Interim Results

1
Interim Results
Financial Highlights
David Grigson
Chief Financial Officer
23 July 2002
2
Financial headlines

• Resilient financial performance in Reuters
• recurring revenue down 2.7
• previous cost saving initiatives delivering.
  Further actions taken in H1
• op margin increases to 12.6 (pre-charge)
• tradition of strong cash conversion maintained
• dividend held at 3.85p
• Good progress in Instinet
• fixed costs down 23
• Improvement in share of Nasdaq trading

3
Reuters - financial performance
H1 H1 Actualm 2002 2001 Growth
Revenue Op costs Op profit (ex restructuring) Re
structuring Op profit Affiliates / investment
income Net interest Profit before Taxation Op
margin (ex restructuring) Tax Rate EPS Dividend
1,542 (1,347 ) 195 (100 ) 95 (30 ) (18 ) 4
7 12.6 34 2.2p 3.85p
1,463 (1,315 ) 148 - 148 (25 ) (11 ) 112
10.2 27 6.4p 3.85p
5 3 32 (36 ) (59 )
Numbers stated before amortisation and net
gains/(losses) on investments
4
Affiliates / investment income

• Share of profit / (loss)
• H1 H1m 2002 2001
• Factiva 2 2
• Radianz (12) (10)
• Tibco Software (21) (10)
• Others /Investment income 1 (7)
• Total (30) (25)

5
Reuters - revenue by type
H1 Growth 2002 Actual Underlying
m

• Recurring 1,405 4 (3)
• Outright 71 (11) (10)
• Usage 66 93 (4)
• Total 1,542 5 (3)

• Recurring decline of 2.7 in line with previous
  guidance
• High tier recurring revenues down 1
• Outright better in Q2 but still impacted by
  cutbacks in IT spend
• Usage revenue now including Bridge Trading

6
Reuters - revenue by customer segment
H1 Growth 2002 Actual Underlying
m
Treasury 513 (1) (1) Investment Banking
Brokerage 447 10 (10) Asset
Management 349 13 (2) Corporates Media 233
0 2 Total 1,542 5 (3)
7
Treasury
H1 Growth 2002 Actual Underlying
m
Recurring 458 (1) (1) Outright 27 2 3
Usage 28 (2) (2) Total 513 (1) (1)

• Recurring - good growth in information products
  offsets declinein conversational dealing
• Outright - strong sales of trade and risk
  management solutions
• Usage matching revenue down in quiet Forex
  markets

8
Investment banking brokerage
H1 Growth 2002 Actual Underlying
m
Recurring 393 5 (9) Outright 20 (33) (32) Usag
e 34 Total 447 10 (10)
n/a
n/a

• Actual revenue up 10 due to inclusion of Bridge
• Underlying revenue declines reflect headcount
  reductionsand IT cutbacks
• Bridge Trading revenues up 52

9
Asset management
H1 Growth 2002 Actual Underlying
m
Recurring 334 15 0 Outright 13 (28) (27) Usag
e 2 Total 349 13 (2)
n/a
n/a

• Actual revenue growth of 13 reflects inclusion
  of Bridge
• Cancellations from traditional Fund Managers
  offset by growth in Private Wealth Management
  sector
• Usage revenue arises through use of Bridge
  trading technologies

10
Corporates media
H1 Growth 2002 Actual Underlying
m
Media 75 (5) (5) Commodities Energy /
Corporates 120 13 10 Research /
Other 38 (22) (5) Total 233 0 2
Media good growth in traditional media
partially offsets continuing decline in online
revenue CE strong outright sales Research re
venue declines mitigated by tight cost control
11
Reuters - operating costs
m H1 2001 1,315 2001 initiatives (65) Reduction
in BT costs (40) Operational gearing (7) New
development spend 18 Other net efficiencies (12)
1,209 Bridge 138 H1 2002 1,347
?7
12
Reuters operating costs looking ahead

• Savings still to come from BT and other actions
  taken last year
• 20m this year and additional 80m next year from
  recent headcount reductions
• BT costs continue to come down
• Bridge integration benefits
• Continuing to address the key drivers of costs
• Complexity and diversity of product architecture
• Number of products
• Location and cost of development centres

13
Other factors - impact on Reuters

• Exchange rates impact on full year
• Small negative (c.2) impact on revenue
• Very limited impact on profits
• FRS17 - minimal impact
• Affiliates financing
• TIBCO and Radianz well funded

14
Instinet - financial performance
H1 H1 Actualm 2002 2001 Growth
Revenue 301 482 (38) Op costs (306) (374) 18 Op
profit (ex restructuring) (5) 108 Restructurin
g (56) - Op profit (61) 108 (156) Net
interest 4 7 Profit before Taxation (57) 115 (150
)
Numbers stated before amortisation and net
gains/(losses) on investments
15
Instinet Q2 highlights

• Share of Nasdaq trading up to 15.9 in June
• Fixed costs down 23 vs Q2 2001
• Headcount down 31 from a year ago
• Product rollouts on plan

Instinet continued to position itself for
long term growth and profitability.
16
Reuters Group - financial performance
H1 H1 Actualm 2002 2001 Growth
Revenue 1,838 1,940 (5) Op costs (1,648) (1,684
) 2 Op profit (ex restructuring) 190 256
(26) Restructuring (156) - Op profit 34 256
(87) Affiliates / Investment
income (30) (25) Net interest (14) (4) Profit
before Tax (10) 227 (105)
Numbers stated before amortisation and net
gains/(losses) on investments
17
Reuters Group - financial performance
H1 H1 Actualm 2002 2001 Growth
Profit before Tax (10) 227 (105) Amortisation
(65) (40) Net gains / (losses) on
investments (13) 170 Reported Profit before
Tax (88) 357 (125)
Tax rate 38 35 EPS (0.5p) 10.4p
Dividend 3.85p 3.85p
Numbers stated before amortisation and net
gains/(losses) on investments
18
Cash flow movement
H1 2002Reuters
H1 2002Instinet
H1 2002ReutersGroup
m
Operating profit/(loss) Depreciation Capex Workin
g capital Operating cash flow (Acquisitions) /
disposals Taxation / other Dividends / share
purchases MovementsNet (debt)/cash12 month
rolling cash conversion
95 90 (53) (60) 72 9 (48) (151) (118) (
820) 132
(61) 23 (9) (129) (176) (8) (39) -
(223) 617
34 113 (62) (189) (104) 1 (87) (151) (341
) (203)
Before amortisation
19
Summary

• Resilience in tough conditions
• Addressing the cost base
• Unaffected by currency and FRS17 exposures
• Investing selectively
• Protecting a strong balance sheet