range of financial instruments.

Overall Transactions revenues grew 1% at actual rates and were flat at comparable rates.

Total Dealing accesses at 30 June 2000 were 21,000, a reduction of 7% compared to June 1999.

The decline in Dealing 2000-1 revenue has been offset by growth in foreign exchange matching, order routing and securities order management revenues.

Revenue

153

165

% change

Actual

(7%)

Comparable

(6%)

Applications and Enterprise Solutions provides software to enable the distribution of real-time information and order flow data within customer organisations, and for pre- and post-trade risk management applications.

A slow start to the year post Millennium resulted in lower installations of risk management and market data systems in the first half of 2000 compared to the first half of 1999. This was exacerbated by strong revenues in the first half of 1999 where customers accelerated projects ahead of the Millennium.

Revenue

16

12

% change

Actual

32%

Comparable

32%

Retail Solutions focuses on selling solutions of content, technology, applications and transaction capabilities to financial services institutions seeking to use the Internet to attract retail customers.

Revenue grew £4 million or 32% at both actual and comparable rates in the six months to 30 June 2000 reflecting increased sales of products aimed at the online brokerage markets.

Instinet

Instinet provides global electronic equity and fixed income brokerage services to investment professionals.

Revenue

Instinet US

282 

200 

Instinet International

97 

55 

Fixed Income

 2 

- 

Total

381 

255 

Costs

(297)

(175)

Contribution

84 

80 

Contribution
growth %

Actual

7%

Comparable

6%

Margin

22%

31%

Revenues grew 50% at actual rates and 47% at comparable rates. Us revenue growth was 37% at comparable rates and International revenue growth was 86% at comparable rates.

Instinet’s average share of the US Equities (NASDAQ and NYSE) market was 8.6% for the first half of 2000, compared with 8.3% for the first half of 1999.

Instinet’s Fixed Income product was launched in the US in March 2000 and internationally in April 2000. Fixed Income revenues and costs were £2 million and £16 million, respectively.

13

Instinet continues to invest in the development of its retail product. Costs incurred in the six months to 30 June 2000 were £15 million compared with £2 million in the first half of 1999.

Investment in the first half of 2000 included £40 million of capital expenditure, principally on capacity expansion of the core network infrastructure for the equity business.

£8 million was spent on branding in the first half of 2000 compared with £1 million in the first half of 1999.

In February 2000 Instinet acquired Lynch, Jones & Ryan (LJR), a provider of commission recapture programmes for pension plan sponsors and other funds. The impact on revenue and contribution growth was not material.

Instinet continues to face significant change in its core markets driven by new and developing technologies, increased competition and an evolving regulatory environment.

An IPO is still under consideration as one of a number of strategic options for Instinet.

For information concerning certain rules that could affect Instinet’s business see Cautionary Statements: ‘SEC Rules for Alternative Trading Systems’, ‘SEC rules on ECN usage’, and ‘NASD initiatives’ on pages 36-37 .

Reuterspace

Reuterspace (RS) is focused on bringing the existing skills of the Reuters group in content, technology and distribution to new communities outside the wholesale financial markets. The division aims to develop opportunities in the business-to-business and business-to-consumer e-commerce market places through internally generated initiatives, partnerships, stakeholdings and acquisitions.

Revenue

97 

74 

Costs

(120)

(79)

Contribution

(23)

(5)

Share of joint venture
and associates results

(3)

1 

Greenhouse Fund profit

42 

29 

Revenue increased £23 million in the first half of 2000, primarily reflecting the impact of acquisitions. Costs include investment of £21 million on the roll-out of online media products outside the Americas, development of retail and mobile strategies and expansion of Greenhouse Fund activities.

Business-to-Business

In the first half of 2000 Reuters Enterprise spent £96 million on acquisitions including ORT, a leading French provider of company information, and Yankee, a US research and advisory business focused on the technology and telecoms industries. An e-market place offering, Qingnaio.net was launched in China.

Business-to-Consumer

Reuters provides news and information online to over 900 websites with over 140 million page views per month. Media revenue increased by 5% to £71 million in the first half of 2000, reflecting continued strong growth in online media revenue which more than tripled to £13 million, offset by reduced television revenues as selected existing services have been cut back and effort refocused towards online delivery of video.

During the first half of 2000, £10 million was spent on the retail portal, branding and mobile. The portal will facilitate an aggregation of retail users and provide intermediation between consumers and financial institutions.

14

Greenhouse Fund

Unquoted Investments

Cost

119  

24  

Quoted Investments

Cost

30  

8  

Market Value

243  

68  

Greenhouse
Fund profit

42  

29  

The Greenhouse Fund invested in 24 companies in the first half of 2000, bringing the total number of investments in companies to 60. A number of disposals were made in the period, realising a pre-tax profit of £42 million.

At 30 June 2000 the total cost of investments held was £149 million and the market value of the 16 quoted investments was £243 million, compared to £438 million as at year end 1999.

A partial flotation of the Greenhouse Fund continues to be considered, subject to satisfactory market conditions.

Overall divisional performance

Revenue

RI

849 

808 

RTS

372 

379 

RF

1,221 

1,187 

Instinet

381 

255 

RS

97 

74 

Total

1,699 

1,516 

Contribution

RI

147 

114 

RTS

101 

117 

RF

248 

231 

Instinet

84 

80 

RS

(23)

(5)

Total

309 

306 

Divisional contribution excludes business transformation costs, goodwill and currency hedging which are managed and reported on a Group basis.

Divisional contribution margin at actual rates was 18%, compared with 20% in the first half of 1999.

Business transformation costs

Reuters announced in February 2000 that Reuters Financial (RF) will take a reorganisation charge of £300 million over the next two years. For the six months to 30 June 2000 the charge was £41 million. The full year charge for 2000 is currently forecast to be £150 million.

Joint Ventures, Associates and Investments

Excluded from operating profit is the performance of a number of strategic investments, minority stakes and joint ventures managed by the Divisions. The more significant of these are set out below:

Reuters Trading Solutions:

GL Trade (owned 34.2%) is a developer of interactive software providing ‘electronic’ gateways to electronic exchanges. Reuters share of GL Trade’s profit for the first half of both 2000 and 1999 was £1 million.

Reuters acquired a 21.9% stake in Pedestal in June 2000. Pedestal manages an internet business-to-business (B2B) marketplace for the trading of secondary mortgage loans and mortgage related products in the US.

15

Reuterspace:

Factiva is a 50% owned joint venture that combines the businesses of Reuters Business Briefing and Dow Jones Interactive. Reuters share of Factiva’s losses for the first half of the year was £1 million.

Disposal of Greenhouse Fund investments realised a profit of £42 million in the first half of the year. The Greenhouse Fund acquired further investments costing £77 million.

Reuters share of profits from its 20% stake in ITN, which principally provides daily scheduled programmes of international and national news for television and radio, was £1 million in the first half of 2000 and 1999.

Sila Communications is a 40% owned venture created in May 2000 with Aether Systems to provide wireless data service in Europe. Reuters owns a 7.6% interest in Aether Systems.

Multex Investor Europe, a 50% owned joint venture formed in February 2000 with Multex.com Inc., providing dedicated broker research and investment information to empower private investors. Reuters share of Multex Investor Europe losses were £1 million in the first half of the year. Reuters holds a 6.5% stake in Multex.com Inc.

In addition, a recently announced joint venture with Handelsblatt Group, a leading German financial news brand, aims to produce rapid German language commentary on breaking financial news, company and market trends to assist users in making decisions on the management of their investment portfolios.

Instinet:

Tradepoint Financial Networks Plc, owned 7.5% by Instinet, is a London-based for-profit stock exchange offering an electronic order driven equities market for UK securities.

Archipelago, owned 12.1% by Instinet, is an electronic communications network for NASDAQ stocks to match purchases and sales electronically outside the exchange trading system.

Instinet holds an 8.7% stake in W.R. Hambrecht, an investment bank offering an ‘Open IPO’ system that allows companies to be taken public via auction on the Internet.

Vencast.com, 13% of which Instinet owns, is a solutions provider for the private equity industry offering a new, secure digital environment which facilitates the process for raising capital.

Corporate:

TIBCO Software Inc. is a provider of real-time infrastructure software for the Internet. Reuters share of TIBCO Software Inc.’s operating profit for the first half of the year was £1 million.

Reuters has a 61% economic interest in TIBCO Software Inc. but its voting rights are restricted to 49% and accordingly TIBCO Software Inc. is accounted for as an associate. If all outstanding employee options were exercised Reuters shareholding in TIBCO Software Inc. would be 44%.

Radianz, a joint venture with Equant, plans 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 substantially all of its network assets to Radianz, which is operational from 1 July 2000.

16

3. Group costs

Cost by Division

RI

702  

694  

1%

RTS

271  

262  

3%

RF

973  

956  

2%

Instinet

297  

175  

69%

RS

120  

79  

52%

Business transformation

41  

-  

RBB/TSI

-  

59  

Goodwill/other

21  

15  

Total

1,452  

1,284  

13%

Costs in RF grew by 2% compared with revenue growth of 3% with the benefit of tight cost control being offset to the same extent by investment in new initiatives. RF margin has improved from 19.5% to 20.3%.

Instinet cost growth of 69% compares to revenue growth of 50%. Excluding the investment in fixed income and retail initiatives cost growth is 59%. This reflects a significant increase in costs to support expansion of the equity business.

Excluding the impact of acquistions cost growth in RS is 36% compared to revenue growth of 14%. This reflects a growth of 10% in underlying costs and £21 million of investment in new business.

Cost by function

Production and communications

792 

795 

Selling and marketing

299 

239 

Support services and administration

296 

229 

Business transformation

41 

- 

Goodwill
amortisation

27 

24 

Net currency gain

(3)

(3)

Total

1,452 

1,284 

% change

Actual

13%

9%

Comparable

13%

6%

Production and communications

This comprises costs involved in the development and delivery of Reuters products and content to its clients. These costs were flat in the first half of 2000 at actual rates and fell by 1% at comparable rates.

Selling and marketing

These costs relate to sales, marketing and client support activities and increased by 25% in the six months ended 30 June 2000 at actual rates and 26% at comparable rates. This growth related to business expansion and branding at Instinet. Excluding Instinet the increase was 8% with the majority of this growth due to the expansion of Reuters branding initiative.

Support services and administration costs

This represents the cost of maintaining the company’s internal infrastructure, including internal systems, property and office costs, finance, legal and general management costs. These costs increased by 29% at actual rates and 28% at comparable rates. The increase reflected costs associated with higher trading volumes at Instinet, increased investment in systems and the expansion of Reuterspace.

Cost by type

Staff

545

481

Services

375

285

Depreciation

139

160

Data

144

136

Comms

91

92

Space

90

80

Other

27

50

Business
transformation

41

-

Total

1,452

1,284

% change

Actual

13%

9%

Comparable

13%

6%

Staff costs rose by 13% at comparable rates in the first half of 2000. The increase was principally due to additional staff required at Instinet to support higher trading volumes and new product development. Excluding Instinet, staff costs increased 5% reflecting salary and headcount increases.

17

Headcount at the end of June 2000 was 17,067 compared to 16,546 at December 1999. This reflects an increase of 685 staff from acquisitions in the first half of the year and also includes the transfer of 339 staff into the Radianz joint venture on 30 June 2000.

Services costs increased 29% at comparable rates in the first half of 2000, reflecting increased settlement and clearing costs at Instinet and higher levels of branding and consulting expenditure.

Depreciation fell by 12% at comparable rates in the six months ended 30 June 2000 reflecting the declining level of capital expenditure.

Data costs increased by 6% at comparable rates in the first half of 2000, in line with revenue growth in RI.

Space costs increased 13% at comparable rates in the first half of 2000 due to the expansion at Instinet and the impact of acquisitions.

Incremental external Millennium costs were £5 million in the first six months of 2000, compared to £10 million in the first half of 1999.

4. Shareholder value

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

Reuters 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 rankings over the completed three-year periods, and ongoing measurement periods as at 30 June 2000 are set out below:

5. Financial needs and resources

Free cash flow which comprises operating cash flow and investment income received less net interest expense, tax paid and expenditure on tangible fixed assets was £237 million for the six months ended 30 June 2000, compared with £234 million in 1999.

An analysis of free cashflow on a divisional basis is set out below.

30 June 2000

RF

344    

RS

(23)   

Instinet

13    

Business transformation costs

(41)   

Tax paid/other

(56)   

Total

237     

18

Additions to tangible fixed assets were £120 million in the first half of 2000, £16 million higher than the first half of 1999. Subscriber equipment expenditure declined £2 million to £32 million compared with the same period in 1999 as spending on Millennium and 3000 product upgrades declined. Other equipment additions rose £18 million to £88 million.

Reuters spent £294 million on acquisitions and investments in the first six months of 2000 compared to £48 million in the same period in 1999. In the first half of 2000 £27 million was spent on Reuters shares acquired by an employee share ownership trust compared with £4 million in the first half of 1999. Proceeds from the sale of fixed asset investments was £44 million, principally relating to Greenhouse Fund disposals in 2000.

Reuters paid dividends of £154 million, in the first half of 2000 and £155 million in the first half of 1999.

Net debt at 30 June 2000 amounted to £92 million, compared with net funds of £86 million at 30 June 1999. Net debt at 30 June 2000 comprised cash and short-term investments of £645 million offset by gross debt of £737 million.

Reuters expects to be able to finance its current business plans from existing resources and facilities.

At 30 June 2000 Reuters Group PLC had syndicated loan facilities of £500 million available which expire in December 2002, all undrawn at 30 June 2000.

A £1.5 billion Euro Commercial Paper Programme was established in 1998. At 30 June 2000, Reuters had raised funds of £329 million under this programme, repayable at various dates through to September 2000.

In 1998 Reuters also established a £1 billion Euro Medium Term Note Programme. At 30 June 2000, Reuters had raised funds of £260 million under this programme, repayable at various dates from February 2001 up to November 2004.

6. Treasury management

Over 80% of Reuters revenue is denominated in non-sterling currencies. Reuters also has significant costs denominated in foreign currencies with a different mix from revenue. Reuters profits are, therefore, exposed to currency fluctuations. The approximate proportion of operating profit excluding goodwill amortisation and currency gains attributable to each key currency group was as follows:

Operating profit
by currency

Continental Europe

   - Euro currencies

86%

74%

   - other

13%

15%

US dollar

61%

51%

Japanese yen

18%

13%

Sterling

   - depreciation

(54%)

(54%)

   - other

(38%)

(12%)

Other

14%

13%

Total

100%

100%

Sterling costs exceeded sterling revenues due to the level of UK-based marketing, development, operational and central management costs and depreciation which, is largely accounted for in sterling once an asset has been acquired.

In broad terms using the 2000 mix of profits, the impact of an additional unilateral 1% strengthening of sterling would have been a reduction of approximately £5 million on operating profits before hedging (1999: £4 million).

19

Sterling was stronger on average during the first half of 2000 compared with the first half of 1999. As a result, reported revenue and operating profit before hedging suffered. If 30 June 2000 exchange rates had prevailed throughout the period, revenue would have been approximately £55 million higher and operating profit before currency hedging approximately £17 million higher.

The risk that sterling might strengthen against foreign currencies is hedged within parameters laid down by the Board. The priority in treasury policy is to reduce the risk of year on year earnings volatility to acceptable levels while allowing a degree of flexibility to take advantage of market movements.

The company has adopted value at risk (VAR) analysis as a means of quantifying the potential impact of exchange rate volatility on reported earnings. VAR is a measure of the potential loss on a portfolio within a specified time horizon, at a specified confidence interval. Loss is defined, in this instance, as the diminution in value of rolling 12-month forecast group profits denominated in sterling. Due to the approximations used in determining VAR, the theory provides order of magnitude estimates only but these are useful for comparison purposes.

Reuters estimates that at 30 June 2000 there is a 5% chance that profits forecast for the coming 12 months will deteriorate by more than £69 million as a result of currency fluctuations before hedging and £32 million after hedging (1999: £58 million before hedging and £31 million after hedging). These figures represent the value at risk.

During the first six months of 2000 the average value at risk on forecast profits for the coming 12 months was as follows:

Value at risk

£m

Before 
hedging

After  
hedging

2000

Average

60     

30     

High

70     

34     

Low

49     

27     

1999

Average

61     

35     

The gains on currency hedging activities for the first six months of 2000 are summarised below:

£m

2000

1999

1998

Currency hedging

5  

3  

28  

Interest rate hedging

(1) 

-  

2  

Recognised currency hedging gains were higher in the first half of 2000 compared with the first half of 1999 due mainly to the relative strength of sterling versus other European currencies.

Gains and losses on instruments used for hedging are not recognised until the exposure that is being hedged is itself recognised. Unrecognised gains and losses on instruments used for hedging, and the movements are set out as follows:

20

Currency
hedging

Gains
£m

(Losses)
£m

Net
£m 

Unrecognised
at 1.1.00

16  

(12)  

4 

Arising in
previous years

- recognised
  at June 2000

7  

(5)  

2 

- not recognised
  at June 2000

9  

(7)  

2 

Arising in 2000

- not recognised
  at June 2000

4  

(17)  

(13)

Unrecognised
at 30.06.00

13  

(24)  

(11)

Of which:

- expected to be
  recognised in 2000

7  

(11)  

(4)

- expected to be
  recognised in
  2001 or later

6  

(13)  

(7)

Unrecognised losses of £11 million at 30 June 2000 compare with unrecognised gains of £4 million at 31 December 1999. The deterioration reflects the weaker pound at 30 June 2000 compared with the end of 1999.

Net cash flows are mainly converted into sterling and either applied to reduce debt or invested in money market instruments with financial institutions holding strong credit ratings.

Interest rates are managed using a mix of financial instruments which commence and mature at various dates through to November 2004. Most interest rate hedging relates to the use of interest rate swaps to shorten the interest rate profile on medium term fixed rate notes issued.

Interest rate
hedging

Gains
£m

(Losses)
£m

Net
£m

Unrecognised
at 1.1.00

0  

(17) 

(17)

Arising
in previous years

- recognised at
  June 2000

0  

(4) 

(4)

- not recognised
  at June 2000

0  

(13) 

(13)

Arising in 2000

- not recognised
  at June 2000

2  

2  

4 

Unrecognised
at 30.06.00

2  

(11) 

(9)

Of which:

- expected to be
  recognised in 2000

0  

(2) 

(2)

- expected to be
  recognised in
  2001 or later

2  

(9) 

(7)

Unrecognised losses of £9 million on interest rate hedging at 30 June 2000 are a result of the increase in sterling interest rates since interest rate swaps were put in place and are offset by compensating adjustments to the fair value of the fixed rate notes issued.

In broad terms, using the average net funds position, a 1% increase in global interest rates would have reduced profit before tax in the first half of 2000 by approximately £1 million (first half of 1999: £1 million) excluding the impact of hedging.

7. US GAAP

Reconciliations of net income and shareholders equity under UK and US GAAP are set out on pages 33 to 35. A discussion of the relevant US accounting policies which differ materially from UK GAAP is given on page 75 of the Reuters Group PLC 1999 Annual Report.

Under UK GAAP certain quoted investments such as those made by the Greenhouse Fund are reflected on the balance sheet at cost as fixed assets at cost, whereas under US GAAP such investments are marked to market and adjusted through the US statement of comprehensive income.

The market value of quoted technology companies can change significantly. On a portfolio basis, a 10% move in the market price of the quoted investments in the Greenhouse Fund at 30 June 2000 would increase/decrease the value of the Fund by £24 million. Quoted investments are also exposed to exchange rate fluctuations. A strengthening of sterling against the US dollar would reduce the market value of the Greenhouse Fund.

21

Consolidated Profit and Loss Account
for the six months to 30 June 2000 (unaudited)

22

Consolidated Statement of Total Recognised Gains
and Losses for the six months to 30 June 2000
(unaudited)

23

Consolidated Cash Flow Statement for the
six months to 30 June 2000 (unaudited)

24

Reconciliation of Net Cash Flow to Movement in
Net Funds for the six months to 30 June 2000
(unaudited)

25

Net Cash Inflow from Operating Activities (unaudited)

26

Consolidated Balance Sheet at 30 June 2000
(unaudited)

27

Reconciliation of Movements in Shareholders’
Funds for the six months to 30 June 2000
(unaudited)