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|REUTERS GROUP PLC ANNUAL REPORT AND ACCOUNTS 1999
|-------------------------------------------------

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|[LOGO]



REUTERS GROUP PLC ANNUAL REPORT AND ACCOUNTS 1999
|-----------------------------------------------------------

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|Reuters in the internet age


At the dawn of a new millennium, Reuters embarks on a range of
major initiatives to accelerate its use of web technologies, open new markets
and migrate its core financial business to an internet-based model.


Reuters vision is to make financial markets really work on the
Internet. The company plays an important role in the functioning of the worlds
financial markets. The Internet is prompting dramatic shifts in the financial
landscape, giving Reuters the opportunity to deliver products in a different
way to many more people needing to manage their interests more dynamically.


In todays world, Reuters is already present across all major
parts of the electronic trading value chain inside its customers organisations.
The process starts with tailored information in front of an individual trader
in a dealing room and feeding seamlessly into spreadsheets to facilitate
analysis. Analysis generates the knowledge for buying or selling successfully.
Risk positions are adjusted and at the touch of a button the user can transact,
settle and clear.


E-commerce is about making money by going from knowing to doing in
minutes or seconds. Reuters, with its indivisible combination of content and
technology, is well positioned to extend to each link of the information and
technology value chain and to offer integrated solutions to a broader range of
financial customers.


The Internet recognises no frontiers and enables Reuters to
serve this new, wider audience of financial activists. The new internet age
requires fast decisions, an appetite for risk, and an ability to adapt
organisations quickly. The new structure Reuters adopted in 1999 moved the
company from a country-based outlook to a business-line structure and continues
to evolve. Further changes will make Reuters more customer-focused, more
e-enabled, and lock into wider audiences to exploit the opportunities of the
Internet.


The company is now focused on three business areas: Reuters
Financial, which includes the Reuters Information and Reuters Trading Solutions
divisions; Instinet, the electronic equities and fixed income brokerage; and
Reuterspace, formerly named Reuters Ventures, the vehicle for developing new
businesses outside the core financial markets. We believe all of these business
areas are well positioned to exploit the opportunities of the Internet and
e-commerce.


Front cover. Fireworks burst from the Eiffel Tower in Paris as
part of global festivities to mark the new Millennium on 1 January 2000.
Philippe Wojazer/Reuters


Lighting of the Eiffel Tower Copyright SociétéNouvelle dExploitation
de la Tour Eiffel. Firework display designed and staged by Yves Pépin and
Christophe Berthonneau Production ECA2/Group F.


The first dawn of the new Millennium is seen in Gisborne, New
Zealand, at 5:46am on 1 January. Gisborne is the first city to see the light of
each new day. Sue Ogrocki/Reuters
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|Financial highlights
|--------------------

|                                        | 1999£m |        | 1998£m |        | %CHANGE
|--------------------------------------- | ------ | ------ | ------ | ------ | -------
|                                       
|Revenue                                 |        | 3,125  |        | 3,032  |        
|Earnings before interest, tax,          |       
|depreciation and amortisation (EBITDA) |        | 1,008  |        | 960    |        
|Operating profit                        |        | 549    |        | 550    |        
|Profit before tax                       |        | 632    |        | 580    |        
|Pre-tax profit margin                   |        | 20.2%  |        | 19.1%  |        
|Taxation                                |        | 207    |        | 196    |        
|Profit after tax                        |        | 425    |        | 384    |        
|Post-tax profit margin                  |        | 13.6%  |        | 12.7%  |        
|Return on tangible fixed assets         |        | 57.5%  |        | 48.2%  |        
|Return on equity                        |        | 102.0% |        | 78.5%  |        
|Free cash flow                          |        | 402    |        | 490    |        
|Net funds/(debt)                        |        | 41     |        | (3     | )      
|                                       
|                                       
|
|                                       
|Basic earnings per ordinary share       |        | 30.2   | p      | 26.7   | p      
|Earnings per ADS*                      |        | $2.91  |        | $2.58  |        
|Dividends per ordinary share            |        | 14.65p |        | 14.40p |        
|Dividends per ADS* (see page 80)        |        | 87.90p |        | 87.70p |        

|+ | EBITDA has been restated to include profits and losses derived from the disposal of
subsidiary undertakings and fixed asset investments.
|- | ----------------------------------------------------------------------------------------------------------------------------------------

|* | Each ADS represents six ordinary shares.
|- | ----------------------------------------

| | A nominal exchange rate of US$1.61=£1 has been used for convenience.
|- | --------------------------------------------------------------------

|The following supplementary information is provided for those
who track Reuters performance on a pre-goodwill basis:
|--------------------------------------------------------------------------------------------------------------------

|                                                       
|-------------------------------------------------------
|
|                                                       
|Pre-tax profit excluding goodwill                      
|Adjusted earnings per ordinary share excluding goodwill
|                                                       

|This annual report and accounts includes forward-looking
statements within the meaning of the US securities laws. For a discussion of
factors which could affect future results, reference should be made to the Cautionary
Statements on pages 41  43.
2      Reuters Group PLC Annual
Report 1999
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|FOR A MORE DETAILED BREAKDOWN TURN TO P86


Five year summary



[THE FOLLOWING TABLES WERE REPRESENTED BY BAR
CHARTS IN THE PRINTED MATERIAL]
|----------------------------------------------------------------------------------------------------------------------------------------------

|95    | 96 | 97    | 98 | 99   
|----- | -- | ----- | -- | -----
|2,703 |    | 2,914 |    | 2,882

|Revenue £million
Grew 3% at actual exchange rates and 1% at comparable exchange rates
|-------------------------------------------------------------------------------------



|95  | 96 | 97  | 98 | 99 
|--- | -- | --- | -- | ---
|558 |    | 652 |    | 626

|Profit before taxation£million 
Up 9% at actual exchange rates
|--------------------------------------------------------------



|95  | 96 | 97  | 98 | 99 
|--- | -- | --- | -- | ---
|801 |    | 923 |    | 909

|Earnings before interest, tax, depreciation and amortisation (EBITDA)£million
Grew 5% at actual exchange rates and 6% at comparable rates
|-----------------------------------------------------------------------------------------------------------------------------------------



|95   | 96 | 97   | 98 | 99  
|---- | -- | ---- | -- | ----
|23.2 |    | 27.3 |    | 24.0

|Basic earnings per ordinary share penceIncreased 13% in 1999
|------------------------------------------------------------



|95   | 96 | 97    | 98 | 99   
|---- | -- | ----- | -- | -----
|9.80 |    | 11.75 |    | 13.00

|Dividends per ordinary sharepence
Increased by 2% in 1999. Dividend cover increased to 2.1 in 1999 from 1.9 in 1998
|-------------------------------------------------------------------------------------------------------------------



|95   | 96 | 97   | 98 | 99  
|---- | -- | ---- | -- | ----
|52.7 |    | 60.7 |    | 61.0

|Cash flow per ordinary sharepence
Increased by 4% in 1999. The ratio is defined on page 87
|------------------------------------------------------------------------------------------



|Three year divisional revenue summary
|-------------------------------------

|97    | 98 | 99   
|----- | -- | -----
|1,477 |    | 1,531

|Reuters Information
£million Revenue grew 6% at actual rates and 4% at comparable rates
|---------------------------------------------------------------------------------------



|97  | 98 | 99 
|--- | -- | ---
|800 |    | 827

|Reuters Trading Systems
£million Revenue declined 4% at actual rates and 5% at comparable rates in 1999
|-------------------------------------------------------------------------------------------------------



|97  | 98 | 99 
|--- | -- | ---
|383 |    | 446

|Instinet £million
Revenue grew 18% at actual rates in 1999 and 15% at comparable rates
|--------------------------------------------------------------------------------------



|97  | 98 | 99 
|--- | -- | ---
|167 |    | 154

|Reuters Ventures£million
Revenue grew 2% at actual rates and remained constant at comparable rates
|--------------------------------------------------------------------------------------------------



---

|[PICTURE OF SIR CHRISTOPHER HOGG, CHAIRMAN]
From the Chairman. The view opening in front of us now is
Internet-dominated and it is good to be able to get to grips with it as a
total priority, having plotted our course towards it for many years.


Managements primary responsibility is for a companys results;
only indirectly can it be held responsible for the share price. Share prices,
however, are a vital signal from markets to managements with regard to value;
which is why we were pioneers in 1993 in using the share price as the basis for
our long-term incentive remuneration. It is incumbent on managements to read
these market signals and to ensure that shareholders are given as clear a
picture as possible, not just of results for past periods but also of future
potential to which value may be ascribed. This is especially the case with
Reuters now, given the companys deep and long-standing immersion in the
business of electronic communication and its links with the Internet. So this
particular Annual Report focuses more than usual on our course as we see it
looking forward, as well as looking back to the financial outcomes for 1999.


The world has now crossed the watershed between the two
centuries, so far without great computer mishap. To a profoundly computer-based
business like Reuters, this is even more of a milestone than the smoothness of
the transition to European Monetary Union on 1 January 1999. The view opening
in front of us now is Internet-dominated and it is good to be able to get to
grips with it as a total priority, having plotted our course towards it for
many years. For we see the Internet as a great and enabling opportunity to
capitalise on our strengths. Since the Reuters Monitor Dealing Service was
introduced in 1981, we have been using electronics and telecommunications to
promote business-to-business e-commerce and to build communities. Embracing
the Net, was the slogan on the cover of our 1996 Annual Report. As the
available technology has evolved, we have monitored its leading edge and gauged
our strategy accordingly, always with an eye to helping professionals and
markets work better. We can now really begin to see how big a difference our
embrace of the Internet and its technology will make when backed by the Reuters
brand and by the companys skills, experience, market positions and global
reach.


Of course this means profound changes of a kind which shake all
companies when they have to maintain competitive edge in a fast-changing
environment. The hiving off of our network is one such



4      Reuters Group PLC Annual
Report 1999
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|change; the release of
assets and people via public offerings into the greater freedom but greater
challenge of independent public quotation is another; the creative destructionof
long-standing parts of the business in pursuit of competitive costs is a third;
and changing the skills balance in order to learn and ride with what markets
need is a fourth. What will not change, as the pervasive glue of the Reuters
group, will be the values which have served us so well for so long: speed,
accuracy, security, independence and freedom from bias in our handling of
information; neutrality, integrity and commitment in our promotion of
e-commerce and nurturing of commercial communities.



These values are embodied in the Reuters Trust Principles, to
which the Directors are bound under the Articles of Association and which the
Founders Share Company is pledged to defend with equity carrying commanding
voting rights under certain circumstances. The chairmanship of the Founders
Share Company has now passed to Pehr Gyllenhammar who, as a director of Reuters
from 1984 to 1997, had long experience of watching the Reuters Trust Principles
at work in the business. We wish him well and will give him every co-operation;
and we warmly thank his predecessor, Sir Frank Rogers, for his work as a
Trustee and as Chairman of the Trustees.


The Reuters Board is also changing. Two executive directors,
André Villeneuve and John Parcell, have now left the Board. Each served Reuters
for more than 30 years and made a major contribution to the tremendous
development of the company over that period. Of the non-executive directors,
Bob Bauman and David Walker have completed six-year terms and are retiring.
Their experience and ability, allied to unfailing interest and commitment, have
benefited Reuters greatly. To all four I offer my warmest thanks on Reuters
behalf; and I welcome to the Board Philip Green as a new executive director and
Dennis Malamatinas as a further non-executive director.


In my statement in the 1993 Annual Report, I commented that the
Founders Share Companys power to confer immunity from takeover places a
particular responsibility on the Board of Reuters to govern the company in a
way which does not call that immunity into question. It is a point which the
Board has continually in mind and particularly in these times when it is so
challenging to judge enduring value.


Sir Christopher Hogg Chairman



Reuters Group PLC Annual Report 1999      5
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|Reuters, where the action is. Chief Executive Peter Job sets
out how our new strategy will drive the business forward in the internet age
and deliver to our increasing customer base.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
vision  to make financial markets really work on the Internet.
|- | -------------------------------------------------------------------

| | The
strategy  Reuters Financial. Linking Reuters Information and Reuters Trading
Solutions to anticipate and meet the e-commerce needs of the financial markets.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Reuters
Information  making the significant investment to migrate the business to the
Internet over four years.
|- | ----------------------------------------------------------------------------------------------------------------

| | Reuters
Trading Solutions  providing integrated trading and technology answers for
major customers globally.
|- | -------------------------------------------------------------------------------------------------------------

| | Joint
ventures to attack new markets  linking with Equant to establish a new secure
financial extranet.
|- | --------------------------------------------------------------------------------------------------------

| | Reuterspace
 created for rapid penetration of wider markets in business-to-business,
consumer finance, and media.
|- | ------------------------------------------------------------------------------------------------------------------

| | Instinet
 poised for global expansion, broadening into retail and fixed income.
|- | --------------------------------------------------------------------------------

|6      Reuters Group PLC Annual
Report 1999
|-------------------------------------------

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|Reuters Group PLC Annual Report 1999      7
|-------------------------------------------

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|[PICTURE OF PETER JOB, CHIEF EXECUTIVE]
Peter Job talks about the new Reuters and his projections for
future growth.


The internet/mobile age will have a major impact on the lives
of everyone. What opportunities does this present for Reuters?


We see the Internet as a fast and deep current running through
all our activities. This current will gain strength from the development of
mobile and broad band digital technologies. If you harness it, you can reap
potentially large benefits.


Our first priority at Reuters is to achieve this in the
financial markets. We believe our central position in these markets makes our
vision very real. And beyond our financial markets other markets beckon.


Reuters purpose is to help organisations and individuals work
more effectively through access to information and software which enables
e-commerce to be conducted.


Whereas we have historically dealt with customers in the
hundreds of thousands, we will now be able to serve tens or even hundreds of
millions of people  both those employed within financial institutions and
corporations in their own business activities or managing their own wealth.
This is a breakthrough for Reuters.


So what will be the effect on your business?


The first effect is to enlarge greatly the lower tier of the
market  the Internet will help us find new customers who would not have been
profitable to us before. We are developing a new business model which will
accelerate the process of porting our core business over to internet
technology. This will involve changes to the Reuters product range with new
price points and new offerings.


The new business model will help clients cut their costs and
also reduce our own costs of administration and support. The key to us will be
to develop the thin client model allowing data to be downloaded from a remote
server together with the software needed to display it.


How are you reorganising the group to capitalise on the
Internet?


Firstly, it is important to recognise that Reuters has been
embracing internet technology for several years so, this reorganisation is a
natural evolution of this process.


The company is now focused on three business areas: Reuters
Financial, the core business, is grouped around the financial markets business
area. It encompasses Reuters Information and Reuters Trading Solutions,
previously known as Reuters Trading Systems. The second is Instinet, our
electronic brokerage subsidiary. The third is Reuterspace whose origins lie in
Reuters Ventures, a division that was set up last July to cover our new
internet activities.


As part of these three clear business areas, we also intend to
develop new joint ventures with partners to increase our exposure to the
Internet and its associated technology.


So how will profits be made from the Internet?


This is a longer-term question since very few people currently
make profits from the Internet. However, the potential for revenue enhancement
is significant and, unlike many dot.com start-ups, we already derive a
worthwhile internet sales stream.


It will be essential in an internet world to have multiple
assets. In the financial market that means text and video news, figures,
performance measurements, analysis, research, historical database access,
transaction applications, software and credit information. We already have all
this and much more. We are taking many of these assets on to the Internet now
with the establishment of our own financial portal.


Top line growth in your core businesses has slowed down over
the last couple of years. What levels of growth do you see in the market for
the core businesses?


The middle and upper levels of the information market have the
potential to grow at a mean of about 5-10% in market terms per annum. Within
these categories there are variations by sector. For example, asset management
still looks set for faster growth whereas foreign exchange is probably
declining marginally. This will make it something of a challenge for us to
outperform the mean in the immediate future. At the lower end, we see our
customers more



8      Reuters Group PLC Annual
Report 1999
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|and more anxious to reinforce their retail franchise by
electronic means, including the delivery to their clients of information and
transactions software bought in from vendors. This market is growing at about
30% per annum from a small base. We are well placed to compete for this
business and it should help to boost our revenue line in future years.


What does this all mean for Reuters group profits overall?


In Reuters Financial we are examining how profits can grow at a
faster rate than revenue. We should receive a powerful nudge in this direction
from the growing e-commerce trend. There are excellent opportunities to reduce
our infrastructure costs in an internet world. In this area of our business
sustainable earnings growth is a priority. While Reuters Financial will
continue to make progress at constant exchange rates over the next two years,
given the restructuring costs, its profits are bound to be significantly lower
in 2000. Group profits overall will reflect this as well as the impact of
accelerated group-wide investment programmes.


There are good growth opportunities for Instinet but the
development of a retail internet product will require further investment.


Reuterspace aimed at a new market on the Internet is a
different case. We believe our shareholders want this division to invest
strongly for the future and will understand if there is a drag on profits from
these investments, always provided that they see us continuing to do good
things. Initial earnings growth is less important here than grabbing the right
piece of internet space and developing it vigorously. As the record of our
Greenhouse Fund shows, there are currently rich rewards for those who make the
right assessments.


How are you going to improve returns to shareholders from the
new Reuters?


We believe that in the future Reuters returns to shareholders
cannot be judged on the historical model of earnings alone. In the future,
Reuters will be judged in terms of developing the value of its assets,
particularly in Instinet and Reuterspace. We will also be judged on the
creation and success of joint ventures with new partners.


What does that imply for your dividend policy?


We are going to put in place a dividend policy that we believe
will stand the test of time in a rapidly changing internet world. In this world
we believe it is not appropriate for us to carry on with a dividend policy
simply based on earnings growth  you cannot consolidate the results of new
activities and expect them to form the basis of a dividend policy. So, a
sensible way for us to support our dividend policy is to do so from the core
business, which is strongly cash generative and will support future dividends.
Our dividend policy will therefore be based on Reuters Financial and we have
set a minimum dividend cover of 1.7 times earnings before goodwill, which we
will seek to improve to 2 times. We go forward into an exciting new future with
returns to shareholders based on a combination of asset value creation and a
dividend stream based on earnings growth and strong cash flow.


You floated TIBCO Software very successfully last year. Will
you be floating other parts of Reuters?


We do not feel committed to stripping down the group, and
diluting its strategic purpose, by floating operations just to realise a fancy
price. It is very important to have the right grouping of assets for the
future, based on a core set of values represented by our traditional and wholly
unchanged effort to be truthful as well as swift.


There may be sound reasons for utilising a flotation for
certain assets  but each case must be weighed carefully on its merits. A
flotation can create businesses that were not there before  this happened when
we floated TIBCO Software in July, empowering talented people to build an
internet infrastructure company out of software originally developed for
dealing rooms. On 31 December 1999 TIBCO Software had a market value of US$9.2
billion.


Flotations also provide us with the ability to create business
combinations which we could not have achieved so well on our own. In framing a
collection of assets, we do not need to own them all 100%, as we used to do.
There are considerable opportunities to develop Instinet, particularly in
retail and fixed income initiatives. We may well float this business and at the
moment this is under consideration. Turning to the Greenhouse Fund, part of
Reuterspace, we do intend to float a portion of this asset to expand the
activity of the Fund.


Reuters Group PLC Annual
Report 1999      9
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| | TO FIND OUT MORE VISIT [LOGO] www.reuters.com/
| | ----------------------------------------------

|Reuters Information (RI) is responsible for the development and
sale of information products for professionals in financial institutions and
their clients.


[PICTURE]Tom Glocer, Chief ExecutiveReuters Information.


[PICTURE OF MILLENNIUM CELEBRATIONSIN TIMES SQUARE, NEW YORK, Brad Rickerby/Reuters]
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|             | 99 | 98     | 97
|------------ | -- | ------ | --
|Revenue      |    | 1,619  |   
|Cost         |    | (1,366 | ) 
|Contribution |    | 253    |   
|Margin       |    | 16     | % 
|Employees    |    | 9,239  |   

|The divisions broad product range extends from full service
information and software applications for traders in the dealing room, brokers
and investment managers, through to internet-delivered solutions linking
financial professionals to their clients. 3000Xtra launched in 1999 is our new
flagship professional product exploiting the latest developments in
applications technology.


RI had a successful year financially in 1999 showing good
profit growth against a background of revenues building more slowly. As
described below, we are making the investments we believe are needed to grow
our business in the years ahead.


The professional financial market is segmenting into two
groups: a more mature, upper segment of around a million users expanding at
single-digit growth rates; and a larger enterprise-wide market with faster
growth in users and revenue. RI is well positioned in both these segments. In
1999 the number of users of the upper tier 3000 product line grew to 71,000 and
the number of off-trading floor users grew to just short of 100,000.


The market consisting of the clients (both individual and
institutional) of financial professionals is expanding even more rapidly. In
close co-operation with the Reuters Trading Solutions division (RTS), we offer
a variety of solutions to enable financial professionals to deliver Reuters
content to their clients.


We have announced a major investment programme costing £500
million to accelerate the transformation of RIs business to an IP-based,
e-commerce model. This investment includes a reorganisation charge of £300
million over the next two years and a further £50 million per annum over four
years to develop e-architecture. This migration will be facilitated by the
recently announced joint venture with Equant to create a business-to-business
IP network.


Through these investments, we expect to expand our customer
base by offering new products at more price points, delivered and supported
through a lower cost infrastructure. We will also work closely with RTS and
Reuterspace to build loyal communities of users of financial information and
applications.


We are excited about the challenge ahead of us and believe we
have the people, skills and resources to succeed.



10      Reuters Group PLC Annual
Report 1999
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---

| | TO FIND OUT MORE VISIT [LOGO] www.reuters.com/
| | ----------------------------------------------

|Reuters Trading Solutions. Reuters financial customers are
increasingly looking for global solutions to their information and technology
needs as they face the challenges of a rapidly changing business landscape.


[PICTURE]Philip Green, Chief ExecutiveReuters Trading Solutions.



[PICTURE OF MILLENNIUM CELEBRATIONSIN SYDNEY, Mark Baker/Reuters]
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|             | 99 | 98    | 97
|------------ | -- | ----- | --
|Revenue      |    | 780   |   
|Cost         |    | (550  | ) 
|Contribution |    | 230   |   
|Margin       |    | 30    | % 
|Employees    |    | 4,105 |   

|They are establishing new business models and adapting them to
the Internet. Reuters believes it is uniquely placed to provide total solutions
and support for its customers across the world. Reuters Trading Systems is
renamed Reuters Trading Solutions (RTS) to reflect this.


The divisions mission is to become a global leader in
technology, knowledge and related services, enabling customers to maximise
performance in the evolving financial community.


RTS encompasses two business elements: Solutions and
Transactions. The level of service will be extended by the formation of a
Reuters Consulting group, tasked with developing and implementing customer
solutions based on Reuters technology products.


Reuters believes the solutions business to be a growth market
as customers look for assistance in reaching and retaining their own clients
through electronic means and increasing internal efficiency through
straight-through-processing.


The Solutions business is subdivided into two main elements:
Applications and Enterprise Solutions and Retail Solutions. Applications and
Enterprise Solutions include the software infrastructure business, which
provides sophisticated software for the enterprise-wide distribution of
real-time information and order flow data within customer organisations, and
for pre- and post-trade risk management applications. Progress in 1999 was
affected by the reluctance of customers to install new systems at the beginning
of the year because of the euro and the millennium restrictions on project
implementation in the second half of the year.


Retail Solutions focuses on enabling Reuters customers to
better serve their customers via the Internet. This ranges from efficiently
gathering order flow information from individuals buying securities, through to
building and providing information content for internet portals.


The Transactions group comprises Money/Foreign Exchange and
Securities Transactions. Its objective is to focus on developing and
maintaining efficient business-to-business transaction communities with managed
services across the full range of financial instruments.


Foreign exchange trading remains a valuable and profitable
business for Reuters although the market has contracted, trading volumes have
declined and there has been a shift away from traditional instruments such as
spot FX to more complex ones. Reuters recently launched Dealing 3000, the new
generation of Reuters Dealing products, as a first step towards meeting the
demands of the changing market.


Reuters Group PLC Annual
Report 1999      11
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| | TO FIND OUT MORE VISIT [LOGO] www.reuters.com/
| | ----------------------------------------------

|Branding for a larger audience. Reuters is promoting the power
and vigour of its brand on the Internet. It already possesses one of the worlds
best known brand names.


[PICTURE]Jean-Claude Marchand,Group Marketing Director.


[PICTURE OF MILLENNIUM CELEBRATIONSIN MOSCOW, Vladimir Alenin/Reuters]



It stands for trust. It means speed, accuracy and independence
in news and information. Reuters name is widely known to the worlds newspaper
readers and to the 40 million individuals already looking at Reuters
information on 900 websites and portals.


Reuters is a leading provider of information to financial
professionals but the Internet is creating the need for a much wider
decision-making audience to be better informed at work, on the road, or at
home. The world is becoming real-time, and technology is making information
available to individuals any time, any place.


The opportunity is to make Reuters brand their natural first
choice.


Reuters wants to be trusted not just for fundamental integrity,
but for its ability to help individuals be better informed in making crucial
decisions, in a way they never could before.


Since its early beginnings, Reuters has been first with the
news and first to use new technologies. The Internet is a natural medium for a
company with this experience and track record. The planned Reuters personal
finance portal will give private individuals access to the same trusted,
dynamic, innovative source that has served financial market trading rooms for
years.


Reuters has been increasing its brand activity and will be
advertising on television for the first time. The Reuters logo has been
redesigned to give it greater impact and to make it more visible.



12      Reuters Group PLC Annual
Report 1999
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| | TO FIND OUT MORE VISIT [LOGO] www.reuters.com/
| | ----------------------------------------------

|Instinet is the worlds largest electronic agency brokerage
firm and a member of 18 equities exchanges in North America, Europe and Asia.


[PICTURE]André Villeneuve, Chairman Instinet.



[PICTURE OF MILLENNIUM CELEBRATIONSIN NEW YORK, Jim Bourg/Reuters]
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|             | 99 | 98    | 97
|------------ | -- | ----- | --
|Revenue      |    | 525   |   
|Cost         |    | (396  | ) 
|Contribution |    | 129   |   
|Margin       |    | 25    | % 
|Employees    |    | 1,379 |   

|Its clients include institutional investors and equity brokers. It plans to broaden
its product line and customer base in 2000, with the launch of a retail
electronic brokerage business and an electronic brokerage for fixed income.


During 1999 Instinet undertook a range of new ventures and
alliances aimed at participating in the developments in the worldwide financial
markets. Equity markets are undergoing significant change due to a combination
of forces, including regulatory and technological evolution, globalisation and
the rise of the retail investor. Instinet seeks to improve the investment
performance of its clients by offering them instant access to global liquidity,
enhanced efficiency and greater opportunities to reduce transaction costs.


The US equities business accounts for nearly 80% of total
revenue. NASDAQ volumes grew strongly although revenue was impacted by some
pricing pressure. Instinets international revenue grew by 39% at comparable
exchange rates in 1999, with trading volumes in international markets
increasing 36% over the previous year. Business in Europe was particularly
strong.


Instinet led a consortium in 1999 that acquired a majority
interest in Tradepoint Financial Networks plc, a publicly-quoted for-profit
exchange based in the UK. In the US, Instinet acquired a minority stake in
Archipelago, a leading electronic communications network that is seeking to
become a self-regulating US stock exchange.


Other developments included an agreement with E*Trade Group
which allows retail investors after-hours access to Instinets deep pool of
equity orders. An advertising campaign raised Instinets market profile and
strengthened its brand name.


In addition to its core equities trading brokerage business,
Instinet also provides trading research and analytics, the latter to assist
institutional investors in better understanding and improving their trading
performance.


Reuters Group PLC Annual
Report 1999      13
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| | TO FIND OUT MORE VISIT [LOGO] www.reuters.com/
| | ----------------------------------------------

|Reuterspace. Reuters Ventures has been renamed Reuterspace. It
groups businesses and assets together to realise the internet-enabled
opportunities for Reuters to reach wider audiences at work and at home through
fixed or mobile devices.


[Picture]Rob Rowley, Chief Executive, Reuterspace.


[PICTURE OF MILLENNIUM CELEBRATIONSIN EGYPT, Aladin Abdel Naby/Reuters]
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|             | 99 | 98    | 97
|------------ | -- | ----- | --
|Revenue      |    | 157   |   
|Cost         |    | (172  | ) 
|Contribution |    | (15   | ) 
|Employees    |    | 1,344 |   

|It includes the following activities: Reuters Media; Reuters
Enterprise; Reuters Personal; Reuters Mobile; Reuters Greenhouse; and Reuters
Partners.


Reuters Media includes both traditional and internet media
sales. It builds on Reuters extensive real-time output and databases of textual
news, still photographs and news video footage to provide services to the worlds
media as well as over 900 websites globally with an estimated 40 million users.
Revenue from sales of internet media products grew by 226% in 1999.


Reuters Enterprise will address the increasing demand for
information in the business-to-business e-commerce market. It will expand and
exploit a range of acquisitions and developments already made. In 1999 Reuters
acquired a majority stake in TowerGroup of Boston MA, its first acquisition in
the IT research advisory market. Together with an earlier investment in
Datamonitor of the UK, the TowerGroup acquisition strengthens Reuters position
in the high-quality, specialised research information market. Reuters has also,
subject to regulatory approval, agreed to acquire ORT, the market leader in
France for company and business credit information.


Reuters Personal will develop a new financial portal to provide
services to the consumer finance market. This broadens the market for Reuters
unique range of content. Reuters also plans to form a new joint venture in
Europe with Multex to offer a financial portal aimed at the high-end retail
investor.


Reuters Mobile builds on its Wireless Services, a new venture
formed in 1999 to establish a strong position in the new and rapidly expanding
market being created by the wireless application protocol (WAP). During 1999
Reuters began delivering user-defined content to mobile telephones. Reuters
proposed joint venture with Aether Systems will develop and provide wireless
data applications in Europe as part of the development of mobile services.


Reuters Greenhouse Fund invests in companies whose technology
or business models are of specific relevance to Reuters (see opposite page).


Reuters Partners will find ways of increasing co-operation with
Reuters growing group of partner companies. They include Factiva, the joint
venture with Dow Jones Inc., which merged the businesses of Reuters Business
Briefing and Dow Jones Interactive in 1999.



14      Reuters Group PLC Annual
Report 1999
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| | TO FIND OUT MORE VISIT [LOGO] www.reuters.com/
| | ----------------------------------------------

|Reuters Greenhouse. The Greenhouse Fund reached an important
milestone when the value of the publicly traded stock in its portfolio reached £438
million at year end in a series of unprecedented surges in technology stocks in
late 1999.


[PICTURE]David Lockwood, CEO Greenhouse Fund;John Taysom, Founder and
CEO Greenhouse Fund; Norman Fiore, AssociateGreenhouse Fund.


[PICTURE OF MILLENNIUM CELEBRATIONSIN LONDON, Dylan Martinez/Reuters]


Five US investments: Intertrust, Digimarc, StarMedia,
Phone.com, and Persistence, all held Initial Public Offerings (IPOs) on NASDAQ
in 1999. The Fantastic Corporation, of Switzerland, had an IPO on the German
Neuer Markt, the Funds first European investment to go public. There have now
been 11 IPOs and three trade sales from the Greenhouse, one sale being to a
public company, EdgarOnline, for stock. The pipeline of qualified deals remains
strong at the beginning of 2000. Full details of the current portfolio can be
found on www.reuters.com/greenhouse/


In 1999 Reuters continued to take advantage of favourable
market conditions to sell down some earlier investments, re-investing in new
start-up opportunities. In order to develop the Fund at a faster pace and to
build on its success, Reuters has appointed advisers to prepare an IPO for a
portion of the Greenhouse Fund in 2000.


Reuters established the Greenhouse Fund in 1995 to invest in
internet start-ups and new technologies and includes stakes in some of the worlds
best known internet companies. The Fund was one of the first external investors
in Yahoo!, the internet directory. In 1999, Greenhouse activity accelerated and
broadened considerably. It invested in start-up companies in the US, Europe,
Israel and Japan, bringing the number of investments at the end of 1999 to 38.
The investment focus continues to be on infrastructure investments that enable
content publishing and e-commerce over public networks. The Fund focuses on
technologies that can be of use to Reuters and on selected, early stage, niche
content.


TIBCO Software Inc.


TIBCO Software is a leading provider of real-time
infrastructure software for the Internet and enterprise. It enables businesses
to dynamically link internal operations, business partners and customer
channels.


TIBCO Software completed an IPO in July 1999 and is now quoted
on NASDAQ. At 31 December 1999 Reuters held a 62.3% stake in the company on an
undiluted basis but its voting rights were restricted to 49%.


TIBCO Software builds on the software which has been successful
in dealing rooms to create applications for the Internet. The technology
driving the value of TIBCO Software remains available to Reuters especially in
providing solutions to larger customers.



Reuters Group PLC Annual
Report 1999      15
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|Board of Directors


[PICTURES OF NON-EXECUTIVE DIRECTORS]


Non-executive Directors


1 Sir Christopher Hogg (1984, Chairman 1985) Chairman of Allied
Domecq PLC since April 1996. Director of SmithKline Beecham plc and member of
the International Council of J.P. Morgan. Former Chairman of Courtaulds PLC
1980-1996 (Chief Executive 1979-1991); former director of the Bank of England
1992-1996. Age 63.


2 Robert (Bob) Bauman (1994) Former Chairman of BTR plc (May
1998-February 1999) and former Chairman of British Aerospace plc (1994-May
1998). Former Chief Executive of SmithKline Beecham plc (1989-1994). Director
of Invensys plc, Union Pacific Corporation, CIGNA Corporation, Hathaway
Holdings, Inc, Morgan Stanley Dean Witter and Russell Reynolds Associates. Age
68.


3 Sir John Craven (1997) Former member of the Board of Managing
Directors of Deutsche Bank AG and former Chairman of Deutsche Morgan Grenfell
plc (1989-1997) and former non-executive director of Rothmans International
B.V. Chairman of Lonmin Plc. Age 59.


4 Dennis Malamatinas (2000) Chief Executive Officer of Burger
King Corporation since 1997 and a director of Diageo plc since 1998. Age 44.


5 Roberto Mendoza (1998) Vice Chairman and a Director of J.P.
Morgan & Co Inc. He joined J.P. Morgan in 1967 and was assigned to London early
in his career. He left in 1972 to pursue graduate studies, returning to the firms
New York office in 1975 to work in international corporate finance. Age 54.


6 Richard (Dick) Olver (1997) A group managing director of BP
Amoco plc and CEO, Exploration and Production. Member of the Institution of
Civil Engineers. A governor of New Hall School. Age 53.


7 Charles Sinclair (1994) Group Chief Executive of Daily Mail
and General Trust plc. A director of Euromoney Institutional Investor PLC and
Schroders Public Limited Company. Age 51.


8 Sir David Walker (1994) Executive Chairman of Morgan Stanley
Dean Witter (Europe), Chairman of Morgan Stanley International Inc. and a
member of the Management Committee of the Board of Morgan Stanley Dean Witter
in New York. Former Deputy Chairman of Lloyds Bank plc, former Chairman of the
Securities and Investments Board and former director of the Bank of England.
Age 60.



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|Executive Directors


9 Peter Job (1988) Chief Executive since 1991. Joined Reuters
as a journalist in 1963. From 1971 he worked to develop the companys business
in Latin America, Africa, Asia and the Middle East. From 1978 until 1991 he
headed the companys business in Asia. Non-executive director Schroders Public
Limited Company and Glaxo Wellcome plc. Former non-executive director Diageo
plc. Age 58.


10 Philip Green (2000) Executive Director and Chief Executive
of Reuters Trading Solutions. He joined Reuters in September 1999 after being
Chief Operating Officer, Europe and Africa, at DHL International, based in
Brussels. He joined DHL in 1990 as Regional Director, Northern Europe having
previously worked in both the UK and US. Age 46.


11 Jean-Claude Marchand (1996) Executive Director, Group
Marketing Director and Chairman of Reuters Information. Managing Director,
Continental Europe since 1989, with Middle East and Africa since 1995. Joined
Reuters in 1971 as a sales executive and became Sales and Marketing Manager,
Asia in 1978. A Swiss national, he has held senior management positions in
Europe since 1979. Age 53.


12 John Parcell (1996) Was Executive Director of Reuters Group
PLC and Chief Executive of Reuters Information division throughout 1999. He
left the board in January 2000.


13 Robert (Rob) Rowley (1989) Chief Executive of Reuterspace
division. Finance Director since 1990. Joined Reuters in 1978, taking financial
responsibility for Europe in 1981. He became Joint Company Secretary in 1988,
Group Financial Controller in 1989, and Company Secretary from 1991 to 1993.
Responsible for new business information products, media and new business
ventures since 1996. Non-executive director Prudential plc since July 1999. Age
50.


14 David Ure (1988) Executive Director responsible for group
technical strategy. Designated non-executive Chairman of the joint venture
telecommunications network company to be formed in 2000 by Reuters and Equant
NV. Also responsible for Reuters Trading Systems division until February 2000.
From 1992 to 1998, he was responsible for group marketing and technical policy.
Before that he headed Reuters operations in Europe, Middle East and Africa. He
joined the company in 1968 as a trainee journalist. Non-executive director of
Woolwich PLC from 1998. Age 52.


15 André Villeneuve (1988) Was Executive Director of Strategic
Planning throughout 1999. He is Chairman of Instinet Corporation. He left the
board in February 2000.


Group Executive Committee


Peter Job (Chair), Philip Green, Jean-Claude Marchand, Rob
Rowley, David Ure, André Villeneuve, Tom Glocer (Chief Executive, Reuters
Information), Stephen Mitchell (General Counsel), Geoffrey Weetman (Director of
Human Resources) and Rosemary Martin (Secretary).


[PICTURES OF EXECUTIVE DIRECTORS]



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Report 1999      17
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|Financial Review and Statements Contents
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|20 | 
|22 | 
|24 | 
|31 | 
|32 | 
|33 | 
|44 | 
|44 | 
|51 | 
|56 | 
|57 | 
|71 | 
|73 | 
|75 | 
|78 | 
|78 | 
|79 | 
|81 | 
|82 | 
|86 | 
|88 | 
|89 | 

|[BACKGROUND PICTURE]Fabrizio Bensch/Reuters
|-------------------------------------------

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|Directors report


The directors submit their annual report and audited financial
statements for the year ended 31 December 1999.


ACTIVITIES


Reuters activities and likely future developments are described
on pages 1015. A detailed review of Reuters activities during 1999 is given on
pages 3343.


SHARE CAPITAL, DIVIDENDS AND PURCHASE OF OWN SHARES


Details of the changes in the authorised and called-up share
capital are set out in notes 26 and 27 on pages 6566.


The company has received notice from The Capital Group
Companies, Inc., that on 31 December 1999 it and its affiliates together held
in their capacity as investment managers 93.4 million ordinary shares of
Reuters (6.6% of the issued share capital) and on 11 February 2000 their
holding was 64.5 million ordinary shares (4.5%). The company also received
notice from Prudential plc that on 31 December 1999 it held a notifiable
interest in 45.4 million ordinary shares of Reuters (3.2%) and on 11 February
2000 its holding was 45.3 million ordinary shares (3.2%). Reuters Founders
Share Company Limited has held the Founders Share since it was issued on 18
February 1998 (and held the Founders Share in Reuters Holdings PLC from 9 May
1984 until 18 February 1998).


An interim dividend of 3.65p per ordinary share was paid on 7
September 1999. The directors recommend a final dividend of 11.0p per ordinary
share giving a total of 14.65p per ordinary share for the year (1998 14.4p).
Subject to shareholders approval at the annual general meeting, the final
dividend will be paid on 20 April 2000 to members on the register at the close
of business on 17 March 2000.


As part of its financial strategy, during 1999 the company
purchased 4,716,981 ordinary shares of 25p each (0.3% of the issued share
capital) for an aggregate consideration of £25 million.


EMPLOYEES


The total number of employees at 31 December 1999 was 16,546
(31 December 1998 16,938). For further details see page 50.


The directors record with regret the death of Malgorzata
Rzepka, 28, an equities correspondent in Warsaw, who was killed in a car crash
on 27 April 1999 while on her way to an interview.


The Board values the courage and professionalism shown by
employees operating in zones of conflict. Reuters aims to cover news wherever
it breaks but instructs staff to avoid risks wherever possible. Reuters policy
is to manage its activities so as to avoid causing unnecessary or unacceptable
risk to the health and safety of its employees.


It is Reuters policy that selection of employees including for
recruitment, training, development and promotion should be determined solely on
their skills, abilities and other requirements which are relevant to the job
and in accordance with the laws in the country concerned. The companys equal
opportunities policy is designed to ensure that disabled people are given the
same consideration as others and, depending on their skills and abilities,
enjoy the same training, development and prospects as other employees.


To encourage employees involvement and to ensure that employees
are aware of the financial and economic factors affecting the group,
communication meetings between management and employee representatives are held
regularly so that the views of employees can be taken into account in making
decisions which are likely to affect their interests. The involvement of
employees in the companys performance is encouraged through employee share
plans.


THE ENVIRONMENT


Reuters activities have marginal direct impact on the
environment and contribute minimally to pollution. Nevertheless within the
group initiatives are taken to address energy conservation and waste management
issues. The groups principal contribution to improving the environment however
is through its news and information products which help to spread global
awareness of environmental issues. Furthermore the provision of its information
services for display and access in electronic form enables customers around the
globe to keep abreast of events and issues with minimal use of paper and other
resources.


The Reuters Foundation, the groups charitable trust, promotes
worldwide interest in environmental concerns through educational projects and
research grants. In cooperation with the World Conservation Union-IUCN the
Foundation encourages excellence in environmental reporting by presenting
annual awards and organising seminars to bring together journalists and experts
to review specific environmental questions. Practical training courses were
held in 1999 in Jordan, Mexico and the UK. Journalists from developing
countries can apply for fully funded fellowships to research environmental
issues as members of the Foundations Fellowship Programme at Oxford Universitys
Green College.


CHARITABLE CONTRIBUTIONS


Reuters made a grant of £3.3 million in 1999 to fund the
educational and humanitarian work of Reuters Foundation (£3.2 million in 1998).
In addition, Reuters regional management made direct charitable donations of £0.8
million in cash and £12.5 million in kind, which includes the value of
information services, equipment and employees time provided free of charge for
educational and humanitarian purposes. The overall total of group charitable
giving, in cash and kind, amounted to £16.6 million in 1999 or 2.6% of pre-tax
profit (£15.2 million or 2.6% in 1998).


Two-thirds of Reuters Foundation spending is devoted to
educational projects and one-third to humanitarian causes. The choice of
beneficiaries reflects Reuters group interests and the concerns of Reuters
employees around the world. Educational programmes concentrate on the media,
financial markets and information technology. Humanitarian priorities include
support for disaster relief work through the Foundations on-line AlertNet
service, and community, environmental and medical causes actively backed by
Reuters staff in many countries.



Reuters Foundation offers short, practical training courses to
journalists from around



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|the world. In 1999, television, text and photographic
workshops were held in Argentina, China, Czech Republic, Iran, Jordan, Lebanon,
Libya, Mexico, South Africa, Thailand, Turkey and the UK. Particular emphasis
is placed in most courses on business, economic and financial news. Specialist
subjects also include environmental and medical reporting. Reuters Foundation
university study programmes offer working mid-career journalists the
opportunity to carry out personal research using the resources of universities
in Europe and the United States. Seventeen university fellowships were awarded
in 1999 for journalists to study at Bordeaux, Cardiff (Wales) and Oxford,
Columbia (New York), Missouri and Stanford (California). In emerging markets,
Reuters Foundation ran a series of training courses for market professionals in
Mauritius, Nigeria, Syria and Uganda.


During one of the worst years in recent times for humanitarian
disasters, natural and man-made, Reuters Foundations AlertNet service proved
an essential tool for international humanitarian agencies responding to
emergencies. AlertNet is a free Internet-based news and communications service
that aims to provide concise and reliable information which will make a useful
contribution to the work of the international humanitarian community. By the
end of 1999 it had 94 members from 21 countries.


Supplementing its support for the relief professionals through
AlertNet, Reuters Foundation also made cash grants to help the victims of the
disasters in Colombia, India, Taiwan, Turkey, Venezuela and Vietnam as well as
the conflict in Kosovo.


In other areas of humanitarian and charitable support, Reuters
Foundation is driven by requests from Reuters colleagues but usually only
responds if they themselves are actively engaged in fund-raising or sharing
their skills. The causes include a wide range of community problems, such as
street children in developing world capitals, medical campaigns, the
environment and education through the arts.


More information on the work of Reuters Foundation is contained
in a separate annual review, available on request from the Director, Reuters
Foundation, 85 Fleet Street, London EC4P 4AJ, or on the Foundations website:
www.foundation.reuters.com


No political contributions are made.


CREDITOR PAYMENT TERMS


It is Reuters normal procedure to agree terms of transactions,
including payment terms, with suppliers in advance. Payment terms vary,
reflecting local practice throughout the world. It is Reuters policy that
payment is made on time, provided suppliers perform in accordance with the
agreed terms. Group trade creditors at 31 December 1999 were equivalent to 32
days purchases during the year.


AUDITORS


A resolution to re-appoint PricewaterhouseCoopers as auditors
at a remuneration to be agreed by the directors will be placed before the
annual general meeting (AGM).


DIRECTORS


The names and biographical details of directors who served
during the year are given on pages 1617. There are no cross-directorships. A
statement of directors remuneration and their interests in shares and options
of the company and its subsidiaries is set out on pages 2430.


The following changes to the Board composition occurred after
31 December 1999. On 1 January 2000, Dennis Malamatinas joined the Board as a
non-executive director and on 7 February 2000 Philip Green was appointed as an
executive director.


On 15 January 2000, John Parcell resigned as a director and
left the company. On 7 February 2000, André Villeneuve resigned as a director to
concentrate on his role as Chairman of Instinet and on 8 February 2000 it was
announced that David Ure would in due course resign from the Board to
concentrate on his role as Chairman of the new joint venture with Equant. Bob
Bauman and Sir David Walker, who joined the Board as non-executive directors in
1994 and who have served two three-year terms, have decided not to stand for
re-election at the forthcoming AGM.


Sir John Craven and Jean-Claude Marchand retire by rotation and
are proposed for re-election as directors at the forthcoming annual general
meeting. Dennis Malamatinas and Philip Green having been appointed by the Board
since the last AGM also retire and are proposed for re-election at the AGM. As
non-executive directors, Sir John Craven and Dennis Malamatinas do not have
service contracts. Jean-Claude Marchands service contract is governed by Swiss
law and technically is terminable on one years notice but his entitlements are
as if the contract were terminable on two years notice. Philip Greens service
contract is also terminable on one years notice but with an initial term of
two years from September 1999. Further information about these directors is set
out on pages 1617.


By order of the Board


/s/ Rosemary Martin


Rosemary MartinCompany Secretary11 February 2000



Reuters Group PLC Annual
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|Corporate governance


Reuters is committed to high standards of corporate governance
and has complied throughout 1999 with the principles of corporate governance
set out in Section 1 of the Combined Code (the Code) except in those limited
areas noted below and in the Remuneration Report.


THE BOARD


As at 31 December 1999 the Board comprised six executive
directors, including the Chief Executive, and seven independent non-executive
directors, including the Chairman who is responsible for running the Board. As
at 11 February 2000 there were five executive directors and eight non-executive
directors. The Board has not identified a senior independent non-executive
director, as specified by the Code, because it considers such an appointment to
be unnecessary at present. Each year the directors, other than the Chairman,
meet to review the role and performance of the Chairman and once a year the
Chairman and the non-executive directors meet to review the performance of the
executive directors.


The Board is scheduled to meet at least six times a year and,
in addition, it has an annual strategy review meeting. A schedule of matters
reserved for the Boards decision includes the approval of annual and interim
results, corporate objectives, strategy and the annual budget, significant
transactions and matters relating to share capital. The directors are bound by
the companys articles of association to pay due regard to the Reuters Trust
Principles. The Board views these as central to the companys standing and
commercial success and works closely with the Reuters Founders Share Company
Limited to safeguard them. The Trust Principles and other relevant information
are set out on page 78.


Regular and ad hoc reports and presentations to the Board and
its committees ensure the directors are supplied, in a timely fashion, with the
information they need. They also have access to the company secretary and they
may take independent professional advice at the companys expense, although no
such advice was sought during 1999.


Non-executive directors are appointed for a term of six years,
subject to agreement after three years that the term should continue. All
directors are subject to election by shareholders at the first opportunity
after their appointment and to re-election thereafter at intervals of no more
than three years. Non-executive directors receive a series of briefings about
Reuters when they join the Board and they periodically visit Reuters offices
throughout the world where they are briefed on various aspects of the companys
operations. Training for executive directors is available as appropriate and a
training programme designed for Reuters in conjunction with the Institute of
Directors is run for directors of the company and its subsidiaries.


Authority is delegated to the Chief Executive for implementing
the strategy and for managing the group. In discharging his responsibility, the
Chief Executive works with a Group Executive committee which during 1999
comprised all the executive directors, Geoffrey Weetman (Director of Human
Resources), Stephen Mitchell (General Counsel) and Philip Green since joining
the company as Chief Executive of Reuters Trading Systems in September 1999.
The company is organised into three business divisions, Reuters Information,
Reuters Trading Systems (renamed in 2000 as Reuters Trading Solutions) and
Reuters Ventures (renamed in 2000 as Reuterspace). A global sales and
operations group was responsible for the sale, installation, delivery and
support of most divisional products during 1999. This group was largely brought
within Reuters Information division in February 2000. Instinet continues to
operate as an autonomous subsidiary.


BOARD COMMITTEES


The Board has also delegated specific responsibilities to its
committees whose terms of reference it sets. The main committees are the Audit
Committee (Chairman: Charles Sinclair), the Remuneration Committee (Chairman:
Bob Bauman) and the Nomination Committee (Chairman: Sir Christopher Hogg). The
members of the Audit and Remuneration Committees are Sir Christopher Hogg, Bob
Bauman, Sir John Craven, Dennis Malamatinas (since 1 January 2000), Roberto
Mendoza, Dick Olver, Charles Sinclair and Sir David Walker. These directors and
the Chief Executive are the members of the Nomination Committee.


The Finance Director and the Deputy Finance Director attend all
the Audit Committee meetings. All executive directors are invited to attend.
The Audit Committee meets at least twice a year and reviews the half year and
annual results before their approval by the Board. In doing so, the Committee
focuses on any change in accounting practice, major areas of judgement, the
going concern assumption and compliance with accounting principles and
regulatory requirements, and it ensures the annual report presents a balanced
and understandable assessment of the companys financial position and
prospects. The Committee may examine whatever aspects it deems appropriate of
the groups financial affairs, its internal and external audits and its
exposure to risks of a legal or regulatory nature. It keeps under review the
effectiveness of Reuters system of accounting and internal financial controls,
for which the directors are responsible (see page 31). The Committee reviews
the plans and findings of the internal and external auditors with them each
year. The auditors have unrestricted access to the Audit Committee. The Audit
Committee recommends the appointment of the companys external auditors.


The Remuneration Committee meets at least four times a year.
Its role is to agree a framework of policies and to determine within it all
remuneration and benefits for the executive directors. In addition, the
Committee decides on any other remuneration issue which affects the interest of
shareholders and is involved in setting the levels and principles in executive
remuneration policy. The Committee has access to professional advice inside and
outside the company. In framing its remuneration policy the Committee has given
full consideration to the provisions of Section 1B of and Schedule A to the
Code. The remuneration report prepared by the Board is set out on pages 2430.
In preparing the report, the Board has followed the provisions of Schedule B to
the Code.


The Nomination Committee makes recommendations to the Board
about future



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|appointments of non-executive directors, the Chairman and the
Chief Executive and considers recommendations from the Chief Executive to the
Board about future appointments of executive directors.



RELATIONS WITH SHAREHOLDERS


The executive directors meet regularly with institutional
shareholders and analysts. Investor relations departments in London and New
York are dedicated to improving communications between the company and its
shareholders. The companys annual general meeting is used as an opportunity to
communicate with private investors. At its annual general meeting in 1999 the
company announced the level of proxies lodged on each resolution and the
balance for and against the resolution after it had been dealt with on a show
of hands. The company proposes to continue with this practice at this years
annual general meeting.


INTERNAL CONTROLS AND FINANCIAL REPORTING


In accordance with the transitional arrangements which apply in
respect of compliance with principle D.2 of the Code on internal control the
Board has decided that for 1999 it will continue to report on internal
financial control pursuant to the guidance for directors on internal control
and financial reporting that was issued by the Rutteman Working Group in
December 1994 (see page 31).


The Board has studied the recommendations of the Turnbull
Committee published on 27 September 1999 and has adopted revised processes to
allow it to report on internal controls in the 2000 Annual Report.



Reuters Group PLC Annual
Report 1999      23
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|Report on remuneration and related matters


This report on remuneration and related matters covers issues
which are the concern of the Board as a whole in addition to those which are
dealt with by the Remuneration Committee.


REMUNERATION OBJECTIVES


Remuneration policy has never been more important than it is
today. The competition for talent in the new economy is fierce and the pool
limited. Reuters policy must help the company to guard against losses of key
people, which is a bigger threat than it ever has been, because Reuters
occupies a leading position in the electronic world and has excellent technical
and management talent. Policy must also focus on bringing in new people and
skills which are needed to maintain and develop that positioning in order to
enhance shareholder value.


Reuters remuneration has to measure up to policy and practice
in the US, which is the undisputed leader in the new internet-based environment
and which will increasingly dictate future direction. Reuters competes for
talent not only with large companies but also with small start-ups that offer
attractive stock participation to people who join them. Both large and start-up
companies in the US offer stock options which pay out on the basis of a companys
stock price, with no other performance links. Reuters believes that, to
compete, it must be prepared to do the same. It would seem that companies
outside the US are progressively adopting the American model as they too enter
the internet age. The remuneration environment has become global, as is the
challenge and the opportunity.


It has become appropriate in certain circumstances for
companies to float group assets publicly. This occurred in Reuters in 1999 with
the Initial Public Offering of a portion of TIBCO Software Inc., itself a
portion of TIBCO Inc., which was bought by Reuters in 1994 for US$125 million.
This floated portion had a market value of £0.9 billion (US$1.4 billion) on 31
December 1999. Reuters does not believe this would have been possible without
the issue of options to those individuals responsible for creating this value.


Reuters needs to react quickly to these new circumstances. It
should also do its best to ensure that remuneration policy is seen to be
equitable by all employees. Terms governing salary, pension and benefits are
basically set by market conditions in each country. However, Reuters believes
variable rewards for internationally mobile management, based on the
performance of the company and its share price, cannot differ too much from
place to place. It also believes managers rewarded for delivering good growth
should be expected to maintain outright shareholdings in the company, in order
to preserve identity of interest between them and the generality of
shareholders.


All employees in Reuters should also be given the opportunity
to share in the companys success, and support its values. Since the beginning
of its life as a public company, Reuters has offered Save-As-You-Earn share
rewards to its employees all over the world. More recently shareholders
approved an all-employee option scheme, Plan 2000, maturing generally in 2001.


The Remuneration Committee expects to review its remuneration
policy in line with these trends in the course of 2000.


REMUNERATION POLICIES


The specific remuneration policies currently in force are as
follows:


Salaries: salaries will be competitive when compared against
those of other companies operating in the same markets.


Annual bonuses: Reuters believes in providing annual incentive
bonus plans to encourage the achievement of predetermined annual performance
targets. Such plans will exist typically for middle and senior management
levels throughout the world.


Competitive market compensation: Reuters seeks to have annual
cash compensation packages for senior managers which can reach the upper
quartile of the market for upper quartile performance where a maximum bonus is
earned.


Benefits: Reuters believes in providing benefits which are
required according to local practice.


Pensions: pension provision will be appropriate to the local
market.


Long-term benefits, including share plans: Reuters seeks to
provide long-term benefits which are competitive in the appropriate market and
seek to achieve consistency with the interests of shareholders. There are
circumstances in which Reuters enables key executives and employees of certain
subsidiaries to acquire shares in their company.


SUMMARY OF DIRECTORSREMUNERATION FOR 1999


The 1999 remuneration packages of executive directors consisted
of annual salary, health and car benefits, prolonged disability insurance, an
annual cash bonus plan, pension contributions and participation in a
performance-linked share plan (described below) and all-employee share schemes.
By far the most significant portion of each executive directors potential
remuneration package was performance related.


EXECUTIVE DIRECTORS SALARIES


In setting the 1999 salary levels the Remuneration Committee
was assisted by reports prepared by independent professional consultants which
basically compared Reuters remuneration packages with the median levels of the
FTSE top 50 companies.


EXECUTIVE DIRECTORS BONUSES


For 1999 the executive directors bonuses were capped at 70% of
salary and depended on the extent to which three key targets were met. The
first target, covering 57% of the bonus, related to the growth in operating
profit at constant exchange rates. The second target, covering 29% of the
bonus, was based on the growth in earnings per share for the Chief Executive
and on growth of divisional profits for directors with divisional
responsibilities. The third target, 14% of the bonus, was based on a
satisfactory completion of Reuters Millennium Programme.


Targets were partially met as regards divisional and operating
profit and fully met as regards earnings per share. The Millennium Programme
has been successful. Directors bonuses amounted to 1.5% of total cash bonuses
paid to all employees of the group.



24      Reuters Group PLC Annual
Report 1999
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|EXECUTIVE DIRECTORS SERVICE CONTRACTS


The service contracts of Peter Job, Rob Rowley and David Ure
are terminable by the company on two years notice. In line with the Code, the
Remuneration Committee has recently agreed not to grant new employment
contracts to executive directors which have a notice period of more than 12
months. Existing directors will not be asked to agree to a reduction in their
notice period. The Committee considers the notice periods for the existing
executive directors appropriate having regard, amongst other things, to their
long service.


The contracts for Peter Job, Rob Rowley, David Ure and
Jean-Claude Marchand provide that any termination payment will not exceed twice
his salary and benefits, plus retention of long-term incentive plan awards held
for more than 18 months, entitlements under the rules of the share option plans
and enhanced early retirement benefits under the companys pension plans.


REMUNERATION OF THE NON-EXECUTIVE DIRECTORS


The Chairmans remuneration comprises salary, life assurance,
prolonged disability insurance and pension. These are amongst the matters
discussed at an annual meeting of the Board to review the Chairmanship. Sir
Christopher Hogg is not present at this meeting.


The remuneration of the other non-executive directors is
determined by ordinary resolution of the shareholders in general meeting. The
Board has power to pay additional remuneration for services outside the scope
of the ordinary duties of a non-executive director. It is proposed that the
non-executive directors fees, which have stood at £33,000 per annum for two
years, should now be raised to £35,000.


DIRECTORS REMUNERATION
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                          | 1999 | 1998 
|--------------------------------------------------------- | ---- | -----
|
|
|Chairman:                                                 |      |      
|Sir Christopher Hogg                                      |      | 203  
|
|Non-executive directors:                                  |     
|R P Bauman                                                |      | 43   
|Sir John Craven                                           |      | 33   
|M P Green    (resigned 20 April 1999)                     |      | 11   
|R Mendoza    (appointed 18 February 1998)                 |      | 33   
|R L Olver                                                 |      | 33   
|C J F Sinclair                                            |      | 43   
|Sir David Walker                                          |      | 33   
|
|Total for non-executive directors    (excluding Chairman) |      | 229  
|
|Executive directors:                                      |     
|P Job, Chief Executive                                    |      | 550  
|J-C Marchand                                              |      | 362  
|J M C Parcell                                             |      | 300  
|R O Rowley                                                |      | 338  
|D G Ure                                                   |      | 355  
|A-F H Villeneuve                                          |      | 355  
|
|Total for executive directors                             |      | 2,260
|
|TOTAL EMOLUMENTS                                          |      | 2,692
|

|Reuters Group PLC Annual
Report 1999      25
|--------------------------------------------

---

|Report on remuneration and related matterscontinued



DIRECTORS PENSION ARRANGEMENTS


Executive directors are entitled to a pension of two-thirds of
basic salary on retirement from Reuters at the normal retirement age of 60.
Post retirement increases are expected to be in line with inflation (guaranteed
up to the level of 5% and discretionary above that level). Reduced pensions are
payable on early retirement before age 60. Enhanced terms may apply on early
retirement subject to fulfilment of certain conditions or with the consent of
the Remuneration Committee.


In the event of death before retirement, a spouses pension of
four-ninths of the executives basic salary is payable, together with a capital
sum equal to four times the aggregate of basic salary and taxable health and
car benefits and a refund with interest of the executive directors own
contributions. On death in retirement, the executive directors spouse will
receive a pension equal to two-thirds of that payable to the executive director.


Pension contributions paid by the company in respect of the six
executive directors are expressed as an average contribution rate, which for
1999 was 21.025%, of basic salaries.


Under an unfunded pension arrangement the Chairman is entitled
to a pension of 2.5% of his annual fee times the number of years of service,
from the date of his appointment as Chairman in May 1985 to the date his office
terminates. In addition, the Chairman has been admitted as a member of the
Reuters Pension Fund for the purpose only of providing a fixed lump sum benefit
of £300,000 for his dependants in the event of his death in service.


Pension benefits earned by directors are as follows:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                     | At 31 December 1999 |    | Accrued Pension Entitlement
|-------------------- | ------------------- | -- | ---------------------------
|
|                    
|Sir Christopher Hogg |                     | 63 |                            
|P Job                |                     | 58 |                            
|J-C Marchand         |                     | 53 |                            
|J M C Parcell        |                     | 53 |                            
|R O Rowley           |                     | 50 |                            
|D G Ure              |                     | 52 |                            
|A-F H Villeneuve     |                     | 55 |                            
|                    

|SHARE PLANSLong-term incentive plan


Since 1993, Reuters has operated a long-term incentive plan
under which annual awards of share rights are made to executive directors and
certain key executives. Vesting of the awards depends on performance in terms
of total return to shareholders over a defined period. Awards vesting under the
plan, which covers the executive directors, are not released until at least
five years from the date of grant.


Under the terms of the plan the number of share rights awarded
annually to each senior executive is determined by dividing each executives
annual salary by the average of the daily closing price of Reuters shares for
the previous year. Throughout 1998 the directors were prohibited from any
dealings in Reuters shares under the requirements of the Listing Rules of the
London Stock Exchange. Thus no grants could be made in 1998. In 1999 the
Remuneration Committee approved a change to the terms of the plan to permit the
1998 awards to be granted in 1999.


26      Reuters Group PLC Annual
Report 1999
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|The table below shows the number of shares underlying awards to
each executive director:
|----------------------------------------------------------------------------------------

|                  | No. of Awards
|----------------- | -------------
|
|
|P Job             |              
|                 
|Restricted shares |              
|Share rights      |              
|Share rights      |              
|Share rights      |              
|Share rights*     |              
|Share rights      |              
|
|                  |              
|
|J-C Marchand     
|                 
|Restricted shares |              
|Share rights      |              
|Share rights      |              
|Share rights      |              
|Share rights*     |              
|Share rights      |              
|
|                  |              
|
|J M C Parcell     |              
|                 
|Restricted shares |              
|Share rights      |              
|Share rights      |              
|Share rights      |              
|Share rights*     |              
|Share rights      |              
|
|                  |              
|
|R O Rowley        |              
|                 
|Restricted shares |              
|Share rights      |              
|Share rights      |              
|Share rights      |              
|Share rights*     |              
|Share rights      |              
|
|                  |              
|
|D G Ure           |              
|                 
|Restricted shares |              
|Share rights      |              
|Share rights      |              
|Share rights      |              
|Share rights*     |              
|Share rights      |              
|
|                  |              
|
|A-F H Villeneuve 
|                 
|Restricted shares |              
|Share rights      |              
|Share rights      |              
|Share rights      |              
|Share rights*     |              
|Share rights      |              
|
|                  |              
|

|*1998 awards delayed until 1999 (see above).
The gains on release are based on 856.5p, being the selling price of some shares sold on the day of release.


Reuters Group PLC Annual
Report 1999      27
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Report on remuneration and related matters continued


Performance under the long-term incentive plan is measured over
a three- to five-year period by comparing the total shareholder return (TSR) of
Reuters with that of other companies comprising the FTSE 100 at the beginning
of the period. Awards vest only after the expiration of this period. The
average of the daily closing prices for the prior calendar year are used as the
initial and ending share prices when calculating the TSR.


The companies comprising the comparator group are ranked
according to each companys TSR for the measurement period with the company
having the highest, or best, TSR ranked first. Reuters position on the list
determines the extent to which plan awards will vest. The pre-set vesting
criteria for awards are shown in the table below together with the actual
ranking for each award as at either the date of vesting or, if not yet vested,
at 31 December 1999. Between the two vesting extremes, awards vest on a
graduated scale.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|               | Pre-set Vesting Criteria
|-------------- | ------------------------
|
|
|1 January 1994 |                         
|1 January 1995 |                         
|1 January 1996 |                         
|1 January 1997 |                         
|1 January 1998 |                         
|1 January 1999 |                         
|              

|Under the plan rules, if awards do not vest 100%, each
participant is permitted either to let the lesser number of shares vest or to
elect to extend the measurement period for the entire award for a fourth year
without a change to the pre-set vesting criteria. A similar election may be
made at the end of year four. The 1994 awards of restricted shares vested 100%
at the end of the initial three-year vesting period and the awards were
released in 1999. The 1995 awards vested 25% based on the 31 December 1997
ranking and the rights become exercisable in February 2000. The three-year
measurement period for the 1996 awards ended on 31 December 1998 with a zero
vesting.


The obligations under the plan, and those of the
performance-related share plan discussed below, will be met from shares held by
Reuters Employee Share Ownership Trusts (ESOTs). The costs are charged to
profit over the vesting period.


Performance-related share plan


Reuters has another performance-related share plan for senior
executives not participating in the long-term incentive plan. Under this plan,
the performance-related share plan, awards have been made to approximately
1,100 executives. The rules for vesting have been brought into line with those
currently operating for the long-term incentive plan.


Participants in the 1999 award received rights to a total of
3.8 million shares (1998 1.9 million; 1997 1.3 million).


TIBCO Finance Technology Inc. share option plan


Following the creation, in late 1996, of a new subsidiary (now
an associate), TIBCO Software Inc., to exploit middleware products outside the
finance industry, an option plan was established over TIBCO Software Inc.
shares for TIBCO Finance Technology Inc. employees. These options will be
satisfied through existing TIBCO Software Inc. shares owned by Reuters. As at
31 December 1999 options had been granted to TIBCO Finance Technology Inc.
employees equivalent to approximately 8% of TIBCO Software Inc. on a fully
diluted basis.


Plan 2000


In 1998 a new, all-employee, option plan was introduced to help
retain and motivate staff worldwide at a time of unprecedented adjustments to
be made for the euro and the Millennium. Under the terms of the plan all staff
had the chance to apply for a single award of options to acquire 2000 shares.
Grants were made in September 1998 and to new employees in early 1999, at
exercise prices of 550p per share and 814p per share respectively. At 31
December 1999 options to acquire a total of 28,180,000 shares had been granted
to over 14,000 employees, including executive directors. The options are
generally exercisable in September 2001, expiring generally in September 2005.
No further options are to be awarded under this plan.


Deferred share bonus plan


A once-off deferred bonus plan has been adopted for senior
managers (excluding the executive directors). Shares equivalent to a value not
exceeding 100% of salary have been awarded as a special 1999 deferred bonus to
97 senior managers. The 1.4 million shares awarded will be met from shares held
by Reuters Employee Share Ownership Trusts (ESOTs) costing £10.5 million, and
will be released to the awardees in 2002. The awards are conditional on
continued employment for the two-year retention period.


Save-as-you-earn (SAYE) and stock purchase plans


Employees are eligible to save a fixed sum each month and to
use these funds to exercise options over Reuters shares. Generally, the
exercise price is fixed at 20% below the market price at the start of the
savings period. The maximum monthly saving is £250 (or equivalent) and
participants can choose between plans having either a five-year or a three-year
savings period.


28      Reuters Group PLC Annual
Report 1999
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Vested options on Reuters Group PLC shares held by directors
during 1999 were as follows:
|-----------------------------------------------------------------------------------------

|                     |  | NO. OF OPTIONS
|-------------------- |  | --------------
|
|
|Sir Christopher Hogg |  |               
|SAYE                 |  | Mar 1997      
|
|                     |  |               
|
|P Job                | 
|SAYE                 |  | Mar 1997      
|                     |  | Mar 1998      
|Plan 2000            |  | Sep 1998      
|
|                     |  |               
|
|J-C Marchand         | 
|SAYE                 |  | Sep 1996      
|                     |  | Mar 1997      
|Plan 2000            |  | Sep 1998      
|
|                     |  |               
|
|J M C Parcell        | 
|Executive            |  | Aug 1992      
|SAYE                 |  | Mar 1997      
|Plan 2000            |  | Sep 1998      
|
|                     |  |               
|
|R O Rowley           | 
|SAYE                 |  | Mar 1997      
|                     |  | Mar 1998      
|Plan 2000            |  | Sep 1998      
|
|                     |  |               
|
|D G Ure              | 
|Plan 2000            |  | Sep 1998      
|
|                     |  |               
|
|A-F H Villeneuve     | 
|SAYE                 |  | Mar 1997      
|                     |  | Mar 1998      
|Plan 2000            |  | Sep 1998      
|
|                     |  |               
|

|No options were granted to, or exercised by, directors during
1999. A gain of £251,850 was made by a director on exercise of options in 1998.
The closing mid-market price of Reuters ordinary shares on 31 December 1999 was
849.5p. During 1999 the price for Reuters ordinary shares ranged between 486p
and 1011p.


Options outstanding under all option plans at 31 December 1999
related to 41,415,560 shares. The number of shares issued under share options
granted over the 10 years to 31 December 1999, combined with the total options
outstanding at 31 December 1999 relating to the same grants, was approximately
6.2% of issued share capital at that date. This compares with a maximum
authorised level of 10%. Also at 31 December 1999 the ESOTs held 21,041,323
shares of Reuters Group PLC, approximately 1.5% of issued share capital. The
authorised limit is 5%.



Reuters Group PLC Annual
Report 1999      29
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Report on remuneration and related matters continued


DIRECTORS INTERESTS


The interests of directors in the issued share capital of group
companies at 31 December 1999 were as follows:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Reuters Group PLC    | 1999 | 1998     
|-------------------- | ---- | ---------
|                    
|R P Bauman           |      | 8,666    
|Sir John Craven      |      | 6,846    
|Sir Christopher Hogg |      | 31,693   
|P Job                |      | 224,994  
|J-C Marchand         |      | 65,425   
|R G Mendoza          |      | 8,000    
|R Olver              |      | 3,000    
|J M C Parcell        |      | 66,000   
|R O Rowley           |      | 182,473  
|C J F Sinclair       |      | 10,062   
|D G Ure              |      | 346,099  
|A-F H Villeneuve     |      | 82,335   
|Sir David Walker     |      | 2,600    
|                    
|                     |      | 1,038,193
|                    

|Directors were the beneficial holders of all shares listed,
except for the following shares held by, or in trust for the benefit of, family
members. Peter Job: 3,050 shares (1998  483); Rob Rowley: 5,606 shares (1998  4,606)
and André Villeneuve: 32,990 shares (1998  120,687).


None of the directors has notified the company of an interest
in any other shares, transactions or arrangements which require disclosure.
There have been no movements in the interests of the directors in the share
capital of the group companies since 31 December 1999.


In October 1999, the Remuneration Committee resolved that
executive directors should retain a shareholding in the company equivalent to
100% of basic salary after three years as a director, rising to 200% of basic
salary after five years as a director.



On behalf of the Board


/s/ Christopher Hogg


Sir Christopher HoggChairman11 February 2000


30      Reuters Group PLC Annual
Report 1999
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Statement of directors responsibilities


Reuters directors are required by UK company law to prepare
financial statements for each financial year which give a true and fair view of
the state of affairs of the company and group as at the end of the financial
year, and of the profit and cash flows of the group for the period. Reuters is
also required to prepare financial statements in accordance with the
requirements of the SEC.


Reuters has complied with both UK and US disclosure
requirements in this report in order to present a consistent picture to all
shareholders. In preparing the financial statements, applicable accounting
standards have been followed, suitable accounting policies have been used and
applied consistently and reasonable and prudent judgements and estimates have
been made.


The directors have reviewed the groups budget and cash flow
forecast for the year to 31 December 2000 and outline projections for the
subsequent year in the light of the sound financial position and borrowing
facilities at 31 December 1999. On the basis of this review the directors are
satisfied that Reuters is a going concern and have continued to adopt the going
concern basis in preparing the financial statements.


As explained on page 23, for 1999 the Board is reporting on
internal financial control. The directors acknowledge their responsibility for
the groups system of internal financial control and confirm that they have
reviewed its effectiveness. They consider that it is appropriately designed to
provide reasonable but not absolute assurance that assets are safeguarded
against material loss or unauthorised use and that transactions are properly
authorised and recorded. The concept of reasonable assurance recognises that
the cost of a control procedure should not exceed the expected benefits. The
control system includes written accounting and control policies and procedures,
clearly drawn lines of accountability and delegation of authority and
comprehensive financial reporting and analysis against approved budgets. In a
growing group of the size, complexity and geographical diversity of Reuters it
should be expected that breakdowns in established control procedures may occur.
During 1999 the directors were not aware of any such breakdowns which resulted
in a material loss.


The group monitors its internal financial control system
through management reviews, detailed representation letters on compliance
signed by the chief executive and chief financial officer of each significant
business unit and a programme of internal audits. The groups external
auditors, PricewaterhouseCoopers, have audited the financial statements and
have reviewed the work of the internal auditors and the internal financial
control systems to the extent they considered necessary to support their audit
report. The Audit Committee has met the internal auditors and
PricewaterhouseCoopers to discuss the results of their work.


By order of the Board


/s/ Rosemary Martin


Rosemary MartinCompany Secretary11 February 2000



Reuters Group PLC Annual
Report 1999      31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Auditors report to the members of Reuters Group PLC


AUDIT REPORT


We have audited the financial statements on pages 4474,
incorporating pages 2430 which have been prepared under the historical cost
convention and the accounting policies set out on pages 7374, and the summary
of differences between UK and US Generally Accepted Accounting Principles on
pages 7577.


RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS


The directors are responsible for preparing the annual report
as described on page 31. This includes responsibility for preparing financial
statements in accordance with applicable United Kingdom accounting standards.
Our responsibilities, as independent auditors, are established in the United
Kingdom by statute, the Auditing Practices Board, the Listing Rules of the
London Stock Exchange and our professions ethical guidance.


We report to you our opinion as to whether the financial
statements give a true and fair view and are properly prepared in accordance
with the United Kingdom Companies Act 1985. We also report to you if, in our
opinion, the directors report is not consistent with the financial statements,
if the company has not kept proper accounting records, if we have not received
all the information and explanations we require for our audit, or if
information specified by law or the Listing Rules regarding directors remuneration
and transactions is not disclosed.


We read the other information contained in the annual report
and consider the implications for our report if we become aware of any apparent
misstatements or material inconsistencies with the financial statements.


We review whether the statement on pages 2223 reflects the
companys compliance with the seven provisions of the Combined Code specified
for our review by the London Stock Exchange and we report if it does not. We
are not required to consider whether the Boards statements on internal control
cover all risks and controls, or to form an opinion on the effectiveness of the
groups corporate governance procedures or its risk and control procedures.


BASIS OF AUDIT OPINION


We conducted our audit in accordance with Auditing Standards
issued by the Auditing Practices Board and with Auditing Standards generally
accepted in the United States. An audit includes examination, on a test basis,
of evidence relevant to the amounts and disclosures in the financial
statements. It also includes an assessment of the significant estimates and
judgements made by the directors in the preparation of the financial
statements, and of whether the accounting policies are appropriate to the
companys circumstances, consistently applied and adequately disclosed.


We planned and performed our audit so as to obtain all the
information and explanations which we considered necessary in order to provide
us with sufficient evidence to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by fraud or
other irregularity or error. In forming our opinion we also evaluated the
overall adequacy of the presentation of information in the financial
statements.


UNITED KINGDOM OPINION


In our opinion, the financial statements give a true and fair
view of the state of affairs of the company and the group as at 31 December
1999 and of the profit and cash flows of the group for the year then ended and
have been properly prepared in accordance with the United Kingdom Companies Act
1985.


UNITED STATES OPINION


In our opinion, the financial statements present fairly, in all
material respects, the financial position of the group at 31 December 1999,
1998 and 1997 and the results of its operations and cash flows for each of the
three years in the period ended 31 December 1999 all expressed in pounds
sterling in conformity with accounting principles generally accepted in the
United Kingdom.


Accounting principles generally accepted in the United Kingdom
vary in certain significant respects from accounting principles generally
accepted in the United States. The application of the latter would have
affected the determination of consolidated net income for each of the three
years in the period ended 31 December 1999, and consolidated shareholders equity
at 31 December 1999, 1998 and 1997, all expressed in pounds sterling, as shown
in the summary of differences between UK and US Generally Accepted Accounting
Principles set out on pages 7577.


/s/ PricewaterhouseCoopers


PricewaterhouseCoopers
Chartered Accountants and
Registered Auditors
London
11 February 2000


PricewaterhouseCoopers [LOGO]



32      Reuters Group PLC Annual
Report 1999
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Operating and financial review


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 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
pages 4143 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
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                         | Year to 31 December
|------------------------ | -------------------
|                        
|£m                      
|                        
|Revenue                  |                    
|Operating profit         |                    
|Joint venture/associates |                    
|Disposals                |                    
| investments            |                    
| subsidiaries           |                    
|Other income             |                    
|Net interest             |                    
|PBT                      |                    
|EPS                      |                    

|Revenue increased 3% at actual rates to £3,125 million in 1999.
At comparable rates revenue increased 1% compared with 9% growth in 1998.


Underlying revenue excluding Reuters Business Briefing and TIBCO Software Inc.
increased 4% at actual rates to £3,081 million in 1999. At comparable rates
underlying revenue increased 2% compared with 7% growth in 1998.


Operating profit before currency hedging grew by 6% at actual
rates and 3% at comparable rates, compared to growth of 14% at comparable rates
in 1998. Actual rates performance benefited from the weakness of sterling
against the US and Japanese currencies. Operating profit after currency hedging
was flat at £549 million.


Total goodwill in the year was £61 million, of which £14
million was charged to associates and joint ventures. This compares to goodwill
of £51 million in 1998 of which £5 million was charged to associates, and total
goodwill of £51 million in 1997.


Incremental external millennium costs were £25 million in 1999,
compared to £31 million in 1998. Total millennium costs were £42 million in
1999, compared to an original budget of £28 million. Spend in 1998 was £55
million.


Recognised currency hedging gains in the year were £9 million
compared with £45 million in 1998 and £56 million in 1997. The reduction in
1999 was due mainly to the relative strength of sterling when hedging for 1999
was undertaken.


Operating profit margin was 17.6%, slightly lower than the 1998
margin of 18.2%, (1997 margin 18.8%).


Disposal of fixed asset investments realised a profit of £50
million, compared to £26 million in 1998, mainly relating to Greenhouse Fund
disposals.


The successful Initial Public Offering (IPO) of TIBCO Software
Inc. on NASDAQ resulted in an accounting profit of £52 million in 1999.


Earnings before interest, tax, depreciation and amortisation
(EBITDA) increased 5% at actual rates to £1,008 million, and increased 6% at
comparable rates. This compares with growth in 1998 of 6% at actual rates and
14% at comparable rates.


EBITDA has been restated to include profits and losses derived
from the disposal of subsidiary undertakings and fixed asset investments.
Comparatives have been restated accordingly.


Net interest payable was £4 million compared with net interest
receivable of £2 million in 1998 and £80 million in 1997. This reflected the
return of £1.5 billion of cash to shareholders in February 1998.


Profit before tax increased 9% to £632 million in 1999,
compared with a decline of 7% in 1998 at actual rates.


The tax charge for 1999 is based on an effective tax rate of
30% on profit before goodwill amortisation compared with a rate of 31% in 1998
(34.9% in 1997) and the UK corporate tax rate of 30.25% for 1999.


Earnings per share increased 13% in 1999 to 30.2p from 26.7p in
1998 ahead of profit before tax growth. This is principally a result of the
reduction in the tax rate. Earnings per share growth in 1998 was 11%.


Free cash flow per share was 28.4p, down 17% from 34.1p in 1998
reflecting higher working capital requirements. Free cash flow per share in
1997 was 27.7p.


Investment in the business continued with £244 million of fixed
asset additions, £197 million of development expenditure and £89 million of
acquisitions and investments net of disposal proceeds. The impact of
acquisitions and disposals was not material to group revenue and operating
profit growth.


2. OPERATING PERFORMANCE
Revenue by type
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|          | Year to 31 December
|--------- | -------------------
|
|£m       
|
|Recurring |                    
|Usage     |                    
|Outright  |                    
|         
|Total     |                    

|Recurring revenue, which is principally derived from the sale
of subscription services, represented 75% of group revenue in 1999, compared
with 73% in 1998 and 74% in 1997.


Usage-based revenue, principally derived from Instinet and
Dealing 20002, represented 19% of total revenue in line with 1998 and 18% of
total revenue in 1997.



Reuters Group PLC Annual
Report 1999      33
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Operating and financial reviewcontinued


Outright revenue which comprises once-off sales of information
management systems and risk management software, represented 6% of group
revenue in 1999 and 8% in both 1998 and 1997.


Revenue by geography


[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE
CHART IN THE PRINTED MATERIAL.]



Revenue by geography
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|EMA          |  | 53% | 
|------------ |  | --- | 
|Asia/Pacific |  | 16% | 
|The Americas |  | 31% | 

|Revenue in Europe, Middle East and Africa (EMA) fell by 1% at
both actual rates and comparable rates in 1999 and grew 7% at actual rates and
9% at comparable rates in 1998.


The Americas saw revenue growth of 11% at actual rates and 8%
at comparable rates in 1999 and 9% at actual rates and 13% at comparable rates
in 1998.


Revenue in Asia grew 3% at actual rates and fell 4% at
comparable rates in 1999 and fell 6% at actual rates and grew 1% at comparable
rates in 1998.


Divisional performance


[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE
CHART IN THE PRINTED MATERIAL.]



% Divisional revenue
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|RI       |  | 53% | 
|-------- |  | --- | 
|RTS      |  | 25% | 
|RV       |  | 5%  | 
|Instinet |  | 17% | 

|With effect from 1 January 1999, Reuters restructured its
business along divisional lines around the markets that it serves:


Global financial markets 
Reuters Information (RI) 
Reuters Trading Systems (RTS) 
Electronic equity brokerage 
Instinet


Other markets 
Reuters Ventures (RV), including the Greenhouse Fund.


RI and RTS, the two largest divisions, distribute their
products to customers through a common infrastructure, the Global Sales and
Operations Group (GSO), responsible for sales, delivery, installation and
customer support. Where appropriate RV utilises the GSO structure and Instinet
operates on an autonomous basis.


In 2000 Reuters Trading Systems was renamed Reuters Trading
Solutions and Reuters Ventures was renamed Reuterspace.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|             | Year to 31 December
|------------ | -------------------
|
|£m           | 1998               
|
|Revenue      |                    
|RI           |                    
|RTS          |                    
|
|RI/RTS       |                    
|Instinet     |                    
|RV           |                    
|
|Total        |                    
|Contribution |                    
|RI           |                    
|RTS          |                    
|
|RI/RTS       |                    
|Instinet     |                    
|RV           |                    
|
|Total        |                    

|Divisional profit performance (contribution) excludes goodwill
and currency hedging which are managed and reported on a group basis.


Divisional results for 1998 and 1999 exclude Reuters Business
Briefing, accounted for as a joint venture since its merger with Dow Jones
Interactive in July 1999 now trading as Factiva, and TIBCO Software Inc.,
accounted for as an associate following its IPO in July 1999.



[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR
CHART IN THE PRINTED MATERIAL.]
1999 Divisional performance
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                           | Revenue | Costs | Contribution
|-------------------------- | ------- | ----- | ------------
|Growth at actual rates     |         | 4     | %           
|Growth at comparable rates |         | 2     | %           
|

|Overall divisional revenue growth of 2% at comparable rates
compares to growth of 8% in 1998.


The combined revenue of RI and RTS represented 78% of total
divisional revenue and 80% in 1998 (1997: 79%).


Divisional contribution increased 5% at actual rates to £597
million compared with growth of 4% in 1998.


RI and RTS combined represented 82% of total divisional
contribution for 1999 with



34      Reuters Group PLC Annual
Report 1999
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|growth of 6% at comparable rates. In 1998 combined contribution
represented 88% of total divisional contribution with growth of 17%.


[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR
CHART IN THE PRINTED MATERIAL.]
Contribution margin at actual rates
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|     | RI | RTS | RV | Instinet
|---- | -- | --- | -- | --------
|
|1999 |    | 16  | %  | 30      
|1998 |    | 10  | %  | 35      
|

|Contribution margin at actual rates was 19%, broadly in line
with 1998 and 20% in 1997.


The RTS and Instinet margins in 1999 were impacted by decline
in profitability of Dealing and Instinet US respectively, combined with
internal investments in new initiatives.


Divisional second half performance
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|             | Six monthsto 30 June | Six months to31 December
|------------ | -------------------- | ------------------------
|
|£m          
|
|Revenue      |                      | 1,516                   
|% change     |                     
|Actual       |                      | 7%                      
|Comparable   |                      | 5%                      
|Contribution |                      | 306                     
|% change     |                     
|Actual       |                      | 6%                      
|Comparable   |                      | 1%                      

|Revenue growth at comparable rates was 5% in the first half of
the year and flat in the second half. The second half results reflected in
particular the effect that millennium concerns had on many of our customers who
deferred purchases.


Fourth quarter revenue was flat at both actual and comparable
rates.


Growth in contribution at comparable rates improved from 1% in
the first half to 3% in the second half.


Joint ventures, associates and investments


Excluded from operating profit are 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 Systems:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | GL Trade (34.2%)
|- | ----------------

|GL Trade is a developer of interactive software providing electronic gateways
to electronic exchanges. Reuters share of GL Trades profit for 1999 was £2
million.


Reuters Ventures:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Factiva (50%)
|- | -------------

| | Greenhouse Fund (various)
|- | -------------------------

| | ITN (20%)
|- | ---------

|Factiva is a joint venture that combines the businesses of
Reuters Business Briefing and Dow Jones Interactive. Reuters share of Factivas
losses for the second half of the year was £4 million.


Disposal of Greenhouse Fund investments realised a profit of £37
million in the year. The Fund acquired new investments costing £61 million.


Reuters share of profits from ITN, which principally provides
daily scheduled programmes of international and national news for television
and radio, was £2 million in 1999.


Instinet:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Tradepoint Financial Networks Plc (7.5%)
|- | ----------------------------------------

| | Archipelago LLC (16.4%)
|- | -----------------------

| | W.R. Hambrecht & Co. (11.4%)
|- | ----------------------------

|Tradepoint is a London-based for-profit stock exchange offering
an electronic order driven equities market for UK securities.


Archipelago is an electronic communications network for NASDAQ
stocks to match purchases and sales electronically outside the exchange trading
system.


W.R. Hambrecht is an investment bank offering an Open IPO system
that allows companies to be taken public via auction on the Internet.


Corporate:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | TIBCO Software Inc. (62.3%)
|- | ---------------------------

|TIBCO Software Inc. is a provider of real-time infrastructure
software for the Internet. Reuters share of the TIBCO Software Inc.s loss for
the second half of the year was £3 million.


Reuters realised an accounting profit of £52 million from the
successful IPO of TIBCO Software Inc. on NASDAQ in July 1999. Voting rights of
Reuters are restricted to 49% and accordingly this company is now accounted for
as an associate.


If all outstanding employee options were exercised Reuters
diluted shareholding would be 47%.


3. DIVISIONAL REVIEW


Reuters Information


Reuters Information (RI) is responsible for the majority of
financial information products. Its aim is to produce, for financial
professionals and their clients, its own differentiated content and features
while aggregating key third party products in a convenient way.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|             | Year to 31 December
|------------ | -------------------
|
|
|
|Revenue      |                    
|Costs        |                    
|
|Contribution |                    
|
|Contribution |                    
|% change     |                    
|Actual       |                    
|Comparable   |                    
|
|Margin       |                    

|Revenue growth at actual rates was 6%, or 4% at comparable
rates with growth in 1998 of 7% at comparable rates. Excluding the impact of
acquisitions, underlying revenue growth was 3% at comparable rates in 1999 and
7% in 1998.


RI costs declined by 2% at comparable rates in 1999 and
increased 7% at comparable rates in 1998, resulting in a contribution growth of
52% in 1999 and 15% in 1998. The reduction in costs reflects the benefits from
the divisional restructuring, including the rationalisation of central
development groups and streamlining of sales and support activities. Also
included is the reversal of an accrual in respect of third party data fees no


Reuters Group PLC Annual
Report 1999      35
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|longer required. Excluding the benefit from this reversal, RI contribution at
comparable rates would have been 38%.



Operating and financial review continued
|---------------------------------------------------------------------------------------------------------------------------------------------------------------

|                     | Year to 31 December
|-------------------- | -------------------
|
|
|
|Revenue              |                    
|Europe,              |                    
|Middle East & Africa |                    
|Asia/Pacific         |                    
|The Americas         |                    
|
|Total                |                    

|Revenues in Europe, Middle East and Africa grew 5% at
comparable rates. Double-digit growth in Germany and a strong performance in
Italy more than offset low growth in the UK.


Revenue growth of 6% was achieved in the Americas at comparable
rates. This included the impact of the acquisition of Lipper Analytical
Services in July 1998. Excluding Lipper, underlying revenue from North America
grew by 2% and revenue from Latin America declined by 4%.


Difficult trading conditions continued to affect the business
in Asia where revenue declined by 2% at comparable rates. Revenue reductions in
Hong Kong and Indonesia offset 4% revenue growth in Japan.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                    | Year to 31 December
|----------------------------------- | -------------------
|
|
|
|Accesses (000s)                     |                    
|3000 products                       |                    
|Other Upper Tier                    |                    
|
|Total Upper Tier                    |                    
|Off Trading Floor                   |                    
|Other (including domestic equities) |                    
|
|                                    |                    
|Mobile                              |                    
|
|Total                               |                    
|Revenue                             |                    
|per access (£000)                   |                    
|3000 products                       |                    
|Other Upper Tier                    |                    
|Overall revenue per access          |                    

|The presentation of access numbers has been revised to exclude
Online Investor Services accesses because the product is sold on a licence
rather than individual subscriber basis.


The number of other upper tier accesses declined by 14% in
1999 and 4% in 1998 as customers transferred to the 3000 products.


Mobile includes short messaging services, pocket watches and
pagers.


Overall RI installed accesses grew by 11% in 1999 compared to
growth of 13% in 1998. Approximately 28% of 3000 installations at 31 December
1999 related to new users of which over 6,300 were installed during 1999.


Revenue per access declined 7% at comparable rates, primarily
as a result of a greater proportion of lower priced Off Trading Floor and
domestic products.


Reuters Trading Systems


Reuters Trading Systems (RTS) supplies
customers with an open technology and transaction framework for improving their
business processes. This means developing applications and trade execution
facilities that can be used alongside other systems customers may own and
linking these to a variety of information sources, either internally or
externally via the Internet.


During 1999 RTS was affected by customer restrictions on
project implementations due to preparations for the millennium changeover. This
delayed systems purchase decisions. The introduction of the euro and continued
consolidation in the finance industry depressed the foreign exchange
transaction business.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|             | Year to 31 December
|------------ | -------------------
|
|
|
|Revenue      |                    
|Costs        |                    
|
|Contribution |                    
|
|Contribution |                    
|growth %     |                    
|Actual       |                    
|Comparable   |                    
|
|Margin       |                    

|Revenue from the underlying business, excluding Reuters Voice
Systems, which was sold in December 1998, declined by 4% at actual rates and 5%
at comparable rates in 1999 and grew by 4% at actual rates in 1998.


Costs increased by 1% compared to 1998 and remained stable at
comparable rates. Investment in development and sales support at TIBCO Finance
and in Securities Transactions Systems were partly offset by cost reductions in
the Dealing business and the disposal of Reuters Voice Systems. In 1998 costs
increased by 3% at actual rates and 6% at comparable rates.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Dealing    | Year to 31 December |     |  
|---------- | ------------------- | --- | -
|
|
|
|Revenue    |                     | 397 |  
|% change   |                    
|Actual     |                     | (7% | )
|Comparable |                     | (9% | )

|Dealing accesses at the end of 1999 numbered 23,000, a decline
of 5% compared with 1998 and dealing accesses at the end of 1998 fell 4%
compared with 1997.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------

|Financial Enterprise Systems | Year to 31 December
|---------------------------- | -------------------
|
|£m                          
|
|Revenue                      |                    
|% change                     |                    
|Actual                       |                    
|Comparable                   |                    

|Excluding the impact of the acquisitions of MarketNet and
Decision Support Systems SA (DSS), revenue decreased by 8% at actual rates.
Revenue growth was lower in the second half of the year as a result of customer
millennium freezes and a consequential decline in licence sale revenues at
TIBCO Finance.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Risk Management Systems | Year to 31 December
|----------------------- | -------------------
|
|£m                     
|
|Revenue                 |                    
|% change                |                    
|Actual                  |                    
|Comparable              |                    

|Strong revenue growth from Risk Management products in the
first half of the year was offset by a slow second half as customers instituted
millennium freezes on new software implementations. In 1998 revenue growth was
50% at comparable rates and 46% at actual rates.


36      Reuters Group PLC Annual
Report 1999
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Other      | Year to 31 December
|---------- | -------------------
|
|£m        
|
|Revenue    |                    
|% change   |                    
|Actual     |                    
|Comparable |                    

|Other revenue includes securities order management via Reuters
InterTrade Direct formed from the Liberty SA acquisition. Average monthly
trading volumes on Reuters InterTrade Direct in 1999 have grown by more than
200% compared to 1998.


Instinet


Instinet provides global electronic equity brokerage services
to investment professionals.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       | Year to 31 December
|---------------------- | -------------------
|
|£m                    
|
|Revenue                |                    
|Instinet US            |                    
|Instinet International |                    
|Fixed Income           |                    
|
|Total                  |                    
|Costs                  |                    
|
|Contribution           |                    
|
|Contribution           |                    
|% change               |                    
|Actual                 |                    
|Comparable             |                    
|
|Margin                 |                    

|Revenue grew 18% at actual rates in 1999 and 15% at comparable
rates, with US revenue growth of 10% and international revenue growth of 39%.
Instinet revenue growth at actual rates in 1998 was 16%.


The US equity business saw share volumes increase by 21%
although average cents per share price continued to decline. As a result
revenue growth in the US was restricted to 10% at comparable rates. In the
international markets trading volumes increased 36% compared to 1998, (52% in
1997).


Investment in 1999 included £65 million of capital expenditure
particularly on system capacity, which was required to comply with US trading
rule changes. In addition £23 million was spent on the development and
preparation to launch a fixed income product and £16 million in the development
of a retail product, including £6 million of branding expenditure. This
contributed to a decline in contribution of 18% at comparable rates, (7% growth
in 1998).


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


Reuters is actively considering its strategic options for
Instinet, one of which is an IPO. At the same time, Instinet is developing a
number of new opportunities including products for the fixed income and retail
markets, both of which will be launched in the near future.


For information concerning certain rules that could affect
Instinets business see Cautionary Statements: SEC rules on ECN usage, SEC
Rules for Alternative Trading Systems, and NASD initiativeson page 42.


Reuters Ventures


Reuters Ventures is the umbrella for a suite of business
activities aimed at opportunities outside the core wholesale finance market and
also contains the Media Group which houses the traditional news and internet
new media publishing business.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|             | Year to 31 December
|------------ | -------------------
|
|£m          
|
|Revenue      |                    
|Costs        |                    
|
|Contribution |                    
|
|Contribution |                    
|% change     |                    
|Actual       |                    
|Comparable   |                    

|Revenue for the period grew 2% at actual rates and remained
constant at comparable rates. Excluding the impact of acquisitions and
disposals, underlying revenue grew 11% at actual rates and 10% at comparable
rates.


Revenue growth was fuelled by growth of 226% at actual rates
derived from internet sales which was offset by slower growth opportunities in
traditional text publishing markets.


During the year VentureOne and The TowerGroup were acquired.


Revenue for 1998 was 8% lower than in 1997 due to the disposal
of the satellite services business in 1997 and fewer TV location specials.


Reuters Ventures costs fell by 5% at actual rates in 1999 and
fell by 8% in 1998. Excluding acquisitions and disposals, costs increased 5% at
actual rates and 4% at comparable rates. Benefits from the reductions in the TV
cost base have been offset by higher Greenhouse costs.


Greenhouse Fund


The Reuters Greenhouse Fund, which holds 38 investments in
quoted and unquoted US, European and Asian high technology companies, disposed
of a number of investments in 1999 resulting in a pre-tax profit of £37
million. At 31 December 1999 the market value of quoted Greenhouse Fund
investments was £438 million.


Other initiatives include the appointment of advisors to
prepare for an IPO of a portion of the Greenhouse Fund in order to build on the
success of the Fund at a faster pace.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Greenhouse Fund      | Year to 31 December
|-------------------- | -------------------
|
|£m                  
|
|Unquoted investments |                    
|Cost                 |                    
|Quoted investments   |                    
|Cost                 |                    
|Market value         |                    
|
|Greenhouse           |                    
|Fund profits         |                    

|Reuters Group PLC Annual
Report 1999      37
|--------------------------------------------

---

|Operating and financial reviewcontinued

4. GROUP COSTS
|-------------------------------------------------------

|Cost by function                    | Year to 31 December
|----------------------------------- | -------------------
|
|£m                                 
|
|Production and                      |                    
|communications                      |                    
|Selling and                         |                    
|marketing                           |                    
|Support services and administration |                    
|Goodwill amortisation               |                    
|Net currency gain                   |                    
|
|Total                               |                    
|% change                            |                    
|Actual                              |                    
|Comparable                          |                    

|The presentation of costs by function has been revised to
reflect more closely the activities under which costs are managed in the new
divisional organisational structure. Where costs relate to two or more
divisions they are allocated across divisions using the most appropriate
metrics available. These allocation methods may change over time as measurement
techniques are refined.


Production and communications


This comprises costs involved in the development and delivery
of Reuters products and content to its clients. These costs fell by 1% at
actual rates (increased 6% in 1998) due principally to the streamlining of
development activity and the one-off reversal of an accrual in respect of third
party data fees.


Selling and marketing


These costs relate to sales, marketing and client support
activities. Selling and marketing have increased by 7% in line with the growth
in 1998, principally reflecting growth in salary costs.


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 have increased by 10% (compared
to growth of 3% in 1998) due to a significant increase in support and general
management costs at Instinet.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Cost by type               | Year to 31 December
|-------------------------- | -------------------
|
|
|
|Staff                      |                    
|Services                   |                    
|Depreciation               |                    
|Data                       |                    
|Comms                      |                    
|Space                      |                    
|Other                      |                    
|Factiva cost reimbursement |                    
|
|Total                      |                    
|% change                   |                    
|Actual                     |                    
|Comparable                 |                    

|Staff costs rose by 5% at comparable rates on average
headcount in the year of 16,662 compared to 16,690 in 1998. Staff costs in 1998
at comparable rates were 14% higher than in 1997.


Services costs increased 8% at comparable rates in 1999 (2% in
1998) due to expenditure associated with the Millennium Programme and higher
advertising spend.


Depreciation decreased by 6% at comparable rates in 1999
(increased 7% in 1998) due to lower subscriber capital expenditure as clients
increasingly opt to use their own hardware.


Data costs fell 8% at comparable rates in 1999 (grew 20% in
1998) reflecting the one-off reversal of an accrual in respect of third party
data fees no longer required.


Communication costs fell 3% at comparable rates in 1999
(increased 7% in 1998) with increased capacity requirements offset by tariff
reductions.


5. 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 independence, as enshrined in the Reuters Trust Principles;
|- | -------------------------------------------------------------------

| | Goodwill attached to the Reuters name;
|- | --------------------------------------

| | Software and other intellectual property;
|- | -----------------------------------------

| | Global databases of financial and other information;
|- | ----------------------------------------------------

| | An integrated global organisation including a skilled workforce;
|- | ----------------------------------------------------------------

| | The market value of various investments which are held at cost under UK GAAP or the
net asset value.
|- | ----------------------------------------------------------------------------------------------------

|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 two- and one-year
measurement periods are set out below:


[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR
CHART IN THE PRINTED MATERIAL.]


Reuters TSR ranking in FTSE 100
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Completed periods |  |    | 
|----------------- |  | -- | 
|95-97             |  | 60 | 
|96-98             |  | 79 | 
|97-99             |  | 71 | 
|Ongoing periods   | 
|98-99             |  | 52 | 
|1999              |  | 18 | 

|
|

|6. 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 £402 million, compared with £490 million in 1998
and £449 million in 1997. The reduction in 1999 reflected higher working
capital requirements, in particular the net increase in counterparty balances
at Instinet.


Additions to tangible fixed assets were £244 million, £52
million lower than 1998. Subscriber equipment expenditure declined £54 million
to £65 million in 1999 as spending on millennium and 3000 product upgrades
declined. Other equipment additions rose £2 million to £179 million.


Reuters spent £135 million on acquisitions and investments
compared to £157 million in 1998. In 1999 £68 million was spent on Reuters
shares acquired by an employee share


38      Reuters Group PLC Annual
Report 1999
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|ownership trust compared with £7 million
in 1998 and £14 million in 1997. Proceeds from the sale of fixed asset
investments was £39 million, principally relating to Greenhouse Fund disposals
in 1999.


Reuters paid dividends of £207 million, up £19 million from
1998, reflecting an increase in dividends per share and a marginal increase in
the number of shares in issue.


Future dividends will be based on the results of RI and RTS,
with the intention that payments will be covered at least 1.7 times by
underlying earnings before goodwill as they would have been in 1999.


In 1999 Reuters repurchased and cancelled 4.7 million ordinary
shares at a total cost of £25 million.


Net funds at 31 December 1999 amounted to £41 million, compared
with net debt of £3 million at 31 December 1998 (1997: £1,290 million net
funds). Net funds at 31 December 1999 comprised cash and short-term investments
of £609 million offset by gross debt of £568 million.


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


At 31 December 1999 Reuters Group PLC had syndicated loan
facilities of £500 million available which expire in December 2002, all undrawn
at 31 December 1999.


A Euro Commercial Paper Programme established in 1998 provides
access to £1.5 billion in uncommitted short-term finance, subject to market
conditions. At 31 December 1999, Reuters had raised funds of £188 million under
this programme, repayable at various dates through to April 2000.


In 1998 Reuters also established a Euro Medium Term Note
Programme which provides access to £1.0 billion of uncommitted finance, subject
to market conditions. At 31 December 1999, Reuters had raised funds of £259
million under this programme, repayable at various dates from February 2001 up
to November 2004.


7. TREASURY MANAGEMENT


A substantial portion of Reuters revenue is committed under
one- and two-year contracts and approximately 80% 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 | 1999 | 1998
|---------------------------- | ---- | ----
|
|Continental Europe           |      |     
| euro currencies            |      | 80  
| other                      |      | 19  
|US dollar                    |      | 49  
|Japanese yen                 |      | 12  
|Sterling                     |     
| depreciation               |      | (52 
| other                      |      | (19 
|Other                        |      | 11  
|
|Total                        |      | 100 

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


In broad terms using the 1999 mix of profits, the impact of an
additional unilateral 1% strengthening of sterling would have been a reduction
of approximately £10 million on operating profits before hedging (1998: £9
million).


Exchange rates had a small favourable impact on operating
profits before hedging in 1999 compared with 1998.


[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE
CHART IN THE PRINTED MATERIAL.]
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                           
|-------------------------------------------
|Sterling trade weighted exchange rate index
|
|
|
|J                                          
|F                                          
|M                                          
|A                                          
|M                                          
|J                                          
|J                                          
|A                                          
|S                                          
|O                                          
|N                                          
|D                                          

|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 main principles underlying currency hedging policies are as
follows:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Committed hedging cannot exceed the underlying cash flow exposure;
|- | ------------------------------------------------------------------

| | Options may only be written against an underlying exposure;
|- | -----------------------------------------------------------

| | Levels of cover for currency hedging cannot exceed 90% of underlying exposure for the
first 12 months and 70% for the following 12 months.
|- | ------------------------------------------------------------------------------------------------------------------------------------------

|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 Group PLC Annual
Report 1999      39
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Operating and financial reviewcontinued



[A LINE CHART APPEARS HERE IN THE PRINTED MATERIAL]
|----------------------------------------------------------------------------------------------

|Change in profit (£m)
|---------------------
|                     
|Profit (£)           
|-125.7715775         
|-122.6272881         
|-119.4829987         
|-116.3387092         
|-113.1944198         
|-110.0501303         
|-106.9058409         
|-103.7615515         
|-100.617262          
|-97.47297259         
|-94.32868315         
|-91.18439372         
|-88.04010428         
|-84.89581484         
|-81.7515254          
|-78.60723596         
|-75.46294652         
|-72.31865708         
|-69.17436765         
|-66.03007821         
|-62.88578877         
|-59.74149933         
|-56.59720989         
|-53.45292045         
|-50.30863102         
|-47.16434158         
|-44.02005214         
|-40.8757627          
|-37.73147326         
|-34.58718382         
|-31.44289438         
|-28.29860495         
|-25.15431551         
|-22.01002607         
|-18.86573663         
|-15.72144719         
|-12.57715775         
|-9.432868315         
|-6.288578877         
|-3.144289438         
|0                    
|3.144289438          
|6.288578877          
|9.432868315          
|12.57715775          
|15.72144719          
|18.86573663          
|22.01002607          
|25.15431551          
|28.29860495          
|31.44289438          
|34.58718382          
|37.73147326          
|40.8757627           
|44.02005214          
|47.16434158          
|50.30863102          
|53.45292045          
|56.59720989          
|59.74149933          
|62.88578877          
|66.03007821          
|69.17436765          
|72.31865708          
|75.46294652          
|78.60723596          
|81.7515254           
|84.89581484          
|88.04010428          
|91.18439372          
|94.32868315          
|97.47297259          
|100.617262           
|103.7615515          
|106.9058409          
|110.0501303          
|113.1944198          
|116.3387092          
|119.4829987          
|122.6272881          
|125.7715775          
|                     

|Reuters estimates that at 31 December 1999 there is a 5% chance
that profits forecast for the coming 12 months will deteriorate by more than £52
million as a result of currency fluctuations before hedging and £27 million
after hedging (1998: £70 million before hedging and £37 million after hedging).
These figures represent the value at risk and are illustrated graphically above.


During 1999 the average value at risk on forecast profits for
the coming 12 months was as follows:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Value at risk£m | Beforehedging | Afterhedging | 
|--------------- | ------------- | ------------ | 
|
|1999 Average    |               | 60           | 
|High            |               | 72           | 
|Low             |               | 52           | 
|1998 Average    |               | 64           | 

|The gains on currency hedging activities for the three years to
December 1999 are summarised below:
|---------------------------------------------------------------------------------------------------

|Recognised gains/(losses)£m | 1999 | 1998 | 1997
|--------------------------- | ---- | ---- | ----
|
|Currency hedging            |      | 9    |     
|Interest rate hedging       |      | (1   | )   

|Recognised currency hedging gains were lower in 1999 compared
with 1998 due mainly to the relative strength of sterling versus other European
currencies when hedging for 1999 was undertaken. Of the currency gains
recognised in 1999, £6 million related to contracts in place at the end of 1998.


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 below:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Currency hedging£m                           | Gains | (Losses) | Net
|-------------------------------------------- | ----- | -------- | ---
|
|Unrecognised at 1 January 1999               |       | 7        |    
|Arising in previous years                    |      
| recognised in 1999                         |       | 7        |    
| not recognised in 1999                     |       | 0        |    
|Arising in 1999                              |      
| not recognised in 1999                     |       | 16       |    
|
|Unrecognised at 31 December 1999             |       | 16       |    
|
|Of which:                                    |      
| expected to be recognised in 2000          |       | 15       |    
| expected to be recognised in 2001 or later |       | 1        |    

|Unrecognised gains of £4 million at 31 December 1999 compare
with unrecognised losses of £6 million at 31 December 1998. The improvement
reflects the strength of sterling at the end of 1999 compared with the end of
1998.


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. The maturity of investments and
debt are matched to minimise interest rate risk.


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£m                      | Gains | (Losses) | Net
|-------------------------------------------- | ----- | -------- | ---
|
|Unrecognised at 1 January 1999               |       | 0        |    
|Arising in previous years                    |      
| recognised in 1999                         |       | 0        |    
|Arising in 1999                              |      
| not recognised in 1999                     |       | 0        |    
|
|Unrecognised at 31 December 1999             |       | 0        |    
|
|Of which:                                    |      
| expected to be recognised in 2000          |       | 0        |    
| expected to be recognised in 2001 or later |       | 0        |    

|Unrecognised losses of £17 million on interest rate hedging at
31 December 1999 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 1999
by approximately £1 million (1998: £1 million) excluding the impact of hedging.


8. US GAAP


Reconciliations of net income and shareholders equity under UK
and US GAAP are set out on pages 7677. A discussion of the relevant US
accounting policies which differ materially from UK GAAP is given on page 75.


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, 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 31 December 1999 would increase/decrease the value of the Fund by £44
million. Quoted investments are also exposed to exchange rate fluctuations. A
strengthening of sterling against the US dollar would reduce the



40      Reuters Group PLC Annual
Report 1999
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|market value
of the Greenhouse Fund.



A different accounting treatment was required under US GAAP
to reflect the impact of the capital reorganisation in February 1998. Under US
GAAP this transaction was deemed to be a share consolidation combined with a
special dividend, and required retroactive restatement of earnings and
dividends per share and per ADS. Under UK GAAP no restatement of earnings per
share was deemed necessary as the return of capital was considered to be
equivalent to a repurchase of shares at market value and the number of new
shares in Reuters Group PLC was set to facilitate comparability with those of
Reuters Holdings PLC.


9. YEAR 2000 READINESS DISCLOSURE


Millennium Programme


Reuters established its Millennium Programme in 1996 to address
the issues arising as a result of the change of millennium and the fact that
the year 2000 is also a leap year.


The first goal of the Programme was achieved when Reuters moved
into the year 2000 without any significant problems. It was not necessary to
invoke any of Reuters Millennium continuity plans over this period.


The Millennium Programme involved the renovation of over 2,000
of Reuters proprietary software applications. More than 27,000 applications
that run on Reuters production systems and over 350,000 applications on client
site key stations globally were updated with millennium versions.


Year 2000 leap year


Algorithms within some computer programmes may not detect that
the year 2000 is a leap year. Reuters Millennium Programme established
procedures, including reviewing software code and testing computer systems,
which would address both the millennium transition and the year 2000 leap year.


To manage this risk, Reuters will re-establish its millennium
command centres with 24 hour staffing which were deployed over the millennium
transition period. Reuters will also be prepared to invoke its millennium
business continuity plans should these prove necessary.


Incorrect processing of dates surrounding the year 2000 leap
year, either by Reuters proprietary computer systems or those of third parties,
represents a residual business risk to Reuters.


Expenditure for 2000 is budgeted at approximately £4 million.


Millennium Programme costs


Details of the costs incurred in 1999 are set out below:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|1999               
|-------------------
|
|Internal effort    
|Development/testing
|Implementation     
|External effort    
|Development/testing
|Implementation     
|
|Total              

|Expenditure for 1999 of £42 million compares with the budget
of £28 million reported in February 1999. The increase principally reflected
additional expenditure on training, enhanced staff coverage over the millennium
weekend and investment in continuity planning at Instinet.


Incremental capital expenditure arising as a direct result of
the programme was £8 million in 1999. No estimation of the cost of assets
replaced in the normal business cycle has been made.


Internal development effort in 1999 of £7 million represented
4% of total group development expenditure. The £10 million of implementation
activity represented 5% of client site activity. Accordingly, Reuters believes
that the Millennium Programme has not resulted in any material deferrals of
product developments or decreases in service quality at client sites.


We do not expect to incur any significant incremental external
costs in 2000.


10. CAUTIONARY STATEMENTS


Forward-looking statements


This document contains certain forward-looking statements
within the meaning of the United States Private Securities Litigation Reform
Act of 1995 with respect to Reuters financial condition, results of operations
and business and managements strategy, plans and objectives for the company.
These statements involve risk and uncertainty because they relate to events and
depend on circumstances that will occur in the future. There are a number of
factors that could cause actual results and developments to differ materially
from those expressed or implied by these forward-looking statements. These
factors include, but are not limited to, changes in economic conditions,
changes in regulatory policies, competition from other information and
financial services providers, technological or other developments affecting the
Internet, difficulties or delays by Reuters in developing new technology or
software products and exposure to fluctuations in currency exchange rates.


Impact of currency movements


Reuters reports results in UK pounds sterling but receives
revenue and incurs expenses in more than 70 currencies and is thereby exposed
to the impact of fluctuations in currency rates. The euros continuing weakness
relative to the pound in 1999 restricted revenue and earnings growth in 1999,
and a continuation of the euros weakness could further restrict reported
revenue and earnings in 2000. Reuters currency exposure is actively hedged. For
additional information concerning currency fluctuations see Treasury Managementon
page 3940.


State of financial markets


Reuters business is dependent upon the health of the financial
markets and the participants in those markets. Reuters business could also be
adversely affected by consolidations and rationalisations among clients in the
financial services and other industries.


Reuters dealing products and Instinet are particularly
dependent upon the level of activity in the foreign exchange and equity markets
respectively.



Reuters Group PLC Annual
Report 1999      41
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Operating and financial review continued


Product development


Products in the information technology industry are becoming
increasingly sophisticated with an associated increase in dependence on third
party software. In addition, Reuters faces challenges in developing
internet-based applications and software. As a result, Reuters, like other
information vendors, may encounter difficulties or delays in the development,
production, testing, marketing, installation and market acceptance of new
products.


Broker activities


Certain Reuters subsidiaries act as brokers in the financial
markets but do not undertake trading on their own account. Instinet Corporation
is an agency broker in the equities markets and Reuters Transaction Services
Limited (RTSL) operates the Dealing 20002 and 3000 electronic brokerage
services for the foreign exchange market. These brokers could incur losses from
broken trades and, in respect of equities, the failure of a counterparty.
Reuters seeks to mitigate these risks by computerised systems, procedural
controls and contractual agreements with customers.


SEC rules for alternative trading systems


In December 1998 the US Securities and Exchange Commission
(SEC) promulgated new rules relating to the regulation of certain alternative
trading systems (ATS). The rules expand the SECs interpretation of the
definition of exchange under the US securities laws to encompass certain
electronic brokerage activities, including those conducted by Instinet
Corporation.


The requirements of Regulation ATS applicable to Instinet
Corporation include, among others, mandatory public display of, and public
access to, best-priced orders displayed within the system and the establishment
and application of fair access and capacity, integrity and security standards.
The new rules became effective on 21 April 1999, subject to a phase-in of the
public display and access requirements. The phase-in schedule generally
provides that an alternative trading system must have complied with the public
display and access requirements with respect to a total of 50% of NASDAQ
securities by 28 September 1999 and must comply with these requirements with
respect to a total of 75% of NASDAQ securities by 25 April 2000; and with
respect to a total of 100% of NASDAQ securities by 20 June 2000.


Instinet has modified and enhanced its trading systems to
comply with Regulation ATS and its implementation dates. Instinet continues to
review and monitor its trading system and procedures for compliance with
Regulation ATS.


SEC rules on ECN usage


Reuters and Instinet Corporation continue to monitor the
operation of the SEC rules governing market-maker and exchange specialist usage
of electronic communications networks (ECNs).


Most recently, by letter dated 19 November 1999, the SEC
Division of Market Regulation issued an extension, until 3 March 2000, of the
Divisions no-action position verifying Instinet Corporations status as an
ECN. The Division continues to condition its position upon, among other things,
Instinet Corporations representation that it has sufficient capacity to handle
the volume of trading reasonably anticipated. Reuters has no reason at this
time to believe that Instinet Corporation will not be able to continue to meet
its obligations as an ECN under currently applicable SEC rules, although no
assurance can be given that the Division will continue to grant such letters or
that the applicable rules or the enforcement of those rules will not change.


NASD initiatives


The US National Association of Securities Dealers, Inc. (NASD),
which oversees the activities of US broker-dealers and also operates and
regulates the primary market for the trading of over-the-counter securities
(NASDAQ), is considering a number of changes to the NASDAQ marketplace.


Some of these changes could put the NASD into direct
competition with Instinet or otherwise have a significant impact on Instinets
business. Each of the NASDs proposals must be approved by the SEC. At this
time Reuters is unable to predict whether, when or in what form any of the NASDs
proposals will be approved or implemented, or the impact that any such
implementation would have on Instinet Corporations business.


Instinet is in discussions with SEC and NASD staff regarding
important issues such as ECN access fees, data dissemination, ECN access to
ITS, SelectNet service and capacity and, most importantly, the overall
structure of US equities markets. Reuters is unable to predict the outcome of
these discussions and the evolution of the US equities market structure,
although these issues and the market structure in general may have a
significant impact on Instinets equities business.


Further regulation of transaction products


The increasing use of electronic systems as alternatives to
traditional exchange and over-the-counter trading has led authorities in
several jurisdictions to explore various methods of regulating such systems,
including the SEC rules described above, implementation of which could impact
Instinet and other transaction products offered by Reuters from time to time.


Networks and systems


Reuters networks and systems risk being impacted by a
catastrophic failure of long or short duration due to factors beyond its
control. Reuters seeks to minimise these risks as far as commercially
reasonable by, inter alia, security controls, systems and communications
redundancy and elimination of single points of failure where feasible.


Internet


The availability of the public Internet and internet technology
is reducing barriers to entry for new information providers, creating
additional competition and new price/cost dynamics in the industry. It may also
increase the availability of commoditised data in cheaper forms and the loss of
control over intellectual property. As a new publishing medium, it will also
create new outlets for content providers.



Reuters strategy is based on developing internet-based products
and reducing costs


42      Reuters Group PLC Annual
Report 1999
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|through internet-based infrastructure. In pursuing this
strategy, Reuters faces risks associated with delays or difficulties in
developing and using new technology and software for the Internet. Reuters also
faces risks associated with implementing its new business model in the
competitive and rapidly changing Internet environment. There can be no
assurance that Reuters will be able to successfully implement its strategy for
the Internet or adapt its business to internet commerce.


Because of the increasing importance of the Internet to Reuters
business, the value of Reuters shares may be more adversely affected by a
decline in the value of internet stocks generally than would have been the case
in the past.


Geographical operations


Reuters may suffer discriminatory tariffs or other forms of
government intervention due to the nature of its editorial and other reporting
activities.

Exposure to companies not controlled by Reuters

Reuters has entered into joint ventures with and made strategic investments in a number of companies involved
in related business where Reuters does not exercise management control, including investments made through the
Greenhouse Fund in internet-related companies. The value of Reuters interest in a number of these companies
has increased significantly, in part as a result of increased investor interest in companies involved in the
internet and technology sectors. The value of Reuters interests may fall if, among other things, the
performance of these companies or companies in these sectors generally do not meet investors expectations or
because of adverse economic conditions. Although Reuters generally seeks board representation or other means
of participating in the management of companies or joint ventures in which it invests, Reuters ability to
affect the performance of these companies or joint ventures may be limited where it does not exercise
management control.




Reuters Group PLC Annual
Report 1999      43
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Consolidated profit and loss accountfor the year ended 31 December
|------------------------------------------------------------------

|                                                            | NOTES | 1999£m | 1998£m | 1997£m
|----------------------------------------------------------- | ----- | ------ | ------ | ------
|                                                           
|Revenue: Group and share of joint venture                   |       |        |        | 3,160 
|less share of joint venture revenue                         |       |        |        | (35   
|                                                           
|Group revenue                                               |       | 1      |        | 3,125 
|Operating costs                                             |       | 2      |        | (2,576
|                                                           
|Operating profit                                            |       |        |        | 549   
|Share of operating loss in:                                 |      
|Joint ventures                                              |       |        |        | (6    
|Associates                                                  |       |        |        | (11   
|Profit on partial disposal of a subsidiary undertaking      |       | 32     |        | 52    
|Profit on disposal of fixed asset investments               |       |        |        | 50    
|Income from fixed asset investments                         |       |        |        | 2     
|Net interest (payable)/receivable                           |       | 3      |        | (4    
|                                                           
|Profit on ordinary activities before taxation               |       |        |        | 632   
|Taxation on profit on ordinary activities                   |       | 4      |        | (207  
|                                                           
|Profit after taxation attributable to ordinary shareholders |       |        |        | 425   
|Dividends                                                   |       | 5      |        | (206  
|                                                           
|Retained profit                                             |       |        |        | 219   
|                                                           
|Basic earnings per ordinary share                           |       | 6      |        | 30.2  
|Fully diluted earnings per ordinary share                   |       | 6      |        | 29.7  

|Consolidated revenue and operating profit derive from
continuing operations in all material respects.


The profit for the year has been computed on an unmodified
historical cost basis.



Consolidated statement of total recognised gains and losses
for the year ended 31 December
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                |  | 1999£m | 1998£m | 1997£m
|--------------------------------------------------------------- |  | ------ | ------ | ------
|                                                               
|Profit after taxation attributable to ordinary shareholders     |  |        |        | 425   
|Translation differences credited/(debited) directly to reserves |  |        |        | 10    
|                                                               
|Total recognised gains and losses relating to the year          |  |        |        | 435   
|                                                               

|The detailed statement showing the movement in capital and
reserves is set out in note 26.


44      Reuters Group PLC Annual
Report 1999
|-----------------------------------------------------------------------------------------------------------------------------------------

---

|Notes on the consolidated profit and loss account


1.    Segmental analysis


The tables below are a segmental analysis of revenue, costs and
contribution which reflect the way in which Reuters is managed. Following the
groups reorganisation which became effective on 1 January 1999 the group is
managed on a divisional basis, comprising Reuters Information, Reuters Trading
Systems (renamed in 2000 as Reuters Trading Solutions), Instinet and Reuters
Ventures (renamed in 2000 as Reuterspace). For comparability the divisional
results exclude Reuters Business Briefing (RBB) and TIBCO Software Inc. RBB is
now part of the Factiva joint venture which became effective in July 1999.
TIBCO Software Inc., was floated on the NASDAQ stock market in July and is now
accounted for as an associate. The segmental analysis for 1998 and 1997 has
been restated to conform to the current year format.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|By Division                   | 1999£m | %CHANGE | 1998£m | %CHANGE | 1997£m
|----------------------------- | ------ | ------- | ------ | ------- | ------
|                             
|Revenue                       |        |         |        |         |       
|Reuters Information           |        | 1,619   |        | 6       | %     
|Reuters Trading Systems       |        | 780     |        | (6      | %)    
|Instinet                      |        | 525     |        | 18      | %     
|Reuters Ventures              |        | 157     |        | 2       | %     
|                             
|Divisional revenue            |        | 3,081   |        | 4       | %     
|TIBCO Software Inc.           |        | 21      |        | (40     | %)    
|Reuters Business Briefing     |        | 31      |        | (43     | %)    
|Share of Factiva revenue      |        | 35      |        |        |       
|Intra-group revenue           |        | (8      | )      | 47      | %     
|                             
|Gross revenue                 |        | 3,160   |        | 4       | %     
|Less share of Factiva revenue |        | (35     | )      |        |       
|                             
|Group revenue                 |        | 3,125   |        | 3       | %     
|                             
|Costs                         |       
|Reuters Information           |        | (1,366  | )      | (1      | %)    
|Reuters Trading Systems       |        | (550    | )      | 3       | %     
|Instinet                      |        | (396    | )      | 36      | %     
|Reuters Ventures              |        | (172    | )      | (5      | %)    
|                             
|Divisional costs              |        | (2,484  | )      | 4       | %     
|TIBCO Software Inc.           |        | (27     | )      | 27      | %     
|Reuters Business Briefing     |        | (32     | )      | 52      | %     
|Share of Factiva costs        |        | (39     | )      |        |       
|Intra-group costs             |        | 8       |        | (47     | %)    
|                             
|Gross costs                   |        | (2,574  | )      | 4       | %     
|Less share of Factiva costs   |        | 39      |        |        |       
|                             
|Group costs                   |        | (2,535  | )      | 3       | %     
|                             
|Contribution                  |       
|Reuters Information           |        | 253     |        | 60      | %     
|Reuters Trading Systems       |        | 230     |        | (20     | %)    
|Instinet                      |        | 129     |        | (17     | %)    
|Reuters Ventures              |        | (15     | )      | 44      | %     
|                             
|Divisional contribution       |        | 597     |        | 5       | %     
|TIBCO Software Inc.           |        | (6      | )      |        |       
|Reuters Business Briefing     |        | (1      | )      | 93      | %     
|                             
|Gross contribution            |        | 590     |        | 6       | %     
|Goodwill                      |       
|Reuters Information           |        | (13     | )      | (11     | %)    
|Reuters Trading Systems       |        | (26     | )      | 35      | %     
|Instinet                      |        | (5      | )      | 27      | %     
|Reuters Ventures              |        | (3      | )      | 59      | %     
|                             
|Total goodwill                |        | (47     | )      | 2       | %     
|Net currency gain             |        | 6       |        | (84     | %)    
|                             
|Operating profit              |        | 549     |        | 0       | %     
|                             

|Reuter: Group PLC Annual Report 1999      45
|--------------------------------------------

---

|Notes on the consolidated profit and loss account continued


1.  Segmental analysis continued



Revenue is normally invoiced in the same geographical area in
which the customer is located. Revenue earned, therefore, generally represents
revenue both by origin and by destination.


The geographical analysis of performance reflects the revenues
earned and costs incurred in each area excluding centrally managed costs which
include development, editorial and divisional and corporate support costs. It
does not purport to show geographical profitability.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|By geography                   | 1999£m | %CHANGE | 1998£m | %CHANGE | 1997£m
|------------------------------ | ------ | ------- | ------ | ------- | ------
|                              
|Revenue                        |        |         |        |         |       
|Europe, Middle East and Africa |        | 1,643   |        | (1      | %)    
|Asia/Pacific                   |        | 503     |        | 3       | %     
|The Americas                   |        | 979     |        | 11      | %     
|                              
|                               |        | 3,125   |        | 3       | %     
|                              
|Operating costs where incurred |       
|Europe, Middle East and Africa |        | (948    | )      | (3      | %)    
|Asia/Pacific                   |        | (255    | )      | 1       | %     
|The Americas                   |        | (737    | )      | 19      | %     
|                              
|                               |        | (1,940  | )      | 5       | %     
|                              
|Contribution                   |       
|Europe, Middle East and Africa |        | 695     |        | 1       | %     
|Asia/Pacific                   |        | 248     |        | 8       | %     
|The Americas                   |        | 242     |        | (8      | %)    
|                              
|                               |        | 1,185   |        | 0       | %     
|                              
|Central costs                  |        | (642    | )      | (4      | %)    
|Net currency gain              |        | 6       |        | (85     | %)    
|                              
|Operating profit               |        | 549     |        | 0       | %     
|                              

|United Kingdom and Ireland revenue was £541 million (1998 £581
million, 1997 £533 million).


With the exception of Instinet, most of Reuters products are
delivered and sold through a common network and geographical infrastructure
managed by the Global Sales and Operations organisation.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Revenue by type | 1999£m | %CHANGE | 1998£m | %CHANGE | 1997£m
|--------------- | ------ | ------- | ------ | ------- | ------
|               
|Recurring       |        | 2,338   |        | 5       | %     
|Usage           |        | 609     |        | 6       | %     
|Outright        |        | 178     |        | (26     | %)    
|               
|                |        | 3,125   |        | 3       | %     
|               

|Recurring revenue is derived from the sale of subscription
services, including maintenance contracts. Usage revenue is principally derived
from Instinet and Dealing 20002. Outright revenue comprises once-off sales of
information management systems and risk management software.


46      Reuters Group PLC Annual
Report 1999
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|2.  Operating costs
|-------------------



|Costs by type                              | 1999£m | %CHANGE | 1998£m | %CHANGE | 1997£m
|------------------------------------------ | ------ | ------- | ------ | ------- | ------
|                                          
|Wages, salaries, commission and allowances |        | 869     |        | 8%      |       
|Social security costs                      |        | 69      |        | (5%     | )     
|Other pension costs (see note 23)          |        | 49      |        | (2%     | )     
|                                          
|Staff costs                                |        | 987     |        | 6%      |       
|Services                                   |        | 641     |        | 10%     |       
|Depreciation                               |        | 310     |        | (6%     | )     
|Data                                       |        | 227     |        | (6%     | )     
|Communications                             |        | 205     |        | (1%     | )     
|Space                                      |        | 145     |        | 12%     |       
|Cost of sales and other                    |        | 39      |        | (23%    | )     
|Goodwill amortisation                      |        | 47      |        | 2%      |       
|Reimbursement of costs                     |        | (19     | )      |        |       
|Currency hedging activities  net gain     |        | (9      | )      | (80%    | )     
|Foreign currency translation  net loss    |        | 3       |        | (44%    | )     
|                                          
|                                           |        | 2,576   |        | 4%      |       
|                                          

|Services costs include equipment hire and bought-in services,
including consultancy and contractors, advertising and publicity, professional
fees and staff-related expenses. Reimbursement of costs comprises amounts
received from Factiva in respect of costs incurred by Reuters on behalf of the
joint venture.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Costs by function                   | 1999£m | %CHANGE | 1998£m | %CHANGE | 1997£m
|----------------------------------- | ------ | ------- | ------ | ------- | ------
|                                   
|Production and communications costs |        | 1,556   |        | (1%     | )     
|Selling and marketing               |        | 513     |        | 7%      |       
|Support services and administration |        | 466     |        | 10%     |       
|Goodwill amortisation               |        | 47      |        | 2%      |       
|Net currency gain                   |        | (6      | )      | (85%    | )     
|                                   
|                                    |        | 2,576   |        | 4%      |       
|                                   

|The presentation of costs by function has been revised to
reflect more closely the activities under which costs are managed in the new
organisation structure.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------



|Costs include:                                                                      | 1999£m | %CHANGE | 1998£m | %CHANGE | 1997£m
|----------------------------------------------------------------------------------- | ------ | ------- | ------ | ------- | ------
|                                                                                   
|Development expenditure                                                             |        | 197     |        | (2%     | )     
|Operating lease expenditure:                                                        |       
|Hire of equipment                                                                   |        | 9       |        | (18%    | )     
|Other, principally property                                                         |        | 79      |        | 8%      |       
|Advertising costs                                                                   |        | 29      |        | 19%     |       
|Reversal of third party data fee accrual                                            |        | (25     | )      |        |       
|                                                                                   
|Fees payable to PricewaterhouseCoopers (formerly Price Waterhouse) were as follows: |       
|Audit fees:                                                                         |       
|United Kingdom                                                                      |        | 1.0     |        | 11%     |       
|Overseas                                                                            |        | 0.9     |        |        |       
|                                                                                   
|                                                                                    |        | 1.9     |        | 6%      |       
|                                                                                   
|Non-audit services:                                                                 |       
|United Kingdom                                                                      |        | 4.7     |        | 24%     |       
|Overseas                                                                            |        | 5.9     |        | (3%     | )     
|                                                                                   
|                                                                                    |        | 10.6    |        | 7%      |       
|                                                                                   
|                                                                                    |        | 12.5    |        | 7%      |       
|                                                                                   

|Reuters Group PLC Annual Report 1999      47
|--------------------------------------------

---

|Notes on consolidated profit and loss account continued


2.  Operating costs continued


The United Kingdom audit fee of £1.0 million includes
£10,000 in respect of the parent company audit.


Non-audit services were as follows:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                               | 1999£m | %CHANGE | 1998£m | %CHANGE | 1997£m
|-------------------------------------------------------------- | ------ | ------- | ------ | ------- | ------
|                                                              
|Litigation support, due diligence and other audit related work |        | 6.3     |        | 62%     |       
|Management consultancy                                         |        | 1.6     |        | (56%    | )     
|Taxation advice                                                |        | 2.7     |        | 13%     |       
|                                                              
|                                                               |        | 10.6    |        | 7%      |       
|                                                              

|Non-audit fees of £9.9 million for PricewaterhouseCoopers in
1998 includes £3.7 million paid to Price Waterhouse and £1.6 million paid to
Coopers & Lybrand prior to the date of appointment of PricewaterhouseCoopers as
auditors. Non-audit fees in 1997 comprise solely amounts paid to the previous
auditors Price Waterhouse.


Non-audit fees paid to Coopers & Lybrand in 1997 not included in
the above figures amounted to £2.6 million.


The directors consider it important that the company has access
to a broad range of external advice, including from PricewaterhouseCoopers.
Where appropriate, work is put out to competitive tender. The Audit Committee
monitors the relationship with PricewaterhouseCoopers, including the level of
non-audit fees.



3.  Net interest (payable)/receivable
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                     | 1999£m | 1998£m | 1997£m
|-------------------- | ------ | ------ | ------
|                    
|Interest receivable: |        |        |       
|Listed investments   |        | 4      |       
|Unlisted investments |        | 42     |       
|                    
|                     |        | 46     |       
|                    
|Interest payable:    |       
|Bank loans           |        | (3     | )     
|Other borrowings     |        | (47    | )     
|                    
|                     |        | (50    | )     
|                    
|                     |        | (4     | )     
|                    

|48      Reuters Group PLC Annual Report 1999
|--------------------------------------------

---

|4.  Taxation on profit on ordinary activities
|---------------------------------------------

|                                                     | 1999£m | 1998£m | 1997£m
|---------------------------------------------------- | ------ | ------ | ------
|                                                    
|UK corporation tax                                   |        |        |       
|Current tax on income for the period                 |        | 91     |       
|Adjustments in respect of prior periods              |        | 9      |       
|                                                    
|                                                     |        | 100    |       
|Double taxation relief                               |        | (14    | )     
|                                                    
|                                                     |        | 86     |       
|Foreign tax                                          |       
|Current tax on income for the period                 |        | 103    |       
|Adjustments in respect of prior periods              |        | 7      |       
|                                                    
|                                                     |        | 110    |       
|Taxes on return of capital to shareholders           |        |       |       
|Deferred taxation                                    |        | 11     |       
|                                                    
|                                                     |        | 207    |       
|                                                    
|Reconciliation to the UK nominal tax rate:           |       
|Effective tax rate                                   |        | 32.7%  |       
|UK nominal tax rate                                  |        | 30.3%  |       
|Taxes as shown in these financial statements         |        | 207    |       
|Corporation tax on pre-tax profit at UK nominal rate |        | 191    |       
|                                                    
|Difference                                           |        | 16     |       
|                                                    
|The difference is principally due to:                |       
|Non-tax deductible amortisation of goodwill          |        | 17     |       
|Taxes on return of capital to shareholders           |        |       |       
|Other differences                                    |        | (1     | )     
|                                                    
|                                                     |        | 16     |       
|                                                    

|The other differences are primarily due to overseas profits
taxed at rates differing from those in the UK and the geographical mix of
profits.


Included in the tax charge of £207 million is tax of £7 million
arising on the profit on disposal of fixed asset investments and the partial
disposal of a subsidiary undertaking.



5.  Dividends
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                      | 1999£m | 1998£m | 1997£m
|--------------------- | ------ | ------ | ------
|                     
|Interim               |        | 52     |       
|Final (1999 proposed) |        | 154    |       
|                     
|                      |        | 206    |       
|                     
|
|                     
|Interim               |        | 3.65   |       
|Final (1999 proposed) |        | 11.00  |       
|                     
|                      |        | 14.65  |       
|                     

|Reuters Group PLC Annual Report 1999      49
|--------------------------------------------

---

|Notes on the consolidated profit and loss accountcontinued


6.  Earnings per ordinary share


Basic earnings per ordinary share are based on the profit after
taxation attributable to ordinary shareholders and on the weighted average
number of those shares in issue during the year. The weighted average number of
shares in issue may be reconciled to the number used in the basic and fully
diluted earnings per ordinary share calculations as follows:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|1999                                                      | 1998 | 1997 
|--------------------------------------------------------- | ---- | -----
|                                                         
|Ordinary shares in issue                                  |      | 1,424
|Ordinary shares held by group undertakings                |      |     
|Non-vested shares held by employee share ownership trusts |      | (15  
|                                                         
|Basic earnings per share denominator                      |      | 1,409
|Issuable on conversion of options                         |      | 20   
|                                                         
|Fully diluted earnings per share denominator              |      | 1,429
|                                                         

|7.  Remuneration of directors


The report of the Remuneration Committee on pages 2430
includes details of directorsemoluments and forms part of these financial
statements.


8.  Employee information


The average number of employees during the year was as follows:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Segmental analysis                  | 1999 | 1998   | 1997
|----------------------------------- | ---- | ------ | ----
|                                   
|Reuters Information                 |      | 9,239  |     
|Reuters Trading Systems             |      | 4,105  |     
|Instinet                            |      | 1,379  |     
|Reuters Ventures                    |      | 1,344  |     
|TIBCO Software Inc.                 |      | 172    |     
|Reuters Business Briefing           |      | 423    |     
|                                   
|                                    |      | 16,662 |     
|                                   
|Analysis by function                |     
|Production and communications       |      | 8,873  |     
|Selling and marketing               |      | 5,005  |     
|Support services and administration |      | 2,784  |     
|                                   
|                                    |      | 16,662 |     
|                                   
|The above include:                  |     
|Development staff                   |      | 2,445  |     
|Journalists                         |      | 2,040  |     

|50      Reuters Group PLC Annual Report 1999
|--------------------------------------------

---

|Consolidated cash flow statement for the year ended 31 December
|---------------------------------------------------------------

|                                                                     | NOTES | 1999£m | 1998£m | 1997£m
|-------------------------------------------------------------------- | ----- | ------ | ------ | ------
|                                                                    
|Net cash inflow from operating activities                            |       | 9      |        | 821   
|Dividends received from associates                                   |       |        |        | 2     
|Returns on investments and servicing of finance                      |      
|Interest received                                                    |       |        |        | 50    
|Interest paid                                                        |       |        |        | (51   
|Income from fixed asset investments                                  |       |        |        | 2     
|                                                                    
|Net cash inflow from returns on investments and servicing of finance |       |        |        | 1     
|Taxation paid                                                        |       |        |        | (167  
|Capital expenditure and financial investment                         |      
|Purchase of tangible fixed assets                                    |       |        |        | (256  
|Sale of tangible fixed assets                                        |       |        |        | 1     
|Purchase of fixed asset investments                                  |       |        |        | (166  
|Sale of fixed asset investments                                      |       |        |        | 39    
|                                                                    
|Net cash outflow on capital expenditure and financial investment     |       |        |        | (382  
|Acquisitions and disposals (including joint ventures and associates) |       | 10     |        | (27   
|Equity dividends paid                                                |       |        |        | (207  
|                                                                    
|Cash inflow before management of liquid resources and financing      |       |        |        | 41    
|Management of liquid resources                                       |      
|Net decrease/(increase) in short-term investments                    |       | 10     |        | 476   
|Financing                                                            |      
|Return of surplus capital                                            |       |        |        |      
|Proceeds from issue of shares                                        |       |        |        | 25    
|Proceeds from issue of non-equity shares in TIBCO Software Inc.      |       |        |        |      
|Shares repurchased                                                   |       |        |        | (25   
|Net (decrease)/increase in borrowings                                |       | 10     |        | (542  
|                                                                    
|Net cash (outflow)/inflow from financing                             |       |        |        | (542  
|                                                                    
|Decrease in cash                                                     |       | 11     |        | (25   
|                                                                    
|                                                                    
|
|                                                                    
|Reconciliation of net cash flow to movement in net funds             |      
|Decrease in cash                                                     |       |        |        | (25   
|Cash outflow/(inflow) from movement in borrowings                    |       |        |        | 542   
|Cash (inflow)/outflow from movement in liquid resources              |       |        |        | (476  
|                                                                    
|Change in net cash resulting from cash flows                         |       |        |        | 41    
|Translation differences                                              |       |        |        | 3     
|                                                                    
|Movement in net funds/(debt)                                         |       |        |        | 44    
|Opening net (debt)/funds                                             |       |        |        | (3    
|                                                                    
|Closing net funds/(debt)                                             |       | 11     |        | 41    
|                                                                    

|Reuters Group PLC Annual Report 1999      51
|--------------------------------------------

---

|Notes on the consolidated cash flow statement


9.  Net cash inflow from operating activities


Operating profit is reconciled to net cash inflow from
operating activities as follows:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                   | 1999£m | 1998£m | 1997£m
|-------------------------------------------------- | ------ | ------ | ------
|                                                  
|Operating profit                                   |        | 549    |       
|Depreciation                                       |        | 310    |       
|Goodwill amortisation                              |        | 47     |       
|Decrease in stocks                                 |        | 1      |       
|Increase in debtors                                |        | (236   | )     
|Increase in creditors                              |        | 112    |       
|Profit on disposal of subsidiaries                 |        |       |       
|Loss on disposal of fixed assets                   |        | 12     |       
|Amortisation of interests in own shares            |        | 18     |       
|Miscellaneous, principally translation differences |        | 8      |       
|                                                  
|Net cash inflow from operating activities          |        | 821    |       
|                                                  

|10.  Analysis of cash flows for headings netted in the cash flow
statement
|--------------------------------------------------------------------------

|Acquisitions and disposals (including joint ventures and associates) | 1999£m | 1998£m | 1997£m
|-------------------------------------------------------------------- | ------ | ------ | ------
|                                                                    
|Cash consideration:                                                  |        |        |       
|Subsidiary undertakings (see note 32)                                |        | (31    | )     
|Joint ventures (see note 32)                                         |        | (3     | )     
|Associated undertakings (see note 32)                                |        | (3     | )     
|Deferred payments for acquisitions in prior years                    |        | (1     | )     
|                                                                    
|                                                                     |        | (38    | )     
|Less cash acquired                                                   |        | 4      |       
|                                                                    
|                                                                     |        | (34    | )     
|Cash received from disposals:                                        |       
|Subsidiary undertakings                                              |        | 7      |       
|                                                                    
|                                                                     |        | (27    | )     
|                                                                    
|Management of liquid resources:                                      |       
|Increase in term deposits                                            |        | (3,920 | )     
|Decrease in term deposits                                            |        | 4,277  |       
|Purchase of certificates of deposit                                  |        | (226   | )     
|Sale of certificates of deposit                                      |        | 352    |       
|Purchase of listed/unlisted securities                               |        | (360   | )     
|Sale of listed/unlisted securities                                   |        | 353    |       
|                                                                    
|                                                                     |        | 476    |       
|                                                                    
|Financing                                                            |       
|(Decrease)/increase in short-term borrowings                         |        | (799   | )     
|Increase/(decrease) in long-term borrowings                          |        | 257    |       
|                                                                    
|                                                                     |        | (542   | )     
|                                                                    

|52      Reuters Group PLC Annual Report 1999
|--------------------------------------------

---

|11.  Analysis of net funds
|--------------------------

|                   |  |     |   |      |   |     |   |       | BANK/OTHER BORROWINGS |      |  
|------------------ |  | --- | - | ---- | - | --- | - | ----- | --------------------- | ---- | -
|
|                  
|31 December 1997   |  | 81  |   | (42  | ) | 39  |   | 1,275 |                       | (6   | )
|Cash flow          |  | (38 | ) | 30   |   | (8  | ) | (313  | )                     | (986 | )
|Exchange movements |  | 1   |   | (1   | ) |    |   |      |                       |     |  
|                  
|31 December 1998   |  | 44  |   | (13  | ) | 31  |   | 962   |                       | (992 | )
|Cash flow          |  | 77  |   | (102 | ) | (25 | ) | (476  | )                     | 799  |  
|Exchange movements |  | (2  | ) | 1    |   | (1  | ) | 4     |                       |     |  
|                  
|31 December 1999   |  | 119 |   | (114 | ) | 5   |   | 490   |                       | (193 | )
|                  

|12.  Derivatives and other financial instruments


A substantial portion of Reuters revenue is receivable in
foreign currencies and committed under one- and two-year contracts with terms
of payment up to six months in advance. As such, Reuters is subject to currency
exposure from committed revenue. In addition, Reuters is subject to interest
rate risk from borrowings and the investment of cash balances. Reuters seeks to
limit these risks by entering into a mix of derivative financial instruments
which include forward contracts, options (including cylinders), swaps and
forward rate agreements. A more detailed discussion on Reuters Treasury
Management can be found in the operating and financial review (see pages 3940).


If the derivative financial instruments were considered
separately from the underlying future revenue and interest income, Reuters
would be subject to market risk on these financial instruments from
fluctuations in currency and interest rates. Reuters only enters into such
derivative financial instruments to hedge (or reduce) the underlying exposure
described above. There is, therefore, no net market risk on such derivative
financial instruments and only a credit risk from the potential non-performance
by counterparties. The amount of this credit risk is generally restricted to
any hedging gain and not the principal amount hedged.


Derivative instruments held at 31 December were:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                          | 1999 | 1998 | 1997
|------------------------- | ---- | ---- | ----
|
|                         
|Currency management       |      |      |     
|Foreign exchange          |     
|forward contracts:        |     
|Contracts in profit       |      | 159  |     
|Contracts in loss         |      | 131  |     
|Foreign currency options: |     
|Contracts in profit       |      | 234  |     
|Contracts in loss         |      | 234  |     
|                         
|                          |      | 758  |     
|                         
|Interest rate management  |     
|Interest rate swaps       |      | 254  |     
|Interest rate collars     |      | 100  |     
|Forward rate agreements   |      | 235  |     
|                         
|                          |      | 589  |     
|                         

|Carrying values are amounts recorded in the balance sheet and
comprise deferred option premia, which are recognised over the period to which
the option relates, and certain locked in profits on swap contracts which have
been recognised for accounting purposes but where settlement in cash has not
yet occurred. Fair values represent the mark to market value of contracts at
the balance sheet date.


The foreign exchange forward contracts are held 33% in
continental European currencies (1998 52%, 1997 56%). The remaining contracts
were principally in Japanese yen and US dollars.


Foreign exchange forward contracts and options mature at dates
up to 23 months from the balance sheet date. Interest forward rate agreements,
swaps and options commence and mature at various dates through to November 2004.


The fair value of foreign currency and interest rate management
instruments is estimated on the basis of market quotes, discounted to current
value using market-quoted interest rates.


Reuters Group PLC Annual Report 1999      53
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Notes on consolidated cash flow statementcontinued


12.  Derivatives and other financial instruments continued


The weighted average fixed rate receivable on the interest rate
swaps at 31 December 1999 was 6% (1998 7%, 1997 8%) and the weighted average
variable rate payable was 7% (1998 6%, 1997 7%). The weighted average
variable rate is based on the rate implied in the yield curve at the balance
sheet date.


All derivative instruments are unsecured. However, Reuters does
not anticipate non-performance by the counterparties who are all banks with
recognised long-term credit ratings of Aor higher.


Tables containing information on hedging gains and losses are
set out on page 40.


Carrying and fair values of group financial assets and
liabilities at 31 December were:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                      | 1999 | 1998 | 1997
|------------------------------------- | ---- | ---- | ----
|
|                                     
|Derivative instruments                |      |     |     
|Other financial assets:               |     
|Fixed asset investments               |      | 127  |     
|Long-term debtors                     |      | 19   |     
|Short-term investments and cash       |      | 609  |     
|Other financial liabilities:          |     
|Short-term borrowings                 |      | (307 | )   
|Long-term borrowings                  |      | (261 | )   
|Other long-term financial liabilities |      | (12  | )   
|                                     

|The fair value of long term-liabilities is after taking into
account the effect of interest rate swaps.


Short-term debtors and creditors have been excluded from the
above analysis and all other disclosures in this note, other than the currency
risk disclosures.


Financial instrument sensitivity analysis


The analysis below
summarises the sensitivity of the fair value of the groups financial
instruments to hypothetical changes in market rates. Fair values are the
present value of future cash flows based on market rates at the valuation date.


The estimated changes in the fair value for foreign exchange
rates are based on an instantaneous 10% change in the value of sterling against
all other currencies from the levels applicable at 31 December 1999 with all
other variables remaining constant. The +10% case represents a 10%
strengthening of sterling against all other currencies and the 10% case
represents a 10% weakening of sterling.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                   |  | FAIR VALUE | FAIR VALUE CHANGEFAVOURABLE/(ADVERSE)EXCHANGE RATE MOVEMENT
|---------------------------------- |  | ---------- | -----------------------------------------------------------
|
|                                  
|                                   |  |            |                                                            
|Foreign exchange forward contracts |  | (3         | )                                                          
|Foreign currency options           |  | 7          |                                                            
|                                  
|                                   |  | 4          |                                                            
|                                  

|The estimated changes in fair values for interest rate
movements are based on an instantaneous change of 1% (100 basis points) in the
specific rate of interest from the levels effective at 31 December 1999 with
all other variables remaining constant.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                             |  | FAIR VALUE | FAIR VALUE CHANGEFAVOURABLE/(ADVERSE)EXCHANGE RATE MOVEMENT
|---------------------------- |  | ---------- | -----------------------------------------------------------
|
|                            
|                             |  |            |                                                            
|Interest rate swap contracts |  | (17        | )                                                          
|                            

Monetary assets and liabilities by currency, excluding the
functional currency of each operation at 31 December 1999, were:

|                                 | NET FOREIGN CURRENCY MONETARY ASSETS/(LIABILITIES) £m
|-------------------------------- | -----------------------------------------------------
|
|                                
|Functional currency of operation |                                                      
|Sterling                         |                                                      
|US dollar                        |                                                      
|                                
|                                 |                                                      
|                                

|54      Reuters Group PLC Annual Report 1999
|--------------------------------------------

---

|12. Derivative and other financial instruments continued


Net currency gains and losses arising from monetary
assets/(liabilities) not in the functional currency of an operation are
recognised in its profit and loss account. Those arising from the translation
of US dollar functional currency financial statements into sterling
(principally Instinet and Tibco Finance) are recognised in the statement of
recognised gains and losses.


The currency and interest rate profile of the groups financial
assets at 31 December 1999 was:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                 |  |       | SHORT-TERM INVESTMENTS | FIXED RATE INVESTMENTS
|---------------- |  | ----- | ---------------------- | ----------------------
|
|                
|Sterling         |  | 200   |                        | 51                    
|US dollar        |  | 400   |                        | 150                   
|Other            |  | 155   |                        | 64                    
|                
|Total            | 
|31 December 1999 |  | 755   |                        | 265                   
|                
|31 December 1998 |  | 1,047 |                        | 85                    
|31 December 1997 |  | 1,390 |                        | 115                   
|                

|Sterling and US dollar floating rate investments include £202
million (1998 £623 million, 1997 £789 million) of money market deposits which
mature within three months of the balance sheet date. Interest on short-term
investments is earned at rates based on local money market rates.


Fixed rate investments are those investments which have an
interest rate fixed for a period of greater than one year.


The currency and interest rate profile of the groups financial
liabilities at 31 December 1999 was:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                 |  |       | BORROWINGS | FIXED RATE BORROWINGS
|---------------- |  | ----- | ---------- | ---------------------
|
|                
|Sterling         |  | 497   |            | 3                    
|Euro             |  | 49    |            |                     
|Other            |  | 34    |            | 9                    
|                
|Total            | 
|31 December 1999 |  | 580   |            | 12                   
|                
|31 December 1998 |  | 1,015 |            | 6                    
|31 December 1997 |  | 66    |            |                     
|                

|The floating rate borrowings comprise bank loans and overdrafts
bearing interest at rates based on local money market rates, commercial paper
and medium-term notes. The weighted average interest rate on bank borrowings at
31 December 1999 was 5% (1998 4%, 1997 4%).


Total borrowings are repayable as follows:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                  | 1999£m |     | 1998£m |       | 1997£m |   
|------------------------------------------------- | ------ | --- | ------ | ----- | ------ | --
|                                                 
|Within one year                                   |        | 307 |        | 1,005 |        | 48
|Between one and two years                         |        | 39  |        | 4     |        | 18
|Between two and five years                        |        | 222 |        |      |        |  
|                                                 
|                                                  |        | 568 |        | 1,009 |        | 66
|                                                 
|Bank borrowings secured against freehold property |        |    |        | 3     |        | 15

|In December 1997, Reuters Group PLC entered into syndicated
credit facilities for £1.5 billion to cover payments due to shareholders under
the capital reorganisation. A facility of £1.0 billion expired on 2 December
1998. The remaining £0.5 billion which is at variable interest rates based on
LIBOR, the London Interbank Offer Rate, may be drawn and redrawn up to one
month prior to its maturity in December 2002.


In March 1998 Reuters established a Euro Commercial Paper
Programme. This provides access to £1.5 billion of uncommitted short-term
finance of which £1.3 billion was unused at 31 December 1999. In December 1998
Reuters established a £1.0 billion Euro Medium Term Note Programme of which £741
million was unused at 31 December 1999.


In addition, at 31 December 1999 Reuters had unused,
short-term, uncommitted bank borrowing facilities denominated in various
currencies, the sterling equivalent of which was approximately £257 million, at
money market rates varying principally between 3% and 9%, depending on the
currency.
Reuters Group PLC Annual Report 1999      55
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Consolidated balance sheet at 31 December
|-----------------------------------------

|                                                        |  | NOTES |  | 1999£m |   | 1998£m |   | PROFORMA1997£m |  
|------------------------------------------------------- |  | ----- |  | ------ | - | ------ | - | -------------- | -
|                                                       
|Fixed assets                                            |  |       |  |        |   |        |   |                |  
|Intangible assets: Goodwill                             |  | 14    |  | 177    |   | 204    |   | 162            |  
|Tangible assets                                         |  | 15    |  | 698    |   | 779    |   | 816            |  
|Investments                                             |  | 16    | 
|Investments in joint ventures:                          | 
|Share of gross assets                                   |  |       |  | 29     |   |       |   |               |  
|Share of gross liabilities                              |  |       |  | (16    | ) |       |   |               |  
|                                                        |  |       |  | 13     |   |       |   |               |  
|Share of net assets of associates                       |  |       |  | 95     |   | 45     |   | 10             |  
|Other investments                                       |  |       |  | 222    |   | 70     |   | 58             |  
|                                                       
|                                                        |  |       |  | 1,205  |   | 1,098  |   | 1,046          |  
|                                                       
|Current assets                                          | 
|Stocks                                                  |  | 17    |  | 4      |   | 6      |   | 13             |  
|Debtors (see note below)                                |  | 18    |  | 834    |   | 595    |   | 498            |  
|Short-term investments                                  |  | 19    |  | 490    |   | 962    |   | 1,275          |  
|Cash at bank and in hand                                |  |       |  | 119    |   | 44     |   | 81             |  
|                                                       
|                                                        |  |       |  | 1,447  |   | 1,607  |   | 1,867          |  
|Creditors: Amounts falling due within one year          |  | 20    |  | (1,679 | ) | (2,184 | ) | (1,077         | )
|                                                       
|Net current (liabilities)/assets                        |  |       |  | (232   | ) | (577   | ) | 790            |  
|                                                       
|Total assets less current liabilities                   |  |       |  | 973    |   | 521    |   | 1,836          |  
|Creditors: Amounts falling due after more than one year |  | 21    |  | (284   | ) | (16    | ) | (37            | )
|Provisions for liabilities and charges:                 | 
|Pensions and similar obligations                        |  | 23    |  | (39    | ) | (36    | ) | (28            | )
|Deferred taxation                                       |  | 24    |  | (23    | ) | (14    | ) | (16            | )
|Other provisions                                        |  | 25    |  | (26    | ) | (66    | ) | (76            | )
|                                                       
|Net assets                                              |  |       |  | 601    |   | 389    |   | 1,679          |  
|                                                       
|Capital and reserves                                    |  | 26    | 
|Called-up share capital                                 |  |       |  | 355    |   | 354    |   | 408            |  
|Capital redemption reserve                              |  |       |  | 1      |   |       |   |               |  
|Share premium account                                   |  |       |  | 42     |   | 16     |   |               |  
|Other reserve                                           |  |       |  | (1,717 | ) | (1,717 | ) | (290           | )
|Profit and loss account reserve                         |  |       |  | 1,920  |   | 1,719  |   | 1,543          |  
|                                                       
|Shareholders equity                                    |  |       |  | 601    |   | 372    |   | 1,661          |  
|Minority interests                                      |  |      
| equity                                                |  |       |  |       |   |       |   | 1              |  
| non-equity                                            |  |       |  |       |   | 17     |   | 17             |  
|                                                       
|Capital employed                                        |  |       |  | 601    |   | 389    |   | 1,679          |  
|                                                       

|Debtors and net current assets include amounts due after more
than one year of £46 million (1998  £40 million, 1997  £57 million).




1997 capital and reserves are shown on a proforma basis (see
note 26).


The balance sheet of Reuters Group PLC is shown on page 71.


The financial statements on pages 4474 and the summary of
differences between UK and US Generally Accepted Accounting Principles on pages
7577 were approved by the directors on 11 February 2000.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|/S/ Peter JobPeter Job, Chief Executive | /S/ Rob RowleyRob Rowley, Finance Director
|--------------------------------------- | ------------------------------------------

|56      Reuters Group PLC Annual Report 1999
|--------------------------------------------

---

|Reconciliation of movements in
shareholders funds for the year ended 31 December
|---------------------------------------------------------------------------------

|                                                                |  | 1999£m |   | 1998£m |   | 1997£m |  
|--------------------------------------------------------------- |  | ------ | - | ------ | - | ------ | -
|                                                               
|Retained profit                                                 |  | 219    |   | 181    |   | 200    |  
|Translation differences credited/(debited) directly to reserves |  | 10     |   | (1     | ) | 2      |  
|Return of surplus capital to shareholders                       |  |       |   | (1,482 | ) |       |  
|Shares issued during the year                                   |  | 25     |   | 13     |   | 22     |  
|Shares repurchased during the year                              |  | (25    | ) |       |   | (21    | )
|                                                               
|Net addition/(reduction) to shareholders equity                |  | 229    |   | (1,289 | ) | 203    |  
|Opening shareholders equity                                    |  | 372    |   | 1,661  |   | 1,458  |  
|                                                               
|Closing shareholders equity                                    |  | 601    |   | 372    |   | 1,661  |  
|                                                               

|Reuters Group PLC Annual Report 1999      57
|--------------------------------------------

---

|Notes on the consolidated balance sheet


13.  Segmental analysis


The tables below show total assets and non-interest bearing net
assets by division and by location on a basis consistent with the segmental
analysis of profit in note 1. For the reasons discussed in that note, the
assets in any location are not matched with the revenue earned in that location.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                             | TOTAL ASSETS | NON-INTEREST BEARINGNET ASSETS
|-------------------------------------------- | ------------ | ------------------------------
|
|                                            
|Reuters Information                          |              | 613                           
|Reuters Trading Systems                      |              | 313                           
|Instinet                                     |              | 656                           
|Reuters Ventures                             |              | 162                           
|TIBCO Software Inc.                          |              |                              
|Central                                      |              | 908                           
|                                            
|Total assets/non-interest bearing net assets |              | 2,652                         
|Interest bearing net assets/(liabilities)    |              |                               
|                                            
|                                             |              |                               
|                                            
|
|
|                                            
|Europe, Middle East and Africa               |              | 1,419                         
|Asia/Pacific                                 |              | 194                           
|The Americas                                 |              | 530                           
|Central                                      |              | 509                           
|                                            
|Total assets/non-interest bearing net assets |              | 2,652                         
|                                            
|Fixed assets                                 |              | 1,205                         
|Current assets                               |              | 1,447                         
|                                            
|                                             |              | 2,652                         
|                                            

|Central total assets by division consist principally of all
cash and short-term investments plus interests in own shares, joint ventures
and associates. Central total assets by location consist principally of those
assets held by head office operations together with unamortised goodwill.


14.  Intangible assets: Goodwill
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  | COST£m |   | AMORTISATION£m |   | NET BOOKAMOUNT£m |  
|----------------------- |  | ------ | - | -------------- | - | ---------------- | -
|                       
|31 December 1998        |  | 526    |   | (322           | ) | 204              |  
|Additions (see note 32) |  | 31     |   |               |   | 31               |  
|Charged in year         |  |       |   | (47            | ) | (47              | )
|Reclassification        |  | (18    | ) | 7              |   | (11              | )
|                       
|31 December 1999        |  | 539    |   | (362           | ) | 177              |  
|                       

|The reclassification comprises goodwill of TIBCO Software Inc.
which became an associated undertaking in July 1999 (see note 16).
58      Reuters Group PLC Annual Report 1999
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|15.  Tangible assets
|--------------------

|                               |  | FREEHOLDPROPERTY£m |   | LEASEHOLDPROPERTY£m |   | COMPUTERSYSTEMSEQUIPMENT£m |   | OFFICEEQUIPMENTAND MOTORVEHICLES£m |   | TOTAL£m |  
|------------------------------ |  | ------------------ | - | ------------------- | - | -------------------------- | - | ---------------------------------- | - | ------- | -
|                              
|Cost                           |  |                    |   |                     |   |                            |   |                                    |   |         |  
|31 December 1998               |  | 181                |   | 142                 |   | 1,698                      |   | 227                                |   | 2,248   |  
|Translation differences        |  |                   |   | 1                   |   | 4                          |   |                                   |   | 5       |  
|Additions                      |  | 23                 |   | 19                  |   | 168                        |   | 34                                 |   | 244     |  
|Owned by subsidiaries acquired |  |                   |   |                    |   |                           |   | 1                                  |   | 1       |  
|Disposals                      |  | (6                 | ) | (6                  | ) | (190                       | ) | (20                                | ) | (222    | )
|                              
|31 December 1999               |  | 198                |   | 156                 |   | 1,680                      |   | 242                                |   | 2,276   |  
|                              
|Depreciation                   | 
|31 December 1998               |  | 66                 |   | 68                  |   | 1,184                      |   | 151                                |   | 1,469   |  
|Translation differences        |  |                   |   |                    |   | 3                          |   |                                   |   | 3       |  
|Charged in the year            |  | 3                  |   | 15                  |   | 257                        |   | 35                                 |   | 310     |  
|On disposals                   |  | (6                 | ) | (2                  | ) | (179                       | ) | (17                                | ) | (204    | )
|                              
|31 December 1999               |  | 63                 |   | 81                  |   | 1,265                      |   | 169                                |   | 1,578   |  
|                              
|Net book amount                | 
|                              
|31 December 1999               |  | 135                |   | 75                  |   | 415                        |   | 73                                 |   | 698     |  
|                              
|31 December 1998               |  | 115                |   | 74                  |   | 514                        |   | 76                                 |   | 779     |  
|                              

|Net book amount of leasehold property |  |  |  |  |  | 1999£m |  | 1998£m |  | 1997£m | 
|------------------------------------- |  |  |  |  |  | ------ |  | ------ |  | ------ | 
|                                     
|Long-term leaseholds                  |  |  |  |  |  | 14     |  | 14     |  | 16     | 
|Short-term leaseholds                 |  |  |  |  |  | 61     |  | 60     |  | 53     | 
|                                     
|                                      |  |  |  |  |  | 75     |  | 74     |  | 69     | 
|                                     
|Capital commitments                   | 
|                                     
|Contracted for                        |  |  |  |  |  | 15     |  | 35     |  | 47     | 
|                                     

|Reuters Group PLC Annual Report 1999      59
|--------------------------------------------

---

|Notes on the consolidated balance sheet continued


16. Investments
|-------------------------------------------------------------------

|                                           |  | INTERESTS INOWN SHARES£m |   | INTERESTS INJOINT VENTURES£m |   | INTERESTS INASSOCIATES£m |   | OTHERINVESTMENTS£m |   | TOTAL£m |  
|------------------------------------------ |  | ------------------------ | - | ---------------------------- | - | ------------------------ | - | ------------------ | - | ------- | -
|                                          
|Net assets/cost                            |  |                          |   |                              |   |                          |   |                    |   |         |  
|31 December 1998                           |  | 45                       |   |                             |   | 15                       |   | 25                 |   | 85      |  
|Additions                                  |  | 68                       |   | 6                            |   |                         |   | 102                |   | 176     |  
|Share of (losses)/profits  arising in year |  |                         |   | (4                           | ) | 1                        |   |                   |   | (3      | )
|Dividends received                         |  |                         |   |                             |   | (2                       | ) |                   |   | (2      | )
|Amounts written (off)/back                 |  | (18                      | ) |                             |   |                         |   | 4                  |   | (14     | )
|Disposals                                  |  |                         |   |                             |   |                         |   | (5                 | ) | (5      | )
|Reclassifications                          |  |                         |   |                             |   | 53                       |   | 1                  |   | 54      |  
|                                          
|31 December 1999                           |  | 95                       |   | 2                            |   | 67                       |   | 127                |   | 291     |  
|                                          
|Goodwill                                   | 
|31 December 1998                           |  |                         |   |                             |   | 30                       |   |                   |   | 30      |  
|Arising in the year                        |  |                         |   | 13                           |   | 3                        |   |                   |   | 16      |  
|Charged in the year                        |  |                         |   | (2                           | ) | (12                      | ) |                   |   | (14     | )
|Disposals                                  |  |                         |   |                             |   | (4                       | ) |                   |   | (4      | )
|Reclassifications (see note 14)            |  |                         |   |                             |   | 11                       |   |                   |   | 11      |  
|                                          
|31 December 1999                           |  |                         |   | 11                           |   | 28                       |   |                   |   | 39      |  
|                                          
|Net book amount                            | 
|31 December 1999                           | 
|Net assets/cost                            |  | 95                       |   | 2                            |   | 67                       |   | 127                |   | 291     |  
|Goodwill                                   |  |                         |   | 11                           |   | 28                       |   |                   |   | 39      |  
|                                          
|                                           |  | 95                       |   | 13                           |   | 95                       |   | 127                |   | 330     |  
|                                          
|31 December 1998                           | 
|Net assets/cost                            |  | 45                       |   |                             |   | 15                       |   | 25                 |   | 85      |  
|Goodwill                                   |  |                         |   |                             |   | 30                       |   |                   |   | 30      |  
|                                          
|                                           |  | 45                       |   |                             |   | 45                       |   | 25                 |   | 115     |  
|                                          
|Listed investments at   31 December 1999   | 
|Carrying value                             |  | 95                       |   |                             |   | 80                       |   | 34                 |   | 209     |  
|Market value                               |  | 179                      |   |                             |   | 3,199                    |   | 640                |   | 4,018   |  
|                                          

|Goodwill on associates was previously included within
intangible assets on the consolidated balance sheet. The reclassification
reflects the Initial Public Offering of TIBCO Software Inc. which is now
treated as an associated undertaking (see note 32).


Had all listed investments been disposed of on 31 December
1999, tax of approximately £153 million would have been payable. The
market value excludes TIBCO Software Inc. shares held by Reuters which will be
transferred to TIBCO Finance employees on the exercise of outstanding options.


The net book amount of Interests in Own Sharesrepresents the
cost less amounts written off in respect of 21 million ordinary shares held by
employee share ownership trusts (ESOTs). These were acquired in the open market
using funds provided by Reuters. The write-off reflects employee interests
under incentive plans which are charged against profit over the vesting period
of the awards (see pages 2628). The ESOTs have waived dividend and voting
rights on these shares.


In July 1999 Reuters and Dow Jones formed a joint venture, Dow
Jones Reuters Business Interactive LLC (trading as Factiva), in which Reuters
has a 50% interest.


In 1998 Reuters entered into a joint venture with Rudin Times
Square Associates LLC to develop a building in the Times Square section of New
York City. At 31 December 1999 Reuters had invested a nominal amount and had
guaranteed the future injection of approximately US$45 million (£28 million).


Other investments consist principally of Greenhouse Fund
investments and Stock Exchange seats.


60      Reuters Group PLC Annual Report 1999
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|17.  Stocks
|-----------

|                          |  | 1999£m |   | 1998£m |   | 1997£m |  
|------------------------- |  | ------ | - | ------ | - | ------ | -
|                         
|Contract work in progress |  | 4      |   | 10     |   | 15     |  
|Less progress payments    |  | (2     | ) | (9     | ) | (11    | )
|                         
|                          |  | 2      |   | 1      |   | 4      |  
|Equipment stocks          |  | 2      |   | 5      |   | 9      |  
|                         
|                          |  | 4      |   | 6      |   | 13     |  
|                         

|18.  Debtors
|------------

|                                             |  | 1999£m |   | 1998£m |   | 1997£m |  
|-------------------------------------------- |  | ------ | - | ------ | - | ------ | -
|                                            
|Trade debtors                                |  | 197    |   | 197    |   | 176    |  
|Less allowance for doubtful accounts         |  | (28    | ) | (28    | ) | (27    | )
|                                            
|                                             |  | 169    |   | 169    |   | 149    |  
|Instinet counterparty debtors                |  | 432    |   | 204    |   | 122    |  
|Other debtors                                |  | 99     |   | 90     |   | 73     |  
|Deferred taxation (see note 24)              |  | 63     |   | 65     |   | 74     |  
|Prepayments and accrued income               |  | 58     |   | 67     |   | 73     |  
|Amounts owed by joint ventures               |  | 13     |   |       |   |       |  
|Advance corporation tax recoverable          |  |       |   |       |   | 7      |  
|                                            
|                                             |  | 834    |   | 595    |   | 498    |  
|                                            
|Amounts falling due after more than one year | 
|(included in the above):                     | 
|Other debtors                                |  | 19     |   | 16     |   | 15     |  
|Deferred taxation                            |  | 27     |   | 24     |   | 42     |  
|                                            
|                                             |  | 46     |   | 40     |   | 57     |  
|                                            

|19.  Short-term investments
|---------------------------

|                                  |  | 1999£m |  | 1998£m |  | 1997£m | 
|--------------------------------- |  | ------ |  | ------ |  | ------ | 
|                                 
|Listed                            |  |        |  |        |  |        | 
|Government securities:            | 
|UK                                |  | 2      |  | 2      |  | 2      | 
|Overseas                          |  | 180    |  | 115    |  | 83     | 
|Other investments:       Overseas |  |       |  |       |  | 265    | 
|                                 
|                                  |  | 182    |  | 117    |  | 350    | 
|                                 
|Unlisted                          | 
|Certificates of deposit           |  | 1      |  | 127    |  | 144    | 
|Term deposits:                    | 
|UK                                |  | 156    |  | 511    |  | 647    | 
|Overseas                          |  | 100    |  | 103    |  | 73     | 
|Other investments:                | 
|UK                                |  | 21     |  | 3      |  |       | 
|Overseas                          |  | 30     |  | 101    |  | 61     | 
|                                 
|                                  |  | 308    |  | 845    |  | 925    | 
|                                 
|                                  |  | 490    |  | 962    |  | 1,275  | 
|                                 

|Reuters Group PLC Annual Report 1999      61
|--------------------------------------------

---

|Notes on the consolidated balance sheet continued



20.  Creditors: Amounts falling due within one year
|--------------------------------------------------------------------------------------------------------

|                                              |  | 1999£m |  | 1998£m |  | 1997£m | 
|--------------------------------------------- |  | ------ |  | ------ |  | ------ | 
|                                             
|Trade creditors                               |  | 118    |  | 126    |  | 135    | 
|Accruals                                      |  | 352    |  | 369    |  | 298    | 
|Instinet counterparty creditors               |  | 328    |  | 186    |  | 77     | 
|Deferred income                               |  | 50     |  | 43     |  | 38     | 
|Other creditors                               |  | 42     |  | 35     |  | 36     | 
|Other taxation and social security            |  | 47     |  | 33     |  | 36     | 
|Amounts owed to joint ventures and associates |  | 18     |  |       |  |       | 
|                                             
|                                              |  | 955    |  | 792    |  | 620    | 
|Bank overdrafts                               |  | 114    |  | 13     |  | 42     | 
|Bank loans                                    |  | 2      |  | 3      |  | 6      | 
|Other borrowings                              |  | 191    |  | 989    |  |       | 
|Current UK corporation and overseas taxation  |  | 263    |  | 232    |  | 269    | 
|Proposed dividend                             |  | 154    |  | 155    |  | 140    | 
|                                             
|                                              |  | 1,679  |  | 2,184  |  | 1,077  | 
|                                             

|Current UK corporation and overseas taxation comprises:
|-------------------------------------------------------

|                           |  | 1999£m |  | 1998£m |  | 1997£m | 
|-------------------------- |  | ------ |  | ------ |  | ------ | 
|                          
|UK corporation tax:        |  |        |  |        |  |        | 
|Advance corporation tax    |  |       |  |       |  | 47     | 
|Mainstream corporation tax |  | 138    |  | 105    |  | 134    | 
|Overseas taxes             |  | 125    |  | 127    |  | 88     | 
|                          
|                           |  | 263    |  | 232    |  | 269    | 
|                          

|Accruals for 1998 and 1997 have been restated following the
introduction of UK Financial Reporting Standard No. 12 (see note 25).


21.  Creditors: Amounts falling due after more than one year
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               |  | 1999£m |  | 1998£m |  | 1997£m | 
|------------------------------ |  | ------ |  | ------ |  | ------ | 
|                              
|Other borrowings               |  | 261    |  |       |  |       | 
|Bank borrowings                |  |       |  | 4      |  | 18     | 
|Accruals                       |  | 14     |  | 12     |  | 19     | 
|Amounts owed to joint ventures |  | 9      |  |       |  |       | 
|                              
|                               |  | 284    |  | 16     |  | 37     | 
|                              

|22.  Concentration of credit risk


Reuters is exposed to concentrations of credit risk. Reuters
invests in UK and US government securities and with high credit quality
financial institutions. Reuters limits the amount of credit exposure to any one
financial institution. Reuters is also exposed to credit risk from its trade
debtors which are concentrated in the financial community. Reuters estimates
that approximately 59% of its subscribers are financial institutions, 27% are
corporations in other sectors of the business community, 6% are from the news
media and 8% are government institutions and individuals worldwide (1998 57%,
29%, 5% and 9% respectively).


Instinet is exposed to the possibility of trades between its
counterparties failing to settle. Due to the settlement mechanisms employed,
the maximum exposure is generally limited to the market movement between the
trade date and the settlement date. There are no material unprovided off
balance sheet exposures or positions in respect of trades undertaken on or
prior to 31 December 1999.


62      Reuters Group PLC Annual Report 1999
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|23.  Pensions and similar obligations


Reuters has established various pension arrangements covering
the majority of its employees. In all plans, except those which are internally
funded, the assets are held separately from those of the company and are
independently administered.


Defined contribution plans


Reuters operates 28 defined contribution plans covering
approximately 65% of its employees, of which the largest plan, the Reuters
Pension Fund, covers approximately 23% of employees. Members of this plan
contribute 6% of basic salaries and Reuters is required to make an annual
contribution of 9.525% of membersbasic salaries regardless of the funding
status of the plan. Reuters does not have the ability to recover assets held by
the plan, nor can it be required to make additional payments to the plan over
and above the annual contributions referred to above. Custodial responsibility
for the assets of the plan rests with two substantial and independent UK
investment managers.


Defined benefit plans


Reuters also operates 32 defined benefit plans covering
approximately 15% of employees. Individually, these plans are of a relatively
minor nature. They are subject to regular valuations based on the accepted
actuarial practice and standards within the country in which the plan is
established. The largest plans are directly invested and others are invested in
insurance contracts. The remainder are internally funded in accordance with
local practice with provisions in the subsidiary undertakings to recognise the
pension obligations.


Where necessary, additional provisions have been established
for the groups plans in accordance with UK Statement of Standard Accounting
Practice 24 based on independent actuarial advice.


Post-retirement medical benefits


In the US, Reuters provides unfunded post-retirement medical
benefits to certain US employees. The principal assumptions used in the most
recent actuarial valuation undertaken at 31 December 1999 were that health care
costs would increase by 7% per annum per head over the next year decreasing to
6% in 2001 and remain at 6% thereafter.


The movement on pension provisions and similar obligations was
as follows:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                      |  | 1999£m |   | 1998£m |   | 1997£m |  
|------------------------------------- |  | ------ | - | ------ | - | ------ | -
|                                     
|Opening balance                       |  | 36     |   | 28     |   | 30     |  
|Profit and loss account (see note 2): | 
|Defined contribution plans            |  | 36     |   | 35     |   | 32     |  
|Defined benefit plans                 |  | 10     |   | 14     |   | 11     |  
|Post-retirement medical benefits      |  | 3      |   | 1      |   | 1      |  
|                                     
|                                      |  | 49     |   | 50     |   | 44     |  
|Utilised in the year                  |  | (46    | ) | (42    | ) | (46    | )
|                                     
|Closing balance                       |  | 39     |   | 36     |   | 28     |  
|                                     

|24.  Deferred taxation liabilities/(assets)
|-------------------------------------------

|                                       |  | 1999£m |   | 1998£m |   | 1997£m |  
|-------------------------------------- |  | ------ | - | ------ | - | ------ | -
|                                      
|Opening balance                        |  | (51    | ) | (58    | ) | (48    | )
|Profit and loss account                |  | 11     |   | 7      |   | (10    | )
|                                      
|Closing balance                        |  | (40    | ) | (51    | ) | (58    | )
|                                      
|The closing balance is analysed below: | 
|Timing differences:                    | 
|Fixed asset related                    |  | 5      |   | 7      |   | (1     | )
|Other                                  |  | (45    | ) | (58    | ) | (57    | )
|                                      
|                                       |  | (40    | ) | (51    | ) | (58    | )
|                                      

|Reuters has provided for all potential deferred tax liabilities
in respect of timing differences and has provided for deferred UK income and
foreign withholding taxes that will be triggered by the expected future
remittance of earnings by overseas subsidiary undertakings. Reuters has not
provided for deferred UK income and foreign withholding taxes relating to
unremitted earnings where remittance of these earnings is not currently
anticipated in the foreseeable future. Reuters estimates that these
unrecognised taxes would total approximately £166 million at 31 December 1999.


Reuters Group PLC Annual Report 1999      63
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Notes on the consolidated balance sheet continued


24.  Deferred taxation liabilities/(assets) continued
|---------------------------------------------------------------------------------------------------------

|                        | ASSETS£m |      | VALUATIONALLOWANCE£m |    | LIABILITIES£m |    | NET£m |    
|----------------------- | -------- | ---- | -------------------- | -- | ------------- | -- | ----- | ---
|                       
|Fixed asset related     |          | (59  | )                    | 44 |               | 20 |       | 5  
|Unrecognised tax losses |          | (19  | )                    | 19 |               |   |       |   
|Other                   |          | (83  | )                    | 18 |               | 20 |       | (45
|                       
|                        |          | (161 | )                    | 81 |               | 40 |       | (40
|                       

|The valuation allowance increased by £16 million during 1999.
Where appropriate deferred tax assets and liabilities are netted for balance
sheet presentation purposes. The net deferred tax balance has been analysed as:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                            |  |  | 1999£m |   | 1998£m |   | 1997£m |  
|--------------------------------------------------------------------------- |  |  | ------ | - | ------ | - | ------ | -
|                                                                           
|Deferred tax asset (included in debtors  see note 18)                      |  |  | (63    | ) | (65    | ) | (74    | )
|Deferred tax liability (included in provisions for liabilities and charges) |  |  | 23     |   | 14     |   | 16     |  
|                                                                           

|25.  Other provisions


During 1999 Reuters has complied with the requirements of UK
Financial Reporting Standard No. 12 Provisions, Contingent Liabilities and
Contingent Assets. Other provisions which were previously included within
creditors are now shown separately on the face of the consolidated balance
sheet. Comparative figures have been adjusted accordingly.


The movement in other provisions during 1999 was as follows:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                          |  | RATIONALISATION£m |   | LEGAL/COMPLIANCE£m |   | PROPERTY£m |   | OTHER£m |   | TOTAL£m |  
|------------------------- |  | ----------------- | - | ------------------ | - | ---------- | - | ------- | - | ------- | -
|                         
|31 December 1998          |  |                   |   |                    |   |            |   |         |   |         |  
|As previously reported    |  |                  |   |                   |   |           |   |        |   |        |  
|Restatement               |  | 36                |   | 19                 |   | 6          |   | 5       |   | 66      |  
|                         
|31 December 1998 restated |  | 36                |   | 19                 |   | 6          |   | 5       |   | 66      |  
|Charged against profit    |  | 8                 |   | 7                  |   | 1          |   | 1       |   | 17      |  
|Utilised in the year      |  | (26               | ) | (18                | ) | (4         | ) | (2      | ) | (50     | )
|Released                  |  | (5                | ) | (1                 | ) |           |   | (1      | ) | (7      | )
|                         
|31 December 1999          |  | 13                |   | 7                  |   | 3          |   | 3       |   | 26      |  
|                         

|At the end of 1998, the costs of a number of restructuring
programmes resulting from the divisional management reorganisation were
provided for. During 1999 these programmes were implemented and a small number
of new programmes were introduced. The final costs were slightly below those
anticipated and resulted in the release of £5 million of the 31 December 1998
balance. At the end of 1999 the provision for incomplete rationalisation
programmes had fallen to £13 million from £36 million at the end of 1998.


The legal/compliance provision represents the expected cost of
settling disputes arising from contractual arrangements with third party
suppliers, including associated legal and professional fees.


The ongoing rationalisation of business premises occupied by
Reuters particularly within the UK has resulted in the need to provide for
unavoidable future rental costs. Property provisions also reflects Reuters
contractual liability at the balance sheet date to make good dilapidations
under ongoing rental agreements.


64      Reuters Group PLC Annual Report 1999
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|26.  Capital and reserves
|-------------------------

|                                          |  | CALLED-UPSHARECAPITAL£m |   | CAPITALREDEMPTIONRESERVE£m |  | SHAREPREMIUMACCOUNT£m |  | OTHERRESERVE£m |   | PROFIT ANDLOSSACCOUNTRESERVE£m |   | SHAREHOLDERSEQUITY£m |  
|----------------------------------------- |  | ----------------------- | - | -------------------------- |  | --------------------- |  | -------------- | - | ------------------------------ | - | ---------------------- | -
|                                         
|31 December 1996 (proforma  see below)   |  | 408                     |   |                           |  |                      |  | (325           | ) | 1,375                          |   | 1,458                  |  
|Shares issued during the year             |  |                        |   |                           |  |                      |  | 35             |   | (13                            | ) | 22                     |  
|Shares repurchased during the year        |  |                        |   |                           |  |                      |  |               |   | (21                            | ) | (21                    | )
|Translation differences                   |  |                        |   |                           |  |                      |  |               |   | 2                              |   | 2                      |  
|Retained earnings for the year            |  |                        |   |                           |  |                      |  |               |   | 200                            |   | 200                    |  
|                                         
|31 December 1997   (proforma  see below) |  | 408                     |   |                           |  |                      |  | (290           | ) | 1,543                          |   | 1,661                  |  
|Capital reorganisation (see below)        |  | (55                     | ) |                           |  |                      |  | (1,427         | ) |                               |   | (1,482                 | )
|Shares issued during the year             |  | 1                       |   |                           |  | 16                    |  |               |   | (4                             | ) | 13                     |  
|Translation differences                   |  |                        |   |                           |  |                      |  |               |   | (1                             | ) | (1                     | )
|Retained earnings for the year            |  |                        |   |                           |  |                      |  |               |   | 181                            |   | 181                    |  
|                                         
|31 December 1998                          |  | 354                     |   |                           |  | 16                    |  | (1,717         | ) | 1,719                          |   | 372                    |  
|Shares issued during the year             |  | 2                       |   |                           |  | 26                    |  |               |   | (3                             | ) | 25                     |  
|Shares repurchased during the year        |  | (1                      | ) | 1                          |  |                      |  |               |   | (25                            | ) | (25                    | )
|Translation differences                   |  |                        |   |                           |  |                      |  |               |   | 10                             |   | 10                     |  
|Retained earnings for the year            |  |                        |   |                           |  |                      |  |               |   | 219                            |   | 219                    |  
|                                         
|31 December 1999                          |  | 355                     |   | 1                          |  | 42                    |  | (1,717         | ) | 1,920                          |   | 601                    |  
|                                         

|Cumulative translation losses at 31 December 1999 totalled £18
million (1998 £28 million, 1997 £27 million).


During 1999 £28 million was received by Reuters Group PLC on
the issue of shares in respect of the exercise of options awarded under various
share option plans. Employees paid £25 million to the group for the issue of
these shares and the balance of £3 million comprised contributions to the
qualifying employee share trust (QUEST) from subsidiary undertakings.


On 18 February 1998, Reuters Group PLC issued and credited as
fully paid 1,417,331,693 ordinary shares of 25p each and paid cash of £1,482
million to acquire the majority of the issued share capital of Reuters Holdings
PLC following the approval of a High Court Scheme of Arrangement. In exchange
for every 15 ordinary shares in Reuters Holdings PLC shareholders received 13
ordinary shares in Reuters Group PLC plus £13.60 in cash.


Share capital and reserves in the 1997 consolidated balance
sheet have been restated on a proforma basis. The proforma share capital as at
31 December 1997 and 31 December 1996 represents the proforma nominal value of
shares in issue of Reuters Group PLC immediately prior to the reorganisation.
Differences between this amount and the previously reported capital and
reserves, excluding the profit and loss account reserve, represent the merger
difference and have been reflected in other reserves.


Reuters Group PLC Annual Report 1999      65
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|27. Share capital
|-----------------

|                                                            |  | 1999£m  |   | 1998£m  |   | PROFORMA1997£m | 
|----------------------------------------------------------- |  | ------- | - | ------- | - | -------------- | 
|                                                           
|Authorised                                                  |  |         |   |         |   |                | 
|One Founders Share of £1                                    |  |        |   |        |   |               | 
|49,998 redeemable preference shares of £1                   |  |        |   |        |   |               | 
|2,100 million ordinary shares of 25p each                   |  | 525     |   | 525     |   | 525            | 
|                                                           
|                                                            |  | 525     |   | 525     |   | 525            | 
|                                                           
|Allotted and called-up                                      | 
|One Founders Share of £1                                    |  |        |   |        |   |               | 
|Ordinary shares of 25p each                                 |  | 355     |   | 354     |   | 408            | 
|                                                           
|                                                            |  | 355     |   | 354     |   | 408            | 
|                                                           
|Number of ordinary shares of 25p each (millions)            |  | 1,422.7 |   | 1,421.6 |   | 1,635.4        | 
|                                                           
|                                                           
|
|                                                           
|Capital reorganisation                                      |  |        |   | (218.1  | ) |               | 
|Shares in Reuters Group PLC issued for cash under employee  | 
|share schemes at prices ranging from 150p to 667p per share |  | 5.8     |   | 4.3     |   |               | 
|Shares repurchased for cash at 530p per share               |  | (4.7    | ) |        |   |               | 
|                                                           
|                                                            |  | 1.1     |   | (213.8  | ) |               | 
|                                                           

|The rights attaching to the Founders Share are set out on page
78.


Proforma ordinary shares allotted and called-up at 31 December
1997 represents the nominal value of shares in issue of Reuters Group PLC
immediately prior to the capital reorganisation on 18 February 1998.
Consequently there are no share movements shown for 1997.


28.  Repurchase of own shares


During 1999 Reuters carried out an on-market share repurchase
programme to acquire, and subsequently cancel, 4.7 million of its ordinary
shares at 530p per share. The total cost of the repurchase programme including
expenses was £25 million, which has been charged against distributable reserves.


66      Reuters Group PLC Annual Report 1999
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|29.  Employee share option plans


Reuters operates share plans for the benefit of employees as
explained in the report on remuneration. Since the flotation of Reuters
Holdings PLC in 1984, Reuters has issued 95 million shares under these plans.


Share option activity for the two years ended 31 December 1999
was as follows:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                            |  | SAVE AS YOUEARN PLANS |   | EXECUTIVEPLANS |   | PLAN2000 |   | TOTAL |   | WEIGHTEDAVERAGEEXERCISEPRICE£ | 
|------------------------------------------- |  | --------------------- | - | -------------- | - | -------- | - | ----- | - | ----------------------------- | 
|                                           
|Ordinary shares under option                |  |                       |   |                |   |          |   |       |   |                               | 
|in millions (including ADSs):               | 
|31 December 1997                            |  | 17.2                  |   | 3.4            |   |         |   | 20.6  |   | 4.05                          | 
|Granted                                     |  | 5.1                   |   |               |   | 25.7     |   | 30.8  |   | 5.43                          | 
|Exercised                                   |  | (3.0                  | ) | (1.7           | ) |         |   | (4.7  | ) | 2.88                          | 
|Expired, cancelled or lapsed                |  | (2.2                  | ) | (0.1           | ) |         |   | (2.3  | ) | 4.70                          | 
|                                           
|31 December 1998                            |  | 17.1                  |   | 1.6            |   | 25.7     |   | 44.4  |   | 5.10                          | 
|Granted                                     |  | 2.6                   |   |               |   | 2.4      |   | 5.0   |   | 7.58                          | 
|Exercised                                   |  | (4.2                  | ) | (0.7           | ) | (0.9     | ) | (5.8  | ) | 4.37                          | 
|Expired, cancelled or lapsed                |  | (0.9                  | ) | (0.1           | ) | (1.2     | ) | (2.2  | ) | 5.26                          | 
|                                           
|31 December 1999                            |  | 14.6                  |   | 0.8            |   | 26.0     |   | 41.4  |   | 5.51                          | 
|                                           
|Number of participants at  31 December 1999 |  | 8,037                 |   | 64             |   | 13,021   |  

|The following table summarises information relating to the
number of shares under option and those which were exercisable at 31 December
1999.
|----------------------------------------------------------------------------------------------------------------------------------------------

|RANGE OF EXERCISE PRICES |  | TOTAL SHARESUNDER OPTION(MILLIONS) |  | WEIGHTEDAVERAGEPERIODREMAINING TOFULL VESTING(MONTHS) |  | WEIGHTEDAVERAGEEXERCISEPRICE |  | SHARESAT31 DECEMBER1999(MILLIONS) |  | EXERCISABLEWEIGHTEDAVERAGEEXERCISEPRICE | 
|------------------------ |  | ---------------------------------- |  | ----------------------------------------------------- |  | ---------------------------- |  | --------------------------------- |  | --------------------------------------- | 
|                        
|Ordinary shares          |  |                                    |  |                                                       |  |                              |  |                                   |  |                                         | 
|£1.00£3.00              |  | 0.1                                |  |                                                      |  | £2.54                        |  | 0.1                               |  | £2.54                                   | 
|£3.01£5.00              |  | 6.7                                |  | 15                                                    |  | £4.18                        |  | 0.5                               |  | £4.32                                   | 
|£5.01£7.00              |  | 30.1                               |  | 21                                                    |  | £5.54                        |  |                                  |  |                                        | 
|£7.01£9.00              |  | 2.4                                |  | 20                                                    |  | £8.14                        |  |                                  |  |                                        | 
|ADSs                     | 
|$20.01$40.00            |  | 0.1                                |  |                                                      |  | $29.38                       |  | 0.1                               |  | $29.38                                  | 
|$40.01$65.00            |  | 1.5                                |  | 25                                                    |  | $56.88                       |  | 0.1                               |  | $43.72                                  | 
|$65.01$90.00            |  | 0.5                                |  | 41                                                    |  | $82.06                       |  |                                  |  |                                        | 
|                        
|                         |  | 41.4                               |  |                                                       |  |                              |  | 0.8                               |  |                                         | 
|                        

|In August 1990 and January 1994, Reuters established employee
share ownership trusts with the power to acquire shares in the open market. The
trustee of both trusts, an off-shore subsidiary of Reuters, is being managed
under contract by an independent management company. Shares purchased by the
trusts will be used either to meet obligations under the companys restricted
share plans described in the report on remuneration on pages 2430 or to
satisfy the exercise of options granted, or to be granted, under other employee
share option plans. Alternatively, new shares may be issued to satisfy these
option obligations.


Reuters Group PLC Annual Report 1999      67
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Notes on the consolidated balance sheets continued


30.  Related party transactions


During the year, Reuters carried out a number of transactions
with related parties in the normal course of business and on an arms length
basis. Details of these transactions are shown below:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  | 31 DECEMBER1998£m |  | AMOUNTSINVOICED£m |   | AMOUNTSCOLLECTED/PAID£m |   | 31 DECEMBER1999£m |  
|----------------------- |  | ----------------- |  | ----------------- | - | ----------------------- | - | ----------------- | -
|                       
|Amounts receivable      |  |                   |  |                   |   |                         |   |                   |  
|Factiva joint venture   |  |                  |  | 24                |   | (11                     | ) | 13                |  
|Associated undertakings |  |                  |  | 6                 |   | (6                      | ) |                  |  
|                       
|                        |  |                  |  | 30                |   | (17                     | ) | 13               
|                       
|Amounts payable         | 
|Factiva joint venture   |  |                  |  | (32               | ) | 19                      |   | (13               | )
|Associated undertakings |  |                  |  | (12               | ) | 9                       |   | (3                | )
|                       
|                        |  |                  |  | (44               | ) | 28                      |   | (16               | )
|                       

|The above related party transactions relate to the rendering or
receiving of services between both parties including agency arrangements and
licence agreements. In addition to the above amounts, Reuters has a promissory
note payable to Factiva with a balance of £11 million outstanding at the year
end.


Reuters is deemed to be related to various companies through
common directorships. During 1999 the amounts invoiced to these companies by
Reuters totalled £57 million with £2 million being invoiced by them.


31. Operating leases


Minimum payments for non-cancellable operating leases for terms
in excess of one year from 31 December are as follows:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                             |  | 1999£m |  | 1998£m |  | 1997£m | 
|---------------------------- |  | ------ |  | ------ |  | ------ | 
|                            
|Year ended 31 December       |  |        |  |        |  |        | 
|1998                         |  |       |  |       |  | 62     | 
|1999                         |  |       |  | 70     |  | 60     | 
|2000                         |  | 79     |  | 64     |  | 51     | 
|2001                         |  | 72     |  | 61     |  | 45     | 
|2002                         |  | 64     |  | 54     |  | 38     | 
|2003                         |  | 55     |  | 46     |  | 30     | 
|2004                         |  | 45     |  | 38     |  | 25     | 
|Thereafter                   |  | 302    |  | 257    |  | 94     | 
|                            
|Total minimum lease payments |  | 617    |  | 590    |  | 405    | 
|                            

|At 31 December Reuters had commitments to make payments during
the following year under non-cancellable operating leases as follows:
|------------------------------------------------------------------------------------------------------------------------------------

|                               | LAND AND BUILDINGS | OTHER
|------------------------------ | ------------------ | -----
|
|                              
|Operating leases which expire: |                    |      
|Within one year                |                    | 7    
|In the second to fifth years   |                    | 41   
|Over five years                |                    | 29   
|                              

|68      Reuters Group PLC Annual Report 1999
|--------------------------------------------

---

|32.  Acquisitions and disposals


During 1999 Reuters acquired a number of subsidiary
undertakings including a 100% shareholding in MarketNet and majority
shareholdings in VentureOne and TowerGroup Holdings. Investments in associated
undertakings and joint ventures included Dow Jones Reuters Business Interactive
LLC (trading as Factiva). The cost, consolidated net assets and goodwill
arising were as follows:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        | SUBSIDIARY UNDERTAKINGS |     |  
|----------------------- | ----------------------- | --- | -
|
|                       
|Tangible fixed assets   |                         | 1   |  
|Fixed asset investments |                         |    |  
|Current assets          |                        
|Cash                    |                         | 8   |  
|Other                   |                         | 9   |  
|Short-term creditors    |                         | (12 | )
|                       
|Net assets acquired     |                         | 6   |  
|Paid in the year:       |                        
|Cash                    |                         |     |  
|Assets                  |                         |     |  
|Deferred                |                         |     |  
|                       
|Goodwill                |                         |     |  
|                       

|Contribution to group revenue of acquisitions made during 1999
was immaterial. Had these companies been acquired on 1 January 1999, their
impact on the groups results would have been immaterial.


Partial disposal of TIBCO Software Inc.


In July 1999 TIBCO Software Inc. completed an Initial Public
Offering (IPO) generating net proceeds of £78 million. Reuters did not
sell any of its shares in the offering and reduced its holding from 95%
(excluding non-equity stock) to 62% on an undiluted basis. Reuters voting
rights are restricted to a maximum of 49% and accordingly TIBCO Software Inc.
is now being accounted for as an associated undertaking.


The IPO generated an accounting profit of £52 million
calculated as follows:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                               |  | £m |  
|---------------------------------------------- |  | -- | -
|                                              
|Increased value of Reuters share of net assets |  | 56 |  
|Goodwill write-off                             |  | (4 | )
|                                              
|                                               |  | 52 |  
|                                              

|Reuters Group PLC Annual Report 1999      69
|--------------------------------------------

---

|Notes on the consolidated balance sheet continued



33. Subsidiary and associated undertakings and joint ventures


The principal subsidiary and associated undertakings and joint
ventures at 31 December 1999, all of which are included in the consolidated
financial statements, are shown below. The shares in Reuters Investments
Limited are held by Reuters Group PLC. The shares in the other companies are
held by Reuters Investments Limited or its wholly-owned subsidiaries.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Subsidiary undertakings                      |  | COUNTRYOFINCORPORATION |  | PRINCIPALAREA OFOPERATION |  | PERCENTAGEOF EQUITYSHARES HELD | 
|-------------------------------------------- |  | ---------------------- |  | ------------------------- |  | ------------------------------ | 
|                                            
|Instinet Corporation                         |  | USA                    |  | USA                       |  | 100                            | 
|Reuters AG                                   |  | Germany                |  | Germany                   |  | 100                            | 
|Reuters America Inc.                         |  | USA                    |  | USA                       |  | 100                            | 
|Reuters Asia Pte Limited                     |  | Singapore              |  | Asia/Pacific              |  | 100                            | 
|Reuters Australia Pty Limited                |  | Australia              |  | Australia                 |  | 100                            | 
|Reuters Eastern Europe Limited               |  | Great Britain          |  | Russia                    |  | 100                            | 
|Reuters Espana SA                            |  | Spain                  |  | Spain                     |  | 100                            | 
|Reuters Hong Kong Limited                    |  | Cook Islands           |  | Hong Kong                 |  | 100                            | 
|Reuters Investments Limited                  |  | Great Britain          |  | Great Britain             |  | 100                            | 
|Reuters Italia SpA                           |  | Italy                  |  | Italy                     |  | 100                            | 
|Reuters Limited                              |  | Great Britain          |  | Worldwide                 |  | 100                            | 
|Reuters Nederland BV                         |  | Netherlands            |  | Netherlands               |  | 100                            | 
|Reuters SA                                   |  | Switzerland            |  | Continental Europe        |  | 100                            | 
|Reuters Services SARL                        |  | France                 |  | France                    |  | 100                            | 
|Reuters Singapore Pte Limited                |  | Singapore              |  | Singapore                 |  | 100                            | 
|Reuters Transaction Services Limited         |  | Great Britain          |  | Worldwide                 |  | 100                            | 
|Tibco Finance Technology Inc.                |  | USA                    |  | Worldwide                 |  | 100                            | 
|                                            
|The financial years for the above subsidiary | 
|undertakings end on 31 December.             | 
|                                            
|Associated undertakings and joint ventures   | 
|                                            
|TIBCO Software Inc. (see note 32)            |  | USA                    |  | Worldwide                 |  | 62                             | 
|Factiva joint venture                        |  | USA                    |  | Worldwide                 |  | 50                             | 
|                                            

|On a diluted basis, after deducting shares under option,
Reuters interest in the equity of TIBCO Software Inc. reduces to 47%.


34. Post balance sheet events


On 3 February 2000 it was announced that Reuters and Equant NV
had agreed to form a new company to offer a secure Internet Protocol (IP)
network to the financial services industry. Equant has one of the worlds
largest networks, providing voice, data and Internet services to companies
around the globe. Reuters will own 51% of the new company. Subject to the
necessary approvals Reuters will transfer £81 million (US$130 million) of
telecommunications network assets into the new entity along with over 400
staff. It will also sell Reuters Connect Services, Reuters existing
telecommunications business serving the financial community, to the new company
for £16 million (US$25 million) in cash.


On 8 February 2000 Reuters announced that it plans to spend £500
million over the next four years in the migration of its services to Internet
technology. This will include a reorganisation charge of £300 million over the
next two years, of which £150 million is likely to be taken in 2000. In
addition to its current spending, Reuters Financial will invest a further £50
million per annum to develop its e-architecture.


70      Reuters Group PLC Annual Report 1999
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Balance sheet of Reuters Group PLC at 31 December
|-------------------------------------------------

|                                             |  | NOTES |  | 1999£m |   | 1998£m |   | 1997£m | 
|-------------------------------------------- |  | ----- |  | ------ | - | ------ | - | ------ | 
|                                            
|Fixed asset investment                       |  | 35    |  | 8,655  |   | 8,640  |   |       | 
|Amounts owed by group undertakings           |  |       |  | 589    |   | 1,144  |   |       | 
|Other borrowings                             |  |       |  | (448   | ) | (989   | ) |       | 
|Proposed dividends                           |  |       |  | (154   | ) | (155   | ) |       | 
|                                            
|Net assets                                   |  |       |  | 8,642  |   | 8,640  |   |       | 
|                                            
|Capital and reserves:                        |  | 36    | 
|Called-up share capital                      |  |       |  | 355    |   | 354    |   |       | 
|Capital redemption reserve                   |  |       |  | 1      |   |       |   |       | 
|Share premium                                |  |       |  | 42     |   | 16     |   |       | 
|Merger reserve                               |  |       |  | 6,788  |   | 6,788  |   |       | 
|Profit and loss account reserve              |  |       |  | 1,456  |   | 1,482  |   |       | 
|                                            
|Capital employed                             |  |       |  | 8,642  |   | 8,640  |   |       | 
|                                            
|Profit attributable to ordinary shareholders |  |       |  | 205    |   | 343    |   |       | 

|This balance sheet was approved by the directors on 11 February
2000.
|---------------------------------------------------------------------

|/S/ Peter JobPeter Job, Chief Executive | /S/ Rob RowleyRob Rowley, Finance Director
|--------------------------------------- | ------------------------------------------

|Advantage has been taken of the provisions of section 230(3) of
the Companies Act 1985 not to present a separate profit and loss account for
Reuters Group PLC.


Reuters Group PLC Annual Report 1999      71
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Notes on the balance sheet of Reuters Group PLC


35. Fixed asset investment


The investment represents the shareholding of Reuters Group PLC
in Reuters Investments Limited.


36. Capital and reserves
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                      |  | CALLED-UPSHARE CAPITAL£m |   | CAPITALREDEMPTIONRESERVE£m |  | SHAREPREMIUMACCOUNT£m |  | MERGERRESERVE£m |  | PROFIT ANDLOSSACCOUNTRESERVE£m |   | TOTAL£m |  
|------------------------------------- |  | ------------------------ | - | -------------------------- |  | --------------------- |  | --------------- |  | ------------------------------ | - | ------- | -
|                                     
|31 December 1998                      |  | 354                      |   |                           |  | 16                    |  | 6,788           |  | 1,482                          |   | 8,640   |  
|Shares issued during    the year      |  | 2                        |   |                           |  | 26                    |  |                |  |                               |   | 28      |  
|Shares repurchased    during the year |  | (1                       | ) | 1                          |  |                      |  |                |  | (25                            | ) | (25     | )
|Retained loss for the year            |  |                         |   |                           |  |                      |  |                |  | (1                             | ) | (1      | )
|                                     
|31 December 1999                      |  | 355                      |   | 1                          |  | 42                    |  | 6,788           |  | 1,456                          |   | 8,642   |  
|                                     

|Following the approval of a High Court Scheme of Arrangement,
the majority of the issued share capital of Reuters Holdings PLC was acquired
by Reuters Group PLC in February 1998. The merger reserve and profit and loss
account reserve arose as a result of this transaction.


The retained loss for the year represents dividends paid to
shareholders and certain administrative costs less dividends from Reuters
Investments Limited.


72      Reuters Group PLC Annual Report 1999
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Accounting policies


Accounting basis


The financial statements are prepared under the historical cost
convention and in accordance with applicable accounting standards. The 1998
capital reorganisation was accounted for using merger accounting principles in
order to show a true and fair view.


Basis of consolidation


The consolidated financial statements include:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|a. |  | The
financial statements of Reuters Group PLC and its subsidiaries to 31 December.
The results of subsidiaries are included for the period during which they are a
member of the group.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|b. |  | Reuters
share of the post-acquisition results of associated undertakings and joint
ventures. Investments in associated undertakings and joint ventures are
included at Reuters share of the net assets at the dates of acquisition plus
the groups share of post-acquisition reserves.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Foreign currency translation


Where it is considered that the functional currency of an
operation is sterling the financial statements are expressed in sterling on the
following basis:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|a. |  | Fixed
assets are translated into sterling at the rates ruling on the date of
acquisition as adjusted for any profits or losses from related financial
instruments.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|b. |  | Monetary
assets and liabilities denominated in a foreign currency are translated into
sterling at the foreign exchange rates ruling at the balance sheet date.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------

|c. |  | Revenue
and expenses in foreign currencies are recorded in sterling at the rates ruling
for the month of the transactions.
|-- |  | --------------------------------------------------------------------------------------------------------------------------

|d. |  | Any
gains or losses arising on translation are reported as part of profit.
|-- |  | --------------------------------------------------------------------------

|For other operations, associated undertakings and joint
ventures, assets and liabilities are translated into sterling at the rates
ruling at the balance sheet date. Revenue and expenses in foreign currencies
are recorded in sterling at the rates ruling for the month of the transactions
and gains or losses arising on translation are dealt with through reserves.


Treasury


Reuters receives revenue and incurs expenses in more than 60
currencies and uses financial instruments to hedge a portion of its net cash
flow and operating profit. Profits and losses from hedging activities are
matched with the underlying cash flows and profits being hedged. Those relating
to trading cash flows are reported as part of profit and those relating to
Reuters capital expenditure programme are adjusted against the cost of the
assets to which they relate.


Reuters uses financial instruments to hedge a portion of its
interest exposure. Profits and losses on financial instruments are reported as
part of profit for the period to which they relate.


Financial instruments hedging the risk on foreign currency
assets are revalued at the balance sheet date and the resulting gain or loss
offset against that arising from the translation of the underlying asset into
sterling.


Revenue


Revenue represents the turnover, net of discounts, derived from
services provided to subscribers and sales of equipment applicable to the year.
Short-term contracts are accounted for on a completed contract basis.


Instinet transactions


Securities transactions between Instinet counterparties which
pass through Instinet in its role as an agency broker are recorded on a
settlement date basis and, therefore, are only reflected in the balance sheet
if there is a failure to settle. Revenues and related expenses arising from
such securities transactions are accrued from the date of the transaction.


Development


Development expenditure is charged against profit in the year
in which it is incurred.


Pensions and similar obligations


The expected cost of pensions and other post-retirement
benefits is charged against profit so as to spread the cost over the service
lives of the employees affected.


Restricted share and Instinet long-term incentive plans


Costs of the restricted share and Instinet long-term incentive
plans are charged to profit over the vesting period of the awards.


Tangible fixed assets


Depreciation is calculated on a straight line basis so as to
write down the assets to their residual values over their expected useful lives:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Freehold land                                                 |  | Not depreciated            | 
|------------------------------------------------------------- |  | -------------------------- | 
|Freehold buildings                                            |  | Normally 50 years          | 
|Leasehold property                                            |  | Over the term of the lease | 
|Computer systems equipment,office equipment andmotor vehicles |  | 3 to 5 years               | 

|Stocks


Stocks and contract work in progress are valued at the lower of
cost and net realisable value less progress payments received and receivable
from clients. Progress payments in excess of the value of work carried out are
included within creditors.


Cost is calculated on a first in first out basis by reference
to the invoiced value of supplies and attributable costs of bringing stocks to
their present location and condition.


Net realisable value is the estimated market value less selling
costs.


Short-term investments


Government securities are stated in the balance sheet at the
lower of cost plus accrued capital appreciation and market value. Income from
these securities and any adjustment for changes in their market value during
the year are reported as part of profit.


Interest on certificates of deposit is calculated at the yield
at which the certificate was purchased and is reported as part of profit over
the life of the certificate. Certificates of deposit are stated in the balance
sheet at the lower of cost plus accrued interest and market value.


Movements in short-term investments are reported under the
heading of management of liquid resources in the cash flow statement.


Reuters Group PLC Annual Report 1999      73
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Accounting policies continued


Debt issuance


Medium-term notes and commercial paper are stated at the amount
of the net proceeds plus any accrued interest or discount. Discounts or premia
to the nominal value are amortised over the term of the issue. Costs associated
with debt issuance are charged against profit over the life of the instrument.


Foreign currency swap agreements and forward contracts are used
to convert non-sterling debt into sterling. Interest rate swaps, swaptions and
forward rate agreements are used to manage interest rate exposures. Amounts
payable or receivable in respect of these derivatives are recognised as
adjustments to interest expense over the period of the contract.


Leasing


Assets acquired under a finance lease are recorded in the
balance sheet as tangible fixed assets with corresponding obligations to pay
future rentals. The assets are valued at the present value of the minimum lease
payments at the rate implicit in the lease.


Rentals payable are apportioned between a finance charge and a
reduction of the outstanding obligation for future amounts payable. The total
finance charge is allocated to accounting periods during the lease term so as
to produce a constant periodic rate of charge on the outstanding obligation
throughout the lease.


Operating lease rentals are charged against profit on a
straight line basis over the period of the lease.


Deferred taxation


Tax deferred or accelerated by the effect of timing differences
is accounted for to the extent that it is considered probable that a liability
or asset will crystallise in the foreseeable future. The only exception to this
is in respect of deferred tax assets relating to provisions for pensions and
other post-retirement benefits which are recognised in full.


Goodwill and intangible assets


Purchased goodwill and intangible assets are capitalised and
amortised through the profit and loss account over their estimated lives which
are between five and 20 years.


Interest in shares of Reuters Group PLC


Shares held by the employee share ownership trusts are recorded
in the balance sheet within fixed asset investments at cost including expenses
less amounts written off.


74 Reuters Group PLC Annual Report 1999
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Summary of differences between UK and US Generally AcceptedAccounting
Principles (GAAP)


ACCOUNTING PRINCIPLES


These consolidated financial statements have been prepared in
accordance with UK GAAP, which differ in certain significant respects from US
GAAP. A description of the relevant accounting principles which differ
materially is given below:


Software revenue recognition


Under UK GAAP, revenue and related direct costs from contracts
for the outright sale of software systems are recognised at the time of client
acceptance. Under US GAAP, specific rules were introduced from January 1998 for
the determination of client acceptance in cases where future significant
modifications or upgrades to the software are considered to be part of the
clients overall acceptance of the product. Under these rules, an amount of
revenue is required to be deferred until these software upgrades have been
delivered and accepted by the client. Warranties provided by Reuters in
connection with the delivery of millennium versions of software fall within
these rules and consequently an element of revenue and related direct cost was
deferred under US GAAP. This policy has not been adopted under UK GAAP.


Goodwill and other acquisition accounting adjustments


UK GAAP require purchased goodwill to include an estimate of
the fair value of any contingent consideration. Under US GAAP, contingent
consideration is recognised as a component of goodwill when the contingency is
resolved.


Under the UK GAAP, goodwill arising on acquisitions of
associates is included within the carrying value of these investments. Under US
GAAP this goodwill is included within intangibles.


Software development costs


Under UK GAAP, costs of developing computer software products
are expensed in the year in which they are incurred. Under US GAAP, the costs
of developing computer software products subsequent to establishing technical
feasibility are capitalised. The amortisation of the capitalised costs is based
on the estimated future revenues or remaining estimated useful economic lives
of the products involved.


Employee costs


Since 1990, options have been granted under Reuters
save-as-you-earn plans at a 20% discount. Under UK GAAP, the share issues are
recorded at their discounted price when the options are exercised. Under US
GAAP, the discount is regarded as employee compensation and is accrued over the
vesting period of the grants.


Taxes on income


Under UK GAAP, deferred taxes are accounted for to the extent
that it is considered probable that a liability or asset will crystallise in
the foreseeable future. Under US GAAP, deferred taxes are accounted for on all
timing differences and a valuation allowance is established in respect of those
deferred tax assets where it is more likely than not that some portion will
remain unrealised. Deferred tax also arises in relation to the tax effect of
the other US GAAP adjustments.


Dividends


Under UK GAAP, dividends are provided for in the year in
respect of which they are declared or proposed. Under US GAAP, dividends and
any related tax credit are given effect only in the period in which dividends
are formally declared.


Shares held by Employee Share Ownership Trusts (ESOTs)


Under UK GAAP, shares held by the ESOTs are recorded as fixed
asset investments at cost less amounts written off. Under US GAAP, those shares
not fully vested are regarded as treasury stock and recorded at cost as a
deduction from shareholdersequity.


Fixed asset investments


Under UK GAAP, fixed asset investments are held in the balance
sheet at the lower of cost or net realisable value. Under US GAAP, fixed asset
investments which are available for sale are stated at fair value with
unrealised gains or losses included in the statement of comprehensive income.


The effects of these differing accounting principles are shown
in notes 3740.


Cash flow statements


The cash flow statement set out on pages 5153 has been
prepared in conformity with UK Financial Reporting Standard No. 1 (Revised) Cash
Flow Statements. The principal differences between this statement and cash
flow statements presented in accordance with US Financial Accounting Standard
No. 95 are as follows:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|1. |  | Under
UK GAAP net cash flow from operating activities is determined before
considering cash flows from (a) returns on investments and servicing of finance
and (b) taxes paid. Under US GAAP, net cash flow from operating activities is
determined after these items.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. |  | Under
UK GAAP, capital expenditure is classified separately while under US GAAP, it
is classified as an investing activity.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------

|3. |  | Under
UK GAAP, dividends are classified separately while under US GAAP, dividends are
classified as financing activities.
|-- |  | -------------------------------------------------------------------------------------------------------------------------

|4. |  | Under
UK GAAP movements in short-term investments are not included in cash but
classified as management of liquid resources. Under US GAAP, short-term
investments with a maturity of three months or less at the date of acquisition
are included in cash.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. |  | Under
UK GAAP movements in bank overdrafts are classified as movements in cash while
under US GAAP they are classified as a financing activity.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------

|Set out below is a summary consolidated cash flow statement
under US GAAP:
|--------------------------------------------------------------------------



|                                                                   |  | 1999£m |   | 1998£m |   | 1997£m |  
|------------------------------------------------------------------ |  | ------ | - | ------ | - | ------ | -
|                                                                  
|Net cash inflow from operating activities                          |  | 657    |   | 795    |   | 817    |  
|Net cash outflow from investing activities                         |  | (409   | ) | (431   | ) | (400   | )
|Net cash outflow from financing activities                         |  | (610   | ) | (764   | ) | (85    | )
|                                                                  
|Net (decrease)/increase in cash and cash equivalents under US GAAP |  | (362   | ) | (400   | ) | 332    |  
|Net decrease in cash under UK GAAP (see notes 45 above)           |  | (25    | ) | (8     | ) | (31    | )
|                                                                  

|Reuters Group PLC Annual Report 1999      75
|--------------------------------------------

---

|Notes on summary of differences between UK and US GAAP


37.  Adjustments to net income
|---------------------------------------------------------------------------------------

|                                                                           |  | 1999£m |   | 1998£m |   | 1997£m |  
|-------------------------------------------------------------------------- |  | ------ | - | ------ | - | ------ | -
|                                                                          
|Profit attributable to ordinary shareholders in accordance with UK GAAP    |  | 425    |   | 384    |   | 390    |  
|US GAAP adjustments:                                                       | 
|Software revenue recognition                                               |  | 2      |   | (2     | ) |       |  
|Acquisition accounting adjustments                                         |  | (2     | ) | (3     | ) | (3     | )
|Software development costs                                                 |  | (2     | ) | (2     | ) | (2     | )
|Employee costs (see note (i) below)                                        |  | (8     | ) | (1     | ) | (3     | )
|Deferred taxes                                                             |  | 36     |   | 16     |   | 4      |  
|                                                                          
|Net income in accordance with US GAAP                                      |  | 451    |   | 392    |   | 386    |  
|                                                                          
|                                                                          
|
|                                                                          
|Earnings and dividends (see note (ii) below)                               | 
|Basic earnings per ADS in accordance with US GAAP                          |  | 192.1  |   | 166.6  |   | 164.5  |  
|Diluted earnings per ADS in accordance with US GAAP                        |  | 189.5  |   | 166.0  |   | 163.4  |  
|                                                                          
|Dividend paid per ADS (including UK advance corporation tax credit)        |  | 97.7   |   | 99.8   |   | 104.7  |  
|Deemed special dividend paid per ADS                                       |  |       |   | 627.7  |   |       |  
|                                                                          
|Total dividend paid per ADS                                                |  | 97.7   |   | 727.5  |   | 104.7  |  
|                                                                          
|Weighted average number of shares used in basic EPS calculation (millions) |  | 1,409  |   | 1,411  |   | 1,407  |  
|Issuable on conversion of options                                          |  | 20     |   | 5      |   | 10     |  
|                                                                          
|Used in diluted EPS calculation                                            |  | 1,429  |   | 1,416  |   | 1,417  |  
|                                                                          
|                                                                          

|(i) Employee costs


The company has complied with Financial Accounting Standard No.
123, Accounting for Stock-Based Compensation(FAS 123). Reuters has continued
to apply the methodologies set out in APB Opinion 25, Accounting for Stock
Issued to Employeesand other US GAAP literature in calculating its US GAAP
adjustments for share option plans and awards of share rights. Had Reuters
elected to recognise compensation expense based upon the fair value at grant
date for awards made in 1995 to 1999 under these plans consistent with the
alternative methodology set out in FAS 123, net income in 1999 in accordance
with US GAAP would have been £8 million lower and earnings per ADS and diluted
earnings per ADS would both have been 3.6p lower than these figures shown
above. Differences arising in prior years were not material.


(ii) Capital reorganisation


As explained in note 26, Reuters Holdings PLC completed a
capital reorganisation in 1998. Under US GAAP this transaction was deemed a
share consolidation combined with a special dividend and, accordingly, earnings
per share and per ADS and dividends per share and per ADS were retroactively
restated. Under UK GAAP no restatement of earnings per share was deemed
necessary as the cash payment was considered to be equivalent to a repurchase
of shares at market value and the number of new shares in Reuters Group PLC was
set to facilitate comparability of earnings with those of Reuters Holdings PLC.


(iii) Derivative instruments and hedging activities


Statement of Financial Accounting Standard No. 133 Accounting
for Derivative Instruments and Hedging Activities(FAS 133), as amended by FAS
137, becomes effective for accounting periods beginning on 1 January 2001. FAS
133, which will require all derivatives to be carried on the balance sheet at
fair value, introduces complex rules in respect of hedge accounting and the
recognition of movements in fair value through the income statement. FAS 133 is
currently being evaluated and the impact that it will have on Reuters financial
statements is not yet known.


76      Reuters Group PLC Annual Report 1999
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|38.  Adjustments to shareholdersequity
|---------------------------------------

|                                                                     |  | 1999£m |   | 1998£m |   | 1997£m |  
|-------------------------------------------------------------------- |  | ------ | - | ------ | - | ------ | -
|                                                                    
|Capital employed before minority interest in accordance with UK GAAP |  | 601    |   | 372    |   | 1,661  |  
|US GAAP adjustments:                                                 | 
|Software revenue recognition                                         |  |       |   | (2     | ) |       |  
|Goodwill and other acquisition accounting adjustments                |  | 43     |   | 14     |   | 11     |  
|Capitalised software development costs net of amortisation           |  | 4      |   | 6      |   | 8      |  
|Fixed asset investments                                              |  | 567    |   | 42     |   | 14     |  
|Shares held by employee share ownership trusts                       |  | (95    | ) | (45    | ) | (39    | )
|Liabilities                                                          |  | (42    | ) | (28    | ) | (25    | )
|Deferred taxes                                                       |  | (123   | ) | (10    | ) | (16    | )
|Dividends not formally declared or paid during the year              |  | 154    |   | 155    |   | 140    |  
|                                                                    
|Shareholders equity in accordance with US GAAP                      |  | 1,109  |   | 504    |   | 1,754  |  
|                                                                    

|39.  Statement of comprehensive income
|--------------------------------------

|                                                     |  | 1999£m |   | 1998£m |   | 1997£m | 
|---------------------------------------------------- |  | ------ | - | ------ | - | ------ | 
|                                                    
|Net income in accordance with US GAAP                |  | 451    |   | 392    |   | 386    | 
|Other comprehensive income, net of tax:              | 
|Unrealised gains on certain fixed asset investments: | 
|Arising during year                                  |  | 425    |   | 37     |   | 8      | 
|Less gains in net income                             |  | (10    | ) | (19    | ) |       | 
|Foreign currency translation differences             |  | 10     |   | (1     | ) | 2      | 
|                                                    
|Comprehensive income in accordance with US GAAP      |  | 876    |   | 409    |   | 396    | 
|                                                    



|40.  Summarised balance sheet (US GAAP basis)
|---------------------------------------------

|                                               |  | 1999£m |   | 1998£m |   | 1997£m |  
|---------------------------------------------- |  | ------ | - | ------ | - | ------ | -
|                                              
|Assets                                         |  |        |   |        |   |        |  
|Fixed tangible assets                          |  | 1,495  |   | 859    |   | 858    |  
|Current assets                                 |  | 1,401  |   | 1,565  |   | 1,809  |  
|Other assets                                   |  | 46     |   | 42     |   | 58     |  
|Software development costs                     |  | 4      |   | 6      |   | 8      |  
|Goodwill and other intangibles                 |  | 227    |   | 250    |   | 174    |  
|                                              
|Total assets                                   |  | 3,173  |   | 2,722  |   | 2,907  |  
|                                              
|Liabilities and shareholders equity           | 
|Current liabilities                            |  | 1,556  |   | 2,102  |   | 1,017  |  
|Long-term liabilities                          |  | 362    |   | 75     |   | 86     |  
|Deferred taxes                                 |  | 146    |   | 24     |   | 32     |  
|Minority interest                              |  |       |   | 17     |   | 18     |  
|                                              
|Shareholders equity before deductions         |  | 1,236  |   | 562    |   | 1,889  |  
|Treasury stock                                 |  |       |   |       |   | (82    | )
|Shares held by employee share ownership trusts |  | (127   | ) | (58    | ) | (53    | )
|                                              
|Total shareholders equity                     |  | 1,109  |   | 504    |   | 1,754  |  
|                                              
|Total liabilities and shareholders equity     |  | 3,173  |   | 2,722  |   | 2,907  |  
|                                              

|Goodwill and other intangibles are net of accumulated
amortisation of £434 million (1998 £375 million, 1997 £322 million). Software
development costs are net of accumulated amortisation of £14 million (1998 £12
million, 1997 £11 million


Reuters Group PLC Annual Report        77
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Preserving Reuters independence


Customers in all parts of the world depend on Reuters to
provide them with reliable and objective news and information.


Reuters therefore has a special need to safeguard its
independence and integrity and avoid any bias which may stem from control by
any particular individuals or interests. Reuters share structure includes two
mechanisms specifically designed to prevent this happening:


No shareholder may own 15% or more shares.


There is a single founders share, in addition to the publicly
traded ordinary shares. This may be used to outvote all ordinary shares if
other safeguards fail and there is an attempt to seize control of the company. Control,
for this purpose, means 30% of the shares.


The Reuters Trust Principles, which are protected by the
founders share, also impose further obligations. The principles and a list of
the trustees are set out below.


THE REUTERS TRUST PRINCIPLES


Reuters is dedicated to preserving its independence, integrity
and freedom from bias in the gathering and dissemination of news and
information. The Reuters Founders Share Company Limited, of which all Reuters
trustees are directors, was established to safeguard those qualities. The
trustees have a duty to ensure that, as far as they are able by the proper
exercise of the powers vested in them, the Reuters Trust Principles are
observed. These are:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | That
Reuters shall at no time pass into the hands of any one interest, group or
faction;
|- | ----------------------------------------------------------------------------------------

| | That
the integrity, independence and freedom from bias of Reuters shall at all times
be fully preserved;
|- | --------------------------------------------------------------------------------------------------------

| | That
Reuters shall supply unbiased and reliable news services to newspapers, news
agencies, broadcasters and other media subscribers and to businesses,
governments, institutions, individuals and others with whom Reuters has or may
have contracts;
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | That
Reuters shall pay due regard to the many interests which it serves in addition
to those of the media; and
|- | --------------------------------------------------------------------------------------------------------------

| | That
no effort shall be spared to expand, develop and adapt the news and other
services and products of Reuters so as to maintain its leading position in the
international news and information business.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|If the trustees believe that any person, together with any
associates, is seeking to obtain or has obtained control of Reuters Group PLC,
a majority of the Reuters trustees may require the votes attaching to the
Founders Share to be exercised. Control means the ability to control the
exercise of 30% or more of the votes which may be cast on a poll at general
meetings of Reuters Group PLC. In such circumstances, the Founders Share
Company has the right at any general meeting of Reuters Group PLC to cast
sufficient votes to pass any resolution supported by, and to defeat any
resolution opposed by, the Founders Share Company.


Any two Reuters trustees may require the votes attaching to the
Founders Share to be cast against any resolution which would alter any of the
articles of association of Reuters Group PLC relating to the Reuters Trust
Principles and the rights of the Founders Share. In such circumstances, the
Founders Share confers upon the Founders Share Company the right to cast
sufficient votes to defeat that resolution.


The Reuters trustees are: Pehr Gyllenhammar (Chairman); Len
Berkowitz; The Rt. Hon the Lord Browne-Wilkinson; Sir Michael Checkland; David
Cole CBE; Robert Erburu; Toyoo Gyohten; Jacques de Larosière de Champfeu KBE;
Sir Christopher Mallaby GCMG GCVO; Dame Sheila Masters DBE; Sir William Purves
CBE DSO; Jaakko Rauramo; Michael Robson; Arthur Ochs Sulzberger; Lyle Turnbull
AO; Richard Winfrey.


Following the capital reorganisation in 1998 the Founders Share
in Reuters Holdings PLC was cancelled and a Founders Share with like rights was
issued by Reuters Group PLC to the Reuters Founders Share Company Limited.


78      Reuters Group PLC Annual Report 1999
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Other information for shareholders


Information for investors can be found on Reuters website
http://www.reuters.com/


ORDINARY SHARES


A register of shareholdersinterests is kept at the companys
head office and is available for inspection on request. The register includes
information on nominee accounts and their beneficial owners.


Hoare Govett and Cazenove & Co. offer low cost share dealing
services for existing and potential Reuters shareholders. Further information
can be obtained from Hoare Govett Corporate Finance Limiteds Low Cost Dealing
Department, 250 Bishopsgate, London EC2M 4AA (Tel: (0)20 7678 8300) and Mrs
Nancy Young, Postal Dealing Department, Cazenove & Co., 12 Tokenhouse Yard,
London EC2R 7AN (Tel: (0)20 7606 1768).


Reuters has arranged for Barclays Stockbrokers Limited to
provide a Reuters Maxi Individual Savings Account (ISA) for UK residents. The
ISA allows investment in Reuters ordinary shares and cash. Further information
can be obtained from Barclays Stockbrokers (Tel: 0845 601 5000). All 0845 calls
are charged at local rates; you can only use this number if you are calling
from the UK. For your security calls are recorded and randomly monitored.
Barclays Stockbrokers Limited is a member of the London Stock Exchange and is
regulated by the Securities and Futures Authority Limited.


Dividends and earnings


Ordinary shareholders have received the following dividends in
respect of each financial year:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                  | 1999   | 1998  | 1997  | 1996   | 1995 
|--------------------------------- | ------ | ----- | ----- | ------ | -----
|                                 
|Interim                           | 3.65p  | 3.4p  | 3.1p  | 2.75p  | 2.3p 
|Final (1999 proposed)             | 11.00p | 11.0p | 9.9p  | 9.00p  | 7.5p 
|                                 
|                                  | 14.65p | 14.4p | 13.0p | 11.75p | 9.8p 
|                                 
|Basic earnings per ordinary share | 30.2p  | 26.7p | 24.0p | 27.3p  | 23.2p

|Ordinary shareholders living in selected countries outside the
United Kingdom can have their dividends paid directly into their bank accounts
in local currency. Any shareholders interested in this service, for which there
is a small charge, should contact the registrar (address on page 89).


Analysis of shareholdings at 31 December 1999


Excluding Reuters ordinary shares held by employee share
ownership trusts, there were 1,402 million shares in issue, analysed as in the
chart opposite. There were 29,634 shareholders on the ordinary share register.


[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE
CHART IN THE PRINTED MATERIAL.]
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Pension funds                        | 31%
|------------------------------------ | ---
|Insurance companies                  | 18%
|Investment funds and trusts (note 1) | 14%
|American Depositary Shares           | 11%
|Individuals                          | 4% 
|Corporate holdings                   | 2% 
|Non-profit organisations             | 2% 
|Foreign governments                  | 1% 
|Others (note 2)                      | 17%

|Note 1: Includes UK unit trusts and US mutual funds


Note 2: Includes all holdings below 100,000 shares, except for
individuals, whose holdings are analysed below this level.



Reuters Group PLC Annual Report 1999      79
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Other information for shareholders continued


AMERICAN DEPOSITARY SHARES (ADSs)


Each ADS represents six ordinary shares.


ADS holders receive the annual and half-yearly reports issued
by Reuters Group PLC.


Reuters Group PLC is subject to the informational requirements
of the US securities laws applicable to foreign companies and in accordance
therewith files an annual report on Form 20-F and other information with the US
Securities and Exchange Commission. Form 20-F is also available from the
Investor Relations departments in London or New York.


ADS Dividends


ADS holders are eligible for all stock dividends or other
entitlements accruing on the underlying Reuters Group PLC shares and receive
all cash dividends in US dollars. These are normally paid twice a year.


Dividend cheques are mailed directly to the ADS holder on the
payment date if ADSs are registered with Reuters US depositary. Dividends on
ADSs that are registered with brokers are sent to the brokers, who forward them
to ADS holders. Reuters US depositary is Morgan Guaranty Trust Company of New
York (address on page 89).


ADS holders should be aware of tax refunds that may increase
the cash dividends paid to qualifying US residents. Dividends per ADS,
including any UK tax refunds but before US tax credits, in respect of each
financial year are set out below.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                      | 1999  | 1998   | 1997   | 1996  | 1995 
|--------------------- | ----- | ------ | ------ | ----- | -----
|                     
|In sterling           |       |        |        |       |      
|Interim               | 21.9p | 21.7p  | 19.8p  | 17.5p | 14.7p
|Final (1999 proposed) | 66.0p | 66.0p  | 63.1p  | 57.4p | 47.8p
|                     
|                      | 87.9p | 87.7p  | 82.9p  | 74.9p | 62.5p
|                     
|In dollars           
|Interim               | 35.0c | 36.1c  | 31.2c  | 27.3c | 22.7c
|Final (1999 proposed) | *     | 105.7c | 104.2c | 93.1c | 72.2c
|                     

|* Final 1999 dividend will be converted to US dollars from
sterling at the rate prevailing on 20 April 2000.


The figures above which have not been restated for the 1998
capital reorganisation, include a refund of UK tax, less a withholding tax on
the total dividend and tax credit. Following the abolition of UK advance
corporation tax credits from 6 April 1999, the amount of the refund of UK tax
is restricted to one-ninth of the dividend paid. Dividends continue to be
subject to a UK withholding tax. This will either be 15% on the total of the
dividend and the tax refund or the value of the tax refund, whichever is the
lower. For dividends paid to qualifying US residents before 6 April 1999, the
tax credit was one-quarter of the amount of dividend on the ordinary shares.


For 1999, the total of the declared dividend per ADS is 87.9p,
the related tax credit per ADS is 9.8p and the withholding tax per ADS is 9.8p,
giving no net tax refund per ADS and a total cash payment of 87.9p per ADS.


ADS holders who are US residents for tax purposes may normally
credit the withholding tax against their federal income tax liabilities.


Dollar amounts paid to ADS holders depend on the
sterling/dollar exchange rate at the time of payment.


80      Reuters Group PLC Annual Report 1999
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Financial diary for 2000
|------------------------

|Tuesday 8 February     | Results for year 1999 announced                                                                                          
|---------------------- | -------------------------------------------------------------------------------------------------------------------------
|                       |                                                                                                                          
|Monday 13 March        | Ordinary shares go ex-dividend                                                                                           
|                       |                                                                                                                          
|Wednesday 15 March     | ADSs go ex-dividend                                                                                                      
|                       |                                                                                                                          
|Tuesday 18 April       | First quarter trading statement issuedAnnual General MeetingTime: 11.30Venue: Glaziers Hall, 9 Montague Close, London SE1
|                       |                                                                                                                          
|Thursday 20 April      | Final dividend for 1999 payable to ordinary shareholders on the register as at 17 March 2000                             
|                       |                                                                                                                          
|Thursday 27 April      | Final dividend payable to ADS holders on the register as at 17 March 2000                                                
|                       |                                                                                                                          
|Tuesday 25 July        | Results for the first six months of 2000 announced                                                                       
|                       |                                                                                                                          
|Monday 31 July         | Ordinary shares go ex-dividend                                                                                           
|                       |                                                                                                                          
|Wednesday 2 August     | ADSs go ex-dividend                                                                                                      
|                       |                                                                                                                          
|Wednesday 6 September  | Interim dividend for 2000 payable to ordinary shareholders on the register as at 4 August 2000                           
|                       |                                                                                                                          
|Wednesday 13 September | Interim dividend payable to ADS holders on the register as at 4 August 2000                                              
|                       |                                                                                                                          
|Friday 20 October      | Third quarter trading statement issued                                                                                   

|Reuters Group PLC Annual Report 1999 81
|---------------------------------------

---

|Summary of 1998 and 1999 results
|--------------------------------

|                                   | 1999 | 1998
|---------------------------------- | ---- | ----
|
|                                  
|Reuters Information                |      |     
|Europe, Middle East and Africa     |      | 247 
|Asia/Pacific                       |      | 75  
|The Americas                       |      | 83  
|                                  
|Total                              |      | 405 
|                                  
|Reuters Trading Systems            |     
|Dealing                            |      | 101 
|Financial Enterprise Systems       |      | 59  
|Risk Management Systems            |      | 18  
|Other                              |      | 7   
|Reuters Voice Systems              |     
|(disposed of in December 1998)     |      |    
|                                  
|Total                              |      | 185 
|                                  
|Instinet                           |     
|US                                 |      | 98  
|International                      |      | 27  
|Fixed Income                       |      |    
|                                  
|Total                              |      | 125 
|                                  
|Reuters Ventures                   |      | 37  
|Reuters Business Briefing (RBB)    |      | 15  
|TIBCO Software (TSI) (see note 32) |      | 8   
|Intra group revenue                |      | (4  
|                                  
|Total revenue                      |      | 771 
|                                  
|Adjustment for TSI/RBB             |      | (23 
|                                  
|Divisional revenue                 |      | 748 
|                                  

|82      Reuters Group PLC Annual Report 1999
|--------------------------------------------

---

|                        | 1999 | 1998  
|----------------------- | ---- | ------
|
|                       
|Reuters Information     |      | (694  
|Reuters Trading Systems |      | (262  
|Instinet                |      | (175  
|Reuters Ventures        |      | (79   
|RBB                     |      | (32   
|TSI                     |      | (27   
|Intra group costs       |      | 6     
|                       
|Total costs             |      | (1,263
|                       
|Adjustment for TSI/RBB  |      | 59    
|                       
|Divisional costs        |      | (1,204
|                       
|Contribution            |     
|Reuters Information     |      | 114   
|Reuters Trading Systems |      | 117   
|Instinet                |      | 80    
|Reuters Ventures        |      | (5    
|RBB                     |      | (1    
|TSI                     |      | (6    
|                       
|Total contribution      |      | 299   
|                       
|Adjustment for TSI/RBB  |      | 7     
|                       
|Divisional contribution |      | 306   
|                       

|Reuters Group PLC Annual Report 1999      83
|--------------------------------------------

---

|Summary of 1998 and 1999 results continued
|------------------------------------------

|                                                            | 1999 | 1998 
|----------------------------------------------------------- | ---- | -----
|
|                                                           
|Reuters Information                                         |      | 14%  
|Reuters Trading Systems                                     |      | 31%  
|Instinet                                                    |      | 31%  
|Reuters Ventures                                            |      | (7%  
|RBB                                                         |      | (3%  
|TSI                                                         |      | (29% 
|                                                           
|Total contribution margin                                   |      | 19%  
|                                                           
|Total divisional contribution margin excluding TSI/RBB      |      | 20%  
|                                                           
|                                                            |     
|Net currency gain                                           |      | 3    
|                                                           
|Goodwill amortisation                                       |      | (24  
|                                                           
|Operating profit                                            |      | 278  
|                                                           
|Operating margin                                            |      | 17.8%
|                                                           
|                                                            |     
|Profit on disposal of fixed asset investments               |      | 29   
|(Loss)/profit from associates                               |      | (1   
|Income from fixed asset investments                         |      |     
|Net interest (payable)/receivable                           |      | (6   
|Profit on disposal of subsidiary                            |      |     
|                                                           
|Profit before taxation                                      |      | 300  
|                                                           
|Taxation on profit on ordinary activities                   |      | (98  
|                                                           
|Profit after taxation attributable to ordinary shareholders |      | 202  
|                                                           
|                                                            |     
|Tax rate on profit before goodwill                          |      | 30%  
|                                                           
|Earnings per ordinary share                                 |      | 14.3p
|                                                           
|Earnings per ADS (USD rate = $1.61)                         |      | $1.38
|Dividend per ordinary share                                 |      | 3.65p
|                                                           
|Number of ordinary shares ranking for dividend (millions)   |      | 1,413
|                                                           

|84      Reuters Group PLC Annual Report 1999
|--------------------------------------------

---

|Net assets                     |  | 1999£m |   | 1998£m |  
|------------------------------ |  | ------ | - | ------ | -
|                              
|Reuters Information            |  | 276    |   | 298    |  
|Reuters Trading Systems        |  | 154    |   | 202    |  
|Reuters Ventures               |  | 110    |   | 28     |  
|Instinet                       |  | 214    |   | 92     |  
|TSI                            |  |       |   | 16     |  
|Central                        |  | (153   | ) | (247   | )
|                              
|                               |  | 601    |   | 389    |  
|                              
|User accesses (000s)          | 
|Information product accesses   | 
|3000 Series                    |  | 71     |   | 48     |  
|Other upper tier               |  | 139    |   | 161    |  
|Off-Trading Floor              |  | 97     |   | 70     |  
|Mobile                         |  | 41     |   | 31     |  
|Other                          |  | 129    |   | 119    |  
|Total                          |  | 477    |   | 429    |  
|Dealing accesses               |  | 23     |   | 24     |  
|Instinet accesses              |  | 21     |   | 16     |  
|                              
|Total accesses (excluding RBB) |  | 521    |   | 469    |  
|                              
|Revenue per access (£000s)    | 
|Information products           | 
|3000 Series                    |  | 6.8    |   | 6.6    |  
|Other upper tier               |  | 5.6    |   | 5.8    |  
|Total RI                       |  | 3.6    |   | 3.8    |  
|Dealing                        |  | 17.6   |   | 17.9   |  
|Instinet                       |  | 27.8   |   | 30.4   |  
|                              

|                                                   | 1999  | 1998   
|-------------------------------------------------- | ----- | -------
|
|                                                  
|Total subscriber locations (000s)                 | 57.7  | 52.8   
|                                                  
|Internet page views per month (millions)           |       | 150200
|                                                  
|Instinet NYSE market share                         | 2.5%  | 2.4%   
|                                                  
|Instinet NASDAQ market share                       | 14.0% | 13.3%  
|                                                  
|Market value of listed Greenhouse investments (£m) | 68    | 438    
|                                                  
|Market value of TSI holding (£m)                   |      | 3,150  
|                                                  

|Reuters Group PLC Annual Report 1999      85
|--------------------------------------------

---

|Eleven year consolidated financial summary for the year ended
31 December


[CHART SHOWING HIGH AND LOW PRICES FOR ORDINARY SHARES
FOR 1999 IN PENCE.] The highest price in 1999 was 1011p, the lowest 486p.


[CHART SHOWING HIGH AND LOW PRICES FOR ADSs
FOR 1999 IN US DOLLARS.] The highest price in 1999 was $100.00, the lowest $50.25.


[CHART SHOWING REVENUE PER EMPLOYEE FOR EACH YEAR FROM 1999 TO 1989.]
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                             |  | 1999£m |   | 1998£m |   | 1997£m |   | 1996£m |   | 1995£m |  
|-------------------------------------------- |  | ------ | - | ------ | - | ------ | - | ------ | - | ------ | -
|                                            
|
|Results                                      |  |        |   |        |   |        |   |        |   |        |  
|Revenue                                      |  | 3,125  |   | 3,032  |   | 2,882  |   | 2,914  |   | 2,703  |  
|Net interest (payable)/receivable            |  | (4     | ) | 2      |   | 80     |   | 61     |   | 60     |  
|Profit before tax                            |  | 632    |   | 580    |   | 626    |   | 652    |   | 558    |  
|Taxation                                     |  | 207    |   | 196    |   | 236    |   | 210    |   | 185    |  
|Profit attributable to ordinary shareholders |  | 425    |   | 384    |   | 390    |   | 442    |   | 373    |  
|                                            
|Net assets                                   | 
|Fixed assets                                 |  | 1,205  |   | 1,098  |   | 1,046  |   | 1,026  |   | 999    |  
|Net current (liabilities)/assets             |  | (232   | ) | (577   | ) | 790    |   | 525    |   | 387    |  
|Long term creditors                          |  | (284   | ) | (16    | ) | (37    | ) | (41    | ) | (135   | )
|Provisions                                   |  | (88    | ) | (116   | ) | (120   | ) | (51    | ) | (39    | )
|                                            
|                                             |  | 601    |   | 389    |   | 1,679  |   | 1,459  |   | 1,212  |  
|                                            
|Tangible fixed assets                        | 
|Additions                                    |  | 244    |   | 296    |   | 361    |   | 372    |   | 304    |  
|Depreciation                                 |  | 310    |   | 331    |   | 312    |   | 283    |   | 250    |  
|                                            
|Development expenditure                      |  | 197    |   | 200    |   | 235    |   | 202    |   | 191    |  
|                                            
|Free cash flow                               |  | 402    |   | 490    |   | 449    |   | 494    |   | 455    |  
|                                            

|                                             |  | 1994£m |   | 1993£m |   | 1992£m |   | 1991£m |   | 1990£m |   | 1989£m |  
|-------------------------------------------- |  | ------ | - | ------ | - | ------ | - | ------ | - | ------ | - | ------ | -
|Results                                      |  |        |   |        |   |        |   |        |   |        |   |        |  
|Revenue                                      |  | 2,309  |   | 1,874  |   | 1,568  |   | 1,467  |   | 1,369  |   | 1,187  |  
|Net interest (payable)/receivable            |  | 51     |   | 60     |   | 66     |   | 49     |   | 30     |   | 19     |  
|Profit before tax                            |  | 510    |   | 440    |   | 383    |   | 340    |   | 320    |   | 283    |  
|Taxation                                     |  | 162    |   | 140    |   | 123    |   | 110    |   | 112    |   | 102    |  
|Profit attributable to ordinary shareholders |  | 347    |   | 299    |   | 236    |   | 230    |   | 207    |   | 181    |  
|                                            
|Net assets                                   | 
|Fixed assets                                 |  | 687    |   | 571    |   | 499    |   | 488    |   | 531    |   | 484    |  
|Net current (liabilities)/assets             |  | 176    |   | 151    |   | 419    |   | 289    |   | 81     |   | (33    | )
|Long term creditors                          |  | (87    | ) | (32    | ) | (26    | ) | (30    | ) | (27    | ) | (22    | )
|Provisions                                   |  | (36    | ) | (32    | ) | (23    | ) | (25    | ) | (30    | ) | (20    | )
|                                            
|                                             |  | 740    |   | 658    |   | 869    |   | 722    |   | 555    |   | 409    |  
|                                            
|Tangible fixed assets                        | 
|Additions                                    |  | 319    |   | 268    |   | 199    |   | 159    |   | 196    |   | 193    |  
|Depreciation                                 |  | 221    |   | 204    |   | 186    |   | 193    |   | 140    |   | 110    |  
|                                             | 
|Development expenditure                      |  | 159    |   | 110    |   | 79     |   | 67     |   | 62     |   | 60     |  
|                                            
|Free cash flow                               |  | 321    |   | 224    |   | 276    |   | 339    |   | 227    |   | 54     |  
|                                            

|NOTES.


1997 and 1998 have been restated to reflect the adoption of FRS
12.

1998 and 1997 have been restated to reflect changes to
reporting user accesses in 1999. 

1989 to 1996 have not been restated to reflect the change to
reporting user accesses in 1999. 
1989 to 1991 have not been restated to reflect the change to
reporting user accesses in 1994. 
1995 and 1996 have been restated to reflect the effect of FRS
10 issued in 1997 which required purchased goodwill and intangible assets to be
capitalised and amortised through the profit and loss account. 1989 to 1994
have not been restated for FRS 10.
1989 to 1991 have not been restated to reflect the effects of
the prior year adjustment for post retirement medical benefits made in 1992.
1989 to 1993 have been restated for the subdivision of every
ordinary share of 10 pence each into four new ordinary shares of 2.5 pence each
in April 1994. 
1990 to 1994 fixed assets have been restated to reflect the
effect of UITF abstract 13 issued in 1995.
Free cash flow is defined as net cash inflow from operating
activities plus net interest received less tax paid and expenditure on tangible
fixed assets.

86      Reuters Group PLC Annual Report 1999
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|                                             | 1999    | 1998    | 1997    | 1996    | 1995   
|-------------------------------------------- | ------- | ------- | ------- | ------- | -------
|                                            
|
|Ratios                                       |         |         |         |         |        
|Basic earnings per ordinary share            | 30.2p   | 26.7p   | 24.0p   | 27.3p   | 23.2p  
|Adjusted earnings per ordinary share (1)     | 34.5p   | 30.3p   | 29.1p   | 30.4p   | 25.8p  
|Dividends per ordinary share                 | 14.65p  | 14.4p   | 13.0p   | 11.75p  | 9.8p   
|Cash flow per ordinary share (2)             | 71.6p   | 68.3p   | 61.0p   | 60.7p   | 52.7p  
|Book value per ordinary share (3)            | 36.1p   | 23.3p   | 99.9p   | 88.3p   | 73.7p  
|Cash flow/book value (4)                     | 195.5%  | 292.0%  | 61.0%   | 68.8%   | 71.5%  
|Profit before tax as a percentage of revenue | 20.2%   | 19.1%   | 21.7%   | 22.4%   | 20.6%  
|Return on tangible fixed assets (5)          | 57.5%   | 48.2%   | 49.0%   | 60.0%   | 55.2%  
|Return on equity (6)                         | 102.0%  | 78.5%   | 25.6%   | 33.7%   | 34.8%  
|                                            
|UK corporation tax rate                      | 30.25%  | 31.0%   | 31.5%   | 33.0%   | 33.0%  
|                                            
|Infrastructure                              
|                                            
|Shares in issue (millions)                   | 1,423   | 1,422   | 1,694   | 1,689   | 1,677  
|Employees                                    | 16,546  | 16,938  | 16,119  | 15,478  | 14,348 
|User accesses                                | 521,000 | 482,000 | 429,000 | 362,000 | 327,100
|                                            

|                                             | 1994    | 1993    | 1992    | 1991    | 1990    | 1989   
|-------------------------------------------- | ------- | ------- | ------- | ------- | ------- | -------
|                                            
|Ratios                                       |         |         |         |         |         |        
|Basic earnings per ordinary share            | 21.7p   | 18.0p   | 14.0p   | 13.7p   | 12.4p   | 10.9p  
|Adjusted earnings per ordinary share (1)     | 21.7p   | 18.0p   | 14.0p   | 13.7p   | 12.4p   | 10.9p  
|Dividends per ordinary share                 | 8.0p    | 6.5p    | 5.3p    | 4.25p   | 3.75p   | 3.25p  
|Cash flow per ordinary share (2)             | 45.6p   | 40.3p   | 33.6p   | 31.7p   | 27.4p   | 23.6p  
|Book value per ordinary share (3)            | 44.7p   | 40.6p   | 51.2p   | 42.7p   | 32.9p   | 24.5p  
|Cash flow/book value (4)                     | 102.0%  | 99.2%   | 65.7%   | 74.2%   | 83.5%   | 96.2%  
|Profit before tax as a percentage of revenue | 22.1%   | 23.5%   | 24.4%   | 23.2%   | 23.4%   | 23.8%  
|Return on tangible fixed assets (5)          | 57.6%   | 57.2%   | 53.2%   | 45.4%   | 41.3%   | 40.9%  
|Return on equity (6)                         | 50.8%   | 39.5%   | 29.9%   | 36.2%   | 43.2%   | 53.6%  
|                                            
|UK corporation tax rate                      | 33.0%   | 33.0%   | 33.0%   | 33.25%  | 34.25%  | 35.0%  
|                                            
|Infrastructure                              
|                                            
|Shares in issue (millions)                   | 1,668   | 1,662   | 1,753   | 1,743   | 1,735   | 1,724  
|Employees                                    | 13,548  | 11,306  | 10,393  | 10,450  | 10,731  | 10,071 
|User accesses                                | 296,700 | 227,400 | 200,800 | 201,800 | 200,900 | 194,800
|                                            

| | RATIOS.
| | -------

|(1) |  | Adjusted
earnings per share are based on profit attributable to ordinary shareholders
excluding capital reorganisation costs and goodwill amortisation.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Cash
flow per ordinary share represents profit before taxation, goodwill
amortisation and depreciation divided by the number of shares in issue after
deducting shares held by employee share ownership trusts. In 1989 to 1997
shares in Reuters Holdings PLC held by group companies are also deducted.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Book
value per ordinary share represents adjusted shareholdersequity divided by the
number of shares in issue after deducting shares held by employee share
ownership trusts. In 1989 to 1997 shares in Reuters Holdings PLC held by group
companies are also deducted from shares in issue. Adjusted shareholdersequity
is calculated after deducting the carrying value of interests in shares of
Reuters Holdings PLC (1989 to 1997).
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Cash
flow/book value represents profit before taxation, goodwill amortisation and
depreciation as a percentage of adjusted shareholders equity.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------

|(5) |  | Return
on tangible fixed assets represents profit after taxation as a percentage of
average tangible fixed assets. The average is calculated by adding tangible
fixed assets at the start and the end of each year and dividing by two.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) |  | Return
on equity represents profit attributable to ordinary shareholders divided by
the average adjusted shareholdersequity. The average is calculated by adding
adjusted shareholdersequity at the start and the end of each year and dividing
by two. In 1998 a weighted average has been used to reflect the capital
reorganisation.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Reuters Group PLC Annual Report 1999      87
|--------------------------------------------

---

|Glossary
|--------

|                                                              | 
|------------------------------------------------------------- | 
|Term used in annual report                                    | 
|                                                              | 
|Advance corporation tax                                       | 
|                                                              | 
|Allotted                                                      | 
|                                                              | 
|Associated undertakings                                       | 
|                                                              | 
|Called-up share capital                                       | 
|                                                              | 
|Capital allowances                                            | 
|                                                              | 
|Cash at bank and in hand                                      | 
|                                                              | 
|Class of business                                             | 
|                                                              | 
|Combined code of practice                                     | 
|                                                              | 
|Creditors                                                     | 
|                                                              | 
|Creditors: Amounts falling due after more than one year       | 
|                                                              | 
|Creditors: Amounts falling due within one year                | 
|                                                              | 
|Debtors                                                       | 
|                                                              | 
|Destination (of revenue)                                      | 
|                                                              | 
|Finance lease                                                 | 
|                                                              | 
|Freehold                                                      | 
|                                                              | 
|Interest receivable                                           | 
|                                                              | 
|Interest in shares of Reuters Group PLC                       | 
|                                                              | 
|Origin (of revenue)                                           | 
|                                                              | 
|Profit                                                        | 
|                                                              | 
|Profit and loss account (statement)                           | 
|                                                              | 
|Profit and loss account reserve(under capital and reserves) | 
|                                                              | 
|Profit attributable to ordinary shareholders                  | 
|                                                              | 
|Proposed dividend                                             | 
|                                                              | 
|Share capital                                                 | 
|                                                              | 
|Share premium account                                         | 
|                                                              | 
|Shares in issue                                               | 
|                                                              | 
|Stocks                                                        | 
|                                                              | 
|Tangible fixed assets                                         | 

|88      Reuters Group PLC Annual Report 1999
|--------------------------------------------

---

|Where to find us


Corporate headquarters: 
85 Fleet Street 
London EC4P 4AJ 
Tel: 44 (0) 20 7250 1122
Registered in England No: 3296375 
http://www.reuters.com/


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Investor Relations: 
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e-mail:
geoff.wicks@reuters.com


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e-mail:
nancy.bobrowitz@reuters.com


Media queries: 
Peter V. Thomas 
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Tel: 44 (0) 20 7542 4890
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Fax: 1 (212) 247 0346 
e-mail:nancy.bobrowitz@reuters.com


Liam Hwee Tay 
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Tel: 65 870 3028 
Fax: 65 870 3456
e-mail:
liam.tay@reuters.com


Registrar/Depositary: for dividend 
queries, duplicate mailings 
and address changes


Ordinary shares: 
Lloyds TSB Registrars Scotland 
117 Dundas Street 
Edinburgh EH3 5ED 
Tel: 0870 601 5366 
Fax: 0870 900 0020


American Depositary Shares: 
Morgan Guaranty Trust 
Company of New York 
PO Box 8205 
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Tel: 1 (781) 575 4328 
Fax: 1 (781) 575 4088


Listings:


London Stock Exchange and NASDAQ Washington D.C. (American
Depositary Share Symbol RTRSY)


Options on ordinary shares are traded on the London Traded
Options Market. The American Stock Exchange in New York and the Chicago Board
Options Exchange list options on American Depositary Shares of Reuters.


Share price information:


Share price information about Reuters Group PLC is available on
Reuters 3000Xtra, Reuters Securities 3000, Reuters Securities 2000 and Equity
Focus products. The Reuters Instrument Codes (RICs) and Reuters Plus/Quotron
codes are as follows (additional Equity Focus codes in brackets):
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                         | Equity FocusReuters 3000XtraSecurities 2000Securities 3000 |                 | Reuters PlusQuotron |         
|---------------------------------------- | ---------------------------------------------------------- | --------------- | ------------------- | --------
|Ordinary shares                          |                                                            | RTRS.L(RTR.L)   |                     | RTRU.EU 
|ADSs traded on NASDAQ                    |                                                            | RTRSY.O         |                     | RTRSY   
|ADSs traded on the London Stock Exchange |                                                            | RTRSy.L(RTRy.L) |                     | RTRAU.EU

|This annual report is available on the Internet at
http://www.reuters.com/ar1999/


Form 20-F:


This document is filed with the US Securities and Exchange
Commission (SEC) and corresponds to the Form 10-K filed by US-based companies.
Hard copies are available from the Investor Relations departments in London and
New York. Electronic copies can be accessed through the Internet on Reuters
Internet page (http://www.reuters.com/) or from the SECs EDGAR Database via
the SECs Home page (http://www.sec.gov).


Reuters Group PLC Annual Report 1999      89
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|[GRAPHIC]



Ric Gemmell took the photographs on pages 4, 8, 16 and 17. ©Reuters
Group PLC 2000. Design by CGI. Typesetting by Real Time Studio. Printing by
Litho-Tech. The paper used in this annual report is from fully sustainable
forests. It was produced without the use of any chlorine compounds. Instinet is
a registered trade mark of Instinet Corporation. Quotron is a registered trade
mark of Quotron Systems, Inc. Reuters is a registered trade mark in more than
25 countries.
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|Behind every decision


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|Behind every decision
|---------------------

|www.reuters.com/ | REUTERS GROUP PLC ANNUAL REPORT AND ACCOUNTS 1999
|---------------- | -------------------------------------------------