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UNITED STATES
  SECURITIES AND EXCHANGE COMMISSION
  Washington, D.C. 20549

FORM 20-F

(Mark One)

|   | REGISTRATION STATEMENT
        PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|-- | ------------------------------------------------------------------------------------------------------
|  
|OR
|   |                                                                                                       
|   | ANNUAL REPORT PURSUANT
        TO SECTION 13 OR 15(b) OF THE SECURITIES EXCHANGE ACT OF 1934          
|   |                                                                                                       
|   | For the fiscal year ended December
          31, 2003                                                 
|  
|OR
|   |                                                                                                       
|   | TRANSITION REPORT PURSUANT
        TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934      
|   |                                                                                                       
|   | For the transition period
        from _________________ to ________________                          

Commission file number333-08354

Reuters Group PLC(Exact name of Registrant as specified
in its charter)

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(Translation of Registrant’s
    name into English)

England(Jurisdiction of incorporation or organization)

85 Fleet Street, London
      EC4P 4AJ, England
  (Address of Principal Executive Offices)

Securities registered or to
    be registered pursuant to Section 12(b) of the Act:None

Securities registered or to
    be registered pursuant to Section 12(g) of the Act:Ordinary Shares of 25p each

Securities for which there
    is a reporting obligation pursuant to Section 15(d) of the Act:None

Indicate the number of outstanding
    shares of each of the issuer’s classes of capital or common stock as
    of the close of the period covered by the annual report.

| | Ordinary Shares of 25p each | 1,432,540,899 | 
| | --------------------------- | ------------- | 
| | Founders Share of £1        | 1             | 

Indicate by check mark whether
    the registrant (1) has filed all reports required to be filed by Section
    13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
    months (or for such shorter period that the registrant was required to file
    such reports), and (2) has been subject to such filing requirements for the
    past 90 days.

Yes                                No

Indicate by check mark which
    financial statement item the registrant has elected to follow.

Item 17                               Item
    18

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In depth

Reuters Annual Report and Form 20-F 2003



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Contents1
   
   Financial highlights2
   
   From the Chairman3
   
   Chief Executives review4
   
   Five and three year summaries5
   
   Selected financial data6
   
   Company information11
   
   Directors report12
   
   Directors and senior managers14
   
   Corporate governance17
   
   Remuneration report25
   
   Statement of directorsresponsibilities26
   
   Independent auditors report
      to theshareholders of Reuters Group PLC27
   
   Operating and financial review42
   
   Consolidated profit and lossaccountConsolidated statement of totalrecognised gains and losses43
   
   Notes on the consolidatedprofit and loss account49
   
   Consolidated cash flowstatement50
   
   Notes on the consolidatedcash flow statement




55
   
   Consolidated balance sheet56
   
   Reconciliation of movementsin shareholders funds57
   
   Notes on the consolidatedbalance sheet71
   
   Balance sheet of Reuters Group PLCNotes on the balance sheetof Reuters Group PLC72
   
   Accounting policies74
   
   Summary of differences between UKand US Generally AcceptedAccounting Principles(GAAP)77
   
   Notes on summary of differencesbetween UK and US GenerallyAccepted Accounting Principles(GAAP)80
   
   Information for shareholders92
   
   Eleven year consolidatedfinancial summary93
   
   Cross reference guide to Form 20-F95
   
   Glossary96
   
   Financial diary for 2004Where to find us


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Financial highlights

|Reuters Group                                                              |       |   |         |   |        |  
|-------------------------------------------------------------------------- | ----- | - | ------- | - | ------ | -
|                                                                           |       |   |         |   |        |  
|                                                                           | 2003  |   | 2002    |   | %      |  
|                                                                           | £m    |   | £m      |   | Change |  
|                                                                           |       |   |         |   |        |  
|Revenue                                                                    | 3,197 |   | 3,575   |   | (11%   | )
|Operating profit/(loss)                                                    | 126   |   | (144    | ) |       |  
|Profit/(loss) before tax                                                   | 49    |   | (493    | ) |       |  
|Profit/(loss) after tax                                                    | 27    |   | (516    | ) |       |  
|Return on equity                                                           | 13.3% |   | (58.4%  | ) |       |  
|Net debt                                                                   | (77   | ) | (66     | ) | 17%    |  
|                                                                           |       |   |         |   |        |  
|                                                                           |       |   |         |   |        |  
|                                                                           |       |   |         |   |        |  
|Basic earnings/(loss) per ordinary share                                   | 3.1p  |   | (29.0p  | ) |       |  
|Diluted earnings/(loss) per share                                          | 3.0p  |   | (29.0p  | ) |       |  
|Earnings/(loss) per ADS1,2                                                 | 32.9c |   | (309.4c | ) |       |  
|Dividends per ordinary share                                               | 10.0p |   | 10.0p   |   |       |  
|Dividends per ADS1(see page 83)                                            | 60.0p |   | 60.0p   |   |       |  
|                                                                           |       |   |         |   |        |  
|1Each
    American Depositary Share represents six ordinary shares.        |       |   |         |   |        |  
|2A
    nominal exchange rate of US$1.78= £1 has been used for convenience. |       |   |         |   |        |  

This report comprises the annual report of Reuters Group PLC in accordance with the United Kingdom requirements and its annual report on Form 20-F in accordance with the requirements of the United States Securities and
Exchange Commission (SEC) for 2003. A cross reference guide setting out the information in this report that corresponds to the Form 20-F items is provided on pages 93-94.

As used in this report, Reuters Group and Group refer to Reuters Group PLC and its subsidiary undertakings, including Instinet Group Incorporated (Instinet Group), joint ventures and associates.
The company refers to the parent Reuters Group PLC. Reuters refers
to Reuters Group excluding Instinet Group.

The consolidated financial statements of Reuters Group
included in this report are presented in pounds sterling (£). On 31 December 2003, the noon buying rate in New York City for cable transfers in foreign
currencies as announced for customs purposes by the Federal Reserve Bank of New York (Noon Buying Rate) was US$1.78= £1; on 3 March 2004 the noon buying rate was US$1.82= £1.
For additional information on exchange rates between the pound sterling and the
US dollar, see exchange rates on page 89.

Reuters Groups consolidated financial statements
are prepared in accordance with accounting principles generally accepted in the
United Kingdom (UK GAAP). UK GAAP differ in certain respects from accounting
principles generally accepted in the United States (US GAAP). The material differences
between UK GAAP and US GAAP relevant to Reuters Group are explained on pages
74-76.

This report contains forward-looking statements within
the meaning of the United States Private Securities Litigation Reform Act of
1995 with respect to Reuters Groups financial condition, results of operations,
business and management strategy and plans and objectives. For a discussion of risks associated with these statements see Risk factors on
pages 40-41.

Reuters, the sphere logo and Reuters product names referred
to in the report are trade marks or registered trade marks of the Reuters Group
of Companies around the world. Other trade marks of third parties are used in
this report for the purpose of identification only.



|Reuters Group PLC Annual Report and Form
    20-F 2003 | 1
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From the Chairman





This is my 19th and last annual Chairmans statement. Some perspective is in order. First, and most important, I am more confident now than I have ever been that Reuters strategy is matched by its ability to implement. The focusing and transforming process which Tom Glocer and his executive team are
so ably managing is absolutely necessary to make Reuters properly competitive in its core business. This, in turn, is a prerequisite for expansion in the financial industry or, for that matter, outside of it. I stressed last year the Boards
belief in managements performance. Since then a great deal more has been accomplished, as this annual report illustrates. Success with Fast Forward cannot be taken for granted. But the omens are good. Throughout my time as Chairman two related factors have profoundly affected Reuters strategy and its implementation: Reuters long history as a news agency, prior to its explosive growth in the finance industry; and the
Reuters Trust Principles. The management skills and experience required to run a leading news agency can be characterised as deep but narrow. Nevertheless, the native Reuters management rose exceptionally well to the challenge of rapidly
expanding the business to meet the demand generated in the financial markets by the pioneering Reuters electronic network. As a result, profits




in the 1980s increased nearly a hundredfold. The 1990s, however, confronted Reuters management with two even more difficult challenges: first, managing and disciplining an organisation far larger than in 1979 and one
flushed with success; and, secondly, sustaining Reuters growth as its original competitive edge diminished.  The 1990s were therefore a decade of experiment, learning and adjustment. Forward momentum was maintained but with increasing difficulty in Reuters core business. The Board and executive wrestled with new and large
problems in managing the complexity of the business and in responding to competition, to the coming of the internet, and to big changes in the financial industry. Mistakes were made but good things also occurred: Reuters was never seduced by the
mirage of the transforming acquisition; substantial surplus cash was returned to shareholders; and, most important of all, learning from experience continued and led ultimately to the leadership and strategy now in place. The Reuters Trust Principles, first articulated in 1941 to describe Reuters purpose, stand for objectivity and independence in reporting facts and events. They have remained pervasive in the business ever since,
notwithstanding its great expansion in the financial industry. They have been a force for growing Reuters organically and have caused us to be wary of forward




integration in the media world, seeing this as a temptation to move from being the servant of truth to being its master. We do acknowledge, however, that mastery does not necessarily mean manipulation; and that opinion
can be unbiased. The Reuters Trust Principles will not deter evolution of Reuters strategy but objectivity and independence in reporting and communication will remain paramount. I warmly welcome my successor, Niall FitzGerald, who brings great international perspective and commercial experience, and I thank all my Board colleagues over the years for their unfailing support, especially John
Craven for his valuable assistance in the task of leading the Board. I also gratefully acknowledge on the Boards behalf the patience, commitment and skill shown by all those working for the continuing health and development of Reuters, in
which I have great confidence. Sir Christopher HoggChairman


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|2 | Reuters Group PLC Annual Report and Form
    20-F 2003 | 

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Chief Executives review





I shall remember 2003 as the year in which our Fast Forward transformation programme was launched and we began to see the first signs of its benefits in our product line, customer service and cost base. Chris Hogg, in his last Chairmans statement, has stated his confidence in our future and the importance of the Reuters Trust Principles in shaping our history. Were he a less modest man he would have allowed me
to pay him the tribute he deserves in these pages. My challenge remains how to transform Reuters, not only our cost base and products, but also our culture, without damaging the core values which sustain us: the pursuit of truth, freedom from bias, objectivity and
global perspective. In 2003 I began to see the evidence that this was indeed possible. In terms of financial results, we returned the Group to profit, while exceeding our Fast Forward savings targets and improving the operating margin (pre-restructuring) of the core Reuters business. The dividend, which
at the beginning of the year many feared could not be maintained, was covered by Reuters earnings and operating cash flow.




In the product line, we fulfilled an interim Fast Forward goal of taking the number of information products down from a confusing 1,300 to 550 and we introduced a host of new products to enthusiastic market reception.
New versions of 3000 Xtra and BridgeStation convinced customers that we have a strong premium tier offer, and we sold 18,000 new units of 3000 Xtra. In the mid tier, we introduced the easy-to-use Reuters Trader and Reuters Knowledge and integrated
the targeted products we obtained in the Multex acquisition. Finally, we made great strides in our Enterprise business by establishing the role of Reuters Market Data System as the market standard in trading room systems and achieving strong growth
in our risk management and enterprise information products. 2003 was also the year in which we reversed a trend of recent years and significantly improved Reuters customer service, as borne out by objective client feedback through our customer satisfaction index. This is one
facet of culture change at Reuters which I will pursue without apology. As part of the Fast Forward drive to simplify and streamline Reuters business, we made considerable progress in the




portfolio, selling or closing 17 non-strategic units in 2003, 73 since the beginning of 2002, and concentrating our efforts on our four principal holdings: Factiva, Instinet Group, Radianz and TIBCO Software Inc.
(TSI). In February 2004 we completed the sale of the majority of our interest in TSI, realising US$563 million (£311 million) in net proceeds which we applied to strengthen the Reuters balance sheet. We continue to work closely with the
remaining large units to build their value, achieve operating synergies with the rest of the Group and ultimately crystallise value for Reuters shareholders. Despite my positive sense of achievement for the work done in 2003, I have two great regrets. We lost Mazen Dana and Taras Protsyuk, two brave Reuters cameramen, at the hands of US forces in Iraq. While these deaths
may be attributed to the fog of war, I still regret that, despite much trying, I have been unable to do more to protect Reuters and other journalists in war zones. This unfinished business tempers my sense of accomplishment for 2003 and also puts it in perspective. Tom GlocerChief
Executive


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| | Reuters Group PLC Annual Report and Form
        20-F 2003 | 3

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Five year summary

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Three year Reuters customer
  segments 
  and Instinet Group revenue summary

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|4 | Reuters Group PLC Annual Report and
      Form 20-F 2003 | 

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Selected financial data

The selected financial information set out
  below is derived, in part, from the consolidated financial statements. The selected
  data should be read in conjunction with the financial statements and related
  notes, as well as the Operating and financial review.

The consolidated financial statements are prepared
  in accordance with UK GAAP, which differ in certain respects from US GAAP. For
  a summary of the material differences between UK and US GAAP and related information
  relevant to Reuters Group, see pages 74-79 of this report.

Consolidated profit and loss accountfor the year ended 31 December

|                                                               |       |        |    |                                        |   |        |   |        |  |        | 
|-------------------------------------------------------------- | ----- | ------ | -- | -------------------------------------- | - | ------ | - | ------ |  | ------ | 
|                                                               | Notes | 2003   |    | 2002                                   |   | 2001   |   | 2000   |  | 1999   | 
|                                                               | below |        |    | £m
            (except per share data) |  
|                                                               |       |        |    |                                        |   |        |   |        |  |        | 
|                                                               |       |        |    |                                        |   |        |   |        |  |        | 
|Amounts in accordance with UK GAAP:                            |       |        |    |                                        |   |        |   |        |  |        | 
|Revenue                                                        |       | 3,197  |    | 3,575                                  |   | 3,885  |   | 3,592  |  | 3,125  | 
|Operating profit/(loss)                                        |       | 126    |    | (144                                   | ) | 302    |   | 411    |  | 549    | 
|Profit/(loss) on ordinary activities before
      taxation     |       | 49     |    | (493                                   | ) | 158    |   | 657    |  | 632    | 
|Profit/(loss) on ordinary activities after
      taxation      |       | 27     |    | (516                                   | ) | 51     |   | 521    |  | 436    | 
|Basic earnings/(loss) per ordinary share                       |       | 3.1p   |    | (29.0p                                 | ) | 3.3p   |   | 37.1p  |  | 30.9p  | 
|Diluted earnings/(loss) per ordinary share                     |       | 3.0p   |    | (29.0p                                 | ) | 3.2p   |   | 36.5p  |  | 30.4p  | 
|Basic earnings/(loss) per ADS                                  |       | 18.5p  |    | (173.8p                                | ) | 19.7p  |   | 222.8p |  | 185.7p | 
|Diluted earnings/(loss) per ADS                                |       | 18.2p  |    | (173.8p                                | ) | 19.3p  |   | 219.1p |  | 183.1p | 
|Dividends declared per ordinary share                          | 1     | 10.0p  |    | 11.1p                                  |   | 11.1p  |   | 17.8p  |  | 16.3p  | 
|Dividends declared per ADS:                                    | 1     |        |    |                                        |   |        |   |        |  |        | 
|Expressed in
      UK currency                                 |       | 60.0p  |    | 66.7p                                  |   | 66.7p  |   | 106.7p |  | 97.7p  | 
|Expressed in
      US currency                                 | 2     | 103.2c |    | 105.1c                                 |   | 95.6c  |   | 157.7c |  | 154.6c | 
|Weighted average number of ordinary shares
      (in millions) |       | 1,396  |    | 1,395                                  |   | 1,404  |   | 1,404  |  | 1,409  | 
|                                                               |       |        |    |                                        |   |        |   |        |  |        | 
|                                                               |       |        |    |                                        |   |        |   |        |  |        | 
|Amounts in accordance with US GAAP:                            |       |        |    |                                        |   |        |   |        |  |        | 
|Revenue                                                        |       | 3,383  |    | 3,771                                  |   | 4,045  |   | 3,704  |  | 3,182  | 
|Operating (loss)/profit                                        |       | (21    | )  | (293                                   | ) | (217   | ) | 458    |  | 426    | 
|(Loss)/income before taxes on income                           |       | (73    | )  | (255                                   | ) | 205    |   | 652    |  | 622    | 
|Net (loss)/income                                              |       | (38    | )  | (127                                   | ) | 92     |   | 534    |  | 451    | 
|Basic (loss)/earnings per ordinary share                       |       | (2.7p  | )  | (9.0p                                  | ) | 6.6p   |   | 38.0p  |  | 32.0p  | 
|Diluted (loss)/earnings per ordinary share                     |       | (2.7p  | )  | (9.0p                                  | ) | 6.5p   |   | 37.4p  |  | 31.6p  | 
|Basic (loss)/earnings per ADS                                  |       | (16.3p | )  | (54.3p                                 | ) | 39.5p  |   | 228.1p |  | 192.1p | 
|Diluted (loss)/earnings per ADS                                |       | (16.3p | )  | (54.3p                                 | ) | 38.7p  |   | 224.3p |  | 189.5p | 
|Dividends declared per ordinary share                          | 1     | 10.0p  |    | 11.1p                                  |   | 18.0p  |   | 16.3p  |  | 16.3p  | 
|Dividends declared per ADS:                                    | 1     |        |    |                                        |   |        |   |        |  |        | 
|Expressed in
      UK currency                                 |       | 60.0p  |    | 66.7p                                  |   | 108.0p |   | 97.7p  |  | 97.7p  | 
|Expressed in
      US currency                                 | 2     | 105.1c |    | 99.6c                                  |   | 155.3c |   | 150.8c |  | 156.4c | 
|Weighted average number of ordinary shares
      (in millions) |       | 1,396  |    | 1,395                                  |   | 1,404  |   | 1,404  |  | 1,409  | 
|                                                               |       |        |    |                                        |   |        |   |        |  |        | 
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|Consolidated balance sheet data                                |       |        |    |                                        |   |        |   |        |  |        | 
|at 31 December                                                 |       |        |    |                                        |   |        |   |        |  |        | 
|                                                               |       |        |    |                                        |   |        |   |        |  |        | 
|                                                               |       | 2003   |    | 2002                                   |   | 2001   |   | 2000   |  | 1999   | 
|£m                                                             | £m    | £m     | £m | £m                                    
|                                                               |       |        |    |                                        |   |        |   |        |  |        | 
|                                                               |       |        |    |                                        |   |        |   |        |  |        | 
|Amounts in accordance with UK GAAP:                            |       |        |    |                                        |   |        |   |        |  |        | 
|Total assets                                                   |       | 2,943  |    | 3,524                                  |   | 4,538  |   | 3,870  |  | 2,714  | 
|Long-term debt and provisions for                              |       |        |    |                                        |   |        |   |        |  |        | 
|charges (excluding deferred tax)                               |       | 663    |    | 572                                    |   | 526    |   | 394    |  | 349    | 
|Net assets                                                     |       | 481    |    | 727                                    |   | 1,273  |   | 1,153  |  | 663    | 
|Shareholders equity                                           |       | 286    |    | 496                                    |   | 1,109  |   | 1,153  |  | 663    | 
|Share capital                                                  |       | 358    |    | 358                                    |   | 358    |   | 357    |  | 355    | 
|                                                               |       |        |    |                                        |   |        |   |        |  |        | 
|                                                               |       |        |    |                                        |   |        |   |        |  |        | 
|Amounts in accordance with US GAAP:                            |       |        |    |                                        |   |        |   |        |  |        | 
|Total assets                                                   |       | 3,000  |    | 3,510                                  |   | 4,373  |   | 3,783  |  | 3,173  | 
|Long-term debt                                                 |       | 568    |    | 552                                    |   | 572    |   | 458    |  | 362    | 
|Net assets                                                     |       | 447    |    | 770                                    |   | 1,125  |   | 1,186  |  | 1,109  | 
|Shareholders equity                                           |       | 245    |    | 528                                    |   | 959    |   | 1,186  |  | 1,109  | 
|                                                               |       |        |    |                                        |   |        |   |        |  |        | 

|1. | Under UK GAAP dividends declared are those declared in respect of the year for which selected financial data is presented. Under US GAAP dividends declared are those formally declared within each
calendar twelve-month period. Dividends declared for 1999-2002 include UK tax credits. Dividends declared for 2003 exclude UK tax credits. Amounts receivable could be higher for US shareholders who have elected to retain the benefits of the old
US/UK tax treaty. For further information relating to dividends and the UK taxation of dividends see pages 83 and 89.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Dividends expressed in US$ have been converted at the actual exchange rates used in the payment of dividends to US shareholders, except that the final dividend declared in respect of 2003, payable
to US ADS holders on 6 May 2004, has been converted at the Noon Buying Rate on 3 March 2004 for convenience.                                                                                                                                                                                                                                                             

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| | Reuters Group PLC Annual
      Report and Form 20-F 2003 | 5

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Company information

Business overviewThe Reuters Group includes the core Reuters information business and Instinet Group, a 63% owned public subsidiary, which operates the largest global electronic agency securities brokerage. Reuters, the global information company, provides information and software applications tailored for professionals in the financial services, media and corporate markets. Reuters information is trusted and drives
decision making across the globe based on Reuters reputation for speed, accuracy and independence. At 31 December 2003, Reuters had 15,500 staff in 92 countries, including some 2,400 editorial staff in 197 bureaux serving approximately 130
countries. Instinet Group had approximately 1,200 employees in eight countries. In 2003, the Reuters Group had revenues of £3.2 billion. Reuters strategyIn February 2003, Reuters launched Fast Forward, a three-year programme intended to strengthen Reuters core information business and address the impact of structural changes in the financial services industry. The six
principal components of the Fast Forward programme and their achievements to date are: 1
   Make Reuters information indispensable,by acquiring new content and improving the quality and usability of existing content. During 2003,
Reuters added new company fundamental data and investment research through its acquisition of Multex. Other significant information enhancements included JJ Kenny non-taxable municipal securities data and exclusive distribution rights to GFIs
credit default swaps prices. In addition, fund managers can now use Barra, the leading source of buy-side risk analytics, to do pre-trade risk analysis on their Reuters 3000 Xtra and BridgeStation workstations. During 2003, JP Morgan Chase and
Deutsche Bank started to use Reuters as a neutral distribution partner for their trading applications, and CSFB is working with Reuters to distribute its fixed income data and analytics. Reuters also signed agreements to allow interoperability for
users of Reuters Messaging with users of AOL, IBM, Lotus and Microsofts instant messaging services.2
   Move to a new business architecture and business operating model,radically simplifying the way products are delivered by the use of simpler
business processes and migration over time to a single, global technology platform. During 2003, Reuters made good progress in this area and began rolling out next generation products and services.3
   Simplify and segment the product line,supplying the right product at the right price to profitable target markets worldwide. Since March 2002,
Reuters has withdrawn approximately 750 products from sale leaving some 550 today, with another 150 products to be removed by the end of 2004. By the end of 2005, Reuters aims to have highly segmented desktop information and transaction products
designed for specific workflow requirements of its target customer segments. Reuters segmented product line took shape during 2003 with the launch of Reuters Trader, a mid-tier product for sales and trading professionals, and Reuters Knowledge for
the research and advisory community.4
   Focus our solutions business around our core areas of expertise risk management, market data distribution systems and treasury solutions.
Reuters announced in February 2003 that it would no longer sell systems integration and custom development consulting and, as a result, eliminated several hundred consulting roles and obsoleted sub-scale software products. In October 2003, Reuters
entered into a new commercial agreement with TIBCO Software Inc. (TSI), and announced its intention to reduce its 48% stake in that company. In February 2004, Reuters reduced its stake to 8.8% through a combination of a public offering and a sale of
shares back to TSI for aggregate net proceeds of approximately £311 million. Reuters will phase out its role as a general reseller of TSI products through March 2005, but retains exclusive rights to sell market data systems and risk management
products for the financial services market until May 2008. In October 2003, Reuters and Accenture announced that Accenture will supply systems integration services for Reuters products globally, giving Reuters customers access to Accentures
skilled consultancy team and creating an additional sales channel for Reuters products.




5
   Reduce and reshape our cost base,redirecting investment into key areas such as customer service and new product development, reaping the
benefits of global scale, reducing staff costs and driving higher operating margins through greater scalability. Reuters delivered £75 million of net cost savings from Fast Forward in 2003, and remains focused on delivering a total of
£440 million annualised cost savings by the end of 2005. While Reuters continues to add staff in key areas of focus such as client training, front line customer support and the new development centre in Bangkok, over 1,500 people left Reuters
during 2003.6
   Reinvigorate culture and behaviour.Reuters focus on a simpler and more competitive product line, combined with a commitment to improving
customer service, is starting to show results. Customer satisfaction improved for two successive quarters in the latter part of 2003. Reuters remains focused on delivering further and sustained improvements in this area. Moreover, Reuters has
announced that it will move the majority of its London staff from various office locations to Canary Wharf in 2005, having seen its New York operation become more aligned and customer service oriented when it moved to a single office in Times
Square. In addition to the similar benefits of having most of its London staff under one roof, Reuters expects to generate annual cost savings of £5 million from the move. Reuters markets drive its organisational structureReuters operates its business through customer segments, geographic sales and service channels and shared resources to build, deploy and support the products and services its customers need. Customer Segments.Effective from 1 January 2004, Reuters has refined the structure of its segments to more closely match the communities they service. The Treasury
Services, Asset Management, Investment Banking and Corporates and Media segments have been re-aligned into the following four customer segments based on the shared needs and requirements of the customers that Reuters serves: Institutional Sales
& Trading, Asset Management & Research, Enterprise and Media. These communities are reinforced by the growth in the use of Reuters Messaging as a key communication tool. Revenues for the three years to 31 December 2003 are analysed in
accordance with the previous segment structure in the Operating and financial review on pages 34-35 and in note 1. Institutional Sales & Tradingfocuses on Reuters core business among its sales and trading end-users dealing in the foreign exchange, fixed income, equities,
commodities and energy and related markets. This segment concentrates on both the buy-side and the sell-side of the trade, delivering world class cross-asset trading data, news, analytics and transactions capability. Asset Management & Researchfocuses on supporting end-users such as portfolio managers, wealth managers, investment bankers and research analysts, who are
making complex financial decisions outside the core sales and trading environment. The strategy for growth is built on key new products and capabilities that have been delivered within the Knowledge and Wealth Manager product families described
below. In addition, Barra risk analytics are now included in the top tier Xtra family of products and Reuters Portfolio Management System. Enterprisetargets the complete business enterprise as a customer, as distinct from the end-user. As such, this segment focuses on Reuters business in enterprise
information distribution systems (Reuters Market Data System and real-time datafeeds), risk and enterprise information products (EIP). EIP, which includes non real-time datafeeds covering end-of-day and intra-day instrument prices, corporate
actions, price histories, terms and conditions and reference data, is targeted as being one of the major growth areas in 2004. Mediafocuses on Reuters wholesale media business, serving the needs of the worlds newspapers, television and cable networks, radio stations, websites and
consumers, as well as working to create a new avenue of growth for Reuters in direct-to-consumer products, principally through reuters.com.


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Products and servicesClose to half a million financial
professionals across the globe each day receive market data, in-depth news, quotes,
statistics and
analytics on financial and commodities markets from Reuters. Known for its expertise
in journalism, Reuters is also the largest financial information provider in
the world with annual sales of £2.7 billion in 2003. Relying on its considerable experience in the financial information industry and incorporating advanced technologies, Reuters has played an important role in redefining this rapidly changing industry and, as a result,
provides a wide range of products and services that offer content, analytics, communities and openness to help customers succeed. Reuters products and services deliver information and allow customers to view, manage, manipulate and engage in transactions based on it. Financial information is collected from an array of sources such as exchanges,
over-the-counter markets, research services and other contributors such as energy and fixed income providers, as well as from Reuters own news, research and data operations, and is available through various delivery platforms such as workstations,
datafeeds and internet solutions. Customers can engage in foreign exchange and money markets transactions with access to a community of approximately 17,000 traders, and can use Reuters large order routing network to gain electronic access to a
variety of brokers. In addition, Reuters offers enterprise solutions to help customers better manage risk, trade processing, financial content and internal business processes throughout their organisation. Product families.To
deliver on the Fast Forward initiative to simplify and segment its product line,
Reuters has grouped its desktop information and transaction products into four
product families aligned with distinct customer needs and communities, and is
working to reduce its desktop offerings to under 50 by the end of 2005. All desktop
information and transactions products are being grouped into one of
four product families, with a distinct brand and set of attributes,
and serving the needs of a distinct set of customers as defined by the customer
segments: Xtra This product family is targeted at the most sophisticated end-users, such as those within sales and trading and portfolio management. It includes
cross-asset class information, advanced integrated analytics and transactional capabilities, extensive customisability, the ability to import and integrate proprietary or third party data or analytics; and the ability to take content out of the
Reuters desktop for further manipulation and analysis. Users are provided with both ready-made models and decision-making tools. There are currently a number of products in this family with all or most of these capabilities, but it is planned to
migrate eventually to a single offer with a small variety of optional extras. The Xtra family is primarily targeted to and managed by the Institutional Sales & Trading segment, but also complements the Asset Management & Research
segments portfolio of products. Trader This
product family is targeted at sales staff and traders who do not need the sophistication
and full integration capability offered in the Xtra  family. The Trader family
includes a number of current and recently launched offerings, sold as Reuters
Trader, and ultimately will include a variety of segmented products to serve
the needs of a majority of Institutional Sales & Trading
customers on the trading floor and other users who focus on domestic and regional
financial instruments. Knowledge This
product family is targeted at the research and advisory business (including investment
bankers and analysts), portfolio managers, and others focused on company-specific
research. Products such as Reuters Knowledge offer an integrated package of both
public and proprietary fundamental content that supports company-specific analysis,
along with basic access to markets information, news and
other content. There are currently three product packages targeted to distinct
end-user groups: investment banking, portfolio managers and corporate clients. Wealth Manager This
family of products is designed for private client advisors of affluent and high
net worth individuals, as well as retail brokers. These customers focus more
on portfolio information and managing relationships with their clients than on
real-time trading information. They require products with a high degree of integration
with their in-house systems. The Wealth Manager family
includes portfolio management and both global and domestic market intelligence
products.




SubscribersReuters products and services are generally billed by reference to the number of user accesses to datafeeds, portable devices and terminals. The number of accesses for Reuters at the end of the last three year’s are
shown below: 31
      December000s
   2003
   
   2002
   
   2001Premium products*
   103
   
   93
   
   842000/3000 series
   70
   
   98
   
   134Mid and lower tier
   254
   
   302
   
   374Total
   427
   
   493
   
   592*Premium products
      include 3000 Xtra, Dealing and BridgeStation. Geographic sales and service channelsReuters serves its customers through a global sales and service channel split into regions: (the Americas; Europe, Middle East and Africa; and Asia Pacific), and the Focus Group Accounts which serve Reuters very
largest global customers. Locally, members of the sales and service teams work with customers to build global and local relationships and to identify the correct product solution to meet customer needs. Through regular training visits our customer
training staff work with end-users to ensure they get full value from the products they use. In addition to the local support, Reuters provides end-users with 24/5 help desk service and pro-active telephone support out of three regional support
hubs, one based in each of the time zones. All sales channels fulfil a crucial role supplying feedback to the customer segments on how products are working and how they can be enhanced to meet future customer needs. Revenues for the three years to 31 December 2003 are analysed by segment on pages 34-35 of the Operating and financial review and by geography and by segment on pages 43-44 in note 1 on the consolidated profit and loss
account. Reuters Centres of ExcellenceReuters future success and profitability
depends on its ability to use its global reach and scale to create and deliver
fast and accurate
information that is free from bias. Support is provided to the business through
shared Centres of Excellence providing specialist services. In conjunction with
the segment restructuring, these centres have also been restructured and now
constitute Operations & Technology, Content and Corporate Services. Operations & Technologybuilds and operates Reuters products and services aligned with customer segment strategies. This group manages Reuters data centres,
development centres, central systems and distribution networks, including relationships with Reuters major telecommunications suppliers, so that Reuters can offer fast, accurate performance to customers across the world. It includes the Chief
Technology Officer, whose role is to drive common architecture and bring innovation into the business through technology leadership, and the Chief Information Officer, whose role is to establish a strong, consistent internal IT strategy across
Reuters. Contentbrings together all Reuters editorial and data operations, including the acquisition, generation, production, packaging and delivery of news, research, data
and other information, whether numerical, textual, graphical, photographic or audio-visual. It includes the editorial group, whose role is to cover and edit the news to the highest standards of accuracy and timeliness so as to meet the needs of
Reuters customers. Reuters news has been a benchmark of excellence for more than 150 years and underpins its reputation for speed and accuracy, freedom from bias and global reach. In numeric data operations, Reuters recently opened a major
English-language content centre in Bangalore, India to help meet customer demand for new content while at the same time reducing cost. Initial plans are in place to support over 300 roles in Bangalore by the end of 2004, with live production
commencing in April 2004.


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Company informationcontinued



Corporate Servicesprovides functional expertise based on globally applied standards for the whole of Reuters. These groups include Finance, Human Resources,
  Corporate Communications, Business Programmes (which includes the Fast Forward programme) and the General Counsels Office (including Legal, Compliance and Internal Audit). Communications networks, technology and equipment
Reuters uses multiple communications networks for distribution of its products. During 2003, Reuters continued to migrate its main product sets on to global IP-based networks principally provided by Radianz Limited
(Radianz), its joint venture with network services provider Equant BV (Equant) in order to deliver greater resilience, speed and capability. Reuters has major technical centres in five locations, supported by many smaller local data centres. The data centres are linked by communications services provided by Radianz and SAVVIS Communications Corporation
(Savvis), using dedicated international communications circuits that rely on satellite links, optical fibre cables and coaxial cables. Radianz leases these circuits from various governmental and private telecommunications operators including Equant.
Communications between data centres and subscribers are provided by Radianz in 20 countries and by Reuters directly or third parties elsewhere. For further information regarding Radianz and the relationship between Reuters Group and Radianz, see
page 87. The services agreements with Radianz and with Savvis are important to the Groups capability to deliver products and services to customers. Although reasonable steps are taken to ensure continuity of service, any
failure or interruption of such systems could have a significant effect on the Groups business (see Risk factors on page 40-41). A summary of these network services agreements is given on page 87. Instinet Group
Instinet Group is the largest global electronic
agency securities broker and has been providing investors with electronic trading
solutions and execution services for more than 30 years. Instinet Group provides
sophisticated electronic trading solutions and execution services to enable buyers
and sellers worldwide to trade securities directly and anonymously with each
other. Instinet Group also gives its customers the opportunity to use sales-trading
expertise and sophisticated technology tools to interact with global securities
markets, improve their trading and investment performance and lower their overall
trading costs. Through its electronic platforms, Instinet Groups customers also
can access other US trading venues, including Nasdaq, the New York Stock Exchange (NYSE), and almost 30 securities markets throughout the world, including stock exchanges in Frankfurt, Hong Kong, London, Paris, Sydney, Tokyo, Toronto and Zurich.
Instinet Groups customers primarily consist of broker-dealers and institutional
investors, such as mutual funds, pension funds, insurance companies and hedge
funds. Since the fourth quarter of 2003, Instinet Group has been implementing a business restructuring plan to establish two distinct business lines: 
   Instinet, the Institutional Broker, which
       serves US and international institutional customers including customers
       of Lynch, Jones & Ryan, Instinet Groups commission recapture
       subsidiary; and
   INETSM,
       Instinet Groups electronic communications network (ECN) that combines
       the US broker-dealer order flow of the Instinet ECN and the Island ECN
       and serves Instinet Groups US broker-dealer customers. INET also
       includes its clearing broker, Instinet Clearing Services, Inc. This reorganisation was substantially completed in February 2004. Instinet Group completed an initial public offering in May 2001 and its common stock is listed on the Nasdaq Stock Market (symbol INGP.O). As a result of the initial public offering as well as acquisitions in which
Instinet Group shares were used as consideration, the largest of which was the purchase of Island ECN in 2002, Reuters Groups shareholding of Instinet Group is now approximately 63%.




Joint ventures and associates
Reuters principal joint ventures and associates include: TIBCO Software Inc.TSI
provides total business integration solutions delivering infrastructure software
that enables organisations to integrate their business  systems in real-time.
In 1999, TSI completed an initial public offering of its common stock on the
Nasdaq Stock Market (symbol TIBX.O).In
October 2003, Reuters announced it had entered into revised commercial arrangements
with TSI and intended to reduce its 48% stake in TSI, including an agreement
by TSI to repurchase US$115 million worth of its shares from Reuters. On 3 February
2004, Reuters completed a public offering of 69 million TSI shares. The offering
and the accompanying repurchase by TSI resulted in aggregate net proceeds of
approximately £311 million for a net profit of
approximately £155 million, and reduced Reuters stake in TSI to 8.8%. In
addition, Reuters no longer has the right to nominate directors to TSIs
board. Reuters Group does not consolidate TSI for accounting purposes and beginning
in 2004,
will no longer account for TSI as an associate. Radianz.Radianz, the joint venture with Equant, was formed in 2000 to develop a secure extranet network for use by the financial services industry. Reuters owns
51% of the company, but shares voting control and therefore does not consolidate Radianz as a subsidiary for accounting purposes. Radianz connects all categories of market participants: brokers, institutions, exchanges, custodians, and clearing and
settlement houses. During 2003, Radianz continued to grow the number of connections on its RadianzNet service and to demonstrate the cost advantage to customers of consolidating multiple services onto a single connection. Factiva.Factiva is a 50% owned joint venture with Dow Jones formed in 1999. It provides a broad range of global news and a deep historical archive of business
information. Through its products and technology solutions, Factiva enables enterprises to retrieve information and integrate it into their business applications and intranet portals. Factivas business information includes Reuters and Dow
Jones newswires, plus nearly 8,000 other newspaper and periodical sources and 8,500 business-oriented websites from around the world, delivered in 22 languages. These sources provide current news, historical articles, photographs, market research
and investment analyst reports, and stock quotes. Factivas primary audience consists of information professionals and researchers, with around 70% of their revenue derived from sources outside the financial services sector. Reuters is a major
distributor of Factiva content within the financial services sector. Reuters Group does not consolidate Factiva for accounting purposes. Competitors
The Group faces significant competition in all market sectors and geographical areas in which it operates. Competing information products for the financial markets are offered by Bloomberg, Thomson Financial, a division of The Thomson Corporation, Quick Corporation of Japan, Telekurs, IDC, Dow Jones, Sungard, Moneyline
Telerate and Factset, plus a number of smaller local and regional competitors. The Lipper funds information business competes with Morningstar, the Micropal unit of Standard & Poors, a division of the McGraw-Hill Companies, Value Line and Thomson Corporations CDA
Weisenberger. Reuters foreign exchange spot dealing services compete with the Electronic Broking Service and Bloomberg, which have recently formed an alliance in this area. Reuters money and foreign exchange transaction products
also compete with voice brokers in the relevant markets. Competitors in the supply of risk products and market data systems include Misys, Sungard Data Systems, CSK Software and a large number of other vendors. Reuters main competitors in the supply of news to the media are Associated Press, Agence France Presse, Dow Jones and Bloomberg News. Instinet Group competes with the following, among others: market makers and other traditional broker-dealers acting as agent or principal; traditional and electronic trading methods in use on US and international
exchanges, including NYSE specialists and the electronic matching systems of international exchanges; the trading platform for the Nasdaq market,


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known as SuperMontage, which enables members
    of the National Association of Securities Dealers, Inc. (NASD) to trade electronically
    in Nasdaq quoted stocks; Archipelago Exchange; the NYSEs institutional
  Xpress, NYSE Openbook and NYSE Direct products; ECNs, alternative
  trading systems (ATSs), electronic brokers and other electronic trading systems,
  including BRUT ECN, Bloomberg Tradebook and ITG; automated trade execution
  services developed by third party vendors for commercialisation in a wide range
  of financial product markets; commercial banks and other financial institutions;
  and trading system software companies. Capital investments, expenditure and divestituresSince
the beginning of 2001, the Group has made a number of acquisitions and has invested
in several new and existing businesses including several joint ventures. In chronological
order, the principal acquisitions and investments (none of which exceeded a cost
of £50 million, save where otherwise stated) were: 
   Diagram fip SA,acquired
       in March 2001, a major European provider of financial software solutions
       for the capital markets;
   ProTrader Group LP,acquired
       by Instinet Group in October 2001 for total consideration valued at £105
       million;
   Certain businesses ofBridge
       Information Systems, Inc.,acquired
       in September 2001 for total consideration of £256 million, including
       interim funding to Bridge and Savvis;
   Island Holding Company
       Inc.,acquired by Instinet Group
       in September 2002 for stock consideration having a value at the closing
       of £194 million;
   Capital Access International
       LLC,which provides fixed income
       holdings information, acquired in November 2002;
   AVT Technologies Limited,a
       specialist in foreign exchange transaction technology, acquired in December
       2002; and
   Multex.com, Inc.,acquired in March 2003 for £158 million. Total capital expenditure for acquisitions, investments in joint ventures, associates and other investments during 2003 was £161 million (2002: £317 million, 2001: £519 million). In October 2001 Reuters sold its interest in VentureOne Corporation, a provider of information and research for the venture capital investment industry, to Wicks Business Information, LLC for a net consideration of
£18 million in cash. Reuters disposed of or closed a total of 56 units in 2002 for consideration totalling £29 million. The principal disposals or closures in 2002 were: 
   London News Radio, in which Reuters held
       a 20% shareholding, sold in September 2002;
   Diagram Asset Management and Diagram EDI
       respectively, two non-core units that were acquired as part of the acquisition
      of Diagram fip SA in 2001, sold in September 2002 and November 2002 respectively;
   Sila Communications, in which Reuters held
       a 40% shareholding, sold in December 2002; and
   Atriax, which ceased operations during
       2002, is currently in the process of being liquidated. Reuters disposed of or closed a total of 17 units in 2003 for consideration totalling £41 million. The principal disposals in 2003 were: 
   Synetix Solutions Limited, a joint venture, sold in January 2003;
   Wall Street on Demand, a wholly-owned subsidiary, sold in March 2003;
   Informa SA, a fixed asset investment in
       which Reuters held a 40% shareholding, sold in September 2003;
   Datamonitor plc, in which Reuters held
       a 20.5% ordinary shareholding, sold on a piecemeal basis between July
       2003 and November 2003;





   The Thai Apex services business, sold into
       a new joint venture formed by Reuters and Systex Corporation in December
       2003; and
   Agence de Presse Médicale International
       SAS, a wholly-owned subsidiary, sold to Wilmington Business Information
       Limited. In addition, Multex Investor Europe Limited was liquidated in July 2003. The company had surplus assets of approximately £10 million which have been absorbed into the Group. In February 2004, Reuters completed a public offering
of 69 million TSI shares and sold an additional 17 million shares back to TSI
for aggregate net proceeds of approximately £311 million. The transactions
 reduced Reuters stake in TSI from 48% to 8.8%. Also, on 19 February 2004, Reuters
sold its 98% holding in Tower Group Holding Corp. to Master Card International
Services, Inc. Further information relating to investments, acquisitions, joint ventures and disposals in 2003 is provided in notes 16 and 31 on the consolidated balance sheet on pages 59 and 69. Government regulation
The UK Financial Services Authority (FSA) under the Financial Services and Markets Acts 2000 regulates Reuters Limited, the principal operating company of Reuters, as a service company. Reuters Transaction Services Limited (RTSL), through which Dealing 3000 Spot, Forwards, FX Options and Interest Rate Swaps Matching are operated, is subject to regulation by the FSA equivalent to that applied to
broking participants in the London market. RTSLs operations in Singapore and Hong Kong are approved and subject to oversight by the Monetary Authority of Singapore and the Hong Kong Monetary Authority, respectively. RTSL has also applied to
the Australian Securities and Investments Commission for an Australian Market Licence: Overseas Operator. Reuters Global Routing Services Limited (RGRS UK), the Groups other authorised firm in the UK, was created in March 2003. Under the passporting provisions of the EU Investment Services Directive, RGRS UK may
introduce UK and EU clients directly to Reuters subsidiary Bridge Trading Company (BTC) in the US. The Reuters Global Routing Service (RGRS) order routing network is operated through RGRS UK and Reuters Global Routing Services (US) LLC (RGRS
US). As registered broker-dealers, members of self-regulatory organisations in the US and other countries in which they operate and, in the case of the Instinet ATSs and the INET ATS as operators of electronic
communications networks and/or alternative trading systems in the US, Instinet Group, BTC and RGRS US are subject to regulation under the US securities laws and their equivalents in other countries, including but not limited to net capital
requirements, and to possible increased levels of regulation in the future. In June 2002, Island ECN submitted to the SEC an application in draft form for registration as a national securities exchange. INET intends to submit a new draft application for registration as a national securities
exchange. See Arrangements with Instinet Group  Corporate Agreement on page 81 and Risk factors  Changes in the regulatory environment could have an adverse effect on Reuters Groups business on page
41. The use of communications links is subject to government licencing in several countries. Corporate structure
The Group conducts its business through a portfolio of companies, including wholly and partly owned subsidiary undertakings, joint ventures and associates. Information concerning the most significant companies is
contained in note 32 on the consolidated balance sheet.


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Company informationcontinued

Property, plant and equipment The Groups tangible fixed assets are
      primarily in the form of computer systems equipment that forms the infrastructure
      for the companys business. This equipment is distributed across global
      sites with greater concentration at the major global and regional technical
      centres. A reducing proportion of the equipment is located at customer
      sites around the world. The Groups principal facilities
        are: 
      the corporate headquarters and adjoining
          office building (145,000 sq. ft.)in Fleet Street, London;
      the US headquarters at 3 Times Square
          in New York City (597,000 sq. ft.);
      the technical centres in London (324,000
          sq. ft.), Hazelwood, Missouri(109,000 sq. ft.), Geneva (144,00 sq.ft.),
          which also includes the regionaloffice for EMEA, Singapore (180,000
          sq. ft.), which also includes theregional office for Asia, and Hauppauge,
          New York (50,000 sq. ft.); and
      the four corporate office buildings
          located in St. Louis County, Missouri(aggregate of 211,000 sq. ft.). The London and Hauppauge technical centres
      are situated on land owned by Reuters, whereas the buildings in Geneva
      and Singapore were built by Reuters on leased land. The leases, including
      periods covered by options to extend, expire in 2095 and 2050, respectively. The Reuters Building at 3 Times
        Square is owned, and was developed jointly, by Reuters and Rudins Times
        Square Associates LLC. In May 2001 Reuters commenced its lease of 692,000
        sq. ft. from the venture, of which 360,000 sq. ft. is subleased to Instinet
        Group, which in turn has subleased 95,000 sq. ft. to third parties. The
        principal part of Reuters lease will expire in 2021. Reuters secured
        its lease position with a US$120 million letter of credit. In 2003, the major technical centre
        building in Hazelwood, Missouri was acquired from Savvis for a total
        consideration of £24 million. Reuters subsequently entered into
        a sale and leaseback for the facility, receiving £23 million under
        a 20 year arrangement. In September 2003, Reuters announced
        a transaction under which its London-based operations would be consolidated
        into a new building at Canary Wharf during 2005. Under the arrangement,
        Reuters will take a lease on a 281,000 sq. ft. office building and has
        transferred approximately 340,000 sq. ft. of redundant offices, including
        85 Fleet Street, to Canary Wharf Group for cash consideration of approximately £30
        million. Reuters is leasing back 85 Fleet Street on a temporary basis
        pending the move to Canary Wharf. History and developmentThough its predecessor was formed
      in London in 1851, the ultimate holding company for the Group, Reuters
      Group PLC, was incorporated in England and Wales on 24 December 1996. Reuters
      registered office and corporate headquarters are located at 85 Fleet Street,
      London EC4P 4AJ, England (telephone: +44 (0)20 7250 1122). Legal proceedingsReuters Group is a party to certain legal
      proceedings including the following: The Island ECN,
        Inc. v. B-Trade Services LLC.On
        20 September 2002, Island ECN commenced an arbitration proceeding against
        respondents Archipelago L.L.C. (Archipelago); B-Trade Services LLC (B-Trade);
        and REDIBook ECN L.L.C. (REDIBook) before the NASD. Island alleged that
        each respondent entered into a subscriber agreement with Island which
        prescribed certain fees and, despite Islands demand that each respondent
        abide by the terms of its contract, each respondent refused to pay such
        fees. Island sought total damages in the amount of approximately US$11.1
        million, of which approximately US$1.9 million was due from B-Trade,
        US$5.2 million from Archipelago and US$4 million from REDIBook. The claim against B-Trade was severed
        from those claims against Archipelago and REDIBook, and was tried to
        conclusion. (By agreement of the parties, the claims against Archipelago
        and REDIBook were stayed for most of calendar year 2003, and were subsequently
        consolidated with Archipelago Securities L.L.C. v. Instinet Group Incorporated
        described




below.) B-Trade denied Islands
        claims, asserted affirmative defences and counterclaimed against Island
        for US$2.75 million. On 21 October 2003, the parties were notified that
        Islands motion for summary judgement had been granted by the panel
        in the matter. As part of that decision, the arbitration panel (i) sustained
        Islands claims against B-Trade in their entirety and awarded Island
        US$1,979,385 (inclusive of interest) and costs, and (ii) dismissed B-Trades
        defences and counter claims against Island. B-Trade has satisfied the
        arbitration award. The Island ECN Inc.
        v. Archipelago L.L.C. and REDIBook ECN L.L.C;Archipelago Securities
      L.L.C. v. Instinet Group Incorporated.As
      noted above, Island ECN commenced an arbitration against Archipelago and
      REDIBook before the NASD seeking US$5.2 million and US$4 million, respectively,
      in unpaid transaction fees allegedly incurred by the respondent in 2002.
      Archipelago and REDIBook have answered and counterclaimed against Island
      by denying the substantive allegations of Islands statement of claim,
      asserting certain affirmative defences and counterclaims against Island,
      alleging that Island engaged in unfair, discriminatory pricing practices
      against these respondents and asserting claims involving breach of contract,
      breach of obligations of good faith, and attempted monopolisation and conspiracy
      to restrain trade under the Sherman Act. The counterclaims allege damages
      of no less than US$30 million before trebling, for a total of no less than
      US$90 million treble damages pursuant to the federal antitrust laws. Archipelago
      is also seeking attorneys fees. Additionally, on 19 February 2003,
        Archipelago commenced a separate action against Instinet Group before
        the NASD, in which it alleged that Instinet Group also engaged in unfair,
        discriminatory pricing practices against it and asserted claims involving
        breach of contract, breach of obligation of good faith, and attempted
        monopolisation and conspiracy to restrain trade under the Sherman Act.
        Archipelago seeks no less than US$41 million before trebling for a total
        of no less than US$123 million trebled damages. Instinet Group has answered
        and intends to defend the proceeding vigorously. These two actions have been consolidated
        by agreement of the parties and are in the discovery phase. NexTrade Holdings,
        Inc. v. ProTrader Group, LP, ProTrader Securities Corp., ProTrader Technologies
        LP, ProTrader Trading LLC, ProTrader Services LP and ProTrader.com LP.On 4 February 2003, NexTrade Holdings, Inc. commenced an action
        in the United States District Court, Middle District of Florida, Tampa
        Division, against certain subsidiaries of Instinet Groups ProTrader
        business. The complaint alleges that these subsidiaries adopted and used
        the mark ProTrader in violation of §32(1) of the Lanham
        Act. The complaint further alleges that these subsidiaries use
        of the ProTrader mark is likely to cause confusion, mistake or deception
        among purchasers of software, services and goods bearing the name ProTrader,
        which allegedly constitutes false designation of origin and unfair competition
        in violation of §43(a) of the Lanham Act. The complaint also alleges
        that these subsidiaries use constitutes trademark infringement
        in violation of Florida state statutes and its common law, and unfair
        competition based on trademark infringement in violation of the common
        law of Florida. Finally, the complaint alleges fraud in the inducement
        based on defendants alleged deceitful negotiations to resolve the
        dispute. Plaintiff seeks to recover all of these subsidiaries profits,
        gains and advantages resulting from the unauthorised use of the ProTrader mark,
        damages sustained by the plaintiff of no less than US$15 million before
        trebling and that such damages be trebled, and exemplary and punitive
        damages of not less than US$90 million. Defendants have answered the
        complaint by denying the substantive allegations, asserting certain affirmative
        defences and by counterclaiming against NexTrade, seeking a cancellation
        of the Pro-Trade trademark on the ground that it is descriptive
        and plaintiff committed fraud on the Patent and Trademark Office during
        the prosecution of its application. While any litigation contains an
        element of uncertainty, it is the opinion of management after consultation
        with counsel that the outcome of these and all other proceedings are
        unlikely to have a material adverse effect on the business, financial
        condition or operating results of the Group.




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        20-F 2003 | 
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Directors report

The directors submit their annual report
      and audited financial statements for the year ended 31 December 2003. ActivitiesThe Groups business is described
      on page 6. A detailed review of activities during 2003 and likely future
      developments is given on pages 6-10 and 27-39. Details of the Groups
      research and development activity and expenditure are given on page 45. Share capital
          and dividendsDetails of the changes in the authorised
      and called-up share capital are set out in notes 26 and 27 to the consolidated
      balance sheet on pages 66-67. Details of significant shareholdings are
      given on page 80. An interim dividend of 3.85 pence
        per ordinary share was paid on3
        September 2003. The directors recommend a final dividend of 6.15 pence
        per ordinary share, giving a total of 10.0 pence per ordinary share for
        the year (2002: 10.0 pence). Subject to shareholders approval at
        the annual general meeting to be held on 22 April 2004, the final dividend
        will be paid on 29 April 2004 to members on the register at the close
        of business on 12 March 2004. EmployeesThe total number of employees at
      31 December 2003 was 16,744 (including 1,223 employees at Instinet Group)
      (31 December 2002: 17,414). Details of average number of employees by segment
      are given on page 48. It is Reuters Group 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. Reuters equal opportunities policy
        is designed to ensure that disabled people are given the same consideration
        as others and enjoy the same training, development and prospects as other
        employees. In the UK, as well as being a member of the Employers Forum
        for Disability, Reuters has made use of the services of both AbilityNet
        (which supplies technology for disabled users) and Employment Opportunities
        (which is a charity helping people with disabilities find and retain
        work). Reuters Group has successfully retained staff who have become
        disabled as well as integrated staff who are disabled when they join.
        This has been possible by using innovative technological solutions and
        re-designing the way that jobs are handled, enabling individuals to contribute
        actively to business needs. Reuters Group makes extensive use
        of its intranet as a communication tool to provide employees with the
        information they need to understand and achieve the Groups business
        objectives, and to enable employees to achieve a common awareness of
        the financial and economic factors affecting the performance of the Group.
        Meetings are regularly held between management and employees union
        representatives so that the views of employees can be taken into account
        in making decisions which may affect their interests. Reuters European
        Employee Forum operates as a pan-European works council. The Chief Executive
        or other executive directors meet with the Forum regularly. Regular employee
        surveys are undertaken to evaluate morale and to identify any employee
        issues that need to be addressed. The results are communicated to employees.
        Reuters Group employees involvement in the Groups performance
        is encouraged through share plans, details of which are set out on pages
        18-19. The Board values the courage and
        professionalism shown by employees operating in zones of conflict. Reuters
        has reviewed the adequacy of its policies, training and procedures for
        employees generally and for those working in dangerous places in particular.
        Reuters has reaffirmed the standing instructions to employees to avoid
        risks wherever possible and for hostile environment training and protective
        equipment to be provided to all employees who may need them. Charitable contributionsIn 2003, Reuters continued to support
      community initiatives and charitable causes, mainly through the work of
      the Reuters Foundation charitable trust. A report on the activities of
      the Foundation and the Groups wider corporate social responsibility
      programme can be found in the 2003 annual review or on the Reuters website
      www.reuters.com/csr. The total cash donated by Reuters in the year amounted
      to £2.5 million (2002: £4.7 million). In addition




to these cash contributions, employees
        are encouraged to give their time and skills to a variety of causes and
        Reuters provides equipment and information services free of charge. No political contributions were
        made by the Group. Creditor payment
          termsIt is the Groups normal procedure
      to agree terms of transactions, including payment terms, with suppliers
      in advance. Payment terms vary, reflecting local practice throughout the
      world. In the UK, Reuters has signed up to the Better Payment Practice
      Code and will continue to participate in it during 2004. The full text
      of the Code is available at www.payontime.co.uk/bppc. It is Group policy
      that payment is made on time, provided suppliers perform in accordance
      with the agreed terms. Group trade creditors at 31 December 2003 were equivalent
      to 18 days purchases during the year (2002:18 days). Authority for
          company to purchase own sharesAt the annual general meeting held
      on 17 April 2003, members renewed the companys authority under section
      166 of the Companies Act 1985 to make purchases of up to 143,252,325 ordinary
      shares at a price of not more than 5% above their average middle market
      quotation in the London Stock Exchange Daily Official List for the five
      business days prior to the date of purchase, nor less than 25 pence each.
      The company did not repurchase any of its own shares during 2003. Post balance
          sheet eventsDetails of post balance sheet events
      are given on page 70. DirectorsThe names and biographical details
      of current directors are given on pages 12-13. Philip Green stepped down from the
        Board in June 2003. On 17 February 2003, Devin Wenig was appointed as
        an executive director. On 3 March 2004, it was announced that Niall FitzGerald
        would become Chairman with effect from 1 October 2004, on which date
        Sir Christopher Hogg would retire from the Board. It was also announced
        on 3 March 2004 that Sir John Craven would retire from the Board at the
        2004 annual general meeting and not stand for re-election. On the retirement
        of Sir John Craven, Richard Olver will become the senior independent
        non-executive director. Sir Christopher Hogg, Tom Glocer, David Grigson
        and Ian Strachan retire by rotation and are proposed for re-election
        as directors at the forthcoming annual general meeting. In accordance
        with the recommendations contained in the new Combined Code, Charles
        Sinclair, having served more than nine years as a director of the company,
        is submitting himself for re-election at the 2004 annual general meeting.
        Charles Sinclair has stated his intention to stand down from the Board
        at the 2005 annual general meeting. As non-executive directors, Sir Christopher
        Hogg, Charles Sinclair and Ian Strachan do not have service contracts
        but have letters of appointment (please refer to the Remuneration report
        on page 17). Details of directors interests
        in the companys shares, the remuneration of the non-executive directors
        and information on the service contracts and remuneration of the executive
        directors are set out on pages 17-24. A non-executive director is not
        required to hold ordinary shares in order to qualify as a director.  Rosemary Martin General Counsel and Company Secretary
    3 March 2004




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        Report and Form 20-F 2003 | 11
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Directors and senior managers

The directors and senior managers of Reuters
    at 3 March 2004 are:

|                        |                         |                                          |  |                     | 
|----------------------- | ----------------------- | ---------------------------------------- |  | ------------------- | 
|Name                    |                         | Position                                 |  | Position held since | 
|                        |                         |                                          |  |                     | 
|Directors               |                         |                                          |  |                     | 
|Sir Christopher Hogg    |                         | Chairman; Director1                      |  | 1985; 1984          | 
|Thomas Glocer           |                         | Chief Executive; Director                |  | 2001; 2000          | 
|David Grigson           |                         | Finance Director; Director               |  | 2000                | 
|Devin Wenig             |                         | President of Customer Segments; Director |  | 2003                | 
|Sir John Craven         |                         | Director1                                |  | 1997                | 
|Niall FitzGerald, KBE   |                         | Director1                                |  | 2003                | 
|Edward Kozel            |                         | Director1                                |  | 2000                | 
|Roberto Mendoza         |                         | Director1                                |  | 1998                | 
|Richard Olver           |                         | Director1                                |  | 1997                | 
|Charles Sinclair        |                         | Director1                                |  | 1994                | 
|Ian Strachan            |                         | Director1                                |  | 2000                | 
|                        |                         |                                          |  |                     | 
|Senior Managers         |                         |                                          |  |                     | 
|Graham Albutt           |                         | President  Business Programmes          |  | 2003                | 
|Christopher Hagman      |                         | Managing Director  Global Channels      |  | 2003                | 
|Alexander Hungate       |                         | Chief Marketing Officer                  |  | 2001                | 
|Geert Linnebank         |                         | Editor-in-Chief                          |  | 2000                | 
|Rosemary Martin         |                         | General Counsel and Company Secretary    |  | 2003; 1999          | 
|Michael Sayers          |                         | Global Head of Operations & Technology   |  | 2003                | 
|Susan Taylor-Martin     |                         | Global Head of Reuters Strategy          |  | 2004                | 
|David Ure               |                         | Strategic Adviser to the Board           |  |                     | 
|                        |                         | and non-executive Chairman of Radianz    |  | 2000                | 
|Christian Verougstraete |                         | Group Human Resources Director           |  | 2003                | 
|Simon Walker            |                         | Director of Corporate Communications     |  | 2003                | 
|                        |                         |                                          |  |                     | 
|1                       | Non-executive director. |                                          |  |                     | 

Philip Green, who was an executive director,
    stepped down from the Board and left Reuters in June 2003. Stephen Mitchell,
    who was General Counsel and Head of Risk, left Reuters in August 2003.

In accordance with the companys
      articles of association at each annual general meeting there shall be proposed
      for re-election the greater of one third of the directors (or, if the number
      of directors is not a multiple of three, the number nearest to but not
      greater than one third) and the number of directors required to retire
      pursuant to the following criteria: (i) due to retire at the meeting by
      reason of age; (ii) wishes to retire and not offer himself for re-election;
      or (iii) shall not have retired from office by rotation in the period of
      three years ending on the date of the meeting.

If there are no changes to the current
      board composition, the directors to stand for re-election at the annual
      general meeting in 2005 will be selected from: Edward Kozel, Roberto Mendoza,
      Richard Olver, Niall FitzGerald and Devin Wenig.



DirectorsSir Christopher
    Hogg.Chairman of the Board
    and Nominations Committee. Non-executive Chairman of GlaxoSmithKline plc
    since May 2002 (non-executive director since 1993) and a non-executive director
    of Air Liquide SA since May 2000. Non-executive Chairman of the Royal National
    Theatre since 1995. Former member of the International Council of JP Morgan
    from 1988 to 2003. Former Chairman of Courtaulds PLC from 1980 to 1996 (chief
    executive 1979-1991) and of Allied Domecq PLC (1996-2002). Former non-executive
    director of the Bank of England (1992-1996). Age 67. Tom Glocer.Chief
      Executive. Former Chief Executive of Reuters Information (2000) and President & Senior
      Company Officer, Reuters America (1998-2000). Appointed Chief Executive
      Officer, Reuters Latin America in 1997 after serving in Reuters legal department
      from 1993. Formerly practiced law in New York, Paris and Tokyo. Non-executive
      director of Instinet Group. Member of the International Advisory Panel
      to the Monetary Authority of Singapore, the Whitney Museum, The Madison
      Council of the Library of Congress and of the Leadership Champions Group
      (Education) of Business in the Community. Age 44. David Grigson.Finance
      Director. Joined Reuters Group in August 2000 from Emap plc where he was
      Group Finance Director and Chairman of Emap Digital. He is a qualified
      chartered accountant and a member of the Financial Services Authority Practitioners
      Panel. Formerly held senior finance roles in the UK and US at Saatchi and
      Saatchi Plc (1984-1989). Held a number of financial positions at Esso UK
      from 1980 to 1984. Also a non-executive director of Instinet Group. Age
      49.




Devin Wenig.Executive
      Director since February 2003. Executive Director and President of Customer
      Segments. President  Investment Banking (2001-2003). Joined Reuters
      Group in 1993 as Corporate Counsel, Reuters America and held a number of
      senior management positions before being appointed President, Reuters Information
      in January 2001. Also a non-executive director of Instinet Group and Nastech
      Pharmaceutical Company. Age 37. Sir John Craven.Senior
      independent non-executive director and member of the Audit Committee. Non-executive
      Chairman of Lonmin Plc since 1997. Non-executive Chairman of Fleming Family & Partners.
      Former member of the Board of Managing Directors of Deutsche Bank AG and
      former Executive Chairman of Morgan Grenfell Group plc (1989-1997). Former
      non-executive director of Gleacher & Co LLC, Rothmans International
      BV, Ducati SpA and Société Générale de Surveillance
      SA. He is a member of the Canadian and Ontario Institute of Chartered Accountants.
      Age 63. Niall FitzGerald,
        KBE.Non-executive director;
        member of the Nominations Committee. Chairman and Chief Executive Officer
        of Unilever PLC since 1996. It has been announced that Niall will be
        retiring from Unilever on 30 September 2004. Niall held a number of posts
        including Finance Director during 30 years with Unilever. He is also
        President of the Advertising Association, a member of the World Economic
        Forums Foundation Board, Co-Chairman of The TransAtlantic Business
        Dialogue, Chairman of The Conference Board, Inc. and a fellow of the
        Association of Corporate Treasurers. Former non-executive director of
        Merck, Ericsson, Bank of Ireland and Prudential plc. Age 58.


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        20-F 2003 | 
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Edward Kozel.Non-executive
      director; member of the Remuneration Committee. Managing Director of Integrated
      Finance Limited an investment bank based in New York and Director of Open
      Range Ventures LLC, of Yahoo! and Narus Inc. Formerly, a non-executive
      director of Cisco Systems Inc. (2000-2001), where he worked from 1989-2000
      in a number of roles, including Chief Technology Officer and Senior Vice
      President for business development. Also a former non-executive director
      of TSI (2000-2001). Prior to 1989 he worked with SRI International in California.
      Age 48. Roberto Mendoza.Non-executive
      director; member of the Remuneration Committee. Chairman of Egg plc and
      Non-executive Director of Prudential plc, Vitro SA and The BOC Group PLC.
      Director of Integrated Finance Limited. Formerly Vice-Chairman and Director
      of JP Morgan & Co Inc. (1990-2000) and Managing Director of Goldman
      Sachs & Co (2000). Joined JP Morgan in 1967 with successive assignments
      in London and New York. Age 58. Richard (Dick) Olver.Non-executive
      director; Chairman of the Audit Committee and a member of the Nominations
      Committee. Deputy Group Chief Executive of BP p.l.c. since January 2003.
      Chief Executive Officer
      of BP
      Exploration & Production
      Division (1998-2002). A member of the Institute of Civil Engineers, he
      has worked for BP since 1973. A governor of New Hall School. Age 57. Charles Sinclair.Non-executive
      director; Chairman of the Remuneration Committee. Group Chief Executive
      of Daily Mail and General Trust plc since 1988. Joined Associated Newspapers
      in 1975 and held a number of roles prior to its merger into the Daily Mail
      Group in 1988. Non-executive director of Euromoney Institutional Investor
      PLC and Schroders plc. Fellow of the Institute of Chartered Accountants.
      Age 55. Ian Strachan.Non-executive
      director; member of the Audit Committee. Non-executive Chairman of Instinet
      Group since 1 January 2003 (non-executive director since May 2001). Non-executive
      director of Transocean Inc., Johnson Matthey plc, Xstrata plc and Rolls-Royce
      Group Plc. Former Non-executive Director of Harsco Corporation, Deputy
      Chairman of Invensys plc (1999-2000) and Chief Executive Officer of BTR
      plc (1996-1999). Former Deputy Chief Executive officer (1991-1995) and
      Chief Financial Officer (1987-1991) of Rio Tinto plc. Also a former Non-executive
      Director of Commercial Union plc (1991-1995). Age 60. Senior ManagersGraham
    Albutt.President  Business
    Programmes. Graham joined Reuters Group in London in 1987. Held various posts
    in central and operational business functions and in May 2001, was additionally
    appointed as Business Integration Executive, developing the structure and
    business model for the integration of the recently acquired Bridge assets.
    Non-executive Director of Datamonitor plc. Age 50. Christopher Hagman.Managing
      Director  Global Channels. Christopher joined Reuters Group in 1987
      based in Sweden and has held various senior sales and general business
      management positions in Sweden, the Netherlands and the UK before being
      appointed to his current post in April 2001. Age 45. Alexander Hungate.Chief
      Marketing Officer. In 1993, Alex joined Reuters Group in London as a business
      development executive. From 1996 to 1998, he was Executive Vice President
      of Reuters Marketing before being appointed Chief Operating Officer, Reuters
      America in 1999 and Chief Executive Officer, Reuters America in 2000. Alex
      is also chairman of Factiva and a trustee of Reuters Foundation. Before
      joining Reuters, Alex worked at Booz Allen & Hamilton as a strategy
      consultant. Non-executive director of British America Business Inc. Age
      37.




Geert Linnebank.Editor-in-Chief.
      Geert became Editor-in-Chief in 2000 having held various editorial management
      roles. In 2003, he also assumed responsibility for Reuters data collection,
      production and acquisition activities. Geert is a trustee of Reuters Foundation
      and a non-executive director of Factiva. Before he joined Reuters in 1983,
      Geert was a correspondent for AP-Dow Jones in Brussels, reporting on Belgium
      and the European Community. Age 47. Rosemary Martin.General
      Counsel and Company Secretary. Rosemary joined Reuters Group in 1997 as
      deputy company secretary and became Company Secretary in 1999. Appointed
      General Counsel in 2003. Rosemary has been the Director of Reuters Foundation
      since 2002. Former partner at Mayer, Brown, Rowe & Maw for eight years.
      Member of Financial Services Authority Listing Authority Advisory Committee
      and a Fellow of the Royal Society for the encouragement of Arts, Manufactures & Commerce.
      Age 43. Michael Sayers.Global
      Head of Operations & Technology. Michael joined Reuters Group in 1977
      and has held a number of positions in both information technology and product
      management including Chief Technology Officer from 1998 until 2003. In
      2003, he was appointed Global Head of Operations and Technology. Age 50. Susan Taylor-Martin.Global
      Head of Corporate Strategy. Susan joined Reuters Group in 1993 in business
      development. She has held management positions in UK marketing, global
      product management and corporate strategy. Susan was appointed to her current
      role on 1 January 2004. Before joining Reuters, Susan worked in corporate
      finance for Smith Barney, Harris Upham & Co. Age 40. David Ure.Strategic
      Adviser to the Board and non-executive Chairman of Radianz. Former executive
      director of Reuters (1989-2000) responsible for group technical strategy
      and Reuters Trading Solutions Division. From 1992 to 1998, he was responsible
      for group marketing and technical policy. Prior to that he headed Reuters
      operations in Europe, Middle East & Africa. Joined Reuters in 1968
      as a trainee journalist. David chairs the Board of Trustees of Reuters
      Foundation. David ceased to be a full-time employee of Reuters on 31 December
      2003 but remains as an employee on a part-time basis. Age 56. Christian Verougstraete.Group
      Human Resources Director. Christian joined Reuters Group in 2003. He has
      executive responsibility for human resources strategy and operations throughout
      Reuters. Prior to joining Reuters, Christian was Executive Vice President
      for Human Resources at S.A.Interbrew.
      Age 53. Simon Walker.Director
      of Corporate Communications. Simon joined Reuters Group in 2003. Prior
      to joining Reuters, Simon was Communications Secretary at Buckingham Palace
      and Director of Communications at British Airways Plc. Age 50.




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        Report and Form 20-F 2003 | 13
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Corporate governance



Reuters Group PLC is committed to high standards
      of corporate governance. The Board monitors and responds to developments
      in governance best practice, particularly in the UK and US, where most
      of the companys shareholders are located. During 2003, Reuters Group
      PLC complied with the Combined Code issued in 1998 save that Tom Glocer
      had a service contract which was terminable by the company on, in effect,
      up to two years notice. The terms of this contract have been varied
      so that, with effect from 1 January 2004, Tom Glocers service contract
      is terminable by the company on, in effect, one years notice. In
      light of developments in corporate governance regulation during 2003, Reuters
      Group PLC made certain alterations to its governance arrangements, as described
      below. Since 1 January 2004, Reuters Group PLC has complied with the Combined
      Code published in July 2003 (the new Combined Code) save that no individual
      member of the Audit Committee has been identified by the Board as having recent
      and relevant financial experience. However, in common with all the
      non-executive directors, the members of the Audit Committee are all experienced
      and influential individuals, having the skills described in their biographies
      in Directors above and the Board considers that, collectively,
      the members have the attributes required to discharge properly the committees
      responsibilities. Reuters Group PLC also complies with all
      SEC and (with the exception of two waivers described below) Nasdaq governance
      requirements, including some as to which compliance is not actually required
      until 31 July 2005 due to the companys status as a foreign
      private issuer. These include requirements to have a majority of
      independent directors, and to have audit, remuneration and nominations
      committees comprised entirely of independent directors. The company has
      received waivers from Nasdaq from two provisions of its governance rules,
      in both cases on the basis that compliance with the rules would be contrary
      to standard UK business practice. For approximately 15 years, the company
      has operated under a waiver of Nasdaqs requirement that all shareholder
      meetings require a quorum of at least one-third of outstanding voting shares;
      instead, the companys articles of association provide, as is typical
      for English public companies, that a quorum shall consist of any two shareholders.
      The company has also received a waiver from Nasdaqs recently revised
      provisions requiring shareholder approval of employee share-based incentive
      schemes. The company does seek and has received shareholder approval of
      its employee share-based incentive schemes to the extent required by UK
      regulation, including the UKLA Listing Rules. The Board As at 3 March 2004, Reuters Group PLCs
      Board consisted of its Chairman, three executive directors and seven non-executive
      directors. The Chairmans significant commitments, other than Reuters,
      are the chairmanship of GlaxoSmithKline plc and the Royal National Theatre
      and being an independent director of Air Liquide SA. It has been announced
      that Niall FitzGerald will become Chairman on 1 October 2004. When he becomes
      Chairman his most significant commitments, other than Reuters, will be
      being a member of the World Economic Forums Foundation Board, Co-chairman
      of the TransAtlantic Business Dialogue and Chairman of The Conference Board.
      Sir John Craven was the senior independent non-executive director throughout
      2003. He will hand over this role, when he retires from the Board at the
      2004 annual general meeting, to Richard Olver. The senior independent non-executive
      director is available to shareholders if they have concerns. No shareholder
      contacted Sir John Craven during 2003. The Board is responsible for the success
      of the company within a framework of controls which enables risk to be
      assessed and managed. It sets the companys strategic aims, ensures
      the necessary resources are in place to achieve these aims and monitors
      performance. The articles of association require the directors to pay due
      regard to the Reuters Trust Principles which are designed to protect Reuters
      Groups integrity and independence and represent the core values at
      the heart of Reuters Groups business. These Principles, which are
      described more fully on page 84, are included in the companys code
      of conduct to which all employees are required to adhere. The Board, through
      its Audit Committee, satisfies itself on the integrity of financial information
      and that the financial, operational and compliance controls and systems
      of risk management are robust. Through its Remuneration Committee, the
      Board determines appropriate levels of remuneration of executive directors.
      The Nominations Committee is the forum through which the Board discharges
      its role in nominating new directors and succession planning. These committees
      are described in more detail below.




The quality of the individual directors,
      the balance of the Boards composition and the dynamics of the Board
      as a group, serve to ensure both the Boards effectiveness and the
      inability of an individual or small group to dominate the Boards
      decision making. The Board has determined that each of the non-executive
      directors is independent in character and judgment by reason of his personal
      qualities, and that each of the non-executive directors is independent as
      that term is defined in Nasdaq and SEC governance requirements. The articles of association provide that
      at each annual general meeting any director appointed since the last annual
      general meeting shall stand for election by the shareholders and one third
      of the directors shall retire from office by rotation and be eligible for
      re-election by the shareholders. Executive directors have service contracts
      (see the Remuneration Report for further information) and the non-executive
      directors receive a letter setting out the terms of their appointment and
      specifying that the appointment is for a term of six years subject to review
      after three years. Sir Christopher Hogg, Richard Olver and Charles Sinclair
      have continued to hold office beyond the initial six year term by agreement
      with the Board. Copies of the non-executive directors letters of
      appointment are available from the Company Secretary on request. When they join the Board, non-executive
      directors receive a series of briefings about Reuters and are supplied
      with Reuters products. Site visits are arranged from time to time to enable
      the non-executive directors to see first hand the operations of the business.
      During 2003, the Board as a group visited Reuters operations in New York
      and St. Louis County, US. In addition, individual directors visited other
      operations of the Group. Training for directors is available as appropriate.
      The companys legal advisers and auditors provide briefings from time
      to time to the directors and a training programme is run for directors
      of subsidiaries. Monthly financial information is provided
      to the directors. Regular and ad hoc reports and presentations are prepared
      and circulated to the directors in advance of Board meetings, together
      with minutes and papers relating to the Boards committees, to ensure
      the directors are supplied, in a timely fashion, with the information they
      need. They also have access to the Company Secretary who is responsible
      for advising the Board through the Chairman on all governance matters.
      The Company Secretary is appointed by, and can only be removed by, the
      Board. The directors may take independent professional advice at the companys
      expense, although no such advice was sought during 2003. A schedule of matters reserved for the Boards
      decision identifies those matters that the Board does not delegate. It
      includes the approval of annual and interim results, corporate objectives,
      strategy and the annual budget, significant transactions and matters relating
      to share capital. The Board met eight times in 2003 and, in
      addition, held a strategy review meeting in June. The directors attended
      all the Board meetings in 2003 save that, by prior arrangement, Niall FitzGerald
      was absent from three meetings and Sir John Craven, Edward Kozel and Richard
      Olver were each absent from one meeting. The Chairman and the non-executive
      directors met without the executive directors being present once in 2003. There is a clear division of responsibilities
      between the running of the Board, which is the Chairmans responsibility,
      and the running of the companys business, which is the Chief Executives
      responsibility with the Board having oversight. The division of responsibilities
      is set out in a document approved by the Board. Each year the Chairman meets with the non-executive
      directors without the executive directors present and Sir John Craven conducts
      a chairmanship review meeting, attended by the directors other than Sir
      Christopher Hogg, at which the Chairmans remuneration and performance
      are reviewed. Each year the Chairman and the non-executive directors review
      the Chief Executives performance and the Chief Executive reviews
      the performance of the other executive directors. During 2003, a review
      of the Boards effectiveness was undertaken, led by the Chairman.
      The chairmen of the Audit and Remuneration Committees also undertook evaluations
      of the performance of their respective committees. In each review, the
      chairman of the Board or the committee circulated a questionnaire to the
      members of the Board or committee and discussed with each member his responses.
      In the case of the review of the Audit Committee, input to the review was
      also provided by the independent auditors and the Head of Internal Audit.




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        20-F 2003 | 
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The responses were collated into a document
      for each of the reviews and these documents were circulated to, and discussed
      by, the Board. Account will be taken of the results in the way the Board
      and committees are managed henceforth. The Board delegates specific responsibilities
      to certain committees. Each committee has its own terms of reference set
      by the Board. These are available on request from the Company Secretary
      or at www.about.reuters.com. The Audit Committee The Audit Committee reviews and, as appropriate,
      actively engages in the processes for financial reporting, internal control,
      risk assessment, audit and compliance assurance, the independence of the
      companys internal and external auditors and the effectiveness of
      the companys system of accounting, its internal financial controls
      and the internal and external audit functions. The committee comprises
      Richard Olver (Chairman), Sir John Craven and Ian Strachan, all of whom
      are considered by the Board to be independent including under the SEC and
      Nasdaq definitions. Sir Christopher
      Hogg resigned from the committee in July so that the committees composition
      would comply with the Smith Guidance contained in the new Combined Code.
      The Audit Committee does not include a member who is a financial
      expert, as defined in the United States Sarbanes-Oxley Act
      of 2002 and related SEC rules because the Board considers that none of
      the members clearly meets all the criteria set out in the relevant definitions
      nor has the Board identified a member of the Audit Committee as having
      recent and relevant financial experience. However, the Board considers
      that the members have the financial experience and qualifications required
      under Nasdaq governance rules and that collectively the members have the
      requisite skills and attributes to enable the Audit Committee properly
      to discharge its responsibilities. The Company Secretary is secretary to
      the committee. The Audit Committees remit, which
      is set out in its terms of reference, includes responsibility for: 
      the oversight responsibilities described
          in the above paragraph;
      reviewing compliance with laws, regulations,
          the companys code of conduct and policies;
      approving related party transactions;
      monitoring the integrity of the companys
          financial statements and any announcements relating to the companys
          financial performance and reviewing significant financial reporting
          judgements contained in them;
      monitoring and reviewing the effectiveness
          of the companys internal audit function;
      making recommendations to the Board,
          for it to put to the shareholders for their approval, regarding the
          appointment, re-appointment and removal of the external auditor and
          approving the remuneration and terms of engagement of the external
          auditors;
      monitoring and reviewing the external
          auditors independence and the effectiveness of the audit process;
      developing and implementing policy on
          the engagement of the external auditor to supply non-audit services;
          and
      overseeing the receipt, review and treatment
          of complaints received regarding accounting, internal accounting controls,
          auditing and compliance matters, whether through the companys whistleblower confidential
          helpline or otherwise The committee met four times in 2003 with
      the Chief Executive, the Finance Director, other officers and the auditors
      attending as required. The auditors have unrestricted access to the Audit
      Committee and, in accordance with usual practice, met twice during the
      year privately with the committee, as did the Head of Internal Audit. All
      members of the Audit Committee attended every committee meeting during
      the year.




The committee reports its activities and
      makes recommendations to the Board. During 2003 the committee discharged
      the responsibilities described above. Its activities included: 
      formally reviewing the draft annual
          report and interim statement respectively and associated announcements,
          focusing on the main areas of judgement and critical accounting policies;
      reviewing the findings of the external
          auditors and the report of the Head of Internal Audit on internal audit
          activities;
      reviewing the effectiveness of internal
          control systems, the risk management process and the compliance programme
          (including the whistleblower programme). To assist it in
          its work, the Committee received presentations from the Head of Global
          Finance, the Head of Internal Audit and the Head of Compliance and
          reviewed risk radars prepared by the business;
      receiving the report of the Chief Executive
          and the Finance Director on the processes followed prior to certification
          being given by them in accordance with the Sarbanes-Oxley Act;
      reviewing the external audit strategy
          and the external auditors report to the committee in respect
          of the annual report and interim statement;
      keeping under review the proportion
          of non-audit fees to audit fees paid to the auditors;
      giving pre-approval to non-audit work
          undertaken by the auditors ;
      reviewing the effectiveness of the auditors;
      determining that an audit tender process
          would be undertaken for the year ending 31 December 2005; and
      reviewing a report on the companys
          corporate social responsibility activities. The committee adopted a code of ethics for
      the companys Chief Executive and senior financial officers in April
      2003, in addition to the companys general code of conduct which applies
      to all Reuters directors, officers and employees. No amendments to, or
      waivers in respect of, either code were made during 2003. Copies of the
      codes are available on request from the Company Secretary and can be viewed
      at www.about.reuters.com. In addition, Instinet Group has adopted a code
      of conduct which applies to its directors, officers and employees and can
      be viewed at www.instinetgroup.com. In view of regulatory developments, in April
      2003 the committee adopted a revised Auditor Independence policy. The policy
      applies to the Groups primary auditors and any other firm serving
      as an auditor to any entities in the Group (other than Instinet Group,
      as explained below). The policy requires all audit engagements to be approved
      by one or more members of, and reported to, the committee. It prohibits
      Group entities from engaging the auditors in activities prohibited by the
      SEC. The policy permits the auditors to be engaged for other services provided
      the engagement is specifically approved in advance by the committee or
      meets the detailed criteria of specific pre-approved activities and is
      notified to the committee. Any services where the expected level of fees
      is greater than £150,000 or the expected term is longer than one
      year, even if otherwise satisfying the detailed criteria, must be approved
      in advance by the committee. The exception to this is Instinet Group, which
      uses the same auditors as Reuters and, as a US publicly traded company
      is separately subject to the auditor independence requirements; the Instinet
      Group audit committee therefore oversees the use by Instinet Group of the
      independent auditors, under a policy which generally requires that all
      such engagements must be specifically approved in advance by the Instinet
      Group audit committee (which includes Ian Strachan, who is also a member
      of the Reuters Audit Committee). For details regarding fees paid to the Groups
      auditors, see note 2 on the consolidated profit and loss account on page
      46. The committee may engage, at the companys
      expense, independent counsel and other advisors as it deems necessary to
      carry out its duties. None was engaged during the year.




| | Reuters Group PLC Annual
        Report and Form 20-F 2003 | 15
| | ---------------------------------------------------------- | --

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Corporate governancecontinued



The Remuneration Committeehas
      oversight of executive remuneration policy. Information concerning the
      Remuneration Committee is set out in the Remuneration Report on page 17. The Nominations
          Committeemakes recommendations
          to the Board about future appointments of non-executive directors,
          the Chairman and the Chief Executive and considers recommendations
          from the Chief Executive to the Board about the future appointment
          of executive directors. Henceforth, the committee will give due consideration
          to the new Combined Codes provisions relating to directors when
          making future appointments to the Board. During the year, following a review
        by the Board, new terms of reference for the committee were adopted.
        These are available from the Company Secretary on request and can be
        viewed at www.about.reuters.com. The new terms clarify that the committees
        remit includes: 
      leading the process for
          all nominations for appointment, re-appointment, promotion, substantial
          changes in duties or responsibilities, dismissal or non re-appointment
          of the Chairman, the Chief Executive and the directors and making recommendations
          to the Board thereon;
      reviewing the structure,
          size and composition of the Board and making recommendations to the
          Board with regard to any changes considered desirable;
      evaluating the skills and
          knowledge required for any nomination in light of the current Board
          composition;
      for the Chairman and the
          non-executive directors, preparing a job specification including details
          of the time commitment required; and
      reviewing succession planning
          of the Board and reviewing the managements succession plan to
          ensure adequacy. In 2003, the composition of the
        committee was changed, from being all the non-executive directors, chaired
        by Sir John Craven, to Sir Christopher Hogg, Richard Olver and Niall
        FitzGerald, chaired by Sir Christopher Hogg. The Board has determined
        that these directors are independent according to the Nasdaq definition.
        The new terms of reference require the committee to meet at least twice
        a year. A director may not attend or be involved in any decision concerning
        him or his successor. The committee has appointed an external adviser
        to assist it in its work in identifying potential candidates for non-executive
        directorships. During 2003, the Nominations Committee
        considered and supported the Chief Executives recommendation that
        Devin Wenig be appointed as an executive director. It also managed the
        chairmanship succession process, identifying candidates and making a
        recommendation to the Board. In March 2004 the process was completed
        when the company announced the appointment of Niall FitzGerald as Chairman
        with effect from 1 October 2004 and agreed the terms of appointment with
        him. Executive CommitteesThe Group Management Committee (GMC),
      which is chaired by the Chief Executive, approves and implements strategy,
      manages the Group and monitors performance. It comprises the three executive
      directors and the senior managers listed on page 12. It meets 22 times
      a year. The Budget and Investment Committee,
        which is chaired by the Finance Director and has 10 senior managers as
        its members, was established during 2003. It allocates the resources
        required to realise Reuters strategy and achieve its objectives. A Disclosure Committee, chaired
        by the Chief Executive was set up in 2002. Its members comprise the Chief
        Executive, the Finance Director, the Director of Corporate Communications,
        the General Counsel and Company Secretary, the Area General Counsel for
        the Americas, the Head of Global Finance, the Head of Internal Audit
        and the Head of External Reporting. The Committee meets quarterly to
        review the Reuters Groups trading statements and financial results
        and to consider the adequacy of the Groups internal controls over
        financial reporting and disclosure controls and procedures.




Relations with
          shareholdersThe executive directors meet regularly
      with institutional shareholders and analysts. Non-executive directors are
      offered the opportunity to attend meetings with major shareholders and
      from time to time some attend the presentations of the annual results to
      analysts. An investor relations department
        is dedicated to facilitating communications between the company and its
        shareholders. A new feature in the investor relations programme introduced
        during the year was teach-ins in which Reuters executives
        gave detailed presentations to investors on certain aspects of the companys
        business. Non-executive directors receive
        a regular report on investor relations as part of the routine board report
        materials. This year the companys brokers carried out a survey
        of investors views and the results of this survey were communicated
        to the Board. Similar surveys are planned at two-year intervals. The companys annual general
        meeting is used as an opportunity to communicate with private investors.
        The chairmen of each of the Board committees are available to answer
        questions at the annual general meeting and all directors are expected
        to attend the annual general meeting. At the annual general meeting,
        the level of proxies lodged on each resolution and the balance for and
        against the resolution and the number of votes withheld are announced
        after the resolution has been voted on by a show of hands. The results
        of voting at the annual general meeting in 2004 will be available on
        Reuters website: www.reuters.com. Directors responsibilities,
          internal controls and financial reportingThe directors responsibilities
    and information on internal controls and financial reporting can be found
    on page 25.




|16 | Reuters
          Group PLC Annual Report and Form 20-F 2003
|-- | ------------------------------------------------------------

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Remuneration report



The report below sets out the Groups
      executive remuneration policy and structure and details of the remuneration
      received by the Groups directors and senior managers in respect of
      the year ended 31 December 2003. Shareholders will be invited to approve
      this report at the annual general meeting on 22 April 2004. 1Consideration
          of remuneration mattersThe Board has overall responsibility
    for determining the framework of executive remuneration and its cost, and
    is required to take account of any recommendations made by the Remuneration
    Committee. The Board has delegated to the Remuneration Committee, through
    formal terms of reference, oversight of the specific remuneration packages
    for the executive directors and consideration of executive remuneration issues
    generally, including the use of equity incentive plans in particular. The Remuneration Committee consists
        solely of non-executive directors. All members of the Remuneration Committee
        have been determined by the Board to be independent as defined by Nasdaq.
        Its current members are Charles Sinclair (Chairman), Edward Kozel and
        Roberto Mendoza. Sir Christopher Hogg stepped down from the Remuneration
        Committee on 17 February 2003. The Company Secretary is secretary to
        the Remuneration Committee. The Remuneration Committee met four times
        in 2003. All members were present at each meeting except that Edward
        Kozel was absent from one meeting. The Chief Executive normally attends
        meetings of the Remuneration Committee, but is not present at any discussion
        concerning his own remuneration. For the year under review, the Remuneration
        Committee was also advised internally by the Group Human Resources Director
        and the Global Head of Performance & Reward. The terms of reference
        permit the Remuneration Committee to obtain its own external advice on
        any matter, at the companys expense, although it did not do so
        in 2003. The Group takes external advice and information from many sources
        in preparing proposals for the Remuneration Committee. Reuters received
        information from Towers Perrin, Mercer HR Consulting and Watson Wyatt
        in relation to remuneration decisions made during 2003. 2Remuneration
          policyExecutive
    directorsThe Remuneration Committee aims to ensure that remuneration and incentive
    arrangements are market-competitive, consistent with best practice and support
    the interests of shareholders. In practical terms, this means that
        the reward structure for directors should attract, motivate and retain
        high-calibre individuals capable of leading the Group successfully. To
        achieve this in a global business environment, the Groups executive
        remuneration must reflect the competitive practices of its principal
        competitors and the other multi national businesses with which it competes
        for talent. The Remuneration Committee believes that market determined
        executive pay, with a heavy emphasis on the variable remuneration elements,
        is the best way to ensure the Group has the high-performing executives
        necessary to achieve its immediate and longer-term strategic objectives.
        It is not the Groups intention to pay more than is necessary for
        this. Consistent with this view, total
        executive remuneration is calibrated to deliver mid-market rewards at
        expected levels of personal and corporate performance. Variable reward
        components will provide an opportunity for much higher levels of remuneration
        where this is supported by exceptional performance, whether on an individual
        level or in relation to the Groups short-term and longer-term business
        priorities. Reuters has made a number of changes
        to executive remuneration over the past few years and an increased proportion
        of executive reward is variable and wholly dependent upon the Groups
        performance. As such, the structure of the individual packages currently
        in place includes a significant proportion of reward that is performance
        related, with basic pay representing well under half of the target earnings
        potential. In 2003, excluding pension entitlements, the targeted composition
        of each executive directors remuneration was as follows:




Proportion
            of fixed versus variable payFixed
      
      
      
      VariableLong-termBase pay
      Bonus
      incentives
      Total%
      %
      %
      %Tom Glocer
      18
      
      22
      
      60
      
      100David Grigson
      32
      
      32
      
      36
      
      100Devin Wenig
      32
      
      32
      
      36
      
      100Philip Green
      Not applicable.
          Please see notes in emoluments table. Variable rewards will continue to be provided
      through a balanced mix of performance-related elements. The annual cash
      bonus plan supports operational objectives over the financial year, while
      the long-term incentive plan will reward superior performance relative
      to the Groups competitors over the medium term and share options
      will support the Groups growth objectives and reward share price
      recovery. The Remuneration Committee also
        believes that, in addition to participating in equity-based incentive
        plans, the executive directors should build and maintain a personal equity
        stake in the company. To this end, a personal shareholding policy is
        operated requiring each executive director to accumulate a personal holding
        worth twice his basic salary within five years. Non-executive
          directorsNon-executive directors are appointed
      for an initial period of six years, subject to review after three years.
      Following the initial six-year period, non-executive directors may be invited
      to continue as a director for a further period, subject always to the requirement
      to stand for re-election by shareholders at least every three years. Non-executive
      directors who serve more than nine years may offer themselves for re-election
      by shareholders annually. Non-executive directors have letters
        of engagement rather than service contracts and are not eligible to participate
        in Reuters executive share plans. Charles Sinclair was invited to join
        the Board in October 1993, Sir John Craven in February 1997, Richard
        Olver in September 1997, Roberto Mendoza in February 1998, Edward Kozel
        in February 2000, Ian Strachan in April 2000 and Niall FitzGerald in
        January 2003. No letter of engagement contains any provision for compensation
        in the event of termination outside of the periods referred to above. The Chairmans remuneration
        is determined by the Board, who in reaching future decisions on appropriate
        levels of pay will continue to have regard to the packages awarded to
        chairmen of other UK listed companies of a similar size and complexity.
        In 2003, the Chairmans remuneration was £262,500 and this
        will be increased to £290,000 per annum for 2004. With effect from 1 October 2004,
        Niall FitzGerald will succeed Sir Christopher Hogg as the Chairman of
        the Group. Niall FitzGerald will be paid an annual fee of £500,000. The Groups shareholders directly
        determine the remuneration paid to the non-executive directors which
        has been set at £35,000 per annum since 2000. It is proposed that
        a new fixed fee of £50,000 per annum be established in respect
        of tenure from 1 January 2004. The Board determines the fees payable
        to each non-executive director who chairs a Board committee. For 2003,
        these were £15,000 per annum, £10,000 per annum and £5,000
        per annum for chairing the Audit, Remuneration and Nominations Committees
        respectively. The Chairman assumed the chairmanship of the Nominations
        Committee on 1 January 2004; he has currently waived the receipt of any
        fees for this chairmanship. Sir John Craven receives an additional £5,000
        per annum for acting as the Senior Independent Director. Remuneration
          structureIt is Reuters general policy to
      construct executive remuneration packages as described below. However,
      in order to ensure the Group is able to recruit and retain the best senior
      executives, the Remuneration Committee believes it needs to maintain the
      freedom to negotiate terms of employment on an individual basis, taking
      account of the circumstances of each case. Where it is necessary, special
      arrangements will also be made to accommodate the needs of, for example,
      international executives who are required to relocate.




|Reuters
          Group PLC Annual Report and Form 20-F 2003 | 17
|------------------------------------------------------------ | --

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Remuneration reportcontinued





Basic
    salary and benefitsIn formulating and reviewing pay packages
  for the executive directors, the Remuneration Committee receives comparator
  group information and assistance from independent remuneration consultants.
  Reuters policy is to maintain a salary structure based upon the mid-market
  of Reuters comparator group of companies. The Remuneration Committee is also
  guided by salary levels among other executives and across the Group as a whole.
  The executive directors indicated that they did not wish to receive a salary
  increase in 2003, and subsequently, for 2004. The Remuneration Committee has
  affirmed this position. Non-cash benefits are provided to executive
      directors and the Chairman in line with normal market practice. All executive
      directors receive company car and private healthcare benefits. Life and
      disability insurance is provided as part of the pension arrangements for
      each executive director and the Chairman. Under the terms of Tom Glocers
      relocation agreement, Reuters provides accommodation in the UK and pays
      home leave expenses for him and his family. Pensions Since April 1999 it has been the Groups
      policy that all new UK employees, including executive directors, are offered
      participation in a defined contribution pension plan. In the case of UK
      executive directors, in lieu of pension provisions above the statutory
      earnings cap (where applicable) an additional taxable allowance is granted.
      In the US, all employees are offered participation in a defined contribution
      (401K) plan. In lieu of a contribution on salary above the tax qualified
      limit, an additional contribution is granted to a Supplementary Employee
      Retirement Plan (SERP). The SERP is unfunded. Annual performance-related
      bonus Bonus arrangements are normally negotiated
      individually and included in each executive directors service contract.
      The Remuneration Committee determines performance targets annually. Bonus
      payments are non-pensionable. In 2003, the executive directors were eligible
      for an annual cash bonus, with a maximum level of 100% of base salary for
      all but Tom Glocer, whose maximum level was 125% of salary. Bonus targets
      were set on a sliding scale and included a mix of financial and strategic
      measures: 60% of the bonus potential was based on performance against financial
      measures; 30% on budgeted Reuters operating profit before restructuring,
      amortisation of goodwill and other intangibles and impairments (Target
      Operating Profit); 15% on budgeted Reuters revenue; and 15% on a cash conversion
      target. The remainder of the bonus potential was divided equally between
      a target to improve the externally measured customer satisfaction index
      and the achievement of the Fast Forward programme transformational targets. In February 2004, the Remuneration Committee
      considered 2003 performance, relative to the specified targets, and awarded
      bonuses of 78.5% to the executive directors of the maximum potential based
      on the achievements during 2003. No payment was made in respect of the
      revenue measure. For 2004, the Remuneration Committee has determined to
      maintain a strong emphasis on financial performance with 60% of the maximum
      bonus potential being measured against Target Operating Profit, budgeted
      revenue and cash conversion targets. In addition, the Remuneration Committee
      has introduced a profit threshold, based on Target Operating Profit below
      which no bonuses will be paid. For the most senior levels of management,
      a proportion of bonus above a target level will be paid in shares, receipt
      of which will be deferred for three years. The Remuneration Committee has also determined
      to maintain focus on achieving Reuters transitional objectives, and to
      this end, the bonus structure will also incorporate measures relating to
      customer satisfaction and delivery against specific product development
      and delivery targets. As Reuters progresses through this transitional phase,
      it is anticipated that the bonus factors will be re-weighted to provide
      an even greater emphasis on financial performance with an increased weighting
      being ascribed to growth and revenue. Under the terms of his service contract,
      effective from 23 July 2001, Tom Glocers bonus potential will rise
      to 150% for 2004. Equity incentive plans The executive directors also participate
      in a discretionary share option plan (DSOP) and a long-term incentive plan
      (LTIP) designed to reward longer-term




performance. Details of all share incentive
      awards outstanding for each executive director serving during 2003 are
      set out on pages 22 and 23. All executive directors future entitlements
      are subject to the performance conditions applicable to the relevant plan
      as disclosed below. Other than as described below, the company has no present
      intention of making any significant change to the executive directors existing
      entitlements under these plans. During 2003, the Remuneration Committee
      reviewed the operation of the existing equity plans and resolved to introduce
      a number of changes to the way these will operate in the future. These
      include the removal of a number of re-testing provisions in the plans and,
      in order to reduce the dilution impact of the share option plans, the Remuneration
      Committee proposes to introduce a Restricted Share Plan for employees below
      the Group Management Committee (GMC) level and an Annual Bonus Profit Sharing

      Plan. Further details of these are provided below. LTIP:since
      1993, Reuters has operated a long-term incentive plan which seeks to encourage
      and reward long-term growth in shareholder value. It is Reuters practice
      to make an annual award of contingent share rights to executive directors
      and those senior managers most able to influence corporate performance.
      From 2003, awards are based on the fair market value per share using option
      pricing methodology. The fair market value ascribed to each share for LTIP
      purposes is presently 39.9% of current market value. The Remuneration Committee considers that
      relative total shareholder return (TSR) remains the most appropriate measurement
      criterion for the LTIP. Whilst endorsing relative TSR as a measure, the
      Remuneration Committee recognises that the company does not naturally fall
      into any one of the existing FTSE industrial sectors. Accordingly, the
      Remuneration Committee believes that the FTSE 100 generally, rather than
      one individual sector e.g. media and photography, remains the most appropriate
      peer group for comparison purposes. Under the terms of his service contract,
      annual equity awards to Tom Glocer will be based on a fair market value,
      calibrated by reference to the average of the mid-market position of a
      comparator group of FTSE 100 companies, with significant international
      operations (excluding the top and bottom five companies measured by market
      capitalisation) and the mid-market position of a US comparator group comprising
      media companies. For both comparator groups, the data has been provided
      by Towers Perrin. LTIP awards will form part of the total equity grant.
      Details of the grants for 2003 are set out in the table on page 22. For 2004, it is anticipated that the fair
      market value of Tom Glocers LTIP award will be approximately 108%
      of basic salary. The other executive directors will receive awards in 2004
      with a fair market value of approximately 81% of base salary. To be consistent with the objectives of
      the plan, and to ensure the Groups growth is measured relative to
      other major UK companies, performance is measured over a three-year period
      by comparing the TSR of the Group with that of other companies comprising
      the FTSE 100 at the beginning of the period. The companies are ranked according
      to their TSR for the measurement period with the company having the highest
      TSR ranked first. As a matter of good practice, the measurements are verified
      independently before being presented to the Remuneration Committee for
      approval. For 2003 awards, the Groups position
      on the list determines the extent to which plan awards will vest. The Group
      must achieve median TSR performance for a proportion of the award to vest:
      full vesting only occurs for top quartile performance. Between those positions,
      awards vest on a straight line scale starting at 4% for median performance.
      If awards made prior to 2003 do not vest or only partially vest after three
      years, the plan permits the measurement period to be extended by up to
      two years under a re-testing provision. Subject to shareholder approval being given
      at the 2004 annual general meeting, from 2004, the re-testing provision
      will be removed and accordingly the plan will not permit any extension
      of the measurement period if the awards do not, or only partially, vest.
      Awards that do not meet at least the median performance condition on completion
      of the performance period will lapse. Future awards shall continue to vest
      in full for top quartile performance, with one-third of the initial award
      vesting for median performance, with proportionate vesting for incremental
      performance between these points.


|   |                                                            | 
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|18 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 

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The pre-set vesting criteria for awards
      which vested during 2003 or which have not yet vested are shown in the
      table below together with the actual ranking at 31 December 2003 (or on
      vesting if earlier). Awards vesting under the plan are not released until
      at least five years from the date of grant. Pre-set
            vesting criteriaDate measurement
      Rankings for
      
      Rankings for
      
      Ranking atperiod commenced
      100% vesting
      zero vesting
      31 December 20031 January 2000
      1 to 26
      
      66 to 100
      
      901 January 2001
      1 to 25
      
      51 to 100
      
      881 January 2002
      1 to 25
      
      51 to 100
      
      971 January 2003
      1 to 25
      
      51 to 100
      
      99 In order to smooth the opening and closing
      points of measurement, the average of the daily closing prices for the
      immediately preceding twelve months is used as the initial and final share
      prices when calculating the TSR. Shares awarded under the plan will continue
      to be met from existing shares held by Reuters employee share ownership
      trusts (ESOTs). The costs are charged to the profit and loss account over
      the vesting periods. DSOP:a
      global discretionary stock option plan was adopted by the Remuneration
      Committee in October 2000 and approved by shareholders in April 2001. It
      aims to reward growth in earnings and in the share price. Therefore, the
      options granted to executive directors can only vest if the percentage
      growth in the Groups earnings per share (EPS) exceeds the percentage
      growth in the retail price index by more than 9% over the three year performance
      period. For existing awards, if the target is not met, the performance
      period may be extended by up to two years with an increase of 3% in the
      hurdle rate of EPS growth for each year added to the performance period.
      If the target rate is not met by the end of the fifth year the options
      will lapse. These performance conditions were established
      in 2001 to retain management focus on earnings in a particularly challenging
      market. The Remuneration Committee believes that it is appropriate to retain
      the performance conditions for executive directors at this stage in Reuters
      transition. However, from 2004, the re-testing provision will be removed
      and accordingly, awards will not permit any extension of the measurement
      period. If the awards do not meet the EPS performance condition upon completion
      of the initial performance period they will lapse. The performance conditions have been measured
      for the June 2001 grant which was the first grant to executive directors
      with these performance conditions. The performance conditions were not
      met and will be subject to a performance re-test at the end of 2004. In
      2003, there were no performance conditions for options granted to participants
      other than the executive directors. The executive directors are contractually
      entitled to participate in the DSOP. Under the terms of his service contract,
      annual equity awards to Tom Glocer are based on a fair market value using
      the option pricing methodology which currently ascribes to each share a
      value of 27.5% of the market price. 2003 awards are detailed in the table
      set out on page 23. For 2004, it is anticipated that the fair market value
      of Tom Glocers DSOP award will be approximately 217% of basic salary.
      Other executive directors awards will be made at a fair market value
      of approximately 69% of basic salary. It is the Remuneration Committees
      practice to divide participants annual entitlements into two awards,
      normally made in February and August each year. To reduce the dilutive impact DSOPs have
      on shareholders interests, it is intended that the number of participants
      be reduced significantly. In the future, participation will normally be
      confined to executive directors and members of the GMC. Subject to obtaining
      shareholder approval, a Restricted Share Plan, as described below, will
      be introduced for other Reuters employees. SAYE Plan:an
      all-employee international savings related share option plan is offered
      in which the Chairman and the executive directors are eligible to participate.
      Participants save a fixed monthly amount of up to £250 (subject to
      a maximum, established annually for each offer) for three or five years
      and are then able to use their savings to buy the Groups shares at
      a price set at a 20% discount to the market value at the start of the savings
      period. In line with market practice, no performance conditions attach
      to options granted under this plan. For the 2003 offer, the fixed monthly
      savings amount was established at a maximum of £100 per month with
      a three year savings period.




Legacy plans:there
      are several legacy plans under which Tom Glocer and Devin Wenig received
      awards prior to becoming executive directors of the Group. It is not intended
      that executive directors should receive any further awards under these
      plans. Performance related share
      plan (PRSP):this plan operated from
      1995 to 2001 and targeted senior executives not participating in the LTIP.
      Tom Glocer and Devin Wenig hold awards granted before they became executive
      directors of the Group. The performance condition is the same as for the
      LTIP, although vested shares can be released three years after grant. Deferred bonus share plan
      (DBSP):restricted share awards were
      made in 2000 as a special retention bonus to a total of around 100 senior
      managers excluding the directors in office at that time. As a retention
      tool, and in line with the then market practice, they were made conditional
      only on remaining in employment until the shares vested. These awards vested
      in February 2002 and February 2003. Tom Glocer has deferred the vesting
      of his shares under the plans, which are currently due to vest in April
      2004 subject to any further deferral that he may elect to make. The shares
      awarded under the plan are satisfied by existing shares from the Groups
      ESOTs. Executive stock option plan
      (ESOP):Tom Glocer participated in
      an executive stock option plan operated in 1993 and 1994. Options under
      the plan carry no performance conditions and vested automatically on the
      third anniversary of grant. Plan 2000:a
      one-off all-employee option grant was made in 1998 in order to support
      the retention of employees over the millennium period. In common with such
      all-employee plans, there is no performance condition to be satisfied.
      All employees, including the executive directors, were given the opportunity
      to apply for an option to acquire 2,000 shares at an exercise price of £5.50
      per share. These options became exercisable in September 2001 and will
      normally expire in September 2005. A small supplementary grant was made
      to new employees in March 1999, at an option price of £8.14 and these
      will normally expire in March 2006. The company may issue new shares to
      satisfy options granted under this plan. Restricted Share Plan:the
      company will seek shareholder approval during 2004 to introduce a restricted
      share plan. Restricted shares will not normally be granted for long-term
      incentive purposes to executive directors or members of the GMC. It is
      intended that, other than for executive directors and GMC members, Reuters
      employees will be eligible to participate in this plan instead of the DSOP.
      This new plan will enable Reuters to provide market competitive remuneration,
      whilst reducing the dilution impact to shareholders. Other than in the
      year of introduction, employees would generally not be eligible to participate
      in the DSOP and the Restricted Share Plan in the same year. Annual Bonus Profit Sharing
      Plan:on 18 December 2003, Reuters
      announced its intention to introduce a new profit sharing plan across the
      all-employee population. This plan is being introduced to focus Reuters
      employees on reward for profit growth. Executive directors and members
      of the GMC will not participate in this plan. Payments under the plan will
      typically be made in the form of shares which will normally be subject
      to a 12 month vesting period. 3Performance graphThe Groups TSR for
          the five years to 31 December 2003 compared with the return achieved
          by the FTSE 100 index of companies is shown below. This index is used
          as the comparator group for the performance conditions attached to
          the LTIP and PRSP referred to above. The calculations assume the reinvestment
          of dividends.


| |                                                            |   
| | ---------------------------------------------------------- | --
| | Reuters Group PLC Annual
        Report and Form 20-F 2003 | 19

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Remuneration reportcontinued

4Service
          contractsIt is the companys policy that new
        directors be offered notice periods of not more than one year. The Group
        recognises, however, that, in the case of appointments from outside the
        company, a longer notice period may initially be necessary, reducing
        to one year subsequently. The Remuneration Committee ensures that appropriate
        provisions are in place in the event of the termination of any directors
        service contract. Tom Glocer has a service contract, with
      an effective date of 23 July 2001, normally terminable by him on 90 days notice
      or, where due to the fault of the Group, on 30 days notice. The company
      may terminate without cause on 30 days notice. In the event of termination
      by Tom Glocer due to the fault of the company or by the company without
      cause, on or before 1 July 2003, he was entitled to a compensation payment
      equal to twice the sum of his basic annual salary and an estimated annual
      bonus calculated by reference to the highest bonus percentage received
      in the previous three years. Following an agreed change to the terms of
      his contract, where the company terminates his contract without fault attributable
      to him, Tom Glocers compensation will be limited to a maximum of
      12 months accrued benefits being annual salary, annual bonus and
      pension contributions. However, in the event of a change in control of
      the company, the contract will revert
      to
      its
      original
      terms
      and Tom Glocer will be entitled to a maximum amount of compensation based
      on 20 months salary, annual bonus and pension contributions,
      if such change of control occurs prior to 1 July 2004. He will be entitled
      to  16 months salary, annual bonus and pension
      contributions, if such event occurs prior to 1 July 2005 and 12 months salary,
      annual bonus and pension contributions thereafter. In the event of termination at any time
      which is not due to the fault of Tom Glocer, he retains the benefit of
      any outstanding share plan awards as if his employment had not ceased.
      In addition, Tom Glocer and his family retain




the life assurance, private healthcare benefits
      provided by the company for one year following termination. David Grigsons and Devin Wenigs
      contracts have effective dates of 21 June 2001 and 17 February 2003 respectively,
      and can be terminated on one years notice. Any termination payment
      will not exceed an amount equal to the sum of annual salary, bonus and
      12 months pension contributions paid by the company. On a change of control of the company, all
      the executive directors are entitled to terminate their contracts on one
      months notice unless the acquiring party has, within three months
      of the change of control, agreed to adopt and uphold the companys
      Trust Principles (see page 84). Termination payments of a maximum of 12
      months salary, annual bonus and 12 months pension contributions
      are payable to David Grigson and Devin Wenig (and to Tom Glocer as previously
      detailed) in such circumstances. 5     Policy
          on external appointmentsThe Group recognises that its directors
        may be invited to become non-executive directors of other companies or
        to become involved in charitable or public service organisations. As
        the Board believes that this can broaden the knowledge and experience
        of the Groups directors to the benefit of the Group, it is the
        Groups policy to approve such appointments provided there is no
        conflict of interest and the commitment required is not excessive. Board
        approval is required and directors are permitted to retain cash only
        fees paid for such appointments. For the period 1 January 2003 to 30
        June 2003, Philip Green received approximately £7,754 as a director
        of SKF AB. None of the other executive directors retained any fees for
        external directorships.




6 Directors remuneration
            for 2003

|                                                         |       |           |              |           |         |       |     |  |              |  |       |  |       | 
|-------------------------------------------------------- | ----- | --------- | ------------ | --------- | ------- | ----- | --- |  | ------------ |  | ----- |  | ----- | 
|                                                         |       |           |              |           |         |       |     |  |              |  | 2003  |  | 2002  | 
|                                                         |       |           |              |           |         |       |     |  |              |  |       |  |       | 
|                                                         |       |           |              |           |         |       |     |  | Compensation |  |       |  |       | 
|Salary/                                                  |       |           | Expense      | for loss  |         |      
|fees                                                     | Bonus | Benefits9 | allowances10 | of office | Total11 | Total
|£000                                                     | £000  | £000      | £000         | £000      | £000    | £000 
|                                                         |       |           |              |           |         |       |     |  |              |  |       |  |       | 
|Chairman:                                                |       |           |              |           |         |       |     |  |              |  |       |  |       | 
|Sir Christopher Hogg                                     | 263   |           |             |           | 15      |       |    |  |             |  | 278   |  | 277   | 
|                                                         |       |           |              |           |         |       |     |  |              |  |       |  |       | 
|Non-executive directors:                                 |       |           |              |           |         |       |     |  |              |  |       |  |       | 
|Sir John Craven                                          | 45    |           |             |           |        |       |    |  |             |  | 45    |  | 45    | 
|Edward Kozel                                             | 35    |           |             |           |        |       |    |  |             |  | 35    |  | 35    | 
|Niall FitzGerald1                                        | 35    |           |             |           |        |       |    |  |             |  | 35    |  |      | 
|Roberto Mendoza                                          | 35    |           |             |           |        |       |    |  |             |  | 35    |  | 35    | 
|Richard Olver                                            | 50    |           |             |           |        |       |    |  |             |  | 50    |  | 45    | 
|Charles Sinclair                                         | 45    |           |             |           |        |       |    |  |             |  | 45    |  | 45    | 
|Ian Strachan2                                            | 204   |           |             |           |        |       |    |  |             |  | 204   |  | 110   | 
|                                                         |       |           |              |           |         |       |     |  |              |  |       |  |       | 
|Executive directors:                                     |       |           |              |           |         |       |     |  |              |  |       |  |       | 
|Tom Glocer3                                              | 816   |           | 801          |           | 281     |       |    |  |             |  | 1,898 |  | 1,710 | 
|Philip Green4                                            | 225   |           |             |           | 14      |       | 58  |  | 834          |  | 1,131 |  | 836   | 
|David Grigson5                                           | 400   |           | 314          |           | 2       |       | 69  |  |             |  | 785   |  | 690   | 
|Devin Wenig6                                             | 312   |           | 274          |           | 12      |       | 11  |  |             |  | 609   |  |      | 
|Total emoluments of directors7                           | 2,465 |           | 1,389        |           | 324     |       | 138 |  | 834          |  | 5,150 |  | 4,714 | 
|                                                         |       |           |              |           |         |       |     |  |              |  |       |  |       | 
|Other senior managers as a group
          (10 persons)8 |       |           |              |           |         |       |     |  |              |  |       |  |       | 
|(2002: 8 persons)                                        | 2,712 |           | 1,551        |           | 118     |       | 367 |  | 1,209        |  | 5,957 |  | 3,748 | 
|                                                         |       |           |              |           |         |       |     |  |              |  |       |  |       | 

|Notes: ( For disclosure purposes,
        all amounts have been rounded up to the nearest thousand.)
|----------------------------------------------------------------------------------------------------
|1.                                                                                                  
|2.                                                                                                  
|3.                                                                                                  
|4.                                                                                                  

|   |                                                            | 
|-- | ---------------------------------------------------------- | 
|20 | Reuters Group PLC Annual Report and
        Form 20-F 2003 | 

---



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|6.  | Directors remuneration
            for 2003continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|5.  | David Grigson received healthcare benefits
        of £1,470, a car allowance of £7,420 and a retirement allowance
        of £61,000                                                                                                                                                                                                                                                                                                                                                                                                                          
|6.  | Devin Wenig was appointed an executive
        director on 17 February 2003 and therefore the amounts shown for Devin
        Wenig as a director are for the period 17 February 2003 to 31 December
        2003. His emoluments for the period 1 January 2003 to 16 February 2003
        are included within the collective numbers for senior managers. He received
        private health care benefits of £12,000 and a car allowance of £11,000.                                                                                                        
|7.  | The total for directors in 2002 includes
        payments of £27,000 and £859,000 respectively to Dennis Malamatinas
        and Geoffrey Weetman who retired in 2002.                                                                                                                                                                                                                                                                                                                                                                                         
|8.  | The senior manager group consisted of
        10 persons in total, including Devin Wenig for the period 1 January 2003
        to 16 February 2003, prior to his appointment as executive director on
        17 February 2003. Stephen Mitchell is included up to 31 August 2003 when
        he left the Group. Christian Verougstraete and Simon Walker are included
        from 3 March 2003 and 8 January 2003, when each respectively joined the
        Group. Rosemary Martin is included from 23 June 2003 when she was appointed
        to the GMC.
|9.  | Items included under Benefits are those
        provided as goods and services during the year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10. | Items included under Expense Allowances
        are contractual benefits, which are paid in cash rather than as goods
        and services during the year.                                                                                                                                                                                                                                                                                                                                                                                                    
|11. | The total aggregate emoluments for the
        directors for the period 1 January 2003 to 31 December 2003 which excludes
        termination payments were £4.4 million. The total equivalent emoluments
        for 2002, which included the emoluments of certain directors not serving
        during 2003, were £4.1 million, excluding termination payments
        of £0.6 million.                                                                                                                                                                     

Directors pensions Tom Glocer, David Grigson and Devin Wenig
    participate in defined contribution pension arrangements.

Tom Glocer participates in the Groups
    US pension arrangements and is entitled to a pension allowance of 20% of
    his base salary during 2003 and 25% of his base salary for 2004. David Grigson
    is a member of the Reuters Retirement Plan in the UK and receives a contribution
    in respect of pension benefits equal to 20% of the UK earnings cap. Both
    are entitled to a lump sum death in service benefit whilst in service of
    four times basic salary.

Devin Wenig participates in the Groups
    US pension arrangements and is entitled to a pension allowance of 6% of his
    base salary. He is entitled to a lump sum death in service benefit of US$1
    million.

Philip Green was a member of the Reuters Retirement
    Plan in the UK and received a contribution in respect of pension benefits
    equal to 20% of the UK earnings cap, pro-rated to 30 June 2003. The Group
    continued to provide death in service benefit of four times his Reuters base
    salary up until 31 December 2003.

|Group contributions and allocations (including
        the cost of life cover) in respect of these directors in 2003 were: |                      |  |                      |  
|-------------------------------------------------------------------------------------------------------------------------- | -------------------- |  | -------------------- | -
|                                                                                                                           |                      |  |                      |  
|                                                                                                                           |                      |  | Company contribution |  
|                                                                                                                           | in respect of period
|Age                                                                                                                        | £000                
|                                                                                                                           |                      |  |                      |  
|Tom Glocer                                                                                                                 | 44                   |  | 167                  |  
|David Grigson                                                                                                              | 49                   |  | 23                   |  
|Philip Green                                                                                                               | 50                   |  | 19                   | 1
|Devin Wenig                                                                                                                | 37                   |  | 22                   | 2
|                                                                                                                           |                      |  |                      |  

|1. | The contribution in respect of Philip
        Green includes the cost of securing continued life cover beyond his date
        of termination.                                                                
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | The contribution in respect of Devin Wenig
        reflects the Group contribution for the full year. Since his appointment
        as an executive director on 17 February 2003, the contributionwas £20,000.

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. Under an unfunded pension arrangement, the Chairman is entitled
    to a pension of 2.5% of his annual fee times the number of years service,
    from the date of his appointment as Chairman in May 1985 to the date his
    office terminates.

Pension benefits earned during 2003 by the
    Chairman are as set out in the following table.

|                      |     |  |                                                                          |  |                                                                               |  |                                                                                                      |  |                                                                                                                                 |  |                                                                                                         |  |                                                                                                         |  |                                                                                                                    | 
|--------------------- | --- |  | ------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------ | 
|Name                  | Age |  | Accrued
        pension at
        31 December
        2003
        £000 |  | Directors
        contributions
        during the
        year
        £000 |  | Increase
            in
        accrued
        pension
        during the
        year
        £000 |  | Increase
            in
        accrued
        pension
        during the
        year
        (net of inflation)
        £000 |  | Transfer
        value of
        accrued
        pension
        31 December
        2002
        £000 |  | Transfer
        value of
        accrued
        pension
        31 December
        2003
        £000 |  | Increase
          in
        transfer
        value, net of
        directors
        contributions
        £000 | 
|                      |     |  |                                                                          |  |                                                                               |  |                                                                                                      |  |                                                                                                                                 |  |                                                                                                         |  |                                                                                                         |  |                                                                                                                    | 
|Sir Christopher Hogg1 | 67  |  | 123                                                                      |  |                                                                              |  | 7                                                                                                    |  | 5                                                                                                                               |  | 1,802                                                                                                   |  | 1,878                                                                                                   |  | 76                                                                                                                 | 
|                      |     |  |                                                                          |  |                                                                               |  |                                                                                                      |  |                                                                                                                                 |  |                                                                                                         |  |                                                                                                         |  |                                                                                                                    | 

|1. | The Group also paid an amount of £5,600
        in respect of life cover for the Chairman.
|-- | ------------------------------------------------------------------------------------------

The information shown above complies with
    requirements under both the London Stock Exchange Listing Rules and the Directors Remuneration
    Report Regulations 2002. The transfer values have been calculated in accordance
    with the guidance note GN11 published by the Institute of Actuaries
    and Faculty of Actuaries.

The total amount of contributions or accruals
    made by the Group in 2003 to provide pension and similar benefits for the
    directors was £368,000(2002: £1.76
    million) and for the directors and the non-director senior managers as a
    group was £1,024,000 (2002: £ 2.15 million). These aggregate
    figures include an accrual of £58,000 and £65,000 respectively
    for the investment returns within the US executive pension arrangements.
    These investment returns are calculated based on each individuals national
    fund choices made by reference to actual investment funds and the actual
    investment returns achieved on these funds.

| |                                                            |   
| | ---------------------------------------------------------- | --
| | Reuters Group PLC Annual
        Report and Form 20-F 2003 | 21

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Remuneration reportcontinued

|Directors interests
        in long-term incentive plans
|---------------------------------------------------------
|                                                         

|                                                                                | Plan1        |             |              |             |          |             |            |            | Market      |        |   |  |           |   |           |   |           |  |           |  |          |  |          
|------------------------------------------------------------------------------- | ------------ | ----------- | ------------ | ----------- | -------- | ----------- | ---------- | ---------- | ----------- | ------ | - |  | --------- | - | --------- | - | --------- |  | --------- |  | -------- |  | ---------
|Number                                                                          | value       
|at                                                                              | per share    | Number at  
|1 January                                                                       | at grant     | 31 December
|2003                                                                            | Number       | for awards  | Number       | Number      | Number   | 2003        | Date from 
|(or later                                                                       | granted      | made        | vested       | (exercised) | (lapsed) | (or earlier | End of     | which     
|Date of                                                                         | date of      | during      | during       | during      | during   | during      | date of    | qualifying | rights are  | Expiry
|award                                                                           | appointment) | period      | period       | period2     | period   | period      | departure) | period     | exercisable | date  
|                                                                                |              |             |              |             |          |             |            |            |             |        |   |  |           |   |           |   |           |  |           |  |          |  |          
|Tom Glocer                                                                      | PRSP3        |             | 1 Apr 19995  |             | 9,855    |             |           |            |            |        |  |  | (9,855    | ) |          |   |          |  | 31 Dec 01 |  | 1 Jan 02 |  | 31 Dec 05
|                                                                                |              |             | 1 Apr 19995  |             | 42,596   |             |           |            |            |        |  |  | (42,596   | ) |          |   |          |  | 31 Dec 01 |  | 1 Jan 02 |  | 31 Dec 05
|                                                                                |              |             | 15 Mar 20005 |             | 33,518   |             |           |            |            |        |  |  |          |   |          |   | 33,518    |  | 31 Dec 04 |  | 1 Jan 05 |  | 31 Dec 06
|                                                                                | LTIP3        |             | 25 Jun 2001  |             | 174,451  |             |           |            |            |        |  |  |          |   |          |   | 174,451   |  | 31 Dec 04 |  | 1 Jan 06 |  | 31 Dec 07
|                                                                                |              |             | 20 Feb 2002  |             | 234,974  |             |           |            |            |        |  |  |          |   |          |   | 234,974   |  | 31 Dec 04 |  | 1 Jan 07 |  | 31 Dec 08
|                                                                                |              |             | 24 Feb 2003  |             |         |             | 1,731,277  |            | 135         | p      |  |  |          |   |          |   | 1,731,277 |  | 31 Dec 05 |  | 1 Jan 08 |  | 31 Dec 09
|                                                                                | DBSP         |             | 24 Mar 20005 |             | 75,000   |             |           |            |            |        |  |  |          |   |          |   | 75,000    |  | 15 Feb 02 |  | 6 Apr 04 |  | n/a      
|                                                                                |              |             | 30 May 20005 |             | 60,000   |             |           |            |            |        |  |  |          |   |          |   | 60,000    |  | 15 Feb 03 |  | 6 Apr 04 |  | n/a      
|                                                                                |              |             |              |             |          |             |            |            |             |        |   |  |           |   |           |   |           |  |           |  |          |  |          
|Total                                                                           |              |             |              |             | 630,394  |             | 1,731,277  |            |             |        |  |  | (52,451   | ) |          |   | 2,309,220 |  |           |  |          |  |          
|                                                                                |              |             |              |             |          |             |            |            |             |        |   |  |           |   |           |   |           |  |           |  |          |  |          
|Philip Green                                                                    | PRSP3        |             | 1 Apr 19994  |             | 100,000  |             |           |            |            |        |  |  | (100,000  | ) |          |   |          |  | 31 Dec 01 |  | 1 Jan 02 |  | 31 Dec 05
|                                                                                | LTIP3        |             | 15 Mar 2000  |             | 24,320   |             |           |            |            |        |  |  |          |   |          |   | 24,320    |  | 31 Dec 04 |  | 1 Jan 06 |  | 31 Dec 06
|                                                                                |              |             | 25 Jun 2001  |             | 55,426   |             |           |            |            |        |  |  |          |   | (9,238    | ) | 46,188    |  | 31 Dec 04 |  | 1 Jan 06 |  | 31 Dec 07
|                                                                                |              |             | 20 Feb 2002  |             | 68,411   |             |           |            |            |        |  |  |          |   | (34,206   | ) | 34,205    |  | 31 Dec 04 |  | 1 Jan 07 |  | 31 Dec 08
|                                                                                |              |             | 24 Feb 2003  |             |         |             | 225,000    |            | 135         | p      |  |  |          |   | (187,500  | ) | 37,500    |  | 31 Dec 05 |  | 1 Jan 08 |  | 31 Dec 09
|                                                                                |              |             |              |             |          |             |            |            |             |        |   |  |           |   |           |   |           |  |           |  |          |  |          
|Total                                                                           |              |             |              |             | 248,157  |             | 225,000    |            |             |        |  |  | (100,000) |   | (230,944) |   | 142,213   |  |           |  |          |  |          
|                                                                                |              |             |              |             |          |             |            |            |             |        |   |  |           |   |           |   |           |  |           |  |          |  |          
|David Grigson                                                                   | LTIP3        |             | 5 Dec 2000   |             | 42,579   |             |           |            |            |        |  |  |          |   |          |   | 42,579    |  | 31 Dec 04 |  | 1 Jan 05 |  | 31 Dec 06
|                                                                                |              |             | 25 Jun 2001  |             | 26,294   |             |           |            |            |        |  |  |          |   |          |   | 26,294    |  | 31 Dec 04 |  | 1 Jan 06 |  | 31 Dec 07
|                                                                                |              |             | 20 Feb 2002  |             | 37,205   |             |           |            |            |        |  |  |          |   |          |   | 37,205    |  | 31 Dec 04 |  | 1 Jan 07 |  | 31 Dec 08
|                                                                                |              |             | 24 Feb 2003  |             |         |             | 200,000    |            | 135         | p      |  |  |          |   |          |   | 200,000   |  | 31 Dec 05 |  | 1 Jan 08 |  | 31 Dec 09
|                                                                                |              |             |              |             |          |             |            |            |             |        |   |  |           |   |           |   |           |  |           |  |          |  |          
|Total                                                                           |              |             |              |             | 106,078  |             | 200,000    |            |             |        |  |  |          |   |           |   | 306,078   |  |           |  |          |  |          
|                                                                                |              |             |              |             |          |             |            |            |             |        |   |  |           |   |           |   |           |  |           |  |          |  |          
|Devin Wenig                                                                     | PRSP3        |             | 15 Mar 20005 |             | 18,166   |             |           |            |            |        |  |  |          |   |          |   | 18,166    |  | 31 Dec 04 |  | 1 Jan 05 |  | 31 Dec 06
|                                                                                |              |             | 29 Mar 20015 |             | 20,704   |             |           |            |            |        |  |  |          |   |          |   | 20,704    |  | 31 Dec 04 |  | 1 Jan 05 |  | 31 Dec 07
|                                                                                | LTIP3        |             | 25 Jun 20015 |             | 2,295    |             |           |            |            |        |  |  |          |   |          |   | 2,295     |  | 31 Dec 04 |  | 1 Jan 06 |  | 31 Dec 07
|                                                                                |              |             | 20 Feb 20025 |             | 22,047   |             |           |            |            |        |  |  |          |   |          |   | 22,047    |  | 31 Dec 04 |  | 1 Jan 07 |  | 31 Dec 08
|                                                                                |              |             | 24 Feb 2003  |             |         |             | 200,000    |            | 135         | p      |  |  |          |   |          |   | 200,000   |  | 31 Dec 05 |  | 1 Jan 08 |  | 31 Dec 09
|                                                                                |              |             |              |             |          |             |            |            |             |        |   |  |           |   |           |   |           |  |           |  |          |  |          
|Total                                                                           |              |             |              |             | 63,212   |             | 200,000    |            |             |        |  |  |          |   |           |   | 263,212   |  |           |  |          |  |          
|                                                                                |              |             |              |             |          |             |            |            |             |        |   |  |           |   |           |   |           |  |           |  |          |  |          
|Other
        senior managers as a group 
        (10 persons)(2002: 8 persons) | PRSP3        |             | 15 Sep 1998  |             | 23,886   |             |           |            |            |        |  |  |          |   |          |   | 23,886    |  | 31 Dec 00 |  | 1 Jan 01 |  | 31 Dec 04
|                                                                                |              |             | 1 Apr 1999   |             | 17,280   |             |           |            |            |        |  |  |          |   |          |   | 17,280    |  | 31 Dec 01 |  | 1 Jan 02 |  | 31 Dec 05
|                                                                                |              |             | 1 Apr 1999   |             | 79,753   |             |           |            |            |        |  |  | (22,217   | ) |          |   | 57,536    |  | 31 Dec 01 |  | 1 Jan 02 |  | 31 Dec 05
|                                                                                |              |             | 15 Mar 2000  |             | 112,216  |             |           |            |            |        |  |  |          |   |          |   | 112,216   |  | 31 Dec 04 |  | 1 Jan 05 |  | 31 Dec 06
|                                                                                |              |             | 29 Mar 2001  |             | 82,570   |             |           |            |            |        |  |  |          |   |          |   | 82,570    |  | 31 Dec 04 |  | 1 Jan 05 |  | 31 Dec 07
|                                                                                | LTIP3        |             | 30 Jun 1997  |             | 30,191   |             |           |            |            |        |  |  | (30,191   | ) |          |   |          |  | 31 Dec 00 |  | 1 Jan 01 |  | 31 Dec 03
|                                                                                |              |             | 1 Apr 1999   |             | 55,956   |             |           |            |            |        |  |  |          |   |          |   | 55,956    |  | 31 Dec 01 |  | 1 Jan 04 |  | 31 Dec 04
|                                                                                |              |             | 1 Apr 1999   |             | 58,425   |             |           |            |            |        |  |  |          |   |          |   | 58,425    |  | 31 Dec 01 |  | 1 Jan 04 |  | 31 Dec 05
|                                                                                |              |             | 15 Mar 2000  |             | 44,687   |             |           |            |            |        |  |  |          |   |          |   | 44,687    |  | 31 Dec 04 |  | 1 Jan 06 |  | 31 Dec 06
|                                                                                |              |             | 25 Jun 2001  |             | 35,176   |             |           |            |            |        |  |  |          |   | (401      | ) | 34,775    |  | 31 Dec 04 |  | 1 Jan 06 |  | 31 Dec 07
|                                                                                |              |             | 20 Feb 2002  |             | 136,072  |             |           |            |            |        |  |  |          |   | (6,887    | ) | 129,185   |  | 31 Dec 04 |  | 1 Jan 07 |  | 31 Dec 08
|                                                                                |              |             | 24 Feb 2003  |             | 58,548   |             | 907,982    |            | 135         | p      |  |  |          |   | (90,741   | ) | 875,789   |  | 31 Dec 05 |  | 1 Jan 08 |  | 31 Dec 09
|                                                                                |              |             | 4 Aug 2003   |             |         |             | 208,333    |            | 135         | p6     |  |  |          |   |          |   | 208,333   |  | 31 Dec 05 |  | 1 Jan 08 |  | 31 Dec 09
|                                                                                |              |             |              |             |          |             |            |            |             |        |   |  |           |   |           |   |           |  |           |  |          |  |          
|Total                                                                           |              |             |              |             | 734,760  |             | 1,116,315  |            |             |        |  |  | (52,408   | ) | (98,029   | ) | 1,700,638 |  |           |  |          |  |          
|                                                                                |              |             |              |             |          |             |            |            |             |        |   |  |           |   |           |   |           |  |           |  |          |  |          

|Notes:
|------
|1.    
|2.    
|3.    
|4.    
|5.    
|6.    

|   |                                                            | 
|-- | ---------------------------------------------------------- | 
|22 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 

---



Back to Contents

|Directors share
        options                                            |                       |               |                |             |          |             |           |            |           |      |         |   |   |   |          |       |           |              |             |             
|--------------------------------------------------------------------------- | --------------------- | ------------- | -------------- | ----------- | -------- | ----------- | --------- | ---------- | --------- | ---- | ------- | - | - | - | -------- | ----- | --------- | ------------ | ----------- | ------------
|                                                                            |                       |               |                |             |          |             |           |            |           |      |         |   |   |   |          |       |           |              |             |             
|                                                                            |                       |               |                |             |          |             | Number at |            |           |      |         |   |   |   |          |       | Number at |              |             |             
|1 January                                                                   | 31December           
|2003                                                                        | Number                | Number        | Number         | Number      | 2003    
|Exercise                                                                    | (or later             | granted       | vested         | (exercised) | (lapsed) | (or earlier | Earliest 
|price5                                                                      | date of               | during        | during         | during      | during   | date of     | exercise  | Expiry    
|Plan4                                                                       | Date of
        grant | (pence)       | appointment)   | period      | period6  | period6     | period    | departure) | date      | date
|                                                                            |                       |               |                |             |          |             |           |            |           |      |         |   |   |   |          |       |           |              |             |             
|Sir Christopher Hogg                                                        | SAYE                  |               | 11 Mar 1999    |             | 667      |             | 1,012     |            |          |      |        |   |  |   |         |       | 1,012     |              | 1 May 2004  |             
|                                                                            |                       |               |                |             |          |             |           |            |           |      |         |   |   |   |          |       |           |              |             |             
|Total                                                                       |                       |               |                |             |          |             | 1,012     |            |          |      |        |   |  |   |         |       | 1,012     |              |             |             
|                                                                            |                       |               |                |             |          |             |           |            |           |      |         |   |   |   |          |       |           |              |             |             
|Tom Glocer                                                                  | DSOP                  |               | 25 Jun 2001    |             | 862      |             | 565,113   |            |          |      |        |   |  |   |         |       | 565,113   |              | 25 Jun 2004 |             
|                                                                            |                       |               | 20 Feb 2002    |             | 528      |             | 461,295   |            |          |      |        |   |  |   |         |       | 461,295   |              | 20 Feb 2005 |             
|                                                                            |                       |               | 2 Aug 2002     |             | 266      |             | 915,654   |            |          |      |        |   |  |   |         |       | 915,654   |              | 2 Aug 2005  |             
|                                                                            |                       |               | 24 Feb 2003    |             | 135      |             |          |            | 1,307,514 |      |        |   |  |   |         |       | 1,307,514 |              | 24 Feb 2006 |             
|                                                                            |                       |               | 4 Aug 2003     |             | 245      |             |          |            | 706,594   |      |        |   |  |   |         |       | 706,594   |              | 4 Aug 2006  |             
|                                                                            | ESOP                  |               | 9 Feb 19941&2  |             | US$7.28  |             | 13,716    |            |          |      |        |   |  |   |         |       | 13,716    |              | 9 Feb 1997  |             
|                                                                            | SAYE                  |               | 11 Mar 19991&2 |             | US$13.68 |             | 1,512     |            |          |      |        |   |  |   | (1,512   | )     |          |              | 1 May 2004  |             
|                                                                            |                       |               | 11 Apr 2002    |             | 448      |             | 2,216     |            |          |      |        |   |  |   | (2,216   | )     |          |              | 1 Jun 2007  |             
|                                                                            |                       |               | 16 Apr 2003    |             | 90       |             | –         |            | 4,200     |      |        |   |  |   |         |       | 4,200     |              | 1 Jun 2006  |             
|                                                                            | Plan 2000             |               | 24 Sep 19982   |             | 550      |             | 2,000     |            |          |      |        |   |  |   |         |       | 2,000     |              | 24 Sep 2001 |             
|                                                                            |                       |               |                |             |          |             |           |            |           |      |         |   |   |   |          |       |           |              |             |             
|Total                                                                       |                       |               |                |             |          |             | 1,961,506 |            | 2,018,308 |      |        |   |  |   | (3,728   | )     | 3,976,086 |              |             |             
|                                                                            |                       |               |                |             |          |             |           |            |           |      |         |   |   |   |          |       |           |              |             |             
|Philip Green3                                                               | DSOP                  |               | 25 Jun 2001    |             | 862      |             | 177,494   |            |          |      | 177,494 |   |  |   |         |       | 177,494   |              | 1 Jul 2003  |             
|                                                                            |                       |               | 20 Feb 2002    |             | 528      |             | 144,886   |            |          |      | 72,443  |   |  |   | (72,443  | )     | 72,443    |              | 1 Jul 2003  |             
|                                                                            |                       |               | 2 Aug 2002     |             | 266      |             | 287,593   |            |          |      | 143,796 |   |  |   | (143,797 | )     | 143,796   |              | 1 Jul 2003  |             
|                                                                            |                       |               | 24 Feb 2003    |             | 135      |             |          |            | 225,000   |      | 37,500  |   |  |   | (187,500 | )     | 37,500    |              | 1 Jul 2003  |             
|                                                                            | SAYE                  |               | 11 Apr 2002    |             | 448      |             | 1,272     |            |          |      | 490     |   |  |   | (782     | )     | 490       |              | 1 Jul 2003  |             
|                                                                            |                       |               | 16 Apr 2003    |             | 90       |             |          |            | 4,200     |      | 233     |   |  |   | (3,967   | )     | 233       |              | 1 Jul 2003  |             
|                                                                            |                       |               |                |             |          |             |           |            |           |      |         |   |   |   |          |       |           |              |             |             
|Total                                                                       |                       |               |                |             |          |             | 611,245   |            | 229,200   |      | 431,956 |   |  |   | (408,489 | )     | 431,956   |              |             |             
|                                                                            |                       |               |                |             |          |             |           |            |           |      |         |   |   |   |          |       |           |              |             |             
|David Grigson                                                               | DSOP                  |               | 25 Jun 2001    |             | 862      |             | 92,807    |            |          |      |        |   |  |   |         |       | 92,807    |              | 25 Jun 2004 |             
|                                                                            |                       |               | 20 Feb 2002    |             | 528      |             | 75,757    |            |          |      |        |   |  |   |         |       | 75,757    |              | 20 Feb 2005 |             
|                                                                            |                       |               | 2 Aug 2002     |             | 266      |             | 150,375   |            |          |      |        |   |  |   |         |       | 150,375   |              | 2 Aug 2005  |             
|                                                                            |                       |               | 24 Feb 2003    |             | 135      |             |          |            | 200,000   |      |        |   |  |   |         |       | 200,000   |              | 24 Feb 2006 |             
|                                                                            |                       |               | 4 Aug 2003     |             | 245      |             |          |            | 200,000   |      |        |   |  |   |         |       | 200,000   |              | 4 Aug 2006  |             
|                                                                            | SAYE                  |               | 12 Apr 2001    |             | 832      |             | 698       |            |          |      |        |   |  |   | (698     | )     |          |              | 1 Jun 2004  |             
|                                                                            |                       |               | 11 Apr 2002    |             | 448      |             | 2,216     |            |          |      |        |   |  |   |         |       | 2,216     |              | 1 Jun 2007  |             
|                                                                            |                       |               | 16 Apr 2003    |             | 90       |             |          |            | 4,200     |      |        |   |  |   |         |       | 4,200     |              | 1 Jun 2006  |             
|                                                                            |                       |               |                |             |          |             |           |            |           |      |         |   |   |   |          |       |           |              |             |             
|Total                                                                       |                       |               |                |             |          |             | 321,853   |            | 404,200   |      |        |   |  |   | (698     | )     | 725,355   |              |             |             
|                                                                            |                       |               |                |             |          |             |           |            |           |      |         |   |   |   |          |       |           |              |             |             
|Devin Wenig                                                                 | DSOP                  |               | 27 Dec 20002   |             | 1,139    |             | 6,913     |            |          |      | 1,728   |   |  |   |         |       | 6,913     |              | 27 Dec 2001 |             
|                                                                            |                       |               | 25 Jun 20012   |             | 862      |             | 9,135     |            |          |      | 2,283   |   |  |   |         |       | 9,135     |              | 25 Jun 2002 |             
|                                                                            |                       |               | 20 Feb 20022   |             | 528      |             | 25,936    |            |          |      | 6,484   |   |  |   |         |       | 25,936    |              | 20 Feb 2003 |             
|                                                                            |                       |               | 2 Aug 20022    |             | 266      |             | 200,000   |            |          |      | 50,000  |   |  |   |         |       | 200,000   |              | 2 Aug 2003  |             
|                                                                            |                       |               | 24 Feb 2003    |             | 135      |             |          |            | 200,000   |      |        |   |  |   |         |       | 200,000   |              | 24 Feb 2006 |             
|                                                                            |                       |               | 4 Aug 2003     |             | 245      |             |          |            | 200,000   |      |        |   |  |   |         |       | 200,000   |              | 4 Aug 2006  |             
|                                                                            | SAYE                  |               | 10 Mar 20001&2 |             | US$19.92 |             | 585       |            |          |      | 585     |   |  |   | (585     | )     |          |              | 15 Apr 2003 |             
|Plan 2000                                                                   |                       | 24 Sept 19982 |                | 550         |          | 2,000       |           |           |           |     |         |  |   |  |          | 2,000 |           | 24 Sept 2001 |             | 24 Sept 2005
|                                                                            |                       |               |                |             |          |             |           |            |           |      |         |   |   |   |          |       |           |              |             |             
|Total                                                                       |                       |               |                |             |          |             | 244,569   |            | 400,000   |      | 61,080  |   |  |   | (585     | )     | 643,984   |              |             |             
|                                                                            |                       |               |                |             |          |             |           |            |           |      |         |   |   |   |          |       |           |              |             |             
|Other senior managers
            as a group
(10 persons) (2002: 8 persons) | SAYE                  |               | 11 Mar 1999    |             | 667      |             | 1,012     |            |          |      |        |   |  |   |         |       | 1,012     |              | 1 May 2004  |             
|                                                                            |                       |               | 10 Mar 2000    |             | 992      |             | 390       |            |          |      | 390     |   |  |   | (390     | )     |          |              | 15 Apr 2003 |             
|                                                                            |                       |               | 12 Apr 2001    |             | 832      |             | 814       |            |          |      |        |   |  |   |         |       | 814       |              | 1 Jun 2004  |             
|                                                                            |                       |               | 11 Apr 2002    |             | 448      |             | 4,760     |            |          |      |        |   |  |   |         |       | 4,760     |              | 1 Jun 2005  |             
|                                                                            |                       |               | 16 Apr 2003    |             | 90       |             |          |            | 12,600    |      |        |   |  |   |         |       | 12,600    |              | 1 Jun 2006  |             
|                                                                            | DSOP                  |               | 27 Dec 2000    |             | 1,139    |             | 38,056    |            |          |      | 11,239  |   |  |   |         |       | 38,056    |              | 27 Dec 2001 |             
|                                                                            |                       |               | 25 Jun 2001    |             | 862      |             | 146,457   |            |          |      | 17,980  |   |  |   |         |       | 146,457   |              | 25 Jun 2002 |             
|                                                                            |                       |               | 20 Feb 2002    |             | 528      |             | 192,067   |            |          |      | 31,554  |   |  |   | (11,394  | )     | 180,673   |              | 20 Feb 2003 |             
|                                                                            |                       |               | 2 Aug 2002     |             | 266      |             | 986,559   |            |          |      | 209,046 |   |  |   | (27,138  | )     | 959,421   |              | 2 Aug 2003  |             
|                                                                            |                       |               | 24 Feb 2003    |             | 135      |             | 20,000    |            | 852,315   |      | 9,375   |   |  |   | (65,625  | )     | 806,690   |              | 24 Feb 2004 |             
|                                                                            |                       |               | 1 Apr 2003     |             | 108      |             |          |            | 350,208   |      |        |   |  |   |         |       | 350,208   |              | 1 Apr 2004  |             
|                                                                            |                       |               | 4 Aug 2003     |             | 245      |             |          |            | 977,550   |      |        |   |  |   |         |       | 977,550   |              | 4 Aug 2004  |             
|                                                                            | Plan 2000             |               | 24 Sep 1998    |             | 550      |             | 16,000    |            |          |      |        |   |  |   |         |       | 16,000    |              | 24 Sep 2001 |             
|                                                                            |                       |               |                |             |          |             |           |            |           |      |         |   |   |   |          |       |           |              |             |             
|Total                                                                       |                       |               |                |             |          |             | 1,406,115 |            | 2,192,673 |      | 279,384 |   |  |   | (104,547 | )     | 3,494,241 |              |             |             
|                                                                            |                       |               |                |             |          |             |           |            |           |      |         |   |   |   |          |       |           |              |             |             

---

| |                                                            |   
| | ---------------------------------------------------------- | --
| | Reuters Group PLC Annual
        Report and Form 20-F 2003 | 23

---



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|Directors share
        optionscontinued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|5.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|6.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|7                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|The
        total interests of the current directors and other senior management
        in the issued share capital of the Group and in shares underlying options
        and incentive plans are shown below as at 3 March 2004. No director or
        senior manager beneficially owns 1% or more of the Groups issued
        share capital. Interests in ordinary shares (excluding options and interests
        in long-term incentive plans disclosed above) held at 1 January 2003
        and 31 December 2003 are also shown for directors in office at 31 December
        2003. Directors were the beneficial owners of all shares except for 814
        shares, 35,000 shares and 16,875 shares held by family members of the
        Chairman, Charles Sinclair and David Grigson respectively and for 52,451
        shares held by a trust of which Tom Glocer is a beneficiary.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

|                                                        |                                                   |         |                                                     |            |         |  |                                     |  |           | 
|------------------------------------------------------- | ------------------------------------------------- | ------- | --------------------------------------------------- | ---------- | ------- |  | ----------------------------------- |  | --------- | 
|                                                        | Interests at      1 January      2003      Shares |         | Interests at      31 December      2003      Shares |            |         |  | Interests at
          3 March 2004 | 
|                                                       
|                                                        |                                                   |         |                                                     | Long-term 
|Shares                                                  |                                                   | Options |                                                     | incentives
|                                                        |                                                   |         |                                                     |            |         |  |                                     |  |           | 
|Directors:                                              |                                                   |         |                                                     |            |         |  |                                     |  |           | 
|Sir Christopher Hogg                                    | 53,321                                            |         | 63,321                                              |            | 63,321  |  | 1,012                               |  |          | 
|Tom Glocer                                              | 24,576                                            |         | 217,058                                             |            | 217,058 |  | 4,765,516                           |  | 2,853,314 | 
|David Grigson                                           | 10,045                                            |         | 48,430                                              |            | 48,430  |  | 848,305                             |  | 506,078   | 
|Devin Wenig                                             | n/a                                               |         | 78,354                                              |            | 78,354  |  | 766,934                             |  | 436,212   | 
|Sir John Craven                                         | 6,846                                             |         | 6,846                                               |            | 6,846   |  |                                    |  |          | 
|Niall FitzGerald                                        | 12,500                                            |         | 30,000                                              |            | 30,000  |  |                                    |  |          | 
|Edward Kozel                                            | 120,000                                           |         | 90,000                                              |            | 67,500  |  |                                    |  |          | 
|Roberto Mendoza                                         | 28,000                                            |         | 53,000                                              |            | 53,000  |  |                                    |  |          | 
|Richard Olver                                           | 10,000                                            |         | 10,000                                              |            | 10,000  |  |                                    |  |          | 
|Charles Sinclair                                        | 32,100                                            |         | 35,000                                              |            | 35,000  |  |                                    |  |          | 
|Ian Strachan                                            | 1,500                                             |         | 15,500                                              |            | 15,500  |  |                                    |  |          | 
|                                                        |                                                   |         |                                                     |            |         |  |                                     |  |           | 
|Other senior managers as a group (10
          persons) | 317,386                                           |         | 433,155                                             |            | 322,125 |  | 3,945,536                           |  | 1,935,407 | 
|                                                        |                                                   |         |                                                     |            |         |  |                                     |  |           | 

As at the date of this report Tom Glocer,
    David Grigson, Devin Wenig and Edward Kozel each held 1,000 shares in the
    Instinet Group and Ian Strachan held 17,780 shares. The other senior managers
    as a group held interests in 3,000 shares of Instinet Group.

None of the directors has notified the company
    of an interest in any other shares, or other 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
    2003 save as otherwise disclosed in this report.

|8                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Remuneration and pension
          arrangements for past directors
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------
|André Villeneuve, a
        former director of both the company and Instinet Group, continues to
        receive his base salary from the Instinet Group of £360,098 (US$600,000)
        per annum from 1 January 2003 until 30 November 2004 in accordance with
        the terms of his severance agreement with Instinet Group. He also received,
        in February 2003, a payment of £528,294 (US$861,120) in lieu of
        bonus entitlements for that same period.

|                                                                                                                                                                                                                                             |                                             
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------
|9                                                                                                                                                                                                                                            | Subsidiary undertaking
          share plans
|A few subsidiary undertakings
        operate share plans over new or existing shares for their directors and
        employees. Of these, only the stock option plans operated by the Instinet
        Group are significant for the Group.

The Instinet 2000 Stock Option Plan permits
    the grant of options up to a maximum of 14% of the common stock outstanding
    immediately after the completion of the Instinet Group IPO in May 2001. Options
    may be granted to directors and employees of Instinet Group at an exercise
    price of not less than fair market value at the date of grant. Options normally
    vest in instalments over a four-year period and may not exceed a term of
    ten years. Approximately 1,050 employees and directors of Instinet Group
    participate in the plan. At 31 December 2003, options were outstanding over
    approximately 27.1 million Instinet Group shares, equivalent to 8.2% of Instinet
    Groups outstanding common stock. These options have exercise prices
    ranging from US$18.70 to US$3.25 per share with a term of seven years from
    grant.

As a result of the acquisition by the Instinet
    Group of Island in 2002, a further 953,235 shares under option were outstanding
    under the Island stock option plan (and are now exercisable into Instinet
    Group common stock) as at 31 December 2003. Exercise prices range from US$0.91
    to US$8.48 (on an adjusted basis) with a term of ten years from grant.

On behalf of the BoardSir Christopher HoggChairman 
3 March 2004

|   |                                                            | 
|-- | ---------------------------------------------------------- | 
|24 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 

---



Back to Contents

Statement of directors responsibilities



Financial reporting The 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 the Group
      as at the end of the financial year and of the profit and cash flows of
      the Group for the period. Reuters Group is also required to prepare financial
      statements in accordance with the requirements of the SEC. Reuters Group 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, the
      directors confirm 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. Directors responsibilities The directors are also responsible for keeping
      proper accounting records which disclose with reasonable accuracy at any
      time the financial position of the Group and which enable them to ensure
      that the financial statements comply with the Companies Act 1985. They
      are also responsible for safeguarding the assets of the company and the
      Group and hence for taking reasonable steps for the prevention and detection
      of fraud and other irregularities. The directors have reviewed the budget and
      cash flow forecasts for the Group and the company for the year to 31 December
      2004 and outline projections for the subsequent year in the light of the
      financial position and borrowing facilities at 31 December 2003. 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. Risk management, internal
        controls and disclosure controls and proceduresThe directors acknowledge their responsibility
      for the Groups system of internal control and confirm they have reviewed
      its effectiveness. In doing so, the Board has taken note of the Guidance
      on Internal Control (the Turnbull Guidance) contained in the new Combined
      Code. The Board confirms that it has adopted a
      process for identifying, evaluating and managing significant risks faced
      by the Group. This process, which accords with the Turnbull guidance, has
      been in place for the full financial year and is ongoing. The control system
      includes: objective setting, risk assessment and monitoring of performance
      at both strategic and business unit levels through a process known within
      the company as mission analysis; the use of balanced
      scorecards to track performance against targets relating to the financial,
      business, people and customer aspects of the companys business; written
      policies and control procedures; monthly financial reporting to the Board
      and senior management which, amongst other things, tracks performance against
      the annual budget; and systems to communicate rapidly to appropriate managers
      incidents requiring immediate attention. In a group of the size, complexity
      and geographical diversity of Reuters it should be expected that breakdowns
      in established control procedures might occur. There are supporting policies
      and procedures for reporting and management of control breakdowns. The
      Board considers that the control system is appropriately designed to manage,
      rather than eliminate, the risk of failure to achieve business objectives
      and can only provide reasonable and not absolute assurance against material
      misstatement or loss. The concept of reasonable assurance recognises that
      the cost of a control procedure should not exceed the expected benefits. Using a common risk management framework
      throughout the organisation, each of the principal business and functional
      units summarises the risks that could impede the achievement of its objectives.
      For each significant risk, line managers document an overview of the risk,
      how it is managed and any improvement actions required. Risk reports covering
      operational, financial and strategic risks are submitted for review by
      the Group Management Committee, the Audit Committee and the Board. A common
      risk assessment process has also been adopted as an integral part of major
      programmes such as the Fast Forward programme.




At the year end, before producing the statement
      on internal control in this annual report and Form 20-F, the Chief Executive
      and Finance Director meet with each member of the Group Management Committee
      to consider formally the operation and effectiveness of the Groups
      risk management and financial, operational and compliance internal control
      systems. This review includes consideration of self-assessment reports
      from line management and covers each of the most significant risks the
      Group faces and how well these are controlled and managed. The Chief Executive
      and the Finance Director report on the results of this review to the Audit
      Committee and to the Board. The Disclosure Committee (described on page
      16) supports the process by reviewing disclosure controls and procedures. Instinet Group and TSI, which are both listed
      on Nasdaq, have their own systems of risk management and internal controls
      on which they each report to their shareholders. The boards of Radianz
      and Factiva, which include Reuters representatives, have responsibility
      for adopting processes for identifying, evaluating and managing significant
      risks in their respective businesses. Reuters assessment of the main risks
      relating to its affiliate companies are considered by the members of the
      Group Management Committee and included, where required, in the Chief Executives
      report to the Board and Audit Committee. In addition to the self-assessment and management
      review procedures, the Group monitors its internal financial control system
      through a programme of internal audits. Internal auditors independently
      review the controls in place to manage significant risks and report to
      the Audit Committee twice a year. The Audit Committee reviews the assurance
      procedures, including compliance controls, on a bi-annual basis and reports
      their findings to the Board. The Groups external auditors, PricewaterhouseCoopers,
      have audited the financial statements and have reviewed the work of internal
      auditors and the internal control systems to the extent they consider necessary
      to support their audit report. The Audit Committee has met internal auditors
      and PricewaterhouseCoopers to discuss the results of their work. During 2003, the directors were not aware
      of any control breakdowns that resulted in a material loss. The company carried out as of the end of
      the period covered by this report, an evaluation under the supervision
      and with the participation of Reuters Group management, including the Chief
      Executive and Finance Director, of the effectiveness of the design and
      operation of the Groups disclosure controls and procedures which
      are defined as those controls and procedures designed to ensure that information
      required to be disclosed in reports filed under the Securities Exchange
      Act of 1934 is recorded, summarised and reported within specific time periods.
      Based on the evaluation, the Chief Executive and the Finance Director concluded
      that the design and operation of these disclosure controls and procedures
      were effective. No significant changes were made in the Groups internal
      controls over financial reporting during the period covered by this report
      that materially affected, or are reasonably likely to affect materially,
      the Groups internal control over financial reporting. By order of the BoardRosemary Martin General Counsel and Company Secretary 
  3 March 2004


| |                                                            |   
| | ---------------------------------------------------------- | --
| | Reuters Group PLC Annual
        Report and Form 20-F 2003 | 25

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United States opinion



To the Board of directors
        and shareholders of Reuters Group PLC In our opinion, the consolidated balance
      sheets and the related consolidated statements of income, total recognised
      gains and losses, cash flows and movements in shareholders equity
      present fairly, in all material respects, the financial position of Reuters
      Group PLC and its subsidiaries at 31 December 2003, 2002 and 2001, and
      the results of their operations and their cash flows for each of the three
      years in the period ended 31 December 2003, in conformity with accounting
      principles generally accepted in the United Kingdom. These financial statements
      are the responsibility of the Groups management; our responsibility
      is to express an opinion on these financial statements based on our audits.
      We conducted our audits of these statements in accordance with auditing
      standards generally accepted in the United States of America, which require
      that we plan and perform the audit to obtain reasonable assurance about
      whether the financial statements are free of material misstatement. An
      audit includes examining, on a test basis, evidence supporting the amounts
      and disclosures in the financial statements, assessing




the accounting principles used and significant
      estimates made by management, and evaluating the overall financial statement
      presentation. We believe that our audits provide a reasonable basis for
      our opinion. Accounting principles generally accepted
      in the United Kingdom vary in certain important respects from accounting
      principles generally accepted in the United States of America. Information
      relating to the nature and effect of such differences is presented in the
      Summary of differences between UK and US generally accepted accounting
      principles.PricewaterhouseCoopers
    LLP Chartered Accountants and Registered Auditors
    London
    3 March 2004




|26 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 
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Operating and financial review



Review of year end results Under US law, all statements other than
      statements of historical fact included in this review are, or may be deemed
      to be, forward-looking statements within the meaning of Section 27A of
      the Securities Act of 1933 and Section 21E of the Securities Exchange Act
      of 1934. Certain important factors that could cause actual results to differ
      materially from those discussed in such forward-looking statements are
      described under Section 8 Risk factors on pages 40-41 as well
      as elsewhere in this review. All written and oral forward-looking statements
      made on or after the date of this report and attributable to Reuters are
      expressly qualified in their entirety by such factors. 1
      Key financial performance
          measuresThe Reuters Group measures
          its performance by reference to revenue and profit, operating margin,
          earnings per share and cash flow. To supplement these UK GAAP measures, the
      Group undertakes further analysis to break them out into their component
      parts, which results in the creation of certain non-GAAP measures. The
      rationale for this analysis is outlined below and reconciliations of the
      non-GAAP measures used herein to UK GAAP are included within the review
      of results. These measures are used by management to measure the performance
      of the business and should be seen as complementary to, rather than replacements
      for, reported statutory results. Underlying results Period-on-period change in Reuters is measured
      both in overall terms (ie actual reported results under UK GAAP) and in
      underlying terms. Underlying change is calculated by excluding the impact
      of currency fluctuations and the results of acquisitions and disposals. The impact of currency fluctuations is excluded
      from underlying results to enable period-on-period comparison of the operating
      results of Reuters on a like-for-like basis. Variations in currency exchange
      rates impact the results because the Reuters Group generates revenues and
      incurs costs in currencies other than its reporting currency. Year-on-year,
      currency exchange rate movements will influence the reported numbers to
      a greater or lesser extent, and therefore they are discussed separately
      from the underlying results to make clear their impact on the overall growth
      or decline in operations. Underlying results are calculated by restating
      the prior periods results using the current periods exchange
      rates. This also reflects the variables over which management has control,
      as business units do not manage currency exposure and business unit operating
      performance is managed against targets set on a constant currency basis.
      Currency exposure is hedged as described in Section 6 Treasury management on
      pages 38-39. The impact of acquisitions and disposals
      is also excluded from underlying results to enable period-on-period comparison
      of the operating results of Reuters on a like-for-like basis. Underlying
      results are calculated by excluding the results of entities acquired or
      disposed of during either the current or prior period, from the results
      of each period under review. Underlying results reflect the operating results
      of the ongoing elements of each business unit, and measure the performance
      of management against variables over which they have control, without the
      impact of changes in rates of foreign exchange, and without the year-on-year
      impact of a step change in revenue and costs that can result from acquisition
      or disposal activity. Underlying figures also allow investors
      to compare the reported Reuters results with the forward-looking guidance
      issued by Reuters to the investor community. Because it is not able to
      forecast currency movements or the exact timing and impact of acquisition
      and disposal activity, Reuters communicates its revenue guidance to investors
      on an underlying basis. Therefore, providing the underlying results in
      addition to the actual reported results assists investors in making their
      own assessment of Reuters performance against the guidance given by management.




Exclusion of restructuring
        charges Reuters results are reviewed before and
      after the impact of Reuters business transformation plan, which includes
      the Fast Forward programme. Under the Fast Forward programme, Reuters is
      incurring restructuring costs, relating primarily to headcount reduction
      and rationalisation of the companys property portfolio. Fast Forward
      is a three-year programme implemented to accelerate and expand on Reuters
      five-year business transformation plan which was launched in 2001; the
      programme is scheduled to complete in 2005 as originally envisaged. The Fast Forward programme is centrally
      managed, and its performance against targets is evaluated separately from
      the normal day-to-day business of Reuters. The six principal components
      of Fast Forward are outlined under Company information on page
      6. As the restructuring charges are incurred
      as part of centrally managed programmes of activity, they do not form part
      of Reuters ongoing business. Restructuring charges are therefore excluded
      from certain profit and margin measures, so as to provide a more detailed
      analysis and understanding of the ongoing business. Restructuring charges
      are considered exceptional under UK GAAP and are separately identified
      in note 2 on the consolidated profit and loss account, but because the
      charges are being incurred over more than two years they are considered recurring.

      However, because of their time-limited and defined nature, Reuters believes
      presenting certain profit measures both including and excluding such charges,
      gives investors better perspective into the performance of Reuters. In
      addition, Reuters management uses both measures to assess the performance
      of management and the business. Exclusion of amortisation
        of goodwill and other intangibles, impairments and disposals For certain cost, profit, margin and earnings
      per share measures, Reuters analyses its results both before and after
      the impact of restructuring, amortisation of goodwill and other intangibles,
      impairments and disposals. The rationale for isolating restructuring charges
      is explained above. Reuters also isolates the impact of income and charges
      in respect of its investments. These charges relate to goodwill and other
      intangibles amortisation and impairments of subsidiaries, associates and
      joint ventures and amounts written off fixed asset investments. Income and charges from investments relate
      to pre-tax profits and losses on disposal of subsidiaries, associates,
      joint ventures and fixed asset investments. The non-GAAP EPS measure also
      eliminates the earnings impact of non-recurring tax charges and credits
      related to impairments, reorganisations and disposals. Such charges and
      income arise from corporate acquisition and disposal activity, rather than
      from the ongoing operations of the business units. These are analysed and
      reviewed separately from ongoing operations, as this is consistent with
      the manner in which Reuters sets internal targets, evaluates its business
      units and issues guidance to the investor community. Acquisition and disposal
      activity does not form part of the operations controlled by business unit
      management, and decisions around such activity are usually determined centrally. Presenting earnings before amortisation
      of goodwill and other intangibles, impairments and disposals and the above
      non-recurring tax items also helps investors measure performance in relation
      to the Groups dividend policy. In October 2001, Reuters Group defined
      the long term goal of its dividend policy to be a dividend cover of at
      least two times, based on Reuters earnings before amortisation of goodwill
      and other intangibles, impairments and disposals.




| | Reuters Group PLC Annual
        Report and Form 20-F 2003 | 27
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Operating and financial reviewcontinued

Note: Group operating loss
          in 2002




Free cash flowReuters free cash flow is used as a performance

      measure and to assess the extent of the Groups dividend cover from
      a cash perspective. Free cash flow is intended to measure all Reuters cash
      movements other than those which are both discretionary in nature and unrelated
      to ongoing operating activities such as purchases of shares by the ESOTs,
      loans to associates and dividends paid out by the Group. Whilst Reuters
      believes that free cash flow is an important performance measure in respect
      of its cash flows, it is not used in isolation, but rather in conjunction
  with other cash flow measures as presented in the financial statements. 2 Financial overviewIntroductionThe financial services markets in which
      the Reuters Group operates remained cost conscious and competitive in 2003,
      resulting in reductions in revenues at both Reuters and the Instinet Group
      for the second successive year. The Reuters Group returned to profit in
      2003 at both the operating and pre tax levels, as the declines in revenues
      were offset by the impact of cost containment and restructuring programmes
      within the Group, which reduced the cost base. Also the level of impairment
      charges and goodwill write-downs that depressed last years earnings
      were not repeated in 2003. Earnings and cash flow have enabled the full
  year dividend to be maintained at 10.0 pence. The beginning of a cyclical recovery in
      the financial services industry towards the end of 2003 resulted in a reduction
      in the rate of decline in revenue, although the pattern is not uniform.
      The US recovery is strong, Asia is showing a modest improvement, and Europe
      is lagging but showing some signs of an upturn. Structural changes remain
      a factor in the financial markets, with overcapacity still being an issue,
      particularly in Europe. The competitive outlook is improving due to enhancements
      to the Reuters product line and improvements in customer service which
      are both translating into new business. Summary of resultsYear
          to 31 December2003
      
      2002
      
      2001£m
      
      £m
      
      £mRevenue:Reuters
      2,664
      
      2,992
      
      3,042Instinet Group
      540
      
      592
      
      854Intra-group
      (7
      )
      (9
      )
      (11
      )Reuters Group revenue
      3,197
      
      3,575
      
      3,885Operating costs:Reuters
      (2,490
      )
      (2,797
      )
      (2,887
      )Instinet Group
      (588
      )
      (931
      )
      (707
      )Intra-group
      7
      
      9
      
      11Reuters Group operating costs
      (3,071
      )
      (3,719
      )
      (3,583
      )Operating profit:Reuters
      174
      
      195
      
      155Instinet Group
      (48
      )
      (339
      )
      147Reuters Group operating profit
      126
      
      (144
      )
      302Affiliates
      (35
      )
      (74
      )
      (85
      )Impairments and disposals
      (13
      )
      (256
      )
      (53
      )Fixed asset investments
      
      
      1
      
      3Net interest
      (29
      )
      (20
      )
      (9
      )Profit before tax:Reuters
      95
      
      (123
      )
      10Instinet Group
      (46
      )
      (370
      )
      148Reuters Group profit before tax
      49
      
      (493
      )
      158




|28 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 
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2003 results compared
        with 2002Reuters Group revenue declined by 11%
      to £3,197 million. Reuters revenue was down 11% to £2,664 million
      and by 12% on an underlying basis, reflecting weak trading conditions in
      global financial markets. Instinet Group revenue was down 9%, largely reflecting
      the adverse impact of the weaker US dollar on Instinet Group revenues. A reconciliation of the UK GAAP percentage
      change in Reuters revenue in 2003 compared to 2002, to the underlying percentage
      change, is set out below: Impact ofUnderlying
      
      Impact of
      
      acquisitions
      
      ActualRevenue
      change
      
      currency
      
      and disposals
      
      changeReuters
      (12%
      )
      (1%
      )
      2%
      
      (11%
      ) As a consequence of declining revenues over
      the past two years, actions have been taken at both Reuters and Instinet
      Group to reduce the operating cost base. Impairment charges and goodwill
      write-downs dropped from £314 million to £121 million. The
      result has been a reduction in Reuters Group operating costs in 2003 of
      17%. The Reuters Group operating loss of £144
      million in 2002 was converted to a £126 million profit in 2003. Reuters
      operating profit decreased by £21 million to £174 million,
      largely driven by an increase in restructuring charges. Excluding amortisation
      of goodwill and other intangibles, impairments and restructuring charges,
      Reuters generated an operating profit of £404 million (2002: £393
      million), with the 3% increase reflecting strong cost control across all
      business units. Instinet Groups operating loss decreased from £339
      million in 2002 to £48 million in 2003, mainly due to goodwill impairment
      charges last year of £208 million. Reuters Group operating margin was 3.9%
      in 2003. The Reuters operating margin remained at 6.5% on an actual basis,
      and increased from 13.1% to 15.2% before amortisation of goodwill and other
      intangibles, impairments and restructuring. A reconciliation of UK GAAP operating
      profit/(loss) and margin to the non-GAAP profit and margin measures is
      set out below: Year to 31
            DecemberReconciliation of non-GAAP
            operatingprofit and
            margin measures
      £m
      
      2003%
      
      £m
      
      2002%Reuters Group operatingprofit/(loss)/margin
      126
      
      3.9%
      
      (144
      )
      Exclude Instinet Groups operating
          loss
      48
      
      
      
      339
      
      Reuters operating profit/margin
      174
      
      6.5%
      
      195
      
      6.5%Exclude:Restructuring
            charges
      134
      
      5.1%
      
      112
      
      3.8%Amortisation
            of goodwilland other
            intangibles
      89
      
      3.3%
      
      86
      
      2.8%Impairment
            of goodwilland other
            intangibles
      7
      
      0.3%
      
      
      
      Reuters operating profit/marginbefore
          amortisation of goodwill andother
          intangibles, impairmentsand
          restructuring
      404
      
      15.2%
      
      393
      
      13.1%




The Reuters Groups share of affiliates losses
      decreased from £74 million in 2002 to £35 million in 2003.
      The main driver of this was a £31 million improvement in TSI, due
      to stronger cost control, minimal restructuring charges compared to 2002
      and a £2 million gain on investments compared to a £4 million
      loss last year, which resulted in a loss totalling £11 million in
      2003. Due to Reuters reduction of its TSI stake to 8.8% in early 2004,
      TSI will be treated as a fixed asset investment in future periods. The
      other key affiliates, Radianz and Factiva, contributed a broadly similar
      performance in 2003 compared to 2002. Radianz contributed a £27 million
      loss (£1 million higher than 2002) due to increased revenues being
      outweighed by impairment charges and restructuring costs. Factiva profit
      reduced by £1 million to £1 million, due to reduced revenue
      resulting from depressed market conditions and the shut-down of legacy
      product offerings, partially mitigated by cost reductions. All other affiliates
      contributed a net £2 million profit compared to an £8 million
      loss in 2002. This reflected the Reuters Groups portfolio rationalisation
      programme, and lower restructuring and impairment charges within the affiliates,
      compared to 2002. The net interest charge increased from £20
      million in 2002 to £29 million in 2003. This is partly due to the
      Multex (renamed Reuters Research) acquisition and also to a £4 million
      reduction in the interest receivable by affiliates due to the falling value
      of US dollar interest earnings. Included in the interest charge was a write-off
      of front-end fees of £4 million attached to Reuters syndicated loan
      facility. Impairment charges and net disposal losses
      have decreased from £256 million in 2002 to £13 million in
      2003. Losses in 2003 include a £17 million provision in respect of
      the disposal of two London-based properties, as part of the Fast Forward
      programme. In 2002, non-cash impairment charges included a £147 million
      charge in respect of a write down in the value of Reuters shares held in
      the ESOTs, due to the fall in Reuters share price over the course of 2002.
      In addition, in 2002, there were £81 million of charges taken to
      reflect a reduction in the carrying value of various investments held by
      the Group and net losses on disposal of £28 million. The losses included
      a £19 million loss on the deemed disposal of a portion of the Groups
      investment in Instinet Group, following the Island acquisition. The Reuters Group reported a profit before
      taxation of £49 million in 2003 compared to a loss of £493
      million in 2002. The 2003 profit is made up of a £95 million profit
      in Reuters, partly offset by a £46 million loss in Instinet Group.
      Excluding amortisation of goodwill and other intangibles, impairments and
      disposals, the Reuters Group profit before taxation was £190 million,
      up from £89 million in 2002. A reconciliation of UK GAAP profit before
      taxation to this measure is set out below: Year to 31
            DecemberReuters Group reconciliation
      2003
      
      2002
      
      2001of profit before taxation
      £m
      
      £m
      
      £mReuters Group profit/(loss) before taxation
      49
      
      (493
      )
      158Exclude:Amortisation of
          goodwill and otherintangibles
      108
      
      118
      
      93Impairments
      35
      
      436
      
      287Disposals
      (2
      )
      28
      
      (234
      )Reuters Group profit before
          taxation,amortisation of goodwill
          and other intangibles,impairments
          and disposals
      190
      
      89
      
      304Reuters Group profit/(loss) before taxation
      49
      
      (493
      )
      158Exclude Instinet Groups operating
          loss/(profit)
      46
      
      370
      
      (148
      )Reuters profit/(loss) before taxation
      95
      
      (123
      )
      10Exclude:Amortisation of
          goodwill and otherintangibles
      96
      
      97
      
      78Impairments
      20
      
      190
      
      274Disposals
      (3
      )
      30
      
      (235
      )Reuters profit before taxation,
          amortisationof goodwill and
          other intangibles,impairments
          and disposals
      208
      
      194
      
      127




| | Reuters Group PLC Annual
        Report and Form 20-F 2003 | 29
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Operating and financial reviewcontinued



The tax charge for 2003 was £22 million, £1
  million lower than 2002, when a charge arose due to the non-deductible nature
  of amortisation charges, and certain write downs, as well as from a dividend
  paid by Instinet Group. A reconciliation of the tax charge to the charge expected
  by applying the standard 30% UK rate of corporation tax to the reported profits
  before taxation is provided in note 4 to the consolidated profit and loss account. The Reuters Group recorded basic earnings per share of
3.1 pence, as compared to a 29.0 pence loss per share in 2002. The 2003 EPS reflects
the Reuters Groups return to a net profit. The loss in 2002 primarily
reflects the £464 million non-cash impairment charges in that year. Reuters Group EPS before amortisation of goodwill and other intangibles, impairment of goodwill, disposals and non-recurring tax effects of impairments, reorganisations and disposals was 11.1 pence (2002: 6.8 pence).
EPS of Reuters on the same basis was 11.8 pence (2002: 10.8 pence).The improvements in both EPS measures are largely due to cost savings outstripping revenue declines. A reconciliation of UK GAAP EPS to these measures is set out below: Year
        to 31 DecemberReuters Group reconciliation
      of EPS
      2003pence
      
      2002pence
      
      2001penceReuters Group EPS
      3.1
      
      (29.0
      )
      3.3Exclude:Amortisation
        of goodwill and other intangibles
      7.7
      
      8.5
      
      6.6Impairments
      2.5
      
      31.3
      
      20.4Disposals
      (0.1
      )
      2.0
      
      (16.7
      )Adjustment to tax chargefor non-recurring tax effectsof impairments, reorganisationsand disposals
      (1.4
      )
      0.6
      
      Adjustment to equity minority interestfor effect of amortisation of goodwilland other intangibles, impairments and
        disposals
      (0.7
      )
      (6.6
      )
      Reuters Group EPS before amortisationof goodwill and other intangibles, impairments,disposals and non-recurring tax effects
        ofimpairments, reorganisations and disposals
      11.1
      
      6.8
      
      13.6Reuters Group EPS
      3.1
      
      (29.0
      )
      3.3Exclude Instinet Groups EPS
      1.9
      
      16.5
      
      (4.8
      )Reuters EPS
      5.0
      
      (12.5
      )
      (1.5
      )Exclude:Amortisation
        of goodwill and other intangibles
      6.8
      
      6.9
      
      5.5Impairments
      1.5
      
      13.6
      
      19.5Disposals
      (0.2
      )
      2.2
      
      (16.7
      )Adjustment to tax charge for non-recurringtax effects of impairments,reorganisations and disposals
      (1.3
      )
      0.6
      
      Reuters EPS before amortisation of goodwilland other intangibles, impairments, disposalsand non-recurring tax effects of impairments,reorganisations and disposals
      11.8
      
      10.8
      
      6.8




Cash flow
Net debt for the Reuters Group, as at 31 December 2003,
increased by £11 million to £77 million, consisting of net funds in Instinet Group of £533 million (a significant portion of which is required
to be held for regulatory capital and/or business purposes), and net debt in Reuters of £610
million. Reuters net debt position increased by £26 million due to higher restructuring cash outflows and the acquisition of Multex (renamed Reuters Research) for £155 million. Post year end, Reuters realised cash
proceeds of £311 million from the reduction of its stake in TSI, and applied these to reduce debt. Instinet Groups net cash position improved by £15 million, due to better cash collections and a decrease in capital expenditure from
£28 million to £8 million. Reuters Group net cash inflow from operating activities
was £429 million compared to £355 million in 2002. The improvement in Reuters Group net cash inflow was due to a £117 million increase in
Instinets net cash inflow, due to movements in net counterparty debtors and creditors. Reuters net cash inflow of £401 million was £43
million lower than in 2002, mainly due to lower revenues. Reuters generated free cash flow of £197 million in 2003 (2002: £214 million), providing funds of 1.4 times the dividend of £140
million. A reconciliation of net cash inflow from operating activities to free
cash flow is shown below: Reuters Group
              reconciliation  of net cash inflowfrom
              operating activities  to free cash flow
      Reuters£m
      
      InstinetGroup£m
      
      ReutersGroup£mYear to 31 December
        2003Net cash inflow from operating activities
      401
      
      28
      
      429Dividends received from associates
      3
      
      
      
      3Returns on investment and servicing of
        finance
      (35
      )
      7
      
      (28
      )Taxation paid
      (65
      )
      32
      
      (33
      )Capital expenditure and financial investment
      (107
      )
      (3
      )
      (110
      )Free cash flow
      197
      
      64
      
      261Year to 31 December
          2002Net cash inflow from operating activities
      444
      
      (89
      )
      355Dividends received from associates
      2
      
      
      
      2Returns on investment and servicing of
        finance
      (43
      )
      (21
      )
      (64
      )Exclude: Dividends
        paid to equityminority interests
      
      
      27
      
      27Taxation paid
      (79
      )
      6
      
      (73
      )Capital expenditure and financial investment
      (183
      )
      (28
      )
      (211
      )Exclude: Purchase
        of shares by ESOT
      65
      
      
      
      65Loans to associates
      6
      
      
      
      6Issue of shares
      2
      
      
      
      2Free cash flow
      214
      
      (105
      )
      109 Dividend per share
A final dividend of 6.15 pence has been proposed which, when added to the interim dividend of 3.85 pence, amounts to 10.0 pence per share, consistent with both 2002 and 2001.


|30 | Reuters Group PLC Annual Report
      and Form 20-F 2003 | 
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2002 results compared with 2001
  Reuters Group revenue in 2002 declined 8% to £3,575 million driven by a 31% decline in revenue at Instinet Group, primarily due to a reduction in transaction fees per share traded and a fall in overall Nasdaq
volumes. Reuters revenue was down 2% to £2,992 million, a 6% decline on
an underlying basis, reflecting weak trading conditions in global markets. A reconciliation of the UK GAAP percentage change in Reuters revenue in 2002 compared to 2001, with the underlying percentage change, is set out below: Impact ofUnderlying
      
      Impact of
      
      acquisitions
      
      ActualRevenue
      change
      
      currency
      
      and disposals
      
      changeReuters
      (6%
      )
      (2%
      )
      6%
      
      (2%
      ) Actions taken at both Reuters and Instinet Group reduced
Group operating costs by 17%. Included in operating costs in 2002 were restructuring
charges of £208 million of which £112 million was in Reuters,
and £96 million in Instinet Group. Similar charges in 2001 were £99 million, of which £82
million was in Reuters. An impairment charge of £208 million was incurred by Instinet Group in 2002 in respect of its subsidiaries, with no equivalent charge in the previous year. Group charges for amortisation of goodwill and other
intangibles in subsidiaries of £107 million, were £26 million higher than in 2001. Charges in Instinet Group increased by 50% to £21 million, whilst charges in Reuters rose by 28% to £86
million, mainly due to the full-year impact of Bridge, which was acquired on
1 October 2001. Group operating profit fell by 148% to a loss of £144 million, with Instinet Group incurring an operating loss of £339 million (2001: £147 million profit) and Reuters delivering an operating profit of
£195 million (2001: £155 million). The Reuters operating profit margin
increased from 5.1% in 2001 to 6.5% in 2002. Reuters operating profit before restructuring charges,
amortisation of goodwill and other intangibles and impairments, of £393 million (2001: £304
million), increased by 29%, due to reduction in costs exceeding the 2% revenue
decline. Operating margin on this basis improved to 13.1%.




A reconciliation of UK GAAP operating profit/(loss) and margin to the non-GAAP profit and margin measures is set out below: Year
        to 31 DecemberReconciliation
              of non-GAAP operatingprofit/(loss)
              and margin measures
      £m
      
      2002%
      
      £m
      
      2001%Reuters Group operating(loss)/profit/margin
      (144
      )
      
      
      302
      
      7.8%Exclude Instinet Groupsoperating loss/(profit)
      339
      
      
      
      (147
      )
      Reuters operating profit/margin
      195
      
      6.5%
      
      155
      
      5.1%Exclude:Restructuring
        charges
      112
      
      3.8%
      
      82
      
      2.7%Amortisation
        of goodwill andother intangibles
      86
      
      2.8%
      
      67
      
      2.2%Reuters operating profit/marginbefore amortisation of goodwill and otherintangibles, impairments and restructuring
      393
      
      13.1%
      
      304
      
      10.0% The Groups share of net operating losses of associates and joint ventures fell from £85 million in 2001 to £74 million in 2002, reflecting the Groups portfolio rationalisation programme,
increased efficiencies and reduced start-up costs. Of the three key affiliates, the profit from Factiva remained steady at £2 million, Radianz contributed a slightly lower loss at £26 million and TSI was significantly worse, moving from
a loss of £19 million in 2001 to a loss of £42 million in 2002, mainly due to significant non-cash restructuring and amortisation charges. All other affiliates contributed a net £8 million loss compared to a £41
million loss
in 2001. Interest charges increased by £11 million to £20 million in 2002. This was mainly due to £10
million lower interest received by Instinet Group, reflecting reduced operating
cash balances resulting
from trading performance and lower US interest rates. Impairments and disposals increased from £53 million to £256 million in 2002, mainly due to the write-down in the value of Reuters shares held in the ESOTs. Net losses on disposal in 2002 were £28
million, including a £19 million deemed partial disposal of Instinet Group, recorded on the acquisition of Island. Although a significant impairment charge was taken in 2001, this was partially offset by the £200
million gain attributable to a deemed disposal of a 15.1% interest, relating
to the initial public offering of Instinet Group. As a result, reported losses before taxation were £493 million, compared to profits of £158 million in 2001. Group profit before taxation and before amortisation of goodwill and other intangibles,
impairments and disposals was £89 million, compared to £304 million
in 2001.


| | Reuters Group PLC Annual
      Report and Form 20-F 2003 | 31
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Operating and financial reviewcontinued



The Reuters Group tax charge for 2002 was £23 million on reported losses before taxation of £493 million. This compares with a charge for 2001 of £107 million on reported profits before taxation of
£158 million. The tax charge for 2002 arose principally due to the non-deductible nature of write-downs in investments and amortisation charges. It also includes a £10
million charge paid on the dividend received from Instinet Group. A reconciliation
of the tax charge to the charge expected by applying the standard 30% UK rate
of corporation tax to the reported profits before taxation is provided in note
4 to the consolidated profit and loss account on page 47. The loss after taxation was £516 million compared to a profit of £51
million in 2001. The Group recorded a loss per share in 2002 of 29.0 pence compared to a basic EPS of 3.3 pence in 2001, reflecting the impairments. EPS before amortisation of goodwill and other intangibles, impairment of goodwill,
disposals and non-recurring tax effects of impairments, reorganisations and disposals was 6.8 pence (2001: 13.6 pence). EPS of Reuters on the same basis was 10.8 pence, a 58% increase over 2001 reflecting improved operating margins. A reconciliation
of UK GAAP profit before taxation and EPS to the non-GAAP measures is set out on page 29. The full year dividend was 10.0 pence in both 2001 and 2002. 3 Prospects
ReutersRecurring revenues (see Section 4 below) in Reuters in the last quarter of 2003 were down 9.8% on an underlying basis and 8.6% on an actual basis, compared to the last quarter of 2002, ahead of expectations and Reuters
guidance. Market conditions have improved such that Reuters expects the decline in underlying recurring revenue in the first quarter of 2004 to be 9% or slightly better compared to the first quarter of 2003. Further gradual improvement in the
decline in underlying recurring revenue is expected in the second quarter. Reuters expects to incur restructuring costs of approximately £125 million in 2004 and to deliver savings from its Fast Forward programme of approximately £145 million in 2004, in addition to the £75
million of savings from the programme in 2003. Restructuring expenditure over the course of the Fast
Forward programme is still anticipated to be £340 million. Targeted annualised savings by the end of 2005 remain at £440
million. Instinet GroupFrom mid-year 2003, Instinet Group has been reorganising its businesses to better exploit the worldwide trend towards greater efficiency and transparency in equities trading. The separation of the sell and buy side
parts of the business, and the consolidation of the order flows of the Island and Instinet electronic communications networks (ECN), were substantially completed in February 2004. Associated with these changes is a reduction in headcount of
approximately 185 employees, most of whom are expected to leave by July 2004.




4 Operating reviewReutersYear to 31 DecemberRevenue
        by type
  2003
  
  2002
  
  2001£m
  
  £m
  
  £mRecurring
   2,456
   
   2,707
   
   2,735Outright
   105
   
   163
   
   215Usage
   103
   
   122
   
   92Total Reuters
   2,664
   
   2,992
   
   3,042 Reuters classifies revenue into three distinct
  types  recurring, outright and usage. Recurring revenue, which makes
  up approximately 92% of Reuters 2003 revenues, refers to the sale of subscription
  products and includes maintenance fees from solutions sales. Recurring revenue
  declined by 9.3% in 2003 (10.2% on an underlying basis) compared to a decline
  of 1% in the previous year (4% on an underlying basis), reflecting the challenging
  market environment. User accesses stood at 427,000 at the year end, down 14% from December 2002, but down 11% excluding the impact of divestments made during the year. Average revenue per access in 2003 increased by 3% on an underlying
basis over 2002, reflecting a higher proportion of premium products primarily due to upgrades and the loss of accesses at the lower end of the price range. Access losses slowed as the year progressed, with a decline of just 1% in the fourth quarter
over the third quarter. Revenue from premium products (which comprises 3000 Xtra,
BridgeStation and Dealing) grew 10% (9% on an underlying basis) to £730 million, with the number of accesses also up 10%. Revenue from 3000 Xtra was
£418 million, up 30% on 2002. The installed base of 3000 Xtra grew steadily through 2003 reaching 69,000 at the end of the year, a 35% increase from the end of 2002. Around 7,000 of the 18,000 additional positions of 3000 Xtra installed in
2003 were new business as opposed to upgrades of existing accesses. Installations represented 91% of firm orders of 3000 Xtra as at the end of the year, compared to 87% at the end of 2002. Dealing revenues of £257
million were down 8% with the number of accesses down 9%. Premium tier accesses
now represent nearly a quarter of the total user base, compared to 19% at the
end of 2002. Average revenue per access for all premium products declined by
1% on an underlying basis compared to 2002,
driven by large customers moving into higher discount bands as their installed
base increased. Recurring revenue from legacy 2000/3000 series products
totalled £363 million and was down 34% (35% on an underlying basis). A
29% decline in accesses was partly due to migration to 3000 Xtra, as well as
cancellations due to market conditions and competitive losses. Revenue per access
declined 9% on an underlying basis compared to 2002, reflecting the migration
of higher priced accesses to 3000 Xtra.




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        20-F 2003 | 
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Revenue from mid and low tier products was £272
  million, down 16% (14% on an underlying basis), with accesses down 12%. 4%
  of the decline in accesses is attributable to divestments of certain Asian
  domestic products as part of the drive to simplify the product offerings. A
  high proportion of the accesses lost in this category were at the lower end
  of the very wide price range, the result of which was an increase in average
  revenue per access. Reuters
Trader and Reuters Knowledge were launched in the latter half of 2003 to grow
  market share in the mid tier. Recurring revenue from all other sources, which includes
exchange fees, software maintenance and rentals and site datafeeds, totalled £1,091
million, down 7% year-on-year and 9% on an underlying basis. Reuters saw good
growth from client infrastructure products, enterprise information products such
as DataScope and Bridge EJV and risk management applications such as Kondor+.
This growth was offset by revenue declines in exchange fees and other recoveries,
software maintenance and rentals, online media services and research and advisory
services. Outright revenue, comprising 4% of Reuters 2003 revenue,
is principally derived from the sales of solutions including software, hardware
and consultancy. Outright revenue declined by 36% (39% on an underlying basis)
due to continuing restrictions on customers IT budgets and Reuters decision
to exit unprofitable bespoke solutions businesses as part of Fast Forward. Usage revenue, 4% of Reuters 2003 revenue, is principally derived from Bridge Trading and Dealing products where revenue is generated based on trading volumes. Usage revenue was down 15% (10% on an underlying basis)
compared to 2002. Bridge Trading revenues declined 46% (41% on an underlying basis) due to weak equity markets early in 2003. Volatility in the foreign exchange markets, product enhancements and sales campaigns drove a 9% (20% underlying) growth in
Dealing Matching revenues compared to 2002. Year to 31 DecemberRevenue by Customer Segment
   2003
   
   2002
   
   2001£m
   £m
   £mTreasury
   1,018
   
   1,134
   
   1,189Investment Banking
   712
   
   834
   
   815Asset Management
   630
   
   709
   
   690Corporates & Media
   304
   
   315
   
   348Total Reuters
   2,664
   
   2,992
   
   3,042 Reconciliation of UK GAAPpercentage
         change tounderlying 2003
         over 2002
   Underlyingchange
   
   Impact ofcurrency
   
   Impact
       ofacquisitionsanddisposals
   
   ActualchangeTreasury
   (10%
   )
   (1%
   )
   1%
   
   (10%
   )Investment Banking
   (17%
   )
   (1%
   )
   3%
   
   (15%
   )Asset Management
   (12%
   )
   
   
   1%
   
   (11%
   )Corporates & Media
   (5%
   )
   (1%
   )
   2%
   
   (4%
   )Total Reuters
   (12%
   )
   (1%
   )
   2%
   
   (11%
   )Reconciliation of UK GAAPpercentage
         change tounderlying 2002
         over 2001
   Underlyingchange
   
   Impact ofcurrency
   
   Impact ofacquisitionsanddisposals
   
   ActualchangeTreasury
   (3%
   )
   (3%
   )
   1%
   
   (5%
   )Investment Banking
   (11%
   )
   (2%
   )
   15%
   
   2%Asset Management
   (4%
   )
   
   
   7%
   
   3%Corporates & Media
   (7%
   )
   (2%
   )
   (1%
   )
   (10%
   )Total Reuters
   (6%
   )
   (2%
   )
   6%
   
   (2%
   )




|Reuters Group PLC Annual
    Report and Form 20-F 2003 | 33
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Operating and financial reviewcontinued

Revenue is allocated to customer segments by reference
  to the activities at particular customer sites. Activities at certain customer
  sites fall into more than one segment. In such cases, revenue is allocated
  based on estimated activity by segment. Effective in 2004, Reuters has refined
  the structure of its segments, as discussed in Company information on
  page 6. The segmental analysis in future years will be restated to reflect
  the new
structure. Treasury ServicesThe Treasury Services segment held
up well as contraction and consolidation of foreign exchange desks slowed during
2003 and client revenues
  were buoyed by volatility in the foreign exchange markets. Revenue was £1,018
  million, down 10% on both an actual and underlying basis, compared to a 5%
  (3% underlying) decline in 2002. A decline in Dealing revenues was partially
  offset by strong demand for 3000 Xtra and by a growth in matching volumes. Recurring revenues within this segment experienced
  a decline of 9% to £905 million, compared to a decline of 4% in the prior year. Outright revenue declined by 35% to £52 million compared to an 18% decline
in 2002, reflecting the constraints on major IT projects by clients and Reuters decision to exit unprofitable bespoke solutions businesses as part of Fast Foward. Usage revenue grew by 13% to £61
million (2002: 4% growth), driven by increased activity on the Dealing Matching
systems, and to a lesser extent, by automated dealing and securities transactions
revenues. Investment BankingRevenue decreased by 15% (17% on
an underlying basis) to £712 million, compared to a 2% increase in 2002.
In 2003, customers faced with global equity market depression continued to cut
costs by eliminating
  duplicate information services and reducing headcount. The 2002 growth was
  due to the acquisition of Bridge, as on an underlying basis revenues declined
  by 11%. Recurring revenue declined by 11%, driven by cancellations of legacy 2000/3000 series, domestic information products and datafeed revenues, partly offset by growth in 3000 Xtra. Outright revenues fell 32% to £34 million, the
  same percentage fall as 2002, as banks remained reluctant to commit to new
  IT projects and Reuters decided to exit unprofitable bespoke solutions businesses
  as part
of Fast Foward. Usage revenue declined by 44% to £32 million,
  driven primarily by a decline in trading volumes at Bridge Trading. 2002 usage
  revenues grew 140% aided by a full year of strong trading performance by Bridge
  Trading; excluding Bridge Trading, 2002 growth was 11%.




Asset ManagementAn
11% (12% underlying) decline in Asset Management revenues to £630 million
was due to clients having lower levels of funds under management, which in turn
forced client cost reductions. 2003 revenues
  included Multex (renamed Reuters Research). Revenue growth of 3% in 2002 was
  driven by the Bridge acquisition (4% decline on an underlying basis). Recurring revenues declined by 10% (2002: 4% growth), with cancellations of 2000/3000 series and legacy domestic products responsible for the majority of the decline. Growth in 3000 Xtra, Reuters Plus and end-of-day
pricing and compliance feeds have partly offset these declines. Outright revenues declined by 39% (2002: 24%) to £19
  million, primarily due to the winding down of two large contracts which provided
  substantial revenues in 2002. Corporates & MediaRevenues from Corporates & Media declined 4% (2002: 10%) to £304
  million; on an underlying basis the decline was 5% (2002: 7%). Media revenues
  as a whole have been relatively robust, driven by customer demand for coverage
  of the Iraq war and its aftermath.  Year to 31 DecemberOperating costs
   2003£m
   
   2002£m
   
   2001£mCustomer Segments
   249
   
   278
   
   323Channels
   932
   
   1,103
   
   1,069Operations & Technology
   669
   
   728
   
   765Content
   286
   
   302
   
   315Corporate Services
   124
   
   188
   
   266Trading costs
   2,260
   
   2,599
   
   2,738Restructuring costs
   134
   
   112
   
   82Amortisation of goodwill and otherintangibles of subsidiaries
   89
   
   86
   
   67Impairment of subsidiaries
   7
   
   
   
   Operating costs
   2,490
   
   2,797
   
   2,887 Reuters operating costs were reduced by 11% in 2003, compared to a decrease of 4% in 2002. Favourable currency movements, particularly the weak US dollar, contributed 1.5% of the decline. Operating costs excluding
restructuring charges, amortisation of goodwill and other intangibles of subsidiaries and impairment of subsidiaries, reduced by 13%. The principal drivers of this reduction were pre-2003 restructuring programmes, enhanced by the Fast Forward
initiative. Staff costs fell by a net 8%, with reductions in headcount and cost per head partly offset by acquisitions, more staff being hired into customer-facing roles and increased numbers of product development staff in lower cost
locations.


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|34 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 

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Customer SegmentsCustomer Segments expenditure accounted
for 11% of trading costs in 2003, and reduced by £29 million or 10%, compared
to a reduction of 14% in 2002. The reduction was primarily driven by net headcount
  reductions. Marketing expenditure and professional services fees also declined,
  continuing a trend from 2002. ChannelsThe sales and client service Channel
costs accounted for 41% of 2003 trading costs. A £171 million, or 16% reduction
in 2003 compares to growth of 3% in 2002. A third of Channel costs are staff
related
  and the majority of Channel cost savings in 2003 came from staff cost reductions.
  A further third of Channel costs relate to market data and communications costs
  which are charged on to clients, and which have fallen in 2003, in line with
  the reductions in
end-users and market data cost reduction programmes undertaken by customers.
  Increased resourcing of client training and support activities has been outweighed
  by streamlining and efficiency gains. Operations & TechnologyOperations and Technology costs
accounted for 30% of trading costs and reduced by £59 million or 8% in
2003, compared to a reduction of 5% in 2002. The savings were primarily achieved in product development, principally from relocating to more cost effective locations and closing down some development facilities. Reductions in internal systems development and
support were also achieved by a combination of outsourcing and winding down of earlier infrastructure projects. ContentContent costs, comprising data
and editorial, represented 13% of trading costs and decreased by £16 million
or 5% in 2003, compared to a reduction of 4% in 2002. Cost savings have been
assisted by the product
  rationalisation programme, which has enabled more focused spend and use of
  resource. Corporate ServicesCorporate Services, which consists
of corporate head office functions and internal services, accounted for 5% of
trading costs in
  2003. A reduction in spend of £64 million or 34% was achieved in 2003,
  compared to
a reduction of 29% in 2002. Costs were lower than in 2002 due to headcount reductions, the winding down of investment projects and the programme to integrate fully the Bridge acquisition.


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        20-F 2003 | 35

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Operating and financial reviewcontinued

Restructuring   The Fast Forward programme, announced
in February 2003 as an acceleration and expansion of the previously announced
business transformation
plan, resulted in a restructuring charge of £144 million in the year,
within operating profit, partly offset by a release of £10 million relating to legacy programmes. The charge compares to previous business transformation plan charges of £112 million in 2002 and £82
million in 2001. In 2003, Fast Forward delivered a total of £75 million cost savings against an original target of £45
million. Some 1,500 staff were made redundant during the course of 2003, of whom
1,148 have already left
the company, with most of the rest to go in 2004. Amortisation of goodwill and other intangibles of subsidiariesAmortisation charges of £89 million in 2003 were slightly higher than in 2002, principally due to AVT (acquired in December 2002), and Multex (acquired in March 2003 and renamed Reuters Research), which together
resulted in a charge of £14 million in 2003. Amortisation in respect of
other subsidiaries decreased compared to 2002. Impairment of subsidiariesThe £7 million charge for the impairment of subsidiaries in 2003 (2002: £nil),
is in respect of EASE Technologies Inc, Yankee Research and Capital Access International. Research and developmentResearch and development expenditure
totalled £136 million in 2003 compared with £154 million in 2002 and £227
million in 2001. The decline in Reuters research and development costs largely reflects the impact of efficiency and cost reduction measures across the development organisation. This decline has been offset in part by costs arising
from the acquisitions of Multex (renamed Reuters Research) and AVT. Notable areas of spend in 2003 include investment in Reuters Trader and Reuters Knowledge and enhancements to our premium desktop and Risk offerings. Instinet GroupYear to 31
          December2003
    
    2002
    
    2001£m
    £m
    £mRevenue
    540
    
    592
    
    854Trading costs
    (519
    )
    (606
    )
    (676
    )Restructuring costs
    (44
    )
    (96
    )
    (17
    )Amortisation of goodwilland other intangibles of subsidiaries
    (12
    )
    (21
    )
    (14
    )Impairment of subsidiaries
    (13
    )
    (208
    )
    Operating costs
    (588
    )
    (931
    )
    (707
    )Operating (loss)/profit
    (48
    )
    (339
    )
    147 While trading volume in the US equity markets
    as a whole has continued to show moderate growth since 2002, Instinet Groups
    most significant market, Nasdaq, has experienced a decline since 2001. Average
    daily trading volume in Nasdaq-listed stocks was down 3.5% for the full year
    2003; however, during the last half of 2003, volume increased and remained
    at a higher level than 2002. Instinet Groups market share, both in
    Nasdaq-listed and US exchange-listed shares, increased significantly in the
    last quarter of 2002 due to the acquisition of Island in September of that
    year. After declining at the end of 2001, and increasing due to organic growth
    and the acquisition of Island in 2002,
Instinet Groups Nasdaq market share has fluctuated during 2003. Instinet
Group trading volumes in Nasdaq-listed equity shares was 119.7 billion in 2003,
an increase from 81.9 billion in 2002 and 65.9 billion in 2001. Instinet Groups
US exchange-listed share volume rose to 20.3 billion in 2003 from 15.7 billion
in 2002 and 11.0 billion 2001.




The following charts illustrate
  the trend of US equity
  trading volume and Instinet Groups market share over the last three years:   The volatility in market share reflects the intense competitive environment within the brokerage business, which has resulted in price reductions since 2001. In September 2001, Instinet Group reduced average prices by
11%, due to a new pricing schedule for US broker-dealer customers. In March 2002, it implemented a new pricing plan for these customers including further reducing prices for trading listed stocks by approximately 60%. In October 2003, it reduced
pricing for routing orders in Nasdaq-listed stocks to other trading venues through its automated smart order-routing system by 37%. Instinet Group continues to monitor future price competition
and evaluate its pricing structure as part of its ongoing efforts to maintain
and expand INETs liquidity pool. The Reuters Group is unable to
anticipate whether the changes in trading volumes and pricing are indicative of future trends, although management expectation is that the intense competition may continue, and if it or the other adverse factors continue or intensify, Instinet
Groups revenues could be adversely affected. In 2003, Instinet Groups revenues declined 9% to £540
million, due primarily to the US dollar weakness and increases in trading volumes
being offset by reductions in pricing (2002: 31% decrease). Excluding restructuring, amortisation and impairment charges, costs were down by 14%. Half the reduction is due to the weaker US dollar. The remainder is largely due to staff cost reductions and to lower market data
and client communications costs. Restructuring charges of £44 million were £52
million lower than in 2002.


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Amortisation charges reduced by £9 million to £12 million in 2003. Charges for the impairment of subsidiaries of £13 million in 2003 relate primarily to Island technology assets and are significantly
  lower than the £208 million impairment recorded in 2002. Operating losses were £48 million compared to a loss of £339 million in 2002 and a profit of £147 million in 2001. Efficiency gains played a significant part in this improved operating performance,
with 18% of Instinet Groups work force leaving the company during 2003. An £11 million decline in Instinet Groups research and development costs in 2003 principally reflects the wind down of major investment projects initiated in 2002. 5
    Financing needs
      and capital structureReuters finances its operations
          by a mixture of cash flows from operations, short-term borrowings from
          banks and commercial paper markets, backed up as required by committed
          bank facilities and finance from capital markets. Reuters manages its
          net debt position and interest costs to support its continued access
          to the full range of debt capital markets. Reuters expects to be able
          to finance its current business plans from ongoing operations and its
          external
facilities. Syndicated credit facilityIn April 2003, Reuters entered
into a new committed syndicated credit facility, replacing its previous facility.
At 31 December 2003, Reuters Group PLC had available £1 billion under the new facility, of which
£640 million expires in April 2008 and £360 million expires in April 2004, with the ability to extend the maturity of the latter in whole or in part in certain circumstances. The facility was undrawn at 31 December 2003. In January 2004,
the company cancelled £200 million of the portion of the syndicated facility
which expires in April 2004. The facility is generally on customary terms and conditions. Drawings under the facility may be made in sterling, euros or other currencies agreed at the time and bear interest at LIBOR plus a margin, variable
according to the long-term credit rating of the company. The facility cross-defaults upon default by Reuters in payment or acceleration of any other borrowings in excess of £20 million. The facility contains two financial covenants: that
Reuters operating profit before interest, tax and amortisation (subject to certain adjustments) should be greater than 2.75 times net finance charges and that Reuters net borrowings should not be greater than 3.50 times Reuters operating profit
before depreciation and amortisation (subject to certain adjustments). As at 31 December 2003, Reuters complied with both of these covenants.




Bilateral loan facilitiesAt the same time as the syndicated
credit facility was arranged, committed bilateral facilities of £90 million were also put in place on similar terms, all of which were undrawn at 31 December 2003. In January
2004, the company cancelled £10 million of the facilities which expire
in April 2004. Euro Commercial Paper ProgrammeA £1.5 billion Euro Commercial Paper Programme was established in 1998. At 31 December 2003, Reuters Group PLC had outstanding obligations of £13 million under this programme, repayable at various dates up
to May 2004. The minimum outstanding during 2003 was £13 million and the maximum was £548
million. The programme is generally on customary terms and conditions, including a condition that Reuters should not be in default on any other debt or similar obligation. The programme has no final maturity date and there is
no requirement to update the programme documentation. Debt is issued at market rates agreed between the issuer and the dealer. The programme documentation contains no financial covenants. Euro Medium Term Note ProgrammeIn 1998, Reuters also established
a £1 billion Euro Medium Term Note Programme. The programme is generally on customary terms and conditions. The programme has no final maturity date but the offering circular,
containing financial information, is updated each year to allow issuance to continue. Debt is issued at market rates agreed between the issuer and the dealer. Notes issued prior to March 2001 (totalling approximately £195 million principal
value as at 31 December 2003) cross-default upon default by Reuters Group in payment or acceleration of any other borrowings in excess of £20
million; notes issued after this date have no cross-default provision. The programme
documentation
contains no financial covenants. At 31 December 2003, Reuters had outstanding obligations of £727 million under the programme, repayable at various dates up to November 2010 including a Euro 500 million public bond issued in November 2003 and
maturing in November 2010. The minimum outstanding during 2003 was £403 million and the maximum was £744 million. Short-term uncommitted facilitiesIn addition, Reuters has short-term
uncommitted bank borrowing facilities denominated in various currencies, the
sterling equivalent of which was approximately £155 million. Drawings under these lines were
£10 million at 31 December 2003. Instinet Group has access to the equivalent
of US$357 million short-term uncommitted bank facilities, of which US$21 million
was drawn at 31 December 2003.


| |                                                            |   
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| | Reuters Group PLC Annual
        Report and Form 20-F 2003 | 37

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Operating and financial reviewcontinued



Contractual financial obligationsThe following table summarises the
  Groups principal contractual financial obligations at 31 December 2003,
  certain of which are described in the consolidated financial statements and
  notes. The Group expects to be able to fund such obligations from ongoing operations
  and its external facilities. Payments due
        by periodContractual
        obligations
      Total
£m
      
      Less
          than 1 year
      £m
      
      1-3years£m
      
      4-5years£m
      
      After 5years£mShort-term debt
      365
      
      365
      
      
      
      
      
      Long-term debt
      406
      
      
      
      406
      
      
      
      Operating leases
      697
      
      97
      
      156
      
      117
      
      327Purchase obligations
      73
      
      73
      
      
      
      
      
      Total contractual obligations
      1,541
      
      535
      
      562
      
      117
      
      327 6
      Treasury managementThe key objectives of Reuters Group
          treasury management are to ensure sufficient liquidity exists to meet
          funding needs and to manage the interest rate and currency risks arising
      from the Groups operations and its sources of finance.Reuters borrows in many currencies,
          at both fixed and floating rates and uses derivative contracts to create
          the desired currency and interest rate basis. Derivatives used are
          principally interest rate swaps, forward rate agreements, interest
          rate caps and collars, currency swaps, forward foreign exchange contracts
      and currency options.The main risks managed by the Group
          Treasurer, under policies approved by the Board, are foreign currency
          risk, interest rate risk, liquidity and refinancing risk and counterparty
          credit risk. A Treasury Committee of the Board periodically reviews
          Reuters treasury activities, policies and procedures. All treasury
          activity takes place within a formal control framework. A separate
      treasury department exists within Instinet Group.




Almost 90% of Group revenue is denominated
  in non-sterling currencies. The Group also has significant costs denominated
  in foreign currencies with a different mix from revenue. Group profits are therefore
  exposed to currency fluctuations. The approximate proportions of operating profit,
  excluding goodwill amortisation and currency gains received in each key currency
  group, were as follows: Year to 31
        DecemberGroup operating profit by currency
      2003
      
      2002
      
      2001Continental Europe:Euro and legacy currencies
      171%
      
      296%
      
      133%Other
      23%
      
      54%
      
      25%US dollar
      (5%
      )
      (71%
      )
      66%Japanese yen
      32%
      
      53%
      
      26%Sterling:Depreciation
      (22%
      )
      (140%
      )
      (63%
      )Other
      (111%
      )
      (143%
      )
      (97%
      )Other
      12%
      
      51%
      
      10%Total
      100%
      
      100%
      
      100% Sterling costs exceeded sterling revenue due
  to the level of restructuring costs and UK-based marketing, development, operational
  and central services costs. In broad terms, using the 2003 mix of profits,
  the impact of an additional unilateral 1% strengthening of sterling would have
  been a reduction of approximately £4 million in operating profits before
  hedging (2002: £7 million, 2001: £10 million). Exchange rate movements in 2003 had a favourable
  net impact on operating profit, mainly due to the stronger euro in 2003 compared
  with 2002.The impact of the weaker US dollar was not
  material as revenue and costs in that currency broadly offset each other.  The Group holds cash and short-term investment
    balances of £694 million, of which £544 million is held by the
    Instinet Group.




|38 | Reuters Group PLC Annual
      Report and Form 20-F 2003 | 
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The priority in Reuters currency management
  policy is to reduce the risk of volatility in the Groups profit and loss
  account to acceptable levels while allowing a degree of flexibility to take
  advantage of market movements. Translation exposure occurs when the net investment
  in overseas subsidiaries is converted into the Groups reporting currency
  of sterling. The Group does not hedge this exposure. However, to the extent
  that the Group has debt, it will be held in currencies approximately proportionate
  to the currency profile of the Groups net assets, including its net investment
  in Instinet Group. Currency swaps may be used to achieve the desired currency
  profile of debt issues. Transaction exposure occurs when, as a result
  of trading activities, an entity receives cash in a currency different from
  its functional currency. The Group seeks to hedge the currency exposure of these
  transactions through the use of spot and forward foreign exchange contracts
  and currency options. Recognised currency hedging gains in 2003 were
  favourable mainly due to the effect of the weaker US dollar on hedges of the
  net investment in overseas subsidiaries. Gains and losses on instruments used for hedging
  are not recognised until the exposure that is being hedged is itself recognised. Net unrecognised gains on derivatives used
  for hedging were £1 million at 31 December 2003 compared to £nil
  million at 31 December 2002 and unrecognised gains of £9 million in 2001. Net cash flows are either applied to reduce
  debt or invest in money market instruments with financial institutions holding
  strong credit ratings with pre-agreed limits set by the Board. Interest rates
  are managed using a mix of financial instruments, which commence and mature
  at various dates through to November 2010. Interest rate hedging relates to
  the use of derivative contracts to alter the currency and interest rate profile
  on medium-term fixed rate notes issued and to hedge timing mismatches. In broad
  terms, using the average net funds position, a 1% increase in global interest
  rates would have reduced profit before tax in the year by approximately £2
  million (2002 and 2001: £1 million) excluding the impact of hedging. 7.Accounting
          policies, US GAAP and  International Financial Reporting StandardsGroup accounting policies conform with
        UK GAAP. In accordance with the requirements of Financial Reporting Standard
        18 (FRS 18), these policies and any applicable estimation techniques
        have been reviewed by the directors, who have confirmed them to be the
      most appropriate for the preparation of the 2003 financial statements.Critical accounting
            policiesIn preparing these financial
    statements, management has made its best estimates and judgements of certain
    amounts included in the financial statements. The most significant judgemental
    areas in 2003 related to:The impairment of fixed
        assets and goodwillUnder UK accounting standards, impairment
    is measured by comparing the carrying value of an asset with the higher of
    its net realisable value or value in use. These comparisons sometimes require
    subjective judgements and estimates to be made by management with regard
    to projected future cash flows of income-generating units or the amounts
    that could be obtained from the sale of investments. As a result, some fixed
    asset investments have been written down to net realisable value.




Accounting for long-term
    incentive plans (LTIP)The costs of shares acquired to cover
    LTIP awards are charged in the profit and loss account over the period to
    which the performance criteria relate. Adjustments are made during the three
    to five-year vesting period of each plan to reflect changes in the possibility
    of performance criteria being met. These adjustments are to some extent subjective
    as performance is based on Reuters Total Shareholder Return (TSR) relative
    to the TSR of the other companies in the FTSE 100 at the start of the measurement
    period. As a result of Reuters continuing low TSR ranking, it has now been
    assumed that the 2000, 2001 and 2002 LTIP schemes are unlikely to deliver
    any value to the participants. Property provisionsAs part of the 2003 restructuring charges,
    a number of leasehold properties have been identified as being surplus to
    requirements. Although efforts are being made to sub-let this vacant space,
    management recognises that this may not be possible immediately given the
    current economic climate. Estimates have been made to cover the cost of vacant
    possession, together with any shortfall arising from sub-leased rental income
    being lower than lease costs being borne by the Group. A judgement has also
    been made in respect of the discount factor, based on a risk-free rate, that
    is applied to the rent shortfalls. The actual outcome may differ from the
    resulting estimates. Allowances for doubtful accountsFor all trade debtors, Reuters management
    makes a judgement regarding the ability of customers to pay and accordingly,
    establishes an allowance for estimated losses arising from non-payment. In
    evaluating this allowance, customer credit worthiness, current economic conditions
    and previous experience are taken into account. If actual collections differ
    from estimates, this will affect future profit. US GAAPA reconciliation of net income
    under UK and US GAAP is set out on page 77. A discussion of the relevant US
    accounting policies which differ materially from UK GAAP is given on pages
    74-76 in the Summary of differences between UK and US Generally Accepted Accounting
    Principles. Details of recent US GAAP accounting pronouncements are given
    on page 79. Off-balance sheet
    arrangementsThe Group does not have any
    off-balance sheet arrangements, as defined by the SEC, that have or are reasonably
    likely to have a current or future effect on the Groups financial position
    or results of operations material to investors. International Financial
    Reporting Standards (IFRS)Reuters Group will be required
     to comply with IFRS with effect from 1 January 2005. An initial evaluation

    of the impact on the financial statements of Reuters Group, and on its financial
     processes and systems, has been made. A programme of work is underway to
    enable
    the preparation of financial statements, which comply with IFRS, for the
    two  comparative years ended 31 December 2003 and 2004, as well as periods
    from
    1 January 2005 onwards. It is intended that during 2004, changes found necessary
     to Reuters Group accounting policies, processes and systems will be put
    into
    effect to ensure compliance with these standards.




| | Reuters Group PLC Annual
      Report and Form 20-F 2003 | 39
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Operating and financial reviewcontinued

8 Risk factorsForward-looking statementsThis
document contains certain forward-looking statements within the meaning of the
United States Private Securities Litigation Reform
Act of 1995 with respect to the Groups financial condition, results of
operations and business and managements strategy, plans and objectives.
In particular, all statements that express forecasts, expectations and projections
with respect to certain matters, including trends in results of operations, margins,
growth rates, overall financial market trends, product releases, the impact of
interest rates or exchange rates, anticipated cost savings and synergies and
the completion of strategic transactions or restructuring programmes are all
forward-looking
statements. These statements involve risk and uncertainty because they relate
to events and depend on circumstances that may 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, the risk factors discussed below.
Any forward-looking statements made by the Group or on its behalf speak only
as of the date they
are made. Reuters Group does not undertake to update any forward-looking statements. Reuters may not be able to realise the anticipated benefits of its Fast Forward transformation planIn February 2003, Reuters announced
it was accelerating its strategy to become a more focused information company.
The Fast Forward plan includes investing in new information, streamlining the
way information is  delivered, offering a more simple and segmented product line,
rationalising the non-core elements of the business, reshaping the cost base
and reinvigorating the company culture. There can be no assurance of achievement
of these objectives or of
the exact timing or extent to which the anticipated benefits of the Fast Forward
programme will be realised. Unfavourable conditions in financial
markets may have a significant adverse effect on the Groups businessThe Groups business is dependent upon the health of the financial markets and the participants in those markets. The Groups dealing products are dependent on the level of activity in the foreign exchange
market. Similarly, the businesses of Bridge Trading and Instinet Group are dependent upon the level of activity in the equity markets. While market conditions improved in 2003, the economic downturn which began in 2001 continued to negatively impact
the Groups results. If these conditions were to worsen or in the event of significant trading market disruptions or suspensions there could be further adverse effects on the Groups business. In addition, the Groups
business could be adversely affected by further consolidations among clients
and competitors.




Currency fluctuations and interest
rate fluctuations may have a significant impact on the Groups reported
revenue and earningsReuters Group 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. Currency movements resulted
in a positive impact on operating profit in 2003. A strengthening of sterling
from current levels, especially in relation to other currencies in which Reuters
Group derives significant revenues or holds significant assets such as the euro
or the US dollar, could adversely affect results in future periods. To the extent
that these currency exposures are not hedged, exchange rate movements may cause
fluctuations in the Groups consolidated financial statements. In addition, an
increase in interest rates from current levels could adversely affect the Groups
results in future periods. The Group may experience difficulties or delays in developing or responding to new customer demands or launching new productsThe
Groups business environment is characterised by rapid technological change, changing and increasingly sophisticated customer demands and evolving industry standards. If the Group is unable to anticipate and
respond to the demand for new services, products and technologies on a timely and cost-effective basis and to respond and adapt to technological advancements and changing standards, its business may be adversely affected. In addition, Reuters Group
may delay or halt the launch of new products and services; its existing products and services may cease to be attractive to customers; and new products and services that the Group may develop and introduce may not achieve market acceptance. In the
event any of the foregoing occurs, the Groups financial results could be
adversely affected. Reuters Group is dependent on third parties for the provision of certain network and other servicesThe Group has outsourced the day-to-day operation of most of its networks to Radianz, the joint venture with Equant. Radianz also provides network services to companies in addition to Reuters Group. Reuters and Equant
are equally represented on the Radianz board with neither party having control. Accordingly, Reuters ability to affect the performance of Radianz may be limited and its business could be adversely affected as a result. In connection with the Bridge acquisition, Reuters entered
into a network services agreement with Savvis which was the primary provider
of network services to Bridge. Reuters currently holds approximately 16% of
Savvis voting share capital, and has an observer on Savvis board.
Reuters has very limited, if any, ability to affect the performance of Savvis. Failure or inability of any third party that provides
significant services to the Group, such as Radianz or Savvis, to perform its
obligations could adversely affect the Groups financial results.




|40 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 
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The Groups business
      may be adversely affected if its networks or systems experience any significant
      failures
  or interruptions or cannot accommodate increased trafficReuters
  Groups business is dependent on the ability to handle speedily substantial
  quantities of data and transactions on its computer-based networks and systems
  and those of Radianz, Savvis and others. Any significant failure or interruption
  of such systems due to factors beyond the Groups control, including terrorist
  activities, could have a material adverse effect on its business and results
  of operations. The continuing increase in the update  rates of market data
  may impact product and network performance from time to time. Factors that
  have significantly increased the market data update rates include: the emergence
  of Nasdaqs
SuperMontage and proprietary data feeds from other markets; high market volatility;
decimalisation; and the multiple listing of options. While the Group has implemented
a number of capacity management initiatives, there can be no assurance that the
Group and its network providers will be able to
accommodate successfully accelerated growth of peak traffic volumes. Reuters is exposed to a decline in the valuation of companies in which it has invested and does not have management controlReuters
has entered into joint ventures with, and made strategic investments in, a number
of companies and also has significant interests
in companies and joint ventures such as Instinet Group, Radianz and Factiva.
The value of a number of these companies fluctuated widely from 2001 through
2003, in part as a result of external market factors. The value of Reuters interests
in these companies is dependent on, among other things, the performance of these
companies
generally, whether such performance meets investors expectations, and external
market and economic conditions. Reuters has limited ability to influence the
management or performance of these companies. Significant competition in the financial
information and trading industries could adversely affect the Groups businessReuters faces significant competition in the financial information industry. The availability of public internet technology reduces barriers to entry and increases the availability of commoditised data in less
expensive forms and loss of control over intellectual property. Instinet Group and Bridge Trading face competition from securities brokers, trading venues and other financial service providers, including many that are well-capitalised and
substantially larger than Instinet Group or Bridge Trading, as the case may be, and have substantially greater financial, technical, marketing and other resources. If the Group is unable to cope effectively with increased competitive pressure
arising from the above or any other factors, its financial results could be adversely affected. Changes in the regulatory environment
could have an adverse effect on Reuters Groups businessThe
US Congress and SEC are currently considering changes to the structure of US
securities markets. These reviews could yield proposals
that would result in additional regulation of or reduced operational flexibility
for the provision of US securities market data by Reuters, and changes in Instinet
Groups ability to receive rebates of market data revenues from the various
organisations to which it provides trading information. The US Congress and SEC
also are considering changes to the operation and regulation of mutual funds.
These efforts could result in reductions in the flexibility that mutual funds
have to obtain brokerage and other services, including research and information
services. The UK
FSA is also reviewing the regulatory requirements addressing the provision to
institutional investors of brokerage and other services, including research and
information services. Reuters Group is unable to predict at this time the impact
on its business or results of operations of any proposed or potential changes
to the regulatory environment.




As a result of their compliance with the requirements
of Regulation ATS, none of Instinet Groups ATSs is currently required to
register as a US national securities exchange. In June 2002, Island ECN submitted
to  the SEC an application in draft form for registration as a national securities
exchange. INET intends to submit a new application for registration as a national
securities exchange. If INET or any of Instinet Groups subsidiaries were
to  register voluntarily as a national securities exchange, or if the SEC were
to require INET to do so, Instinet Group could become subject to substantial
additional regulation, which might reduce its operational flexibility in ways
that could have a
material adverse effect on its business. Among other consequences, Instinet Group
might be required to comply with fair representation or ownership requirements.
These and other requirements could adversely affect its operations and could
also  result in material limitations or restrictions on Reuters equity interest
in Instinet Group or Reuters ability to exercise its voting and other governance
rights with respect to Instinet Group. Instinet Groups ATSs are also subject
to  Regulation ATS and certain other rules, which require ATSs meeting certain
trading volume criteria to provide quotation data to an SRO and to provide other
broker-dealers execution access to such quotes. Compliance with Regulation ATS
could have an
adverse effect on Instinet Groups business, financial condition and operating
results. In July 2002, the SEC also took action that resulted in the suspension
of market data revenue sharing programmes, in which INET (then known as Island
ECN)
participated, and led to Island ECNs suspension of its own programme. Instinet
Group has been from time to time, and is currently, involved in discussions and
proceedings with the SEC and some of its customers regarding the application
of  these and other SEC rules, which may have a material adverse effect on Instinet
Groups pricing policies and business operations. Future SEC rule-makings
or interpretations relating to equities securities markets and market conditions
could
adversely affect Instinet Groups business, financial condition and operating
results. The NASD regulates the activities of Instinet Groups US broker-dealer subsidiaries and its Nasdaq subsidiary competes with Instinet Group. The NASD, either directly or through subsidiaries, is able to propose,
and often obtain SEC approval of rule changes that the Group believes can be to Nasdaqs competitive benefit as a securities marketplace and to Instinet Groups
competitive disadvantage. Reuters Group is unable to predict at this time the
impact of any proposed or potential changes to the regulatory environment in
which Instinet Group and its affiliates operate, which may include additional
changes to the Nasdaq marketplace considered by the NASD or the adoption by authorities
in
other jurisdictions of new methods for regulating electronic over-the-counter
trading. The Group may be exposed to adverse governmental action in countries where Reuters conducts reporting activitiesAs
the worlds largest news and information company,
Reuters Group may suffer discriminatory tariffs or other forms of adverse government
intervention due to the nature of its editorial and other reporting
activities. The Group may not be able to realise the anticipated benefits of existing or future acquisitionsTo
achieve its strategic objectives, Reuters Group has acquired or invested in,
and in the future may seek to acquire or invest in,
other companies and businesses. No assurance can be given that Reuters Group
will realise, when anticipated or at all, the benefits it expects as a result
of any acquisition. Achieving these benefits will depend on many factors, including
the successful and timely integration, and in some cases the consolidation of
products,
technology, operations and administrative functions, of companies that have previously
operated separately. Considering the highly technical and complex nature of Reuters
Groups products and services, these integration efforts may be difficult
and time consuming.


| | Reuters Group PLC Annual Report and Form
        20-F 2003 | 41
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Consolidated profit and loss account
for the year ended 31 December

|                                                           |       |  |        |   |        |   |        |  
|---------------------------------------------------------- | ----- |  | ------ | - | ------ | - | ------ | -
|                                                           |       |  | 2003   |   | 2002   |   | 2001   |  
|                                                           | Notes |  | £m     |   | £m     |   | £m     |  
|                                                           |       |  |        |   |        |   |        |  
|Revenue: Group and share of joint ventures                 |       |  | 3,297  |   | 3,682  |   | 3,990  |  
|less share of joint ventures revenue                       |       |  | (100   | ) | (107   | ) | (105   | )
|                                                           |       |  |        |   |        |   |        |  
|Group revenue                                              | 1     |  | 3,197  |   | 3,575  |   | 3,885  |  
|Operating costs                                            | 2     |  | (3,071 | ) | (3,719 | ) | (3,583 | )
|                                                           |       |  |        |   |        |   |        |  
|Operating profit/(loss)                                    |       |  | 126    |   | (144   | ) | 302    |  
|Share of operating losses of joint ventures                | 16    |  | (27    | ) | (35    | ) | (46    | )
|Impairment of investments in joint ventures                | 16    |  | (8     | ) | (6     | ) | (16    | )
|Share of operating losses of associates                    | 16    |  | (8     | ) | (39    | ) | (39    | )
|Impairment of investment in associate                      | 16    |  | (1     | ) |       |   | (26    | )
|Profit/(loss) on disposal of subsidiary undertakings       | 31    |  | 3      |   | (29    | ) | 216    |  
|Profit/(loss) on disposal of joint ventures and associates | 31    |  | 10     |   | 3      |   | (7     | )
|Loss on disposal of tangible fixed assets                  | 15    |  | (17    | ) |       |   | (10    | )
|Profit/(loss) on disposal of other fixed asset investments | 31    |  | 6      |   | (2     | ) | 35     |  
|Income from fixed asset investments                        |       |  |       |   | 1      |   | 3      |  
|Amounts written off fixed asset investments                | 16    |  | (6     | ) | (222   | ) | (245   | )
|Net interest payable                                       | 3     |  | (29    | ) | (20    | ) | (9     | )
|                                                           |       |  |        |   |        |   |        |  
|Profit/(loss) on ordinary activities before taxation       |       |  | 49     |   | (493   | ) | 158    |  
|Taxation on profit/(loss) on ordinary activities           | 4     |  | (22    | ) | (23    | ) | (107   | )
|                                                           |       |  |        |   |        |   |        |  
|Profit/(loss) on ordinary activities after taxation        |       |  | 27     |   | (516   | ) | 51     |  
|Equity minority interests                                  |       |  | 16     |   | 112    |   | (5     | )
|                                                           |       |  |        |   |        |   |        |  
|Profit/(loss) attributable to ordinary shareholders        |       |  | 43     |   | (404   | ) | 46     |  
|Dividends                                                  | 5     |  | (140   | ) | (139   | ) | (140   | )
|                                                           |       |  |        |   |        |   |        |  
|Loss for the period                                        |       |  | (97    | ) | (543   | ) | (94    | )
|                                                           |       |  |        |   |        |   |        |  
|Basic earnings/(loss) per ordinary share                   | 6     |  | 3.1p   |   | (29.0p | ) | 3.3p   |  
|Diluted earnings/(loss) per ordinary share                 | 6     |  | 3.0p   |   | (29.0p | ) | 3.2p   |  

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

The result 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

|                                                                                         |        |   |         |   |         |  | 
|---------------------------------------------------------------------------------------- | ------ | - | ------- | - | ------- |  | 
|                                                                                         | 2003£m |   | 2002
£m |   | 2001
£m |  | 
|                                                                                        
|                                                                                         |        |   |         |   |         |  | 
|Profit/(loss) attributable to ordinary shareholders                                      | 43     |   | (404    | ) | 46      |  | 
|Unrealised gain on deemed partial disposal of subsidiary undertakings                    |       |   | 1       |   | 11      |  | 
|Unrealised gain on deemed partial disposal of associates                                 |       |   | 12      |   |        |  | 
|Unrealised gains on disposal of fixed asset investments                                  |       |   | 10      |   |        |  | 
|Translation differences taken directly to reserves                                       | (113   | ) | (95     | ) | 23      |  | 
|                                                                                         |        |   |         |   |         |  | 
|Total recognised gains and losses relating to the year                                   | (70    | ) | (476    | ) | 80      |  | 
|                                                                                         |        |   |         |   |         |  | 
|A detailed statement showing the movement in capital and reserves is set out in note 26. |        |   |         |   |         |  | 



|   |                                                            | 
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|42 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 

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Notes on the consolidated
profit and loss account

|1Segmental
        analysis                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The tables below show a
        segmental analysis of revenue, costs and results which reflects the way
        Reuters was managed during 2003. Revenue is allocated to customer segments
        by reference to the activities at particular customer sites. Activities
        at certain customer sites fall into more than one segment. In such cases
        revenue is allocated based on estimated activity by segment. Prior periods
        have been restated to reflect changes in the management of the cost
base.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Segmental revenue
          less direct customer segment costs does not purport to represent segmental
          profitability. Direct customer segment costs include the costs of global
          customer segment management, marketing, non-integrated businesses and
          specific revenue related activities. The majority of revenue related
    costs are included within the channels and centres of excellence.                                                                                                  

|                                                                                       |        |        |      |    |        |        |      |    |        |  
|-------------------------------------------------------------------------------------- | ------ | ------ | ---- | -- | ------ | ------ | ---- | -- | ------ | -
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|Revenue                                                                                | 2003   |        | %    |    | 2002   |        | %    |    | 2001   |  
|£m                                                                                     |        | change |      | £m |        | change |      | £m |       
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|Treasury                                                                               | 1,018  |        | (10% | )  | 1,134  |        | (5%  | )  | 1,189  |  
|Investment Banking                                                                     | 712    |        | (15% | )  | 834    |        | 2%   |    | 815    |  
|Asset Management                                                                       | 630    |        | (11% | )  | 709    |        | 3%   |    | 690    |  
|Corporates & Media                                                                     | 304    |        | (4%  | )  | 315    |        | (10% | )  | 348    |  
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|Reuters                                                                                | 2,664  |        | (11% | )  | 2,992  |        | (2%  | )  | 3,042  |  
|Instinet Group                                                                         | 540    |        | (9%  | )  | 592    |        | (31% | )  | 854    |  
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|                                                                                       | 3,204  |        | (11% | )  | 3,584  |        | (8%  | )  | 3,896  |  
|Share of joint ventures revenue                                                        | 100    |        | (6%  | )  | 107    |        | 1%   |    | 105    |  
|Intra-group revenue                                                                    | (7     | )      | (26% | )  | (9     | )      | (11% | )  | (11    | )
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|Gross revenue                                                                          | 3,297  |        | (10% | )  | 3,682  |        | (8%  | )  | 3,990  |  
|Less share of joint ventures revenue                                                   | (100   | )      | (6%  | )  | (107   | )      | 1%   |    | (105   | )
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|Group revenue                                                                          | 3,197  |        | (11% | )  | 3,575  |        | (8%  | )  | 3,885  |  
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|Operating costs                                                                        |        |        |      |    |        |        |      |    |        |  
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|Treasury                                                                               | (96    | )      | 12%  |    | (85    | )      | (3%  | )  | (89    | )
|Investment Banking                                                                     | (45    | )      | 2%   |    | (45    | )      | 12%  |    | (40    | )
|Asset Management                                                                       | (94    | )      | (16% | )  | (112   | )      | 10%  |    | (101   | )
|Corporates & Media                                                                     | (103   | )      | (10% | )  | (116   | )      | (28% | )  | (158   | )
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|Direct customer segment                                                                | (338   | )      | (5%  | )  | (358   | )      | (8%  | )  | (388   | )
|Channels                                                                               | (932   | )      | (15% | )  | (1,103 | )      | 3%   |    | (1,069 | )
|Operations & Technology                                                                | (676   | )      | (8%  | )  | (734   | )      | (4%  | )  | (767   | )
|Content                                                                                | (286   | )      | (5%  | )  | (302   | )      | (4%  | )  | (315   | )
|Corporate Services                                                                     | (124   | )      | (34% | )  | (188   | )      | (29% | )  | (266   | )
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|Reuters                                                                                | (2,356 | )      | (12% | )  | (2,685 | )      | (4%  | )  | (2,805 | )
|Instinet Group                                                                         | (544   | )      | (35% | )  | (835   | )      | 21%  |    | (690   | )
|Restructuring costs                                                                    | (178   | )      | (15% | )  | (208   | )      | 110% |    | (99    | )
|Intra-group costs                                                                      | 7      |        | (26% | )  | 9      |        | (18% | )  | 11     |  
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|                                                                                       | (3,071 | )      | (17% | )  | (3,719 | )      | 4%   |    | (3,583 | )
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|Operating profit                                                                       |        |        |      |    |        |        |      |    |        |  
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|Treasury                                                                               | 922    |        | (12% | )  | 1,049  |        | (5%  | )  | 1,100  |  
|Investment Banking                                                                     | 667    |        | (15% | )  | 789    |        | 2%   |    | 775    |  
|Asset Management                                                                       | 536    |        | (10% | )  | 597    |        | 2%   |    | 589    |  
|Corporates & Media                                                                     | 201    |        |     |    | 199    |        | 6%   |    | 190    |  
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|Segmental revenue less direct customer segment costs                                   | 2,326  |        | (12% | )  | 2,634  |        | (1%  | )  | 2,654  |  
|Channels                                                                               | (932   | )      | (15% | )  | (1,103 | )      | 3%   |    | (1,069 | )
|Operations & Technology                                                                | (676   | )      | (8%  | )  | (734   | )      | (4%  | )  | (767   | )
|Content                                                                                | (286   | )      | (5%  | )  | (302   | )      | (4%  | )  | (315   | )
|Corporate Services                                                                     | (124   | )      | (34% | )  | (188   | )      | (29% | )  | (266   | )
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|Reuters                                                                                | 308    |        |     |    | 307    |        | 29%  |    | 237    |  
|Instinet Group                                                                         | (4     | )      | (98% | )  | (243   | )      |     |    | 164    |  
|Restructuring costs                                                                    | (178   | )      | (15% | )  | (208   | )      | 110% |    | (99    | )
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|Operating profit/(loss)                                                                | 126    |        |     |    | (144   | )      |     |    | 302    |  
|                                                                                       |        |        |      |    |        |        |      |    |        |  
|Operating costs include amortisation and impairment of goodwill and other intangibles. |       

---



| |                                                            |   
| | ---------------------------------------------------------- | --
| | Reuters Group PLC Annual Report and Form
        20-F 2003 | 43

---



Back to Contents

Notes on the consolidated profit
and loss accountcontinued

1 Segmental analysiscontinuedRevenue 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 operating costs incurred in each area excluding amortisation and impairment of goodwill and other intangibles and net currency
gain/(loss).

|                                                                                                                                                                                                                                                                                                                      |        |        |      |    |        |        |      |    |        |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------ | ------ | ---- | -- | ------ | ------ | ---- | -- | ------ | -
|By geography                                                                                                                                                                                                                                                                                                          | 2003   |        | %    |    | 2002   |        | %    |    | 2001   |  
|£m                                                                                                                                                                                                                                                                                                                    |        | change |      | £m |        | change |      | £m |       
|                                                                                                                                                                                                                                                                                                                      |        |        |      |    |        |        |      |    |        |  
|Revenue                                                                                                                                                                                                                                                                                                               |        |        |      |    |        |        |      |    |        |  
|Europe, Middle East and Africa                                                                                                                                                                                                                                                                                        | 1,552  |        | (9%  | )  | 1,714  |        | (7%  | )  | 1,838  |  
|The Americas                                                                                                                                                                                                                                                                                                          | 1,204  |        | (11% | )  | 1,354  |        | (10% | )  | 1,502  |  
|Asia/Pacific                                                                                                                                                                                                                                                                                                          | 441    |        | (13% | )  | 507    |        | (7%  | )  | 545    |  
|                                                                                                                                                                                                                                                                                                                      |        |        |      |    |        |        |      |    |        |  
|                                                                                                                                                                                                                                                                                                                      | 3,197  |        | (11% | )  | 3,575  |        | (8%  | )  | 3,885  |  
|                                                                                                                                                                                                                                                                                                                      |        |        |      |    |        |        |      |    |        |  
|Operating costs where incurred                                                                                                                                                                                                                                                                                        |        |        |      |    |        |        |      |    |        |  
|Europe, Middle East and Africa                                                                                                                                                                                                                                                                                        | (1,474 | )      | (5%  | )  | (1,557 | )      | (11% | )  | (1,751 | )
|The Americas                                                                                                                                                                                                                                                                                                          | (1,232 | )      | (20% | )  | (1,548 | )      | 10%  |    | (1,411 | )
|Asia/Pacific                                                                                                                                                                                                                                                                                                          | (253   | )      | (18% | )  | (307   | )      | (6%  | )  | (327   | )
|                                                                                                                                                                                                                                                                                                                      |        |        |      |    |        |        |      |    |        |  
|                                                                                                                                                                                                                                                                                                                      | (2,959 | )      | (13% | )  | (3,412 | )      | (2%  | )  | (3,489 | )
|                                                                                                                                                                                                                                                                                                                      |        |        |      |    |        |        |      |    |        |  
|Contribution                                                                                                                                                                                                                                                                                                          |        |        |      |    |        |        |      |    |        |  
|Europe, Middle East and Africa                                                                                                                                                                                                                                                                                        | 78     |        | (50% | )  | 157    |        | 81%  |    | 87     |  
|The Americas                                                                                                                                                                                                                                                                                                          | (28    | )      | 85%  |    | (194   | )      |     |    | 91     |  
|Asia/Pacific                                                                                                                                                                                                                                                                                                          | 188    |        | (5%  | )  | 200    |        | (9%  | )  | 218    |  
|                                                                                                                                                                                                                                                                                                                      |        |        |      |    |        |        |      |    |        |  
|                                                                                                                                                                                                                                                                                                                      | 238    |        | 47%  |    | 163    |        | (59% | )  | 396    |  
|                                                                                                                                                                                                                                                                                                                      |        |        |      |    |        |        |      |    |        |  
|Other costs                                                                                                                                                                                                                                                                                                           |        |        |      |    |        |        |      |    |        |  
|Goodwill and other intangibles:                                                                                                                                                                                                                                                                                       |        |        |      |    |        |        |      |    |        |  
|Amortisation                                                                                                                                                                                                                                                                                                          | (101   | )      | (5%  | )  | (107   | )      | 31%  |    | (81    | )
|Impairment                                                                                                                                                                                                                                                                                                            | (20    | )      | (90% | )  | (208   | )      |     |    |       |  
|Net currency gain/(loss)                                                                                                                                                                                                                                                                                              | 9      |        | 24%  |    | 8      |        |     |    | (13    | )
|                                                                                                                                                                                                                                                                                                                      |        |        |      |    |        |        |      |    |        |  
|Operating profit/(loss)                                                                                                                                                                                                                                                                                               | 126    |        |     |    | (144   | )      |     |    | 302    |  
|                                                                                                                                                                                                                                                                                                                      |        |        |      |    |        |        |      |    |        |  
|United Kingdom and
       Ireland revenue was £428 million (2002: £485 million, 2001: £521
       million). With the exception of Instinet Group, Reuters products aredelivered
       and sold primarily through a common geographical infrastructure and delivered
       over a number of communications networks. |       
|                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                      |        |        |      |    |        |        |      |    |        |  
|The impact of the Multex acquisition
       in 2003, the Island acquisition in 2002 and the Bridge acquisition in
       2001 are reflected principally in the Americassee
       note 31).                                                                                                                          
|                                                                                                                                                                                                                                                                                                                      |        |        |      |    |        |        |      |    |        |  
|Revenue by type                                                                                                                                                                                                                                                                                                       | 2003   |        | %    |    | 2002   |        | %    |    | 2001   |  
|£m                                                                                                                                                                                                                                                                                                                    |        | change |      | £m |        | change |      | £m |       
|                                                                                                                                                                                                                                                                                                                      |        |        |      |    |        |        |      |    |        |  
|Recurring                                                                                                                                                                                                                                                                                                             | 2,449  |        | (9%  | )  | 2,699  |        | (1%  | )  | 2,724  |  
|Usage                                                                                                                                                                                                                                                                                                                 | 643    |        | (10% | )  | 713    |        | (24% | )  | 946    |  
|Outright                                                                                                                                                                                                                                                                                                              | 105    |        | (36% | )  | 163    |        | (25% | )  | 215    |  
|                                                                                                                                                                                                                                                                                                                      |        |        |      |    |        |        |      |    |        |  
|                                                                                                                                                                                                                                                                                                                      | 3,197  |        | (11% | )  | 3,575  |        | (8%  | )  | 3,885  |  
|                                                                                                                                                                                                                                                                                                                      |        |        |      |    |        |        |      |    |        |  

Recurring revenue is derived from the sale of subscription services, including maintenance contracts. Usage revenue is principally derived from Instinet Group, Dealing 2000-2 and Dealing 3000 Spot Matching and Bridge
Trading Company. Outright revenue comprises once-off sales including information and risk management solutions.

|44 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 
|-- | ---------------------------------------------------------- | 

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Back to Contents

2 Operating costs

|                                               |       |        |      |    |       |        |      |    |       |  
|---------------------------------------------- | ----- | ------ | ---- | -- | ----- | ------ | ---- | -- | ----- | -
|Costs by type                                  | 2003  |        | %    |    | 2002  |        | %    |    | 2001  |  
|£m                                             |       | change |      | £m |       | change |      | £m |      
|                                               |       |        |      |    |       |        |      |    |       |  
|Salaries, commission and allowances            | 1,015 |        | (14% | )  | 1,180 |        | (9%  | )  | 1,299 |  
|Social security costs                          | 73    |        | (8%  | )  | 79    |        | (5%  | )  | 83    |  
|Other, pension costs (see note 23)             | 50    |        | (21% | )  | 65    |        | 4%   |    | 63    |  
|                                               |       |        |      |    |       |        |      |    |       |  
|Staff costs                                    | 1,138 |        | (14% | )  | 1,324 |        | (8%  | )  | 1,445 |  
|Services                                       | 722   |        | (11% | )  | 811   |        | (8%  | )  | 883   |  
|Depreciation                                   | 193   |        | (15% | )  | 227   |        | (8%  | )  | 246   |  
|Data                                           | 300   |        | (13% | )  | 343   |        | 1%   |    | 340   |  
|Communications                                 | 376   |        | (10% | )  | 420   |        | 25%  |    | 335   |  
|Space                                          | 269   |        | (14% | )  | 312   |        | 29%  |    | 242   |  
|Cost of sales and other                        | 10    |        | (78% | )  | 46    |        | (16% | )  | 55    |  
|Goodwill and other intangibles (see note 14):  |       |        |      |    |       |        |      |    |       |  
|Amortisation                                   | 101   |        | (5%  | )  | 107   |        | 31%  |    | 81    |  
|Impairment                                     | 20    |        | (90% | )  | 208   |        |     |    |      |  
|Other operating income                         | (48   | )      | (32% | )  | (71   | )      | 25%  |    | (57   | )
|Currency hedging activities  net loss/(gain)  | 11    |        |     |    | (10   | )      |     |    | 2     |  
|Foreign currency translation  net (gain)/loss | (21   | )      |     |    | 2     |        |     |    | 11    |  
|                                               |       |        |      |    |       |        |      |    |       |  
|Total costs by type                            | 3,071 |        | (17% | )  | 3,719 |        | 4%   |    | 3,583 |  
|                                               |       |        |      |    |       |        |      |    |       |  

The directors believe that the nature of the Groups business is such that the format of the analysis of operating costs required by the Companies Act 1985 is not appropriate. The format has been adopted in a
manner consistent with the Groups activities. Services include equipment hire and bought-in services, including consultancy and contractors, advertising and publicity, professional fees and staff-related expenses. Other operating income
comprises amounts received from joint ventures and others in respect of costs incurred by Reuters on their behalf.

|                                          |       |   |        |   |       |   |        |   |       | 
|----------------------------------------- | ----- | - | ------ | - | ----- | - | ------ | - | ----- | 
|                                          | 2003  |   | %      |   | 2002  |   | %      |   | 2001  | 
|Costs by function                         | £m    |   | change |   | £m    |   | change |   | £m    | 
|                                          |       |   |        |   |       |   |        |   |       | 
|Production and communications             | 1,661 |   | (15%   | ) | 1,947 |   | 3%     |   | 1,883 | 
|Selling and marketing                     | 580   |   | 1%     |   | 574   |   | (23%   | ) | 741   | 
|Support services and administration       | 541   |   | (21%   | ) | 683   |   | (11%   | ) | 766   | 
|Goodwill and other intangibles:           |       |   |        |   |       |   |        |   |       | 
|Amortisation                              | 101   |   | (5%    | ) | 107   |   | 31%    |   | 81    | 
|Impairment                                | 20    |   | (90%   | ) | 208   |   |       |   |      | 
|Restructuring costs                       | 178   |   | (15%   | ) | 208   |   | 110%   |   | 99    | 
|Net currency (gain)/loss                  | (10   | ) | 25%    |   | (8    | ) |       |   | 13    | 
|                                          |       |   |        |   |       |   |        |   |       | 
|Total costs by function                   | 3,071 |   | (17%   | ) | 3,719 |   | 4%     |   | 3,583 | 
|                                          |       |   |        |   |       |   |        |   |       | 
|Costs include                             |       |   |        |   |       |   |        |   |       | 
|Development expenditure                   | 171   |   | (15%   | ) | 200   |   | (32%   | ) | 294   | 
|Operating lease expenditure:              |       |   |        |   |       |   |        |   |       | 
|Hire of equipment                         | 8     |   | (11%)  |   | 9     |   | (31%)  |   | 13    | 
|Other, principally property               | 107   |   | (4%)   |   | 112   |   | 4%     |   | 108   | 
|Loss on disposal of tangible fixed assets |      |   |       |   | 1     |   |       |   | 11    | 
|Advertising                               | 37    |   | 18%    |   | 32    |   | (7%)   |   | 34    | 
|                                          |       |   |        |   |       |   |        |   |       | 



| | Reuters Group PLC Annual
        Report and Form 20-F 2003 | 45
| | ---------------------------------------------------------- | --

---



Back to Contents

Notes on the consolidated profit 
and loss accountcontinued

2 Operating costscontinuedFees payable to PricewaterhouseCoopers were as follows:

|                                                                                                                          |        |    |        |    |      |  |      |   |      | 
|------------------------------------------------------------------------------------------------------------------------- | ------ | -- | ------ | -- | ---- |  | ---- | - | ---- | 
|                                                                                                                          | 2003   |    | %      |    | 2002 |  | %    |   | 2001 | 
|£m                                                                                                                        | change | £m | change | £m
|                                                                                                                          |        |    |        |    |      |  |      |   |      | 
|Audit services:                                                                                                           |        |    |        |    |      |  |      |   |      | 
|Statutory audit                                                                                                           | 3.0    |    | 30%    |    | 2.3  |  | 5%   |   | 2.2  | 
|                                                                                                                          |        |    |        |    |      |  |      |   |      | 
|Audit related services:                                                                                                   |        |    |        |    |      |  |      |   |      | 
|Regulatory reporting                                                                                                      | 0.1    |    | (50%   | )  | 0.2  |  |     |   |     | 
|Further assurance services                                                                                                | 1.7    |    | 6%     |    | 1.6  |  | (43% | ) | 2.8  | 
|                                                                                                                          |        |    |        |    |      |  |      |   |      | 
|Tax services:                                                                                                             |        |    |        |    |      |  |      |   |      | 
|Compliance services                                                                                                       | 0.8    |    | (11%   | )  | 0.9  |  | 14%  |   | 0.7  | 
|Advisory services                                                                                                         | 0.8    |    | 14%    |    | 0.7  |  | (50% | ) | 1.4  | 
|                                                                                                                          |        |    |        |    |      |  |      |   |      | 
|Other services:                                                                                                           |        |    |        |    |      |  |      |   |      | 
|Management consultancy                                                                                                    |       |    |       |    | 3.4  |  | (52% | ) | 7.1  | 
|Other                                                                                                                     |       |    |       |    |     |  |     |   | 0.9  | 
|                                                                                                                          |        |    |        |    |      |  |      |   |      | 
|Total fees                                                                                                                | 6.4    |    | (30%   | )  | 9.1  |  | (40% | ) | 15.1 | 
|                                                                                                                          |        |    |        |    |      |  |      |   |      | 
|                                                                                                                          |        |    |        |    |      |  |      |   |      | 
|United Kingdom                                                                                                            | 2.6    |    | (60%   | )  | 5.8  |  | (37% | ) | 9.2  | 
|Overseas                                                                                                                  | 3.8    |    | 15%    |    | 3.3  |  | (44% | ) | 5.9  | 
|                                                                                                                          |        |    |        |    |      |  |      |   |      | 
|The
      statutory audit fee includes £10,000 (2002: £10,000, 2001: £10,000)
    in respect of the parent company audit. |       

Further assurance services predominantly
  consist of due diligence activities related to acquisitions and disposals.
  Tax compliance services include assistance with corporation and other tax returns.
  Tax advisory services
relate to tax planning and employee-related issues.

Management consultancy fees include amounts earned in 2001 and 2002 by PwC Consulting, which ceased to be part of PricewaterhouseCoopers on 1 October 2002.

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 receivable/(payable)                                     |     
|----------------------------------------------------------------------- | ----
|                                                                        |     
|                                                                        | 2003
|£m                                                                      | £m  
|                                                                        |     
|Interest receivable:                                                    |     
|Listed
          investments                                            |    
|Unlisted
          investments                                          | 13  
|Share
          of joint ventures and associates interest (see note 16) | 5   
|                                                                        |     
|                                                                        | 18  
|                                                                        |     
|Interest payable:                                                       |     
|Bank
          loans and overdraft                                      | (10 
|Other
          borrowings                                              | (36 
|Unwinding
          of discount on provisions                           | (1  
|                                                                        |     
|                                                                        | (47 
|                                                                        |     
|Total net
        interest payable                                      | (29 
|                                                                        |     

|   |                                                            | 
|-- | ---------------------------------------------------------- | 
|46 | Reuters Group PLC Annual Report and
        Form 20-F 2003 | 

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Back to Contents

|4 Taxation on profit
    on ordinary activities          |     
|-------------------------------------------------------- | ----
|                                                         |     
|                                                         | 2003
|£m                                                       | £m  
|                                                         |     
|UK corporation tax                                       |     
|Current tax on income for the period                     | 68  
|Share of joint ventures and associates tax (see note 16) | 1   
|Adjustments in respect of prior periods                  | (19 
|                                                         |     
|                                                         | 50  
|Double taxation relief                                   | (4  
|                                                         |     
|                                                         | 46  
|                                                         |     
|Foreign tax                                              |     
|Current tax on income for the period                     | 26  
|Share of joint ventures and associates tax (see note 16) | 6   
|Adjustments in respect of prior periods                  | (36 
|                                                         |     
|                                                         | (4  
|                                                         |     
|Total current tax                                        | 42  
|Deferred taxation (see note 24)                          | (20 
|                                                         |     
|Tax on profit/(loss)                                     | 22  
|                                                         |     

In accordance with the requirements of FRS 19 Deferred Tax,
  a reconciliation of the current tax charge on ordinary activities for the period
  reported in the profit and loss account is set out below.

|                                                                                                                                                             |      |    |      |   |      |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---- | -- | ---- | - | ---- | -
|                                                                                                                                                             | 2003 |    | 2002 |   | 2001 |  
|£m                                                                                                                                                           | £m   | £m
|                                                                                                                                                             |      |    |      |   |      |  
|Profit/(loss) before tax                                                                                                                                     | 49   |    | (493 | ) | 158  |  
|                                                                                                                                                             |      |    |      |   |      |  
|Corporation tax on pre-tax profit/(loss) at UK nominal rate of 30%                                                                                           | 15   |    | (148 | ) | 48   |  
|Non-tax deductible amortisation and impairment of goodwill and other intangibles                                                                             | 30   |    | 88   |   | 28   |  
|Adjustments in respect of prior years                                                                                                                        | (55  | )  | (22  | ) | (3   | )
|Permanent differences                                                                                                                                        | 7    |    | 13   |   | 2    |  
|Book profit on Instinet IPO not taxable                                                                                                                      |     |    |     |   | (60  | )
|Non-tax deductible investment impairments                                                                                                                    | 5    |    | 77   |   | 86   |  
|Fixed asset related timing differences                                                                                                                       | (12  | )  | 1    |   | 5    |  
|Non-fixed asset related timing differences                                                                                                                   | (15  | )  | 39   |   | 11   |  
|Tax losses not currently utilised                                                                                                                            | 56   |    | 35   |   | 35   |  
|Tax on dividend received on acquisition of Island                                                                                                            |     |    | 10   |   |     |  
|Other differences                                                                                                                                            | 11   |    | 9    |   | 5    |  
|                                                                                                                                                             |      |    |      |   |      |  
|Total current tax                                                                                                                                            | 42   |    | 102  |   | 157  |  
|                                                                                                                                                             |      |    |      |   |      |  
|The
      other differences are primarily due to overseas profits taxed at rates
    differing from those in the UK and the geographical mix of profits.     |     
|                                                                                                                                                             |     
|No tax is expected to fall due
      in respect of the disposal of fixed asset investments, subsidiaries and
      associates in 2004 (2003
and 2002: £nil). |     
|                                                                                                                                                             |     
|There is no tax impact on the
      unrealised gains
arising
in 2003 (2002 and 2001: £nil).                                                                  |     

| |                                                            |   
| | ---------------------------------------------------------- | --
| | Reuters Group PLC Annual Report and
        Form 20-F 2003 | 47

---



Back to Contents

Notes on the consolidated profit
and loss accountcontinued

|5 Dividends                                                                                                                                                |       |   |       |   |       |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------- | ----- | - | ----- | - | ----- | -
|                                                                                                                                                           |       |   |       |   |       |  
|                                                                                                                                                           | 2003  |   | 2002  |   | 2001  |  
|                                                                                                                                                           | £m    |   | £m    |   | £m    |  
|                                                                                                                                                           |       |   |       |   |       |  
|Interim paid                                                                                                                                               | 54    |   | 53    |   | 54    |  
|Final (2003 proposed)                                                                                                                                      | 86    |   | 86    |   | 86    |  
|                                                                                                                                                           |       |   |       |   |       |  
|                                                                                                                                                           | 140   |   | 139   |   | 140   |  
|                                                                                                                                                           |       |   |       |   |       |  
|                                                                                                                                                           |       |   |       |   |       |  
|Per ordinary share                                                                                                                                         | Pence |   | Pence |   | Pence |  
|                                                                                                                                                           |       |   |       |   |       |  
|Interim paid                                                                                                                                               | 3.85  |   | 3.85  |   | 3.85  |  
|Final (2003 proposed)                                                                                                                                      | 6.15  |   | 6.15  |   | 6.15  |  
|                                                                                                                                                           |       |   |       |   |       |  
|                                                                                                                                                           | 10.00 |   | 10.00 |   | 10.00 |  
|                                                                                                                                                           |       |   |       |   |       |  
|                                                                                                                                                           |       |   |       |   |       |  
|6 Earnings per ordinary share                                                                                                                              |       |   |       |   |       |  
|Basic and diluted earnings per ordinary share are based on the results 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 diluted earnings per |      
|ordinary share calculations as follows:                                                                                                                    |       |   |       |   |       |  
|                                                                                                                                                           |       |   |       |   |       |  
|                                                                                                                                                           |       |   |       |   |       |  
|Weighted average number in millions                                                                                                                        | 2003  |   | 2002  |   | 2001  |  
|                                                                                                                                                           |       |   |       |   |       |  
|Ordinary shares in issue                                                                                                                                   | 1,432 |   | 1,432 |   | 1,431 |  
|Non-vested shares held by employee share ownership trusts                                                                                                  | (36   | ) | (37   | ) | (27   | )
|                                                                                                                                                           |       |   |       |   |       |  
|Basic earnings per share denominator                                                                                                                       | 1,396 |   | 1,395 |   | 1,404 |  
|Issuable on conversion of options                                                                                                                          | 18    |   |      |   | 28    |  
|                                                                                                                                                           |       |   |       |   |       |  
|Diluted earnings per share denominator                                                                                                                     | 1,414 |   | 1,395 |   | 1,432 |  
|                                                                                                                                                           |       |   |       |   |       |  

7 Remuneration of directors
  The remuneration report on pages 17-24 includes
    details of directors emoluments, pension arrangements, long-term incentive
    plans and stock option plans; details of which form part of these financial
    statements.

8 Employee information
The average number of employees during the
year was as follows:

|                                                                                                 |        |  |        |  |        | 
|------------------------------------------------------------------------------------------------ | ------ |  | ------ |  | ------ | 
|Customer segment                                                                                 | 2003   |  | 2002   |  | 2001   | 
|                                                                                                 |        |  |        |  |        | 
|Treasury                                                                                         | 465    |  | 373    |  | 241    | 
|Investment Banking                                                                               | 189    |  | 169    |  | 166    | 
|Asset Management                                                                                 | 627    |  | 759    |  | 354    | 
|Corporates & Media                                                                               | 793    |  | 858    |  | 1,279  | 
|                                                                                                 |        |  |        |  |        | 
|Direct customer segment                                                                          | 2,074  |  | 2,159  |  | 2,040  | 
|Channels                                                                                         | 5,431  |  | 5,843  |  | 5,901  | 
|Operations & Technology                                                                          | 3,563  |  | 3,633  |  | 3,475  | 
|Content                                                                                          | 3,399  |  | 3,348  |  | 3,813  | 
|Corporate Services                                                                               | 1,533  |  | 1,619  |  | 1,508  | 
|                                                                                                 |        |  |        |  |        | 
|Reuters                                                                                          | 16,000 |  | 16,602 |  | 16,737 | 
|Instinet Group                                                                                   | 1,345  |  | 1,731  |  | 2,251  | 
|                                                                                                 |        |  |        |  |        | 
|Total                                                                                            | 17,345 |  | 18,333 |  | 18,988 | 
|                                                                                                 |        |  |        |  |        | 
|By location                                                                                      |        |  |        |  |        | 
|Europe, Middle East and Africa                                                                   | 8,743  |  | 8,920  |  | 9,283  | 
|The Americas                                                                                     | 6,065  |  | 6,874  |  | 6,998  | 
|Asia/Pacific                                                                                     | 2,537  |  | 2,539  |  | 2,707  | 
|                                                                                                 |        |  |        |  |        | 
|Total                                                                                            | 17,345 |  | 18,333 |  | 18,988 | 
|                                                                                                 |        |  |        |  |        | 
|By function                                                                                      |        |  |        |  |        | 
|Production and communications                                                                    | 9,022  |  | 9,658  |  | 9,809  | 
|Selling and marketing                                                                            | 4,846  |  | 5,146  |  | 5,282  | 
|Support services and administration                                                              | 3,477  |  | 3,529  |  | 3,897  | 
|                                                                                                 |        |  |        |  |        | 
|Total                                                                                            | 17,345 |  | 18,333 |  | 18,988 | 
|                                                                                                 |        |  |        |  |        | 
|The above include:                                                                               |        |  |        |  |        | 
|Development staff                                                                                | 2,123  |  | 2,109  |  | 2,440  | 
|                                                                                                 |        |  |        |  |        | 
|The average number of employees during 2003 included 211 temporary staff (2002: 281, 2001: 341). |        |  |        |  |        | 



|48 | Reuters Group PLC Annual Report
      and Form 20-F 2003 | 
|-- | -------------------------------------------------------- | 

---



Back to Contents

Consolidated cash flow statement
  for the year ended 31 December

|                                                                                |       |  |      |   |      |   |      |  
|------------------------------------------------------------------------------- | ----- |  | ---- | - | ---- | - | ---- | -
|                                                                                |       |  | 2003 |   | 2002 |   | 2001 |  
|                                                                                | Notes |  | £m   |   | £m   |   | £m   |  
|                                                                                |       |  |      |   |      |   |      |  
|Net cash inflow from operating activities                                       | 9     |  | 429  |   | 355  |   | 887  |  
|Dividends received from associates                                              |       |  | 3    |   | 2    |   | 2    |  
|Returns on investments and servicing
      of finance                           |       |  |      |   |      |   |      |  
|Interest received                                                               |       |  | 17   |   | 20   |   | 30   |  
|Interest paid                                                                   |       |  | (45  | ) | (58  | ) | (40  | )
|Income from fixed asset investments                                             |       |  |     |   | 1    |   | 3    |  
|Dividends paid to equity minority interests                                     |       |  |     |   | (27  | ) |     |  
|                                                                                |       |  |      |   |      |   |      |  
|Net cash outflow from returns on investments
      and servicing of finance     |       |  | (28  | ) | (64  | ) | (7   | )
|Taxation paid                                                                   |       |  | (33  | ) | (73  | ) | (173 | )
|Capital expenditure and financial investment                                    |       |  |      |   |      |   |      |  
|Purchase of tangible fixed assets                                               |       |  | (131 | ) | (168 | ) | (276 | )
|Sale of tangible fixed assets                                                   |       |  | 13   |   | 15   |   | 6    |  
|Purchase of fixed asset investments                                             |       |  | (3   | ) | (80  | ) | (73  | )
|Sale of fixed asset investments                                                 |       |  | 11   |   | 22   |   | 68   |  
|                                                                                |       |  |      |   |      |   |      |  
|Net cash outflow on capital expenditure
      and financial investment          |       |  | (110 | ) | (211 | ) | (275 | )
|Acquisitions and disposals (including
      joint ventures and associates)      | 10    |  | (106 | ) | (6   | ) | (89  | )
|Equity dividends paid                                                           |       |  | (140 | ) | (139 | ) | (227 | )
|                                                                                |       |  |      |   |      |   |      |  
|Cash inflow/(outflow) before management
      of liquid resources and financing |       |  | 15   |   | (136 | ) | 118  |  
|Management of liquid resources                                                  |       |  |      |   |      |   |      |  
|Net (increase)/decrease in short-term investments                               | 10    |  | (99  | ) | 378  |   | (448 | )
|Financing                                                                       |       |  |      |   |      |   |      |  
|Proceeds from the issue of shares                                               | 26    |  |     |   | 2    |   | 16   |  
|Net (decrease)/increase in borrowings                                           | 10    |  | (13  | ) | (158 | ) | 350  |  
|                                                                                |       |  |      |   |      |   |      |  
|Net cash (outflow)/inflow from financing                                        |       |  | (13  | ) | (156 | ) | 366  |  
|                                                                                |       |  |      |   |      |   |      |  
|(Decrease)/increase in cash                                                     | 11    |  | (97  | ) | 86   |   | 36   |  
|                                                                                |       |  |      |   |      |   |      |  
|                                                                                |       |  |      |   |      |   |      |  
|                                                                                |       |  |      |   |      |   |      |  
|                                                                                |       |  | 2003 |   | 2002 |   | 2001 |  
|                                                                                | Notes |  | £m   |   | £m   |   | £m   |  
|                                                                                |       |  |      |   |      |   |      |  
|Reconciliation of net cash flow to movement
      in net debt                   |       |  |      |   |      |   |      |  
|(Decrease)/increase in cash                                                     |       |  | (97  | ) | 86   |   | 36   |  
|Cash outflow/(inflow) from movement in
      borrowings                         | 10    |  | 13   |   | 158  |   | (350 | )
|Cash inflow/(outflow) from movement in
      liquid resources                   | 10    |  | 99   |   | (378 | ) | 448  |  
|                                                                                |       |  |      |   |      |   |      |  
|Change in net funds/(debt) resulting from
      cash flows                      |       |  | 15   |   | (134 | ) | 134  |  
|Net funds arising on acquisitions                                               |       |  | 3    |   | 1    |   | 15   |  
|Translation differences                                                         |       |  | (29  | ) | (71  | ) | 23   |  
|                                                                                |       |  |      |   |      |   |      |  
|Movement in net (debt)/funds                                                    |       |  | (11  | ) | (204 | ) | 172  |  
|Opening net (debt)/funds                                                        | 11    |  | (66  | ) | 138  |   | (34  | )
|                                                                                |       |  |      |   |      |   |      |  
|Closing net (debt)/funds                                                        | 11    |  | (77  | ) | (66  | ) | 138  |  
|                                                                                |       |  |      |   |      |   |      |  



| | Reuters Group PLC Annual
      Report and Form 20-F 2003 | 49
| | -------------------------------------------------------- | --

---





Back to Contents

Notes on the consolidated
    cash flow statement

|9 Net cash inflow from operating
        activitiesOperating profit is reconciled to net cash inflow from operating activities
      as follows: |        |    |        |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------------ | ------ | -- | ------ | - | ------ | -
|                                                                                                                                                 |        |    |        |   |        |  
|                                                                                                                                                 | 2003   |    | 2002   |   | 2001   |  
|£m                                                                                                                                               | £m     | £m
|                                                                                                                                                 |        |    |        |   |        |  
|Operating profit/(loss)                                                                                                                          | 126    |    | (144   | ) | 302    |  
|Depreciation                                                                                                                                     | 193    |    | 227    |   | 246    |  
|Amortisation and impairment of goodwill
        and other intangible assets                                                                      | 121    |    | 315    |   | 81     |  
|(Increase)/decrease in stocks                                                                                                                    | (1     | )  | 2      |   | 4      |  
|Decrease/(increase) in debtors                                                                                                                   | 316    |    | 241    |   | (6     | )
|(Decrease)/increase in creditors                                                                                                                 | (316   | )  | (314   | ) | 254    |  
|Loss on disposal of tangible fixed assets                                                                                                        |       |    | 1      |   | 11     |  
|Amounts written (back)/off interests in
        own shares                                                                                       | (12    | )  | 3      |   | 12     |  
|Other, principally translation differences                                                                                                       | 2      |    | 24     |   | (17    | )
|                                                                                                                                                 |        |    |        |   |        |  
|Net cash inflow from operating activities                                                                                                        | 429    |    | 355    |   | 887    |  
|                                                                                                                                                 |        |    |        |   |        |  
|                                                                                                                                                 |        |    |        |   |        |  
|10 Analysis of cash flows for
        headings netted in the cash flow statement                                                                 |        |    |        |   |        |  
|                                                                                                                                                 |        |    |        |   |        |  
|                                                                                                                                                 | 2003   |    | 2002   |   | 2001   |  
|£m                                                                                                                                               | £m     | £m
|                                                                                                                                                 |        |    |        |   |        |  
|Acquisitions and disposals (including
          joint ventures and associates)                                                                   |        |    |        |   |        |  
|Cash consideration:                                                                                                                              |        |    |        |   |        |  
|Subsidiary undertakings
          (see note 31)                                                                                                  | (155   | )  | (41    | ) | (373   | )
|Joint ventures                                                                                                                                   |       |    | (2     | ) | (44    | )
|Associates                                                                                                                                       |       |    |       |   | (22    | )
|Loans (repaid
          to)/from joint ventures and associates                                                                                   | (3     | )  | 6      |   | (9     | )
|Deferred payments
          for acquisitions in prior years                                                                                      | (11    | )  | (5     | ) | (3     | )
|                                                                                                                                                 |        |    |        |   |        |  
|                                                                                                                                                 | (169   | )  | (42    | ) | (451   | )
|Less cash acquired (net of cash disposed)                                                                                                        | 38     |    | 29     |   | 5      |  
|                                                                                                                                                 |        |    |        |   |        |  
|                                                                                                                                                 | (131   | )  | (13    | ) | (446   | )
|Cash received from disposals (including
        deemed disposals):                                                                               |        |    |        |   |        |  
|Subsidiary undertakings                                                                                                                          | 10     |    | 4      |   | 357    |  
|Joint ventures
          and associates                                                                                                          | 15     |    | 3      |   |       |  
|                                                                                                                                                 |        |    |        |   |        |  
|Net cash outflow on acquisitions and disposals                                                                                                   | (106   | )  | (6     | ) | (89    | )
|                                                                                                                                                 |        |    |        |   |        |  
|Management of liquid resources                                                                                                                   |        |    |        |   |        |  
|(Increase)/decrease in term deposits                                                                                                             | (5     | )  | 84     |   | (66    | )
|Purchase of certificates of deposit                                                                                                              |       |    |       |   | (31    | )
|Sale of certificates of deposit                                                                                                                  |       |    | 1      |   | 30     |  
|Purchase of listed/unlisted securities                                                                                                           | (3,582 | )  | (4,587 | ) | (1,566 | )
|Sale of listed/unlisted securities                                                                                                               | 3,488  |    | 4,880  |   | 1,185  |  
|                                                                                                                                                 |        |    |        |   |        |  
|Net (increase)/decrease in short-term
        investments                                                                                        | (99    | )  | 378    |   | (448   | )
|                                                                                                                                                 |        |    |        |   |        |  
|Financing                                                                                                                                        |        |    |        |   |        |  
|(Decrease)/increase in short-term borrowings                                                                                                     | (78    | )  | (173   | ) | 300    |  
|Increase in long-term borrowings                                                                                                                 | 65     |    | 15     |   | 50     |  
|                                                                                                                                                 |        |    |        |   |        |  
|Net cash (outflow)/inflow from financing                                                                                                         | (13    | )  | (158   | ) | 350    |  
|                                                                                                                                                 |        |    |        |   |        |  
|                                                                                                                                                

|11 Analysis of net funds |            |            |             |           |            |       |       |   |                       |   |                         |   |      |  
|------------------------ | ---------- | ---------- | ----------- | --------- | ---------- | ----- | ----- | - | --------------------- | - | ----------------------- | - | ---- | -
|                         |            |            |             |           |            |       |       |   |                       |   |                         |   |      |  
|                         |            |            |             |           |            |       |       |   | Bank/other borrowings |   |                         |  
|                         |            |            |             |           |            |       |       |   |                       |   |                         |  
|                         | Cash at    |            |             |           | Total cash |       |       |   | Falling               |   | Falling
      due after |   |      |  
|bank and                 | and        | Short-term | due within  | more than
|in hand                  | Overdrafts | overdrafts | investments | one year  | one year   | Total
|£m                       | £m         | £m         | £m          | £m        | £m         | £m   
|                         |            |            |             |           |            |       |       |   |                       |   |                         |   |      |  
|31 December 2001         | 138        |            | (86         | )         | 52         |       | 1,019 |   | (595                  | ) | (338                    | ) | 138  |  
|Cash flow                | 23         |            | 63          |           | 86         |       | (378  | ) | 173                   |   | (15                     | ) | (134 | )
|Exchange movements       | (3         | )          | 4           |           | 1          |       | (71   | ) | (1                    | ) |                        |   | (71  | )
|Arising on acquisition   |           |            |            |           |           |       |      |   | 1                     |   |                        |   | 1    |  
|                         |            |            |             |           |            |       |       |   |                       |   |                         |   |      |  
|31 December 2002         | 158        |            | (19         | )         | 139        |       | 570   |   | (422                  | ) | (353                    | ) | (66  | )
|Cash flow                | (86        | )          | (11         | )         | (97        | )     | 99    |   | 78                    |   | (65                     | ) | 15   |  
|Exchange movements       |           |            | 1           |           | 1          |       | (50   | ) | 8                     |   | 12                      |   | (29  | )
|Arising on acquisition   |           |            |            |           |           |       | 3     |   |                      |   |                        |   | 3    |  
|                         |            |            |             |           |            |       |       |   |                       |   |                         |   |      |  
|31 December 2003         | 72         |            | (29         | )         | 43         |       | 622   |   | (336                  | ) | (406                    | ) | (77  | )
|                         |            |            |             |           |            |       |       |   |                       |   |                         |   |      |  



|50 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 
|-- | ---------------------------------------------------------- | 

---



Back to Contents

12 Derivatives and other financial
    instrumentsDiscussion of the Groups objectives
    and policies for the management of financial instruments and associated risks
    together with information relating to hedging activities is included under Treasury
    management in the Operating and financial review on pages 38-39.

A substantial portion of Reuters revenue
    is receivable in foreign currencies with terms of payment up to three months
    in advance. As such, Reuters is subject to currency exposure from committed
    revenue and, additionally, to interest rate risk from borrowing and the investment
    of cash balances. Reuters seeks to limit these risks by entering into a mix
    of derivative financial instruments.

If the derivative financial instruments
    were considered separately from the underlying future revenue and interest,
    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:

|                                                                                                                                                                                                                  |                      |       |          |       |       |         |                      |       |          |   |      |   |                      |  |          |  |      |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | ----- | -------- | ----- | ----- | ------- | -------------------- | ----- | -------- | - | ---- | - | -------------------- |  | -------- |  | ---- | -
|                                                                                                                                                                                                                  |                      |       |          |       | 2003  |         |                      |       |          |   | 2002 |   |                      |  |          |  | 2001 |  
|                                                                                                                                                                                                                  |                      |       |          |       |       |         |                      |       |          |   |      |   |                      |  |          |  |      |  
|                                                                                                                                                                                                                  | Gross
      contract |       | Carrying |       | Fair  |         | Gross
      contract |       | Carrying |   | Fair |   | Gross
      contract |  | Carrying |  | Fair |  
|amounts                                                                                                                                                                                                           | value                | value | amounts  | value | value | amounts | value                | value
|£m                                                                                                                                                                                                                | £m                   | £m    | £m       | £m    | £m    | £m      | £m                   | £m   
|                                                                                                                                                                                                                  |                      |       |          |       |       |         |                      |       |          |   |      |   |                      |  |          |  |      |  
|Foreign exchange forward contracts:                                                                                                                                                                               |                      |       |          |       |       |         |                      |       |          |   |      |   |                      |  |          |  |      |  
|Contracts in
          profit                                                                                                                                                                                     | 102                  |       |         |       | 1     |         | 96                   |       |         |   | 7    |   | 110                  |  |         |  | 13   |  
|Contracts in
          loss                                                                                                                                                                                       | 63                   |       |         |       | (1    | )       | 154                  |       |         |   | (6   | ) | 143                  |  |         |  | (3   | )
|Foreign currency options:                                                                                                                                                                                         |                      |       |          |       |       |         |                      |       |          |   |      |   |                      |  |          |  |      |  
|Contracts in
          profit                                                                                                                                                                                     | 23                   |       |         |       | 1     |         | 194                  |       | 2        |   | 1    |   | 163                  |  |         |  | 1    |  
|Contracts in
          loss                                                                                                                                                                                       | 88                   |       |         |       | (1    | )       | 60                   |       |         |   | (1   | ) | 148                  |  |         |  | (2   | )
|Currency and interest rate swaps:                                                                                                                                                                                 |                      |       |          |       |       |         |                      |       |          |   |      |   |                      |  |          |  |      |  
|Contracts in
          profit                                                                                                                                                                                     | 614                  |       | 26       |       | 27    |         | 361                  |       | 12       |   | 16   |   | 210                  |  |         |  | 1    |  
|Contracts in
          loss                                                                                                                                                                                       | 67                   |       |         |       |      |         | 203                  |       | (14      | ) | (17  | ) | 127                  |  |         |  | (1   | )
|                                                                                                                                                                                                                  |                      |       |          |       |       |         |                      |       |          |   |      |   |                      |  |          |  |      |  
|Total                                                                                                                                                                                                             | 957                  |       | 26       |       | 27    |         | 1,068                |       |         |   |     |   | 901                  |  |         |  | 9    |  
|                                                                                                                                                                                                                  |                      |       |          |       |       |         |                      |       |          |   |      |   |                      |  |          |  |      |  
|The fair values of foreign
        currency and interest rate management instruments are estimated on the
        basis of market quotes, discounted to current value using market-quoted
        interest rates.

The following table provides an analysis
    by currency of derivative contracts held for currency hedging purposes as
    at 31 December.

|                                                                                                                                                                                                      |       |   |          |   |         |   |       |   |          |  |         |  |       |  |          |  |         | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----- | - | -------- | - | ------- | - | ----- | - | -------- |  | ------- |  | ----- |  | -------- |  | ------- | 
|                                                                                                                                                                                                      |       |   |          |   | 2003    |   |       |   |          |  | 2002    |  |       |  |          |  | 2001    | 
|                                                                                                                                                                                                      |       |   |          |   |         |   |       |   |          |  |         |  |       |  |          |  |         | 
|                                                                                                                                                                                                      | Swaps |   | Forwards |   | Options |   | Swaps |   | Forwards |  | Options |  | Swaps |  | Forwards |  | Options | 
|%                                                                                                                                                                                                     | %     | % | %        | % | %       | % | %     | %
|                                                                                                                                                                                                      |       |   |          |   |         |   |       |   |          |  |         |  |       |  |          |  |         | 
|Euro                                                                                                                                                                                                  | 4     |   | 60       |   | 100     |   |      |   | 54       |  | 100     |  |      |  | 22       |  | 90      | 
|Japanese yen                                                                                                                                                                                          |      |   | 3        |   |        |   |      |   | 33       |  |        |  |      |  | 31       |  |        | 
|US dollar                                                                                                                                                                                             | 88    |   | 36       |   |        |   |      |   |         |  |        |  |      |  | 23       |  | 10      | 
|Other                                                                                                                                                                                                 | 8     |   | 1        |   |        |   |      |   | 13       |  |        |  |      |  | 24       |  |        | 
|                                                                                                                                                                                                      |       |   |          |   |         |   |       |   |          |  |         |  |       |  |          |  |         | 
|Total                                                                                                                                                                                                 | 100   |   | 100      |   | 100     |   |      |   | 100      |  | 100     |  |      |  | 100      |  | 100     | 
|                                                                                                                                                                                                      |       |   |          |   |         |   |       |   |          |  |         |  |       |  |          |  |         | 
|Foreign exchange forward
        contracts and options mature at dates up to June 2004; currency swaps
        and interest rate swaps both mature at various dates through to November
        2010.



| | Reuters Group PLC Annual
        Report and Form 20-F 2003 | 51
| | ---------------------------------------------------------- | --

---



Back to Contents

Notes on the consolidated
  cash flow statementcontinued

|12 | Derivatives and other
        financial instrumentscontinued
|-- | ------------------------------------------------------------

|The results of currency and interest rate
        hedging activities for the three years to December 2003 are as summarised
        below: |      |    |                     |   |      |  
|------------------------------------------------------------------------------------------------------------------------------------------ | ---- | -- | ------------------- | - | ---- | -
|                                                                                                                                           |      |    |                     |   |     
|                                                                                                                                           |      |    | Year to 31 December
|                                                                                                                                           |      |    |                    
|Recognised
          gains/(losses)                                                                                                        | 2003 |    | 2002                |   | 2001
|£m                                                                                                                                         | £m   | £m
|                                                                                                                                           |      |    |                     |   |      |  
|Currency hedging                                                                                                                           | 11   |    | 10                  |   | (4   | )
|Interest rate hedging                                                                                                                      | (3   | )  | (2                  | ) | (1   | )
|                                                                                                                                           |      |    |                     |   |      |  

|Recognised currency hedging gains in
          2003 were favourable mainly due to the effect of the weaker US dollar
          on hedges of the net investment in overseas subsidiaries.
        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:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                                                                                      |       |    |          |   |     |   | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----- | -- | -------- | - | --- | - | 
|Hedging                                                                                                                                                                                               | Gains |    | (Losses) |   | Net
|£m                                                                                                                                                                                                    | £m    | £m
|                                                                                                                                                                                                      |       |    |          |   |     |  
|Unrecognised at 1 January
        2003                                                                                                                                                                | 13    |    | (13      | ) | 0   |  
|Arising in previous years                                                                                                                                                                             |       |    |          |   |     |  
|recognised in 2003                                                                                                                                                                                    | (11   | )  | 10       |   | (1  | )
|                                                                                                                                                                                                      |       |    |          |   |     |   | 
|not recognised in 2003                                                                                                                                                                                | 2     |    | (3       | ) | (1  | )
|Arising in 2003                                                                                                                                                                                       |       |    |          |   |     |  
|not recognised in 2003                                                                                                                                                                                | 3     |    | (1       | ) | 2   |  
|                                                                                                                                                                                                      |       |    |          |   |     |   | 
|Unrecognised at 31 December
        2003                                                                                                                                                              | 5     |    | (4       | ) | 1   |  
|                                                                                                                                                                                                      |       |    |          |   |     |   | 
|Of which:                                                                                                                                                                                             |       |    |          |   |     |  
|expected to be recognised
        in 2004                                                                                                                                                             | 4     |    | (2       | ) | 2   |  
|expected to be recognised
        in 2005 or later                                                                                                                                                    | 1     |    | (2       | ) | (1  | )
|                                                                                                                                                                                                      |       |    |          |   |     |   | 
|Net unrecognised gains on
        derivatives used for hedging were £1 million at 31 December 2003
        compared to £nil at 31 December 2002 and unrecognised gains of £9
        million in 2001. |       |    |          |   |     |  

The weighted average variable rate payable
    on the interest rate swaps used to alter the currency and interest rate profile
    of debt issued at 31 December 2003 was 3% (2002: 4%, 2001: 4%). 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 A3/A- or
    higher.

Carrying and fair values of Group financial
    assets and liabilities at 31 December were:

|                                                                                                                                                               |          |       |       |       |          |   |      |   |          |   |      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | ----- | ----- | ----- | -------- | - | ---- | - | -------- | - | -----
|                                                                                                                                                               |          |       | 2003  |       |          |   | 2002 |   |          |   | 2001 
|                                                                                                                                                               |          |       |       |       |          |   |      |   |          |   |      
|                                                                                                                                                               | Carrying |       | Fair  |       | Carrying |   | Fair |   | Carrying |   | Fair 
|value                                                                                                                                                          | value    | value | value | value | value   
|£m                                                                                                                                                             | £m       | £m    | £m    | £m    | £m      
|                                                                                                                                                               |          |       |       |       |          |   |      |   |          |   |      
|Derivative instruments                                                                                                                                         | 26       |       | 27    |       |         |   |     |   |         |   | 9    
|Other financial assets:                                                                                                                                        |          |       |       |       |          |   |      |   |          |   |      
|Fixed asset investments                                                                                                                                        | 54       |       | 73    |       | 66       |   | 67   |   | 140      |   | 160  
|Long-term debtors                                                                                                                                              | 21       |       | 21    |       | 12       |   | 12   |   | 15       |   | 15   
|Short-term investments and cash                                                                                                                                | 694      |       | 694   |       | 728      |   | 728  |   | 1,157    |   | 1,160
|Other financial liabilities:                                                                                                                                   |          |       |       |       |          |   |      |   |          |   |      
|Short-term borrowings                                                                                                                                          | (365     | )     | (365  | )     | (441     | ) | (441 | ) | (681     | ) | (681 
|Long-term borrowings                                                                                                                                           | (406     | )     | (406  | )     | (353     | ) | (353 | ) | (338     | ) | (338 
|Other long-term financial liabilities                                                                                                                          | (113     | )     | (113  | )     | (88      | ) | (88  | ) | (29      | ) | (29  
|                                                                                                                                                               |          |       |       |       |          |   |      |   |          |   |      
|The fair value of fixed
        asset investments is the carrying value unless the investment has a readily
        determinable market value which is higher.

The fair value of listed short-term investments
    was based on quoted market prices for those investments. The carrying amount
    of the other short-term deposits and investments approximated to their fair
    values due to the short maturity of the instruments held.

The fair value of short-term borrowings approximated
    to the carrying value due to the short maturity of the investments.

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.



|52 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 
|-- | ---------------------------------------------------------- | 

---



Back to Contents

|12                                                                                                                                                                                                                                                                                                                     | Derivatives and other financial
        instrumentscontinued
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------
|Financial
          instrument sensitivity analysisThe 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
        adverse changes in the fair value of financial instruments are based
        on an instantaneous:
|-----------------------------------------------------------------------------------------------------------------------
|i)                                                                                                                     
|ii)                                                                                                                    
|                                                                                                                       

|                                 |                |              |                                         |  
|-------------------------------- | -------------- | ------------ | --------------------------------------- | -
|                                 |                |              | Fair value changes
        arising from
|                                 |                |              |                                        
|                                 |                |              |                                         |  
|                                 |                | weakening   
|                                 |                | in £ against
|                                 | 1% increase in | other       
|Fair                             | interest rates | currencies  
|value                            | (adverse)      | (adverse)   
|£m                               |                | £m           | £m                                     
|                                 |                |              |                                         |  
|Currency and interest rate swaps | 27             |              | (26                                     | )
|Forward contracts                |               |              |                                        |  
|                                 |                |              |                                         |  
|Total                            | 27             |              | (26                                     | )
|                                 |                |              |                                         |  

Monetary assets and liabilities by currency,
    after cross currency swaps, excluding the functional currency of each operation
    at 31 December 2003, were:

|                                                                                                                                                                                                                                                                                                                                                                                      |           |      |             |     |        |       |       |   |          |   |                                                            | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | ---- | ----------- | --- | ------ | ----- | ----- | - | -------- | - | ---------------------------------------------------------- | 
|                                                                                                                                                                                                                                                                                                                                                                                      |           |      |             |     |        |       |       |   |          |   | Net foreign currency
        monetary assets/(liabilities)
|                                                                                                                                                                                                                                                                                                                                                                                      |           |      |             |     |        |       |       |   |          |   |                                                           
|                                                                                                                                                                                                                                                                                                                                                                                      |           |      |             |     |        |       |       |   | Japanese |   | Hong Kong                                                  | 
|Sterling                                                                                                                                                                                                                                                                                                                                                                              | US dollar | Euro | Swiss franc | yen | dollar | Other | Total
|£m                                                                                                                                                                                                                                                                                                                                                                                    | £m        | £m   | £m          | £m  | £m     | £m    | £m   
|                                                                                                                                                                                                                                                                                                                                                                                      |           |      |             |     |        |       |       |   |          |   |                                                            | 
|Functional currency of operation:                                                                                                                                                                                                                                                                                                                                                     |           |      |             |     |        |       |       |   |          |   |                                                            | 
|Sterling                                                                                                                                                                                                                                                                                                                                                                              |          |      | (405        | )   | (3     | )     | (38   | ) | 2        |   |                                                           | 
|US dollar                                                                                                                                                                                                                                                                                                                                                                             | (21       | )    |            |     |       |       | (10   | ) |         |   |                                                           | 
|Euro                                                                                                                                                                                                                                                                                                                                                                                  | (10       | )    |            |     |       |       |      |   |         |   |                                                           | 
|Swiss franc                                                                                                                                                                                                                                                                                                                                                                           | 26        |      | 1           |     | 4      |       |      |   | (2       | ) |                                                           | 
|Japanese yen                                                                                                                                                                                                                                                                                                                                                                          | 1         |      |            |     |       |       |      |   |         |   |                                                           | 
|Hong Kong dollar                                                                                                                                                                                                                                                                                                                                                                      | 2         |      | 19          |     |       |       |      |   | (3       | ) |                                                           | 
|Other                                                                                                                                                                                                                                                                                                                                                                                 | (3        | )    | 18          |     |       |       |      |   |         |   |                                                           | 
|                                                                                                                                                                                                                                                                                                                                                                                      |           |      |             |     |        |       |       |   |          |   |                                                            | 
|Total                                                                                                                                                                                                                                                                                                                                                                                 | (5        | )    | (367        | )   | 1      |       | (48   | ) | (3       | ) |                                                           | 
|                                                                                                                                                                                                                                                                                                                                                                                      |           |      |             |     |        |       |       |   |          |   |                                                            | 
|Exchange differences that
        arise as a consequence of trading transactions and the translation of
        monetary assets and liabilities are taken to the profit and loss account.
        Exchange differences attributable to long-term foreign currency borrowings
        used to finance the Groups foreign currency investments are taken
        directly to reserves.

The currency and interest rate profile of the
    Groups financial assets at 31 December 2003 was:

|                 |         |             |                                         |             |                        | 
|---------------- | ------- | ----------- | --------------------------------------- | ----------- | ---------------------- | 
|                 |         |             | Cash and short-term
        investments |             | Fixed rate investments
|                 |         |             |                                         |             |                       
|                 |         |             |                                         |             |                        | 
|Weighted         | average
|average          | time   
|Floating         | Fixed   | interest    | for which                              
|Non-interest     | rate    | rate        | rate at                                 | rate       
|Total            | bearing | investments | investments                             | 31 December | is fixed              
|£m               | £m      | £m          | £m                                      | %           | Years                 
|                 |         |             |                                         |             |                        | 
|Sterling         | 105     |             | 1                                       |             | 98                     | 
|US dollar        | 559     |             | 55                                      |             | 503                    | 
|Euro             | 45      |             | 4                                       |             | 41                     | 
|Other            | 57      |             | 12                                      |             | 31                     | 
|                 |         |             |                                         |             |                        | 
|31 December 2003 | 766     |             | 72                                      |             | 673                    | 
|                 |         |             |                                         |             |                        | 
|31 December 2002 | 806     |             | 78                                      |             | 717                    | 
|31 December 2001 | 1,312   |             | 155                                     |             | 1,022                  | 
|                 |         |             |                                         |             |                        | 

Sterling, US dollar and euro short-term floating
    rate investments include £303 million (2002: £135 million, 2001: £301
    million) of money market deposits which mature within three months of the
    balance sheet date. Interest on floating rate 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.



| | Reuters Group PLC Annual
        Report and Form 20-F 2003 | 53
| | ---------------------------------------------------------- | --

---



Back to Contents

Notes on the consolidated 
  cash flow statementcontinued

12 Derivatives and other
    financial instrumentscontinuedThe currency and interest rate profile of
    the Groups financial liabilities, after allowing for interest rate
    and cross currency swaps, at 31 December 2003 was:

|                                                                                                                                                                                                                                                                                                                                                                                                                           |             |            |       |  |            | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | ---------- | ----- |  | ---------- | 
|                                                                                                                                                                                                                                                                                                                                                                                                                           |             |            |       |  | Borrowings
|                                                                                                                                                                                                                                                                                                                                                                                                                           |             |            |       |  |           
|                                                                                                                                                                                                                                                                                                                                                                                                                           |             |            | Other |  | Floating  
|financial                                                                                                                                                                                                                                                                                                                                                                                                                  | rate       
|Total                                                                                                                                                                                                                                                                                                                                                                                                                      | liabilities | borrowings
|£m                                                                                                                                                                                                                                                                                                                                                                                                                         | £m          | £m        
|                                                                                                                                                                                                                                                                                                                                                                                                                           |             |            |       |  |            | 
|Sterling                                                                                                                                                                                                                                                                                                                                                                                                                   | 291         |            | 30    |  | 261        | 
|US dollar                                                                                                                                                                                                                                                                                                                                                                                                                  | 515         |            | 72    |  | 443        | 
|Euro                                                                                                                                                                                                                                                                                                                                                                                                                       | 29          |            | 8     |  | 21         | 
|Swiss franc                                                                                                                                                                                                                                                                                                                                                                                                                | 39          |            |      |  | 39         | 
|Other                                                                                                                                                                                                                                                                                                                                                                                                                      | 10          |            | 3     |  | 7          | 
|                                                                                                                                                                                                                                                                                                                                                                                                                           |             |            |       |  |            | 
|31 December 2003                                                                                                                                                                                                                                                                                                                                                                                                           | 884         |            | 113   |  | 771        | 
|                                                                                                                                                                                                                                                                                                                                                                                                                           |             |            |       |  |            | 
|31 December 2002                                                                                                                                                                                                                                                                                                                                                                                                           | 882         |            | 88    |  | 794        | 
|31 December 2001                                                                                                                                                                                                                                                                                                                                                                                                           | 1,048       |            | 29    |  | 1,019      | 
|                                                                                                                                                                                                                                                                                                                                                                                                                           |             |            |       |  |            | 
|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 2003
        was 4% (2002: 4%, 2001: 4%). The above analysis excludes creditors falling
        due within one year which are of a non-financial nature.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                       |  |                                                        |  |                       |  |                                                        |  |                       |  |                                                        | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------- |  | ------------------------------------------------------ |  | --------------------- |  | ------------------------------------------------------ |  | --------------------- |  | ------------------------------------------------------ | 
|Total financial liabilities are repayable
        as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                       |  |                                                        |  |                       |  |                                                        |  |                       |  |                                                        | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                       |  |                                                        |  |                       |  |                                                        |  |                       |  |                                                        | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                       |  |                                                        |  |                       |  |                                                        |  |                       |  |                                                        | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                       |  | 2003                                                   |  |                       |  | 2002                                                   |  |                       |  | 2001                                                   | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                       |  |                                                        |  |                       |  |                                                        |  |                       |  |                                                        | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Borrowings
        £m |  | Other
        financial
        liabilities
        £m |  | Borrowings
        £m |  | Other
        financial
        liabilities
        £m |  | Borrowings
        £m |  | Other
        financial
        liabilities
        £m | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                       |  |                                                        |  |                       |  |                                                        |  |                       |  |                                                        | 
|Within one year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 365                   |  | 55                                                     |  | 441                   |  | 35                                                     |  | 681                   |  | 16                                                     | 
|Between one and two years                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 58                    |  | 19                                                     |  | 282                   |  | 23                                                     |  | 137                   |  | 3                                                      | 
|Between two and five years                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 348                   |  | 39                                                     |  | 71                    |  | 30                                                     |  | 201                   |  | 10                                                     | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                       |  |                                                        |  |                       |  |                                                        |  |                       |  |                                                        | 
|Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 771                   |  | 113                                                    |  | 794                   |  | 88                                                     |  | 1,019                 |  | 29                                                     | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                       |  |                                                        |  |                       |  |                                                        |  |                       |  |                                                        | 
|In April 2003, Reuters Group
        PLC entered into syndicated credit facilities for £1.0 billion,
        of which £640 million expires in 2008 and £360 million expires
        in 2004, with the ability to extend the maturity of the latter in whole
        or in part in certain circumstances. The facility is at variable interest
        rates based on LIBOR, the London Interbank Offer Rate, is committed and
        may be drawn and redrawn up to one month prior to its maturity in April
        2008. There are also bilateral facilities of £90 million. At December
        2003, the above facilities were undrawn. In January 2004, the company
        cancelled £200 million of the portion of the syndicated facility
        and £10 million of the bilateral facilities which expire in April
        2004.

In March 1998, Reuters established a Euro
    Commercial Paper Programme. This provides access to £1.5 billion of
    uncommitted short-term finance of which £1,487 million was unused at
    31 December 2003. In December 1998, Reuters established a £1.0 billion
    Euro Medium Term Note Programme of which £273 million was unused at
    31 December 2003.

In addition, at 31 December 2003, the Group
    had unused, short-term, uncommitted bank borrowing facilities denominated
    in various currencies, the sterling equivalent of which was approximately £500
    million, at money market rates varying principally between 0% and 5%, depending
    on the currency.

|   |                                                            | 
|-- | ---------------------------------------------------------- | 
|54 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 

---



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Consolidated balance sheet at 31 December

|                                                                    |       |  |        |   |        |   |        |  
|------------------------------------------------------------------- | ----- |  | ------ | - | ------ | - | ------ | -
|                                                                    |       |  | 2003   |   | 2002   |   | 2001   |  
|                                                                    | Notes |  | £m     |   | £m     |   | £m     |  
|                                                                    |       |  |        |   |        |   |        |  
|Fixed assets                                                        |       |  |        |   |        |   |        |  
|Intangible assets                                                   | 14    |  | 375    |   | 418    |   | 498    |  
|Tangible assets                                                     | 15    |  | 481    |   | 601    |   | 691    |  
|Investments                                                         | 16    |  |        |   |        |   |        |  
|Investments
          in joint ventures:                            |       |  |        |   |        |   |        |  
|Share
          of gross assets                                     |       |  | 108    |   | 207    |   | 270    |  
|Share
          of gross liabilities                                |       |  | (56    | ) | (110   | ) | (118   | )
|                                                                    |       |  | 52     |   | 97     |   | 152    |  
|Share
          of net assets of associates                         |       |  | 230    |   | 266    |   | 329    |  
|Other
          investments                                         |       |  | 128    |   | 134    |   | 293    |  
|                                                                    |       |  |        |   |        |   |        |  
|                                                                    |       |  | 1,266  |   | 1,516  |   | 1,963  |  
|                                                                    |       |  |        |   |        |   |        |  
|Current assets                                                      |       |  |        |   |        |   |        |  
|Stocks                                                              | 17    |  | 2      |   | 1      |   | 3      |  
|Debtors                                                             | 18    |  | 708    |   | 1,019  |   | 1,231  |  
|Deferred taxation                                                   | 24    |  | 273    |   | 260    |   | 184    |  
|Short-term investments                                              | 19    |  | 622    |   | 570    |   | 1,019  |  
|Cash at bank and in hand                                            |       |  | 72     |   | 158    |   | 138    |  
|                                                                    |       |  |        |   |        |   |        |  
|                                                                    |       |  | 1,677  |   | 2,008  |   | 2,575  |  
|Creditors: Amounts falling
          due within one year            | 20    |  | (1,766 | ) | (2,198 | ) | (2,709 | )
|                                                                    |       |  |        |   |        |   |        |  
|Net current liabilities                                             |       |  | (89    | ) | (190   | ) | (134   | )
|                                                                    |       |  |        |   |        |   |        |  
|Total assets less current
          liabilities                     |       |  | 1,177  |   | 1,326  |   | 1,829  |  
|Creditors: Amounts falling
          due after more than one year   | 21    |  | (425   | ) | (354   | ) | (344   | )
|Provisions for liabilities
          and charges                    |       |  |        |   |        |   |        |  
|Pensions and similar obligations                                    | 23    |  | (63    | ) | (59    | ) | (58    | )
|Deferred taxation                                                   | 24    |  | (33    | ) | (27    | ) | (30    | )
|Other provisions                                                    | 25    |  | (175   | ) | (159   | ) | (124   | )
|                                                                    |       |  |        |   |        |   |        |  
|Net assets                                                          |       |  | 481    |   | 727    |   | 1,273  |  
|                                                                    |       |  |        |   |        |   |        |  
|Capital and reserves                                                | 26    |  |        |   |        |   |        |  
|Called-up share capital                                             |       |  | 358    |   | 358    |   | 358    |  
|Share premium account                                               |       |  | 91     |   | 91     |   | 89     |  
|Other reserve                                                       |       |  | (1,717 | ) | (1,717 | ) | (1,717 | )
|Capital redemption reserve                                          |       |  | 1      |   | 1      |   | 1      |  
|Profit and loss account reserve                                     |       |  | 1,553  |   | 1,763  |   | 2,378  |  
|                                                                    |       |  |        |   |        |   |        |  
|Shareholders equity                                                |       |  | 286    |   | 496    |   | 1,109  |  
|Equity minority interests                                           |       |  | 195    |   | 231    |   | 164    |  
|                                                                    |       |  |        |   |        |   |        |  
|Capital employed                                                    |       |  | 481    |   | 727    |   | 1,273  |  
|                                                                    |       |  |        |   |        |   |        |  
|The balance sheet of Reuters
        Group PLC is shown on page 71. |       |  |        |   |        |   |        |  

The financial statements on pages 42-73 and
    the summary of differences between UK and US generally accepted accounting
    principles on pages 74-79 were approved by the directors on 3 March 2004.

Tom GlocerChief Executive


David GrigsonFinance Director


| |                                                              |   
| | ------------------------------------------------------------ | --
| | Reuters Group PLC Annual
          Report and Form 20-F 2003 | 55

---



Back to Contents

Reconciliation of movements
    in shareholders fundsfor the year ended
  31 December

|                                                                              |      |   |       |   |       |  
|----------------------------------------------------------------------------- | ---- | - | ----- | - | ----- | -
|                                                                              | 2003 |   | 2002  |   | 2001  |  
|                                                                              | £m   |   | £m    |   | £m    |  
|                                                                              |      |   |       |   |       |  
|Loss for the period                                                           | (97  | ) | (543  | ) | (94   | )
|Unrealised gain on deemed partial disposal
        of subsidiary undertakings |     |   | 1     |   | 11    |  
|Unrealised gain on deemed partial disposal
        of associates              |     |   | 12    |   |      |  
|Unrealised gain on disposal of fixed asset
        investments                |     |   | 10    |   |      |  
|Translation differences taken directly
        to reserves                    | (113 | ) | (95   | ) | 23    |  
|Shares issued during the year                                                 |     |   | 2     |   | 16    |  
|                                                                              |      |   |       |   |       |  
|Net movement in shareholders equity                                          | (210 | ) | (613  | ) | (44   | )
|Opening shareholders equity                                                  | 496  |   | 1,109 |   | 1,153 |  
|                                                                              |      |   |       |   |       |  
|Closing shareholders equity                                                  | 286  |   | 496   |   | 1,109 |  
|                                                                              |      |   |       |   |       |  
|

|   |                                                            | 
|-- | ---------------------------------------------------------- | 
|56 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 

---



Back to Contents

Notes on the consolidated
    balance sheet

13 Segmental analysisThe tables below show total assets and
  non-interest bearing net assets by customer segment 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
          bearing net assets |  
|                                                                                                                                                                                                                                                                                                                                                                   |       |  |       |  |              |  |                                           |  
|                                                                                                                                                                                                                                                                                                                                                                   | 2003  |  | 2002  |  | 2001         |  | 2003                                      |  
|By customer segment                                                                                                                                                                                                                                                                                                                                                | £m    |  | £m    |  | £m           |  | £m                                        |  
|                                                                                                                                                                                                                                                                                                                                                                   |       |  |       |  |              |  |                                           |  
|Treasury Services                                                                                                                                                                                                                                                                                                                                                  | 200   |  | 227   |  | 224          |  | 121                                       |  
|Investment Banking                                                                                                                                                                                                                                                                                                                                                 | 113   |  | 131   |  | 162          |  | 47                                        |  
|Asset Management                                                                                                                                                                                                                                                                                                                                                   | 125   |  | 160   |  | 175          |  | 45                                        |  
|Corporates & Media                                                                                                                                                                                                                                                                                                                                                 | 136   |  | 170   |  | 224          |  | 42                                        |  
|                                                                                                                                                                                                                                                                                                                                                                   |       |  |       |  |              |  |                                           |  
|Total customer segment                                                                                                                                                                                                                                                                                                                                             | 574   |  | 688   |  | 785          |  | 255                                       |  
|Channels                                                                                                                                                                                                                                                                                                                                                           | 387   |  | 437   |  | 513          |  | 235                                       |  
|Operations & Technology                                                                                                                                                                                                                                                                                                                                            | 303   |  | 435   |  | 522          |  | 199                                       |  
|Content                                                                                                                                                                                                                                                                                                                                                            | 27    |  | 27    |  | 36           |  | (56                                       | )
|Corporate Services                                                                                                                                                                                                                                                                                                                                                 | 13    |  | 14    |  | 19           |  | (27                                       | )
|Central                                                                                                                                                                                                                                                                                                                                                            | 485   |  | 579   |  | 699          |  | (39                                       | )
|Instinet Group                                                                                                                                                                                                                                                                                                                                                     | 1,154 |  | 1,344 |  | 1,964        |  | (9                                        | )
|                                                                                                                                                                                                                                                                                                                                                                   |       |  |       |  |              |  |                                           |  
|Total assets/non-interest bearing net
        assets                                                                                                                                                                                                                                                                                                               | 2,943 |  | 3,524 |  | 4,538        |  | 558                                       |  
|                                                                                                                                                                                                                                                                                                                                                                   |       |  |       |  |              |  |                                           |  
|Interest bearing net assets                                                                                                                                                                                                                                                                                                                                        |       |  |       |  |              |  | (77                                       | )
|                                                                                                                                                                                                                                                                                                                                                                   |       |  |       |  |              |  |                                           |  
|Total net assets                                                                                                                                                                                                                                                                                                                                                   |       |  |       |  |              |  | 481                                       |  
|                                                                                                                                                                                                                                                                                                                                                                   |       |  |       |  |              |  |                                           |  
|                                                                                                                                                                                                                                                                                                                                                                   |       |  |       |  |              |  |                                           |  
|                                                                                                                                                                                                                                                                                                                                                                   |       |  |       |  |              |  |                                           |  
|                                                                                                                                                                                                                                                                                                                                                                   |       |  |       |  | Total assets |  | Non-interest
        bearing net assets   |  
|                                                                                                                                                                                                                                                                                                                                                                   |       |  |       |  |              |  |                                           |  
|                                                                                                                                                                                                                                                                                                                                                                   | 2003  |  | 2002  |  | 2001         |  | 2003                                      |  
|By location                                                                                                                                                                                                                                                                                                                                                        | £m    |  | £m    |  | £m           |  | £m                                        |  
|                                                                                                                                                                                                                                                                                                                                                                   |       |  |       |  |              |  |                                           |  
|Europe, Middle East and Africa                                                                                                                                                                                                                                                                                                                                     | 974   |  | 1,381 |  | 1,803        |  | 203                                       |  
|The Americas                                                                                                                                                                                                                                                                                                                                                       | 1,323 |  | 1,660 |  | 2,093        |  | 117                                       |  
|Asia/Pacific                                                                                                                                                                                                                                                                                                                                                       | 157   |  | 192   |  | 241          |  | 42                                        |  
|Central                                                                                                                                                                                                                                                                                                                                                            | 489   |  | 291   |  | 401          |  | 196                                       |  
|                                                                                                                                                                                                                                                                                                                                                                   |       |  |       |  |              |  |                                           |  
|Total assets/non-interest bearing net
        assets                                                                                                                                                                                                                                                                                                               | 2,943 |  | 3,524 |  | 4,538        |  | 558                                       |  
|                                                                                                                                                                                                                                                                                                                                                                   |       |  |       |  |              |  |                                           |  
|Fixed assets                                                                                                                                                                                                                                                                                                                                                       | 1,266 |  | 1,516 |  | 1,963        |  |                                           |  
|Current assets                                                                                                                                                                                                                                                                                                                                                     | 1,677 |  | 2,008 |  | 2,575        |  |                                           |  
|                                                                                                                                                                                                                                                                                                                                                                   |       |  |       |  |              |  |                                           |  
|Total assets                                                                                                                                                                                                                                                                                                                                                       | 2,943 |  | 3,524 |  | 4,538        |  |                                           |  
|                                                                                                                                                                                                                                                                                                                                                                   |       |  |       |  |              |  |                                           |  
|Central total assets by
        customer segment consist principally of Reuters 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 and other intangibles.

|14 Intangible assets        |          |   |             |   |            |   |       |  
|--------------------------- | -------- | - | ----------- | - | ---------- | - | ----- | -
|                            |          |   |             |   |            |   |       |  
|                            |          |   |             |   | Technology |   |       |  
|                            | Goodwill |   | Trade names |   | know-how   |   | Total |  
|                            | £m       |   | £m          |   | £m         |   | £m    |  
|                            |          |   |             |   |            |   |       |  
|Cost                        |          |   |             |   |            |   |       |  
|31 December 2002            | 1,037    |   | 36          |   | 127        |   | 1,200 |  
|Reclassification            | (22      | ) |            |   | 22         |   |      |  
|Exchange differences        | (70      | ) | 3           |   | (12        | ) | (79   | )
|Additions                   | 99       |   |            |   | 24         |   | 123   |  
|Disposals                   | (8       | ) |            |   |           |   | (8    | )
|                            |          |   |             |   |            |   |       |  
|31 December 2003            | 1,036    |   | 39          |   | 161        |   | 1,236 |  
|                            |          |   |             |   |            |   |       |  
|Amortisation and impairment |          |   |             |   |            |   |       |  
|31 December 2002            | (758     | ) | (5          | ) | (19        | ) | (782  | )
|Reclassification            | 1        |   |            |   | (1         | ) |      |  
|Exchange differences        | 32       |   |            |   | 3          |   | 35    |  
|Disposals                   | 7        |   |            |   |           |   | 7     |  
|Charged in the year:        |          |   |             |   |            |   |       |  
|Amortisation                | (73      | ) | (5          | ) | (23        | ) | (101  | )
|Impairment                  | (7       | ) | (1          | ) | (12        | ) | (20   | )
|                            |          |   |             |   |            |   |       |  
|31 December 2003            | (798     | ) | (11         | ) | (52        | ) | (861  | )
|                            |          |   |             |   |            |   |       |  
|Net book amount             |          |   |             |   |            |   |       |  
|31 December 2003            | 238      |   | 28          |   | 109        |   | 375   |  
|                            |          |   |             |   |            |   |       |  
|31 December 2002            | 279      |   | 31          |   | 108        |   | 418   |  
|                            |          |   |             |   |            |   |       |  

The reclassification results from the finalisation
    of the fair value adjustments in respect of the acquisition of AVT Technologies
    Limited in 2002 and is based on an independent valuation performed by professionally
    qualified valuers.

| |                                                            |   
| | ---------------------------------------------------------- | --
| | Reuters Group PLC Annual
        Report and Form 20-F 2003 | 57

---



Back to Contents

Notes on the consolidated
    balance sheetcontinued



|15 Tangible assets                                                                                                                                                                                |           |           |           |       |        |   |        |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | --------- | --------- | ----- | ------ | - | ------ | - | ------ | -
|                                                                                                                                                                                                  |           |           |           |       |        |   |        |   |        |  
|                                                                                                                                                                                                  |           |           |           |       |        |   | Office |   |        |  
|Computer                                                                                                                                                                                          | equipment
|Freehold                                                                                                                                                                                          | Leasehold | systems   | and motor
|property                                                                                                                                                                                          | property  | equipment | vehicles  | Total
|£m                                                                                                                                                                                                | £m        | £m        | £m        | £m   
|                                                                                                                                                                                                  |           |           |           |       |        |   |        |   |        |  
|Cost                                                                                                                                                                                              |           |           |           |       |        |   |        |   |        |  
|31 December 2002                                                                                                                                                                                  | 228       |           | 251       |       | 1,450  |   | 316    |   | 2,245  |  
|Exchange differences                                                                                                                                                                              | (4        | )         | (22       | )     | (101   | ) | (19    | ) | (146   | )
|Additions                                                                                                                                                                                         | 23        |           | 5         |       | 90     |   | 12     |   | 130    |  
|Acquisitions                                                                                                                                                                                      |          |           | 4         |       | 4      |   | 1      |   | 9      |  
|Disposals                                                                                                                                                                                         | (2        | )         | (24       | )     | (403   | ) | (63    | ) | (492   | )
|                                                                                                                                                                                                  |           |           |           |       |        |   |        |   |        |  
|31 December 2003                                                                                                                                                                                  | 245       |           | 214       |       | 1,040  |   | 247    |   | 1,746  |  
|                                                                                                                                                                                                  |           |           |           |       |        |   |        |   |        |  
|Depreciation                                                                                                                                                                                      |           |           |           |       |        |   |        |   |        |  
|31 December 2002                                                                                                                                                                                  | (75       | )         | (113      | )     | (1,210 | ) | (246   | ) | (1,644 | )
|Exchange differences                                                                                                                                                                              |          |           | 3         |       | 90     |   | 19     |   | 112    |  
|Charged in the year                                                                                                                                                                               | (7        | )         | (24       | )     | (124   | ) | (38    | ) | (193   | )
|Impairment                                                                                                                                                                                        | (17       | )         |          |       |       |   |       |   | (17    | )
|Acquisitions                                                                                                                                                                                      |          |           |          |       | (2     | ) |       |   | (2     | )
|Disposals                                                                                                                                                                                         | 2         |           | 22        |       | 393    |   | 62     |   | 479    |  
|                                                                                                                                                                                                  |           |           |           |       |        |   |        |   |        |  
|31 December 2003                                                                                                                                                                                  | (97       | )         | (112      | )     | (853   | ) | (203   | ) | (1,265 | )
|                                                                                                                                                                                                  |           |           |           |       |        |   |        |   |        |  
|Net book amount                                                                                                                                                                                   |           |           |           |       |        |   |        |   |        |  
|31 December 2003                                                                                                                                                                                  | 148       |           | 102       |       | 187    |   | 44     |   | 481    |  
|                                                                                                                                                                                                  |           |           |           |       |        |   |        |   |        |  
|31 December 2002                                                                                                                                                                                  | 153       |           | 138       |       | 240    |   | 70     |   | 601    |  
|                                                                                                                                                                                                  |           |           |           |       |        |   |        |   |        |  
|The impairment charge for
        freehold property represents a provision for loss on disposal of London-based
        property. The disposal was completed in January
      2004 (see note 33).

|                                      |      |    |      | 
|------------------------------------- | ---- | -- | ---- | 
|                                      | 2003 |    | 2002 | 
|Net book amount of leasehold property | £m   | £m
|                                      |      |    |      | 
|Long-term leaseholds                  | 44   |    | 38   | 
|Short-term leaseholds                 | 58   |    | 100  | 
|                                      |      |    |      | 
|                                      | 102  |    | 138  | 
|                                      |      |    |      | 
|Contracted capital commitments        | 14   |    | 11   | 
|                                      |      |    |      | 



|58 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 
|-- | ---------------------------------------------------------- | 

---



Back to Contents



|16 Investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                |            |              |       |              |   |       |   |     |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- | ---------- | ------------ | ----- | ------------ | - | ----- | - | --- | -
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                |            |              |       |              |   |       |   |     |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Interests in   |            | Interests in |       | Interests in |   | Other |   |     |  
|own shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | joint ventures | associates | investments  | Total
|£m                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | £m             | £m         | £m           | £m   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                |            |              |       |              |   |       |   |     |  
|Net assets/cost                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                |            |              |       |              |   |       |   |     |  
|31 December 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 68             |            | 94           |       | 258          |   | 66    |   | 486 |  
|Reclassifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |               |            | (7           | )     |             |   | (4    | ) | (11 | )
|Exchange differences                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |               |            | (4           | )     | (22          | ) | (2    | ) | (28 | )
|Additions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |               |            |             |       |             |   | 3     |   | 3   |  
|Arising in year  share of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                |            |              |       |              |   |       |   |     |  
|Operating losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |               |            | (24          | )     | (4           | ) |      |   | (28 | )
|Interest receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |               |            | 1            |       | 4            |   |      |   | 5   |  
|Taxation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |               |            | (4           | )     | (3           | ) |      |   | (7  | )
|Dividends received                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |               |            |             |       | (3           | ) |      |   | (3  | )
|Loans to joint ventures (see note 29)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |               |            | 6            |       |             |   |      |   | 6   |  
|Loan to joint venture written off (see
        note 29)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |               |            | (8           | )     |             |   |      |   | (8  | )
|Impairments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | (3             | )          |             |       | (1           | ) | (3    | ) | (7  | )
|Amount written back                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 9              |            |             |       |             |   |      |   | 9   |  
|Disposals (see note 31)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |               |            | (2           | )     | (3           | ) | (6    | ) | (11 | )
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                |            |              |       |              |   |       |   |     |  
|31 December 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 74             |            | 52           |       | 226          |   | 54    |   | 406 |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                |            |              |       |              |   |       |   |     |  
|Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                |            |              |       |              |   |       |   |     |  
|31 December 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |               |            | 3            |       | 8            |   |      |   | 11  |  
|Charged in the year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |               |            | (3           | )     | (4           | ) |      |   | (7  | )
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                |            |              |       |              |   |       |   |     |  
|31 December 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |               |            |             |       | 4            |   |      |   | 4   |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                |            |              |       |              |   |       |   |     |  
|Net book amount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                |            |              |       |              |   |       |   |     |  
|31 December 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                |            |              |       |              |   |       |   |     |  
|Net assets/cost                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 74             |            | 52           |       | 226          |   | 54    |   | 406 |  
|Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |               |            |             |       | 4            |   |      |   | 4   |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                |            |              |       |              |   |       |   |     |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 74             |            | 52           |       | 230          |   | 54    |   | 410 |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                |            |              |       |              |   |       |   |     |  
|31 December 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                |            |              |       |              |   |       |   |     |  
|Net assets/cost                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 68             |            | 94           |       | 258          |   | 66    |   | 486 |  
|Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |               |            | 3            |       | 8            |   |      |   | 11  |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                |            |              |       |              |   |       |   |     |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 68             |            | 97           |       | 266          |   | 66    |   | 497 |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                |            |              |       |              |   |       |   |     |  
|Listed investments at 31 December 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                |            |              |       |              |   |       |   |     |  
|Carrying value                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 74             |            |             |       | 199          |   | 11    |   | 284 |  
|Market value                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 84             |            |             |       | 464          |   | 30    |   | 578 |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                |            |              |       |              |   |       |   |     |  
|The net book amount of interests
        in own shares represents the cost less amounts written off and impairments
        in respect of 36 million Reuters ordinary shares held by employee share
        ownership trusts (ESOTs). These were acquired on the open market using
        funds provided by Reuters. The amount written back includes employee
        interests under incentive plans which were being charged against profit
        over the vesting period of the awards (see pages 18-19). The ESOTs have
        waived dividend and voting rights on all shares they hold. The aggregate
        dividend waived on these shares in 2003 was £4 million (2002: £4
        million, 2001: £3 million).

The carrying value of interests in joint
    ventures and associates at 31 December 2003 comprises the following assets
    and liabilities:

|                                                         |                |   |            |  
|-------------------------------------------------------- | -------------- | - | ---------- | -
|                                                         | Joint ventures |   | Associates |  
|£m                                                       | £m            
|                                                         |                |   |            |  
|Fixed assets                                             | 57             |   | 95         |  
|Current assets                                           | 51             |   | 218        |  
|Liabilities falling due within one
        year          | (52            | ) | (64        | )
|Liabilities falling due after more than
        one year | (4             | ) | (19        | )
|                                                         |                |   |            |  
|                                                         | 52             |   | 230        |  
|                                                         |                |   |            |  
|Share of revenue                                         | 100            |   | 138        |  
|                                                         |                |   |            |  

Other investments consist principally of small
    equity investments. Impairment write downs have been made when, based on
    directors valuations, a permanent diminution in the carrying value
    of the investment has occurred.

The reclassifications reflect the acquisition
    of Multex. (See note 31).

Had all listed investments been disposed
    of on 31 December 2003, tax of approximately £8 million would have
    been payable on the assumption that none of the earnings would be repatriated.
    The market value of interests in associates excludes 2.5 million TSI shares
    held by Reuters, which are subject to options held by Reuters employees who
    worked at TIBCO Finance Technology Inc., a former Reuters subsidiary which
    was incorporated into other Reuters businesses in 2001.

| | Reuters Group PLC Annual
        Report and Form 20-F 2003 | 59
| | ---------------------------------------------------------- | --

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Notes on the consolidated balance sheetcontinued



|17 Stocks                 |      |  |      |   |      |  
|------------------------- | ---- |  | ---- | - | ---- | -
|                          |      |  |      |   |      |  
|                          | 2003 |  | 2002 |   | 2001 |  
|                          | £m   |  | £m   |   | £m   |  
|                          |      |  |      |   |      |  
|Contract work in progress | 2    |  | 2    |   | 5    |  
|Less progress payments    |     |  | (2   | ) | (3   | )
|                          |      |  |      |   |      |  
|                          | 2    |  |     |   | 2    |  
|Equipment stocks          |     |  | 1    |   | 1    |  
|                          |      |  |      |   |      |  
|Total stocks              | 2    |  | 1    |   | 3    |  
|                          |      |  |      |   |      |  



|18 Debtors                                    |      |   |       |   |       |  
|--------------------------------------------- | ---- | - | ----- | - | ----- | -
|                                              |      |   |       |   |       |  
|                                              | 2003 |   | 2002  |   | 2001  |  
|                                              | £m   |   | £m    |   | £m    |  
|                                              |      |   |       |   |       |  
|Amounts falling due within one year           |      |   |       |   |       |  
|Trade debtors                                 | 211  |   | 249   |   | 299   |  
|Less allowance for doubtful accounts          | (41  | ) | (52   | ) | (47   | )
|                                              |      |   |       |   |       |  
|                                              | 170  |   | 197   |   | 252   |  
|Instinet counterparty debtors                 | 356  |   | 514   |   | 621   |  
|Amounts owed by joint ventures and associates | 21   |   | 81    |   | 104   |  
|Other debtors                                 | 84   |   | 149   |   | 160   |  
|Prepayments and accrued income                | 56   |   | 66    |   | 79    |  
|                                              |      |   |       |   |       |  
|                                              | 687  |   | 1,007 |   | 1,216 |  
|Amounts falling due after more than one year  |      |   |       |   |       |  
|Other debtors                                 | 16   |   | 12    |   | 15    |  
|Prepayments and accrued income                | 5    |   |      |   |      |  
|                                              |      |   |       |   |       |  
|Total debtors                                 | 708  |   | 1,019 |   | 1,231 |  
|                                              |      |   |       |   |       |  



|19 Short-term investments    |          |      |  |      |  |       | 
|---------------------------- | -------- | ---- |  | ---- |  | ----- | 
|                             |          |      |  |      |  |       | 
|                             |          | 2003 |  | 2002 |  | 2001  | 
|                             |          | £m   |  | £m   |  | £m    | 
|                             |          |      |  |      |  |       | 
|Listed                       |          |      |  |      |  |       | 
|Government securities:       | UK       | 10   |  | 23   |  |      | 
|                             | Overseas | 18   |  | 29   |  | 55    | 
|Other deposits               | Overseas | 109  |  | 329  |  | 342   | 
|                             |          |      |  |      |  |       | 
|                             |          | 137  |  | 381  |  | 397   | 
|                             |          |      |  |      |  |       | 
|Unlisted                     |          |      |  |      |  |       | 
|Certificates of deposit      | UK       | 1    |  | 2    |  | 1     | 
|Term deposits:               | UK       | 47   |  | 47   |  | 70    | 
|                             | Overseas | 32   |  | 29   |  | 74    | 
|Other deposits:              | UK       | 24   |  | 4    |  | 61    | 
|                             | Overseas | 381  |  | 107  |  | 416   | 
|                             |          |      |  |      |  |       | 
|                             |          | 485  |  | 189  |  | 622   | 
|                             |          |      |  |      |  |       | 
|Total short-term investments |          | 622  |  | 570  |  | 1,019 | 
|                             |          |      |  |      |  |       | 

|   |                                                            | 
|-- | ---------------------------------------------------------- | 
|60 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 

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|20 Creditors: Amounts falling
        due within one year       |       |  |       |  |       | 
|--------------------------------------------------------------- | ----- |  | ----- |  | ----- | 
|                                                                |       |  |       |  |       | 
|                                                                | 2003  |  | 2002  |  | 2001  | 
|                                                                | £m    |  | £m    |  | £m    | 
|                                                                |       |  |       |  |       | 
|Trade creditors                                                 | 95    |  | 103   |  | 142   | 
|Accruals                                                        | 446   |  | 519   |  | 556   | 
|Instinet counterparty creditors                                 | 389   |  | 545   |  | 709   | 
|Deferred income                                                 | 29    |  | 57    |  | 68    | 
|Amounts owed to joint ventures and associates                   | 29    |  | 86    |  | 118   | 
|Other creditors                                                 | 33    |  | 37    |  | 66    | 
|Other taxation and social security                              | 40    |  | 65    |  | 49    | 
|                                                                |       |  |       |  |       | 
|                                                                | 1,061 |  | 1,412 |  | 1,708 | 
|Bank overdrafts                                                 | 29    |  | 19    |  | 86    | 
|Bank loans                                                      | 1     |  | 11    |  | 7     | 
|Other borrowings                                                | 335   |  | 411   |  | 588   | 
|Current UK corporation and overseas taxation                    | 254   |  | 259   |  | 234   | 
|Proposed dividend                                               | 86    |  | 86    |  | 86    | 
|                                                                |       |  |       |  |       | 
|Total creditors falling due within one
        year             | 1,766 |  | 2,198 |  | 2,709 | 
|                                                                |       |  |       |  |       | 
|Current UK corporation and overseas taxation
        comprises: |       |  |       |  |       | 
|UK corporation tax                                              | 170   |  | 125   |  | 102   | 
|Overseas taxes                                                  | 84    |  | 134   |  | 132   | 
|                                                                |       |  |       |  |       | 
|                                                                | 254   |  | 259   |  | 234   | 
|                                                                |       |  |       |  |       | 
|                                                                |       |  |       |  |       | 

|21 Creditors: Amounts falling due after more than one year                                        |      |  |      |  |      | 
|------------------------------------------------------------------------------------------------- | ---- |  | ---- |  | ---- | 
|                                                                                                  |      |  |      |  |      | 
|                                                                                                  | 2003 |  | 2002 |  | 2001 | 
|                                                                                                  | £m   |  | £m   |  | £m   | 
|                                                                                                  |      |  |      |  |      | 
|Term notes and commercial paper                                                                   | 406  |  | 353  |  | 337  | 
|Bank borrowings                                                                                   |     |  |     |  | 1    | 
|Accruals                                                                                          | 19   |  |     |  | 2    | 
|Amounts owed to joint ventures                                                                    |     |  | 1    |  | 4    | 
|                                                                                                  |      |  |      |  |      | 
|Total creditors falling due after more than one year                                              | 425  |  | 354  |  | 344  | 
|                                                                                                  |      |  |      |  |      | 
|The maturity profile of all bank overdrafts, bank loans and other borrowings is given in note 12. |      |  |      |  |      | 

22 Concentration of credit risk
      Reuters Group is exposed to concentrations of credit risk. Reuters Group invests in UK and US government securities and with high credit quality financial institutions. Reuters Group limits the amount of credit
      exposure to any one financial institution. The Group is also exposed to credit risk from its trade debtors, which are concentrated in the financial community. Reuters Group estimates that approximately 70% of its subscribers are financial
    institutions, 16% are corporations in other sectors of the business community, 6% are from the news media and 8% are government institutions and individuals worldwide (2002: 68%, 19%, 6% and 7% respectively).

Instinet Group 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 2003.

23 Pensions and similar obligationsReuters Group 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 Group and are
      independently administered.

Defined contribution plansReuters Group operates 32 defined contribution plans covering approximately 66% of its employees, of which the largest plans are, the Reuters Pension Fund, the Reuters Retirement Plan and the Reuters 401(k) Pension
      Plans. The percentage of employees covered and the company contribution to these plans were:

|                             |                    |  |                            | 
|---------------------------- | ------------------ |  | -------------------------- | 
|                             |                    |  | Company                    | 
|                             |                    |  | contribution               | 
|                             | %
              of |  | %
              of         | 
|                             | employees          |  | basic
              salary | 
|                             |                    |  |                            | 
|Reuters Pension Fund         | 11.7%              |  | 9.525%                     | 
|Reuters Retirement Plan      | 14.2%              |  | 7.0%                       | 
|Reuters 401(k) Pension Plans | 19.8%              |  | 6.0%                       | 
|                             |                    |  |                            | 

Defined benefit plansThe Group also operates 33 defined benefit
        plans covering approximately 18% of employees. Individually, these plans
        are of a relatively minor nature. The 15 largest plans are valued under
        SSAP 24 by independently  qualified actuaries using the projected unit
        credit method. The SSAP 24 provision is reviewed annually based on locally
        reported information, with the most recent review being at 1 January
        2003. The
        smaller remaining plans are subject to
        regular valuations based on 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.

| |                                                                    |   
| | ------------------------------------------------------------------ | --
| | Reuters Group PLC
                Annual Report and Form 20-F 2003 | 61

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Notes on the consolidated balance sheetcontinued



23 Pensions and similar obligationscontinued
Funding policy is set in accordance with local requirements.

The largest defined benefit plans are the UK Supplementary Pension Scheme (SPS)
and those in Switzerland, Japan and Hong Kong. The charges in respect of these
plans in 2003 were £2 million, £5 million, £3 million and £2
million respectively (2002: £6 million, £4 million, £3 million
and £1 million respectively). Details of the SSAP 24 valuation results
in respect of
these plans are given below.

|                                               |        |  |             |  |       |  |           | 
|---------------------------------------------- | ------ |  | ----------- |  | ----- |  | --------- | 
|                                               | UK SPS |  | Switzerland |  | Japan |  | Hong Kong | 
|                                               |        |  |             |  |       |  |           | 
|% of employees covered                         | 0.3%   |  | 3.9%        |  | 2.4%  |  | 1.0%      | 
|Assumptions:                                   |        |  |             |  |       |  |           | 
|Investment return: pre-retirement              | 6.9%   |  | 4.5%        |  | 3.0%  |  | 7.0%      | 
|Investment return: post-retirement             | 5.4%   |  | 4.5%        |  | 3.0%  |  | 7.0%      | 
|Salary growth                                  | 3.9%   |  | 3.0%        |  | 3.0%  |  | 5.0%      | 
|Pension increases                              | 2.4%   |  | 1.5%        |  | 2.0%  |  |          | 
|Market value of assets (£m)                    | 33     |  | 57          |  | 14    |  | 13        | 
|Present value of past service liabilities (£m) | 43     |  | 70          |  | 22    |  | 15        | 
|                                               |        |  |             |  |       |  |           | 
|

Post-retirement medical benefitsIn the US, the Group closed its post-retirement
medical plan with effect from 1 July 2002. A total of 232 employees, retirees
and covered spouses retain entitlement to post-retirement medical benefit which
remain unfunded. The principal assumptions used in the most recent actuarial
valuation undertaken at 1 January 2003 were a discount rate of 8% and that the
growth in health care costs would decrease from 10% per annum per head in 2003
to 6% by 2007 and
remain at 5% thereafter.

Movement on pension provisions and similar obligations

|                                     |      |   |      |   |      |  
|------------------------------------ | ---- | - | ---- | - | ---- | -
|                                     | 2003 |   | 2002 |   | 2001 |  
|                                     | £m   |   | £m   |   | £m   |  
|                                     |      |   |      |   |      |  
|Opening balance                      | 59   |   | 58   |   | 50   |  
|Profit and loss account (see noe 2): |      |   |      |   |      |  
|Defined contribution plans           | 35   |   | 47   |   | 40   |  
|Defined benefit plans                | 18   |   | 18   |   | 18   |  
|Post-retirement medical benefits     | (3   | ) |     |   | 5    |  
|                                     |      |   |      |   |      |  
|                                     | 50   |   | 65   |   | 63   |  
|Utilised in the year                 | (46  | ) | (64  | ) | (55  | )
|                                     |      |   |      |   |      |  
|Closing balance                      | 63   |   | 59   |   | 58   |  
|                                     |      |   |      |   |      |  

FRS 17: 3rd year transitional disclosuresComposition of the schemesFull actuarial valuations were carried out as
at various dates between 31 December 2001 and 31 December 2002, and updated to
31 December 2003 by independent qualified actuaries in accordance with FRS 17.
The major
assumptions used by the actuary at 31 December 2003 were:

|                                                             |       |  |       |  |          |  |       |  |                |  |       |  |                  |  |                 | 
|------------------------------------------------------------ | ----- |  | ----- |  | -------- |  | ----- |  | -------------- |  | ----- |  | ---------------- |  | --------------- | 
|                                                             |       |  |       |  |          |  |       |  |                |  |       |  |                  |  | Post-retirement | 
|                                                             |       |  |       |  | UK plans |  |       |  | Overseas plans |  |       |  | medical benefits | 
|                                                             |       |  |       |  |          |  |       |  |                |  |       |  |                  |  |                 | 
|                                                             | 2003  |  | 2002  |  | 2001     |  | 2003  |  | 2002           |  | 2001  |  | 2003             |  | 2002            | 
|                                                             | %     |  | %     |  | %        |  | %     |  | %              |  | %     |  | %                |  | %               | 
|                                                             |       |  |       |  |          |  |       |  |                |  |       |  |                  |  |                 | 
|Discount rate                                                | 5.50% |  | 5.50% |  | 5.75%    |  | 4.03% |  | 4.10%          |  | 4.99% |  | 6.25%            |  | 6.75%           | 
|Inflation assumption                                         | 2.50% |  | 2.25% |  | 2.50%    |  | 1.44% |  | 1.52%          |  | 1.79% |  | 2.00%            |  | 2.00%           | 
|Rate of increase in salaries                                 | 3.75% |  | 4.00% |  | 4.25%    |  | 2.55% |  | 3.06%          |  | 3.42% |  |                 |  |                | 
|Rate of increase in pensions in payment                      | 2.50% |  | 2.25% |  | 2.50%    |  | 1.42% |  | 1.69%          |  | 1.72% |  |                 |  |                | 
|                                                             |       |  |       |  |          |  |       |  |                |  |       |  |                  |  |                 | 
|The assets in the scheme and expected return on assets were: |       |  |       |  |          |  |       |  |                |  |       |  |                  |  |                 | 
|                                                             |       |  |       |  |          |  |       |  |                |  |       |  |                  |  |                 | 
|Expected rate of return on assets                            |       |  |       |  |          |  |       |  |                |  |       |  |                  |  |                 | 
|Equities                                                     | 8.25% |  | 8.25% |  | 8.25%    |  | 7.23% |  | 7.60%          |  | 7.53% |  |                 |  |                | 
|Bonds                                                        | 5.00% |  | 5.00% |  | 5.75%    |  | 3.76% |  | 3.86%          |  | 4.16% |  |                 |  |                | 
|Property                                                     | 6.67% |  | 6.60% |  | 7.00%    |  |      |  |               |  |      |  |                 |  |                | 
|Cash                                                         | 3.75% |  | 3.50% |  | 3.50%    |  | 2.83% |  | 2.65%          |  | 2.65% |  |                 |  |                | 
|Other                                                        |      |  |      |  |         |  | 4.77% |  | 5.25%          |  | 6.00% |  |                 |  |                | 
|                                                             |       |  |       |  |          |  |       |  |                |  |       |  |                  |  |                 | 
|Market value (£m)                                            |       |  |       |  |          |  |       |  |                |  |       |  |                  |  |                 | 
|Equities                                                     | 23    |  | 19    |  | 21       |  | 60    |  | 50             |  | 59    |  |                 |  |                | 
|Bonds                                                        | 11    |  | 7     |  | 6        |  | 43    |  | 40             |  | 41    |  |                 |  |                | 
|Property                                                     | 1     |  | 1     |  |         |  |      |  |               |  |      |  |                 |  |                | 
|Cash                                                         | 2     |  | 6     |  | 9        |  | 6     |  | 3              |  | 4     |  |                 |  |                | 
|Other                                                        |      |  |      |  |         |  | 7     |  | 4              |  | 4     |  |                 |  |                | 
|                                                             |       |  |       |  |          |  |       |  |                |  |       |  |                  |  |                 | 
|                                                             |       |  |       |  |          |  |       |  |                |  |       |  |                  |  |                 | 
|



|62 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 
|-- | ---------------------------------------------------------- | 

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23 Pensions and similar obligationscontinued
The following amounts at 31 December were measured in accordance with the requirements of FRS 17.

|                                                                                                                                                                                                                                                                                                                                                                                                                                    |      |   |      |   |          |   |      |   |                |   |      |   |                  |   |                 |   |      |   |       |   |      |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | - | ---- | - | -------- | - | ---- | - | -------------- | - | ---- | - | ---------------- | - | --------------- | - | ---- | - | ----- | - | ---- | -
|                                                                                                                                                                                                                                                                                                                                                                                                                                    |      |   |      |   |          |   |      |   |                |   |      |   |                  |   | Post-retirement |   |      |   |       |   |      |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                    |      |   |      |   | UK plans |   |      |   | Overseas plans |   |      |   | medical benefits |   |                 |   |      |   | Total |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                    |      |   |      |   |          |   |      |   |                |   |      |   |                  |   |                 |   |      |   |       |   |      |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                    | 2003 |   | 2002 |   | 2001     |   | 2003 |   | 2002           |   | 2001 |   | 2003             |   | 2002            |   | 2001 |   | 2003  |   | 2002 |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                    | £m   |   | £m   |   | £m       |   | £m   |   | £m             |   | £m   |   | £m               |   | £m              |   | £m   |   | £m    |   | £m   |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                    |      |   |      |   |          |   |      |   |                |   |      |   |                  |   |                 |   |      |   |       |   |      |  
|Total market value of assets                                                                                                                                                                                                                                                                                                                                                                                                        | 37   |   | 33   |   | 36       |   | 116  |   | 97             |   | 108  |   |                 |   |                |   |     |   | 153   |   | 130  |  
|Present value of scheme liabilities                                                                                                                                                                                                                                                                                                                                                                                                 | (57  | ) | (63  | ) | (56      | ) | (140 | ) | (132           | ) | (100 | ) | (5               | ) | (6              | ) | (31  | ) | (202  | ) | (201 | )
|                                                                                                                                                                                                                                                                                                                                                                                                                                    |      |   |      |   |          |   |      |   |                |   |      |   |                  |   |                 |   |      |   |       |   |      |  
|(Deficit)/surplus in the scheme                                                                                                                                                                                                                                                                                                                                                                                                     | (20  | ) | (30  | ) | (20      | ) | (24  | ) | (35            | ) | 8    |   | (5               | ) | (6              | ) | (31  | ) | (49   | ) | (71  | )
|Related deferred tax asset                                                                                                                                                                                                                                                                                                                                                                                                          | 6    |   | 9    |   | 6        |   | 8    |   | 10             |   |     |   | 2                |   | 2               |   | 12   |   | 16    |   | 21   |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                    |      |   |      |   |          |   |      |   |                |   |      |   |                  |   |                 |   |      |   |       |   |      |  
|Net pension (liability)/asset                                                                                                                                                                                                                                                                                                                                                                                                       | (14  | ) | (21  | ) | (14      | ) | (16  | ) | (25            | ) | 8    |   | (3               | ) | (4              | ) | (19  | ) | (33   | ) | (50  | )
|                                                                                                                                                                                                                                                                                                                                                                                                                                    |      |   |      |   |          |   |      |   |                |   |      |   |                  |   |                 |   |      |   |       |   |      |  
|Made up of:                                                                                                                                                                                                                                                                                                                                                                                                                         |      |   |      |   |          |   |      |   |                |   |      |   |                  |   |                 |   |      |   |       |   |      |  
|Net pension asset                                                                                                                                                                                                                                                                                                                                                                                                                   |     |   |     |   |         |   |     |   |               |   | 13   |   |                 |   |                |   |     |   |      |   |     |  
|Net pension liability                                                                                                                                                                                                                                                                                                                                                                                                               | (14  | ) | (21  | ) | (14      | ) | (16  | ) | (25            | ) | (5   | ) | (3               | ) | (4              | ) | (19  | ) | (33   | ) | (50  | )
|                                                                                                                                                                                                                                                                                                                                                                                                                                    |      |   |      |   |          |   |      |   |                |   |      |   |                  |   |                 |   |      |   |       |   |      |  
|The assets and liabilities
      reported under UK plans cover a small UK scheme with 180 members together
      with unfunded early retirement and retirement benefit schemes, the liabilities
      of which are covered through book reserves. The figures do not include
      Reuters Pension Fund, as this is a defined contribution plan and its assets
      and liabilities are not required to be disclosed under FRS 17.

If the above amounts had been recognised
    in the financial
statements, the Groups net assets and profit and loss reserve at 31 December
would be as follows:

|                                                                                 |       |   |       |   |       |  
|-------------------------------------------------------------------------------- | ----- | - | ----- | - | ----- | -
|                                                                                 | 2003  |   | 2002  |   | 2001  |  
|                                                                                 | £m    |   | £m    |   | £m    |  
|                                                                                 |       |   |       |   |       |  
|Net assets per consolidated balance sheet                                        | 481   |   | 727   |   | 1,273 |  
|Add: net pension liability already recognised in net assets                      | 30    |   | 24    |   | 24    |  
|                                                                                 |       |   |       |   |       |  
|Net assets before impact of FRS 17                                               | 511   |   | 751   |   | 1,297 |  
|Net pension liability under FRS 17                                               | (33   | ) | (50   | ) | (25   | )
|                                                                                 |       |   |       |   |       |  
|Net assets after impact of FRS 17                                                | 478   |   | 701   |   | 1,272 |  
|                                                                                 |       |   |       |   |       |  
|Consolidated profit and loss account reserve                                     | 1,553 |   | 1,763 |   | 2,378 |  
|Add: net pension liability already recognised in profit and loss account reserve | 30    |   | 24    |   | 24    |  
|                                                                                 |       |   |       |   |       |  
|Profit and loss account reserve before impact of FRS 17                          | 1,583 |   | 1,787 |   | 2,402 |  
|Net pension liability under FRS 17                                               | (33   | ) | (50   | ) | (25   | )
|                                                                                 |       |   |       |   |       |  
|Profit and loss account reserve after impact of FRS 17                           | 1,550 |   | 1,737 |   | 2,377 |  
|                                                                                 |       |   |       |   |       |  

Under the requirements of FRS 17, the following
    amounts would have been recognised in the performance statements in the year
to 31 December:

|                                                    |          |   |          |   |            |  |       |   |          |   |          |   |            |   |       |  
|--------------------------------------------------- | -------- | - | -------- | - | ---------- |  | ----- | - | -------- | - | -------- | - | ---------- | - | ----- | -
|                                                    |          |   |          |   |            |  | 2003  |   |          |   |          |   |            |   | 2002  |  
|                                                    |          |   |          |   |            |  |       |   |          |   |          |   |            |   |       |  
|                                                    |          |   |          |   | Post-      |  |       |   |          |   |          |   | Post-      |   |       |  
|                                                    |          |   |          |   | retirement |  |       |   |          |   |          |   | retirement |   |       |  
|                                                    |          |   | Overseas |   | medical    |  |       |   |          |   | Overseas |   | medical    |   |       |  
|                                                    | UK plans |   | plans    |   | benefits   |  | Total |   | UK plans |   | plans    |   | benefits   |   | Total |  
|                                                    | £m       |   | £m       |   | £m         |  | £m    |   | £m       |   | £m       |   | £m         |   | £m    |  
|                                                    |          |   |          |   |            |  |       |   |          |   |          |   |            |   |       |  
|Analysis of amount charged to operating profit      |          |   |          |   |            |  |       |   |          |   |          |   |            |   |       |  
|Current service cost                                | 1        |   | 11       |   |           |  | 12    |   | 2        |   | 9        |   | 2          |   | 13    |  
|Past service cost                                   |         |   | 1        |   |           |  | 1     |   |         |   |         |   | (29        | ) | (29   | )
|Curtailments/settlements                            |         |   |         |   |           |  |      |   | 5        |   | (1       | ) |           |   | 4     |  
|                                                    |          |   |          |   |            |  |       |   |          |   |          |   |            |   |       |  
|Total operating charge                              | 1        |   | 12       |   |           |  | 13    |   | 7        |   | 8        |   | (27        | ) | (12   | )
|                                                    |          |   |          |   |            |  |       |   |          |   |          |   |            |   |       |  
|Analysis of amount credited to other finance income |          |   |          |   |            |  |       |   |          |   |          |   |            |   |       |  
|Expected return on pension scheme assets            | 2        |   | 6        |   |           |  | 8     |   | 2        |   | 7        |   |           |   | 9     |  
|Interest on pension scheme liabilities              | (3       | ) | (5       | ) |           |  | (8    | ) | (3       | ) | (5       | ) | (1         | ) | (9    | )
|                                                    |          |   |          |   |            |  |       |   |          |   |          |   |            |   |       |  
|Net return                                          | (1       | ) | 1        |   |           |  |      |   | (1       | ) | 2        |   | (1         | ) |      |  
|                                                    |          |   |          |   |            |  |       |   |          |   |          |   |            |   |       |  
|



| | Reuters Group PLC Annual Report and Form
        20-F 2003 | 63
| | ---------------------------------------------------------- | --

---



Back to Contents

Notes on the consolidated balance sheetcontinued

23 Pensions and similar obligationscontinued

|                                                                                                                                                                                                                                                                                                |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | - | -------- | - | ---------- | - | ----- | - | -------- | - | -------- | - | ---------- | - | ----- | -
|                                                                                                                                                                                                                                                                                                |          |   |          |   |            |   | 2003  |   |          |   |          |   |            |   | 2002  |  
|                                                                                                                                                                                                                                                                                                |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|                                                                                                                                                                                                                                                                                                |          |   |          |   | Post-      |   |       |   |          |   |          |   | Post-      |   |       |  
|                                                                                                                                                                                                                                                                                                |          |   |          |   | retirement |   |       |   |          |   |          |   | retirement |   |       |  
|                                                                                                                                                                                                                                                                                                |          |   | Overseas |   | medical    |   |       |   |          |   | Overseas |   | medical    |   |       |  
|                                                                                                                                                                                                                                                                                                | UK plans |   | plans    |   | benefits   |   | Total |   | UK plans |   | plans    |   | benefits   |   | Total |  
|                                                                                                                                                                                                                                                                                                | £m       |   | £m       |   | £m         |   | £m    |   | £m       |   | £m       |   | £m         |   | £m    |  
|                                                                                                                                                                                                                                                                                                |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|Analysis of amount recognised in                                                                                                                                                                                                                                                                |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|statement of total recognised gains                                                                                                                                                                                                                                                             |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|and losses (STRGL)                                                                                                                                                                                                                                                                              |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|Actual return less expected                                                                                                                                                                                                                                                                     |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|return on pension scheme assets                                                                                                                                                                                                                                                                 | 2        |   | 10       |   |           |   | 12    |   | (9       | ) | (17      | ) |           |   | (26   | )
|Experience gains/(losses) arising                                                                                                                                                                                                                                                               |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|on the scheme liabilities                                                                                                                                                                                                                                                                       | 8        |   | (2       | ) | 1          |   | 7     |   |         |   | (9       | ) | (3         | ) | (12   | )
|Changes in assumptions underlying                                                                                                                                                                                                                                                               |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|the present value of the scheme liabilities                                                                                                                                                                                                                                                     | (1       | ) | 5        |   |           |   | 4     |   |         |   | (20      | ) |           |   | (20   | )
|                                                                                                                                                                                                                                                                                                |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|Actuarial gain/(loss) recognised in the STRGL                                                                                                                                                                                                                                                   | 9        |   | 13       |   | 1          |   | 23    |   | (9       | ) | (46      | ) | (3         | ) | (58   | )
|                                                                                                                                                                                                                                                                                                |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|                                                                                                                                                                                                                                                                                                |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|Movement in (deficit)/surplus during the year                                                                                                                                                                                                                                                   |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|(Deficit)/surplus in the scheme at beginning                                                                                                                                                                                                                                                    |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|of the year                                                                                                                                                                                                                                                                                     | (30      | ) | (35      | ) | (6         | ) | (71   | ) | (20      | ) | 8        |   | (31        | ) | (43   | )
|Movement in year:                                                                                                                                                                                                                                                                               |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|Current service cost                                                                                                                                                                                                                                                                            | (1       | ) | (11      | ) |           |   | (12   | ) | (2       | ) | (9       | ) | (2         | ) | (13   | )
|Employer contributions                                                                                                                                                                                                                                                                          | 3        |   | 10       |   |           |   | 13    |   | 7        |   | 10       |   |           |   | 17    |  
|Curtailments/settlements                                                                                                                                                                                                                                                                        |         |   |         |   |           |   |      |   | (5       | ) | 1        |   |           |   | (4    | )
|Past service costs                                                                                                                                                                                                                                                                              |         |   | (1       | ) |           |   | (1    | ) |         |   |         |   | 29         |   | 29    |  
|Other finance income                                                                                                                                                                                                                                                                            | (1       | ) | 1        |   |           |   |      |   | (1       | ) | 2        |   | (1         | ) |      |  
|Actuarial loss recognised in the STRGL                                                                                                                                                                                                                                                          | 9        |   | 13       |   | 1          |   | 23    |   | (9       | ) | (46      | ) | (3         | ) | (58   | )
|Effect of currency translation                                                                                                                                                                                                                                                                  |         |   | (1       | ) |           |   | (1    | ) |         |   | (1       | ) | 2          |   | 1     |  
|                                                                                                                                                                                                                                                                                                |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|Deficit in scheme at end of year                                                                                                                                                                                                                                                                | (20      | ) | (24      | ) | (5         | ) | (49   | ) | (30      | ) | (35      | ) | (6         | ) | (71   | )
|                                                                                                                                                                                                                                                                                                |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|                                                                                                                                                                                                                                                                                                |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|History of experience gains and losses                                                                                                                                                                                                                                                          |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|                                                                                                                                                                                                                                                                                                |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|Difference between the expected                                                                                                                                                                                                                                                                 |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|and actual return on scheme assets                                                                                                                                                                                                                                                              |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|Amount (£m)                                                                                                                                                                                                                                                                                     | 2        |   | 10       |   |           |   | 12    |   | (9       | ) | (17      | ) |           |   | (26   | )
|Percentage of scheme                                                                                                                                                                                                                                                                            |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|assets at period end                                                                                                                                                                                                                                                                            | 5.4%     |   | 8.6%     |   |           |   | 7.8%  |   | 27.8%    |   | 17.9%    |   |           |   | 20.4% |  
|                                                                                                                                                                                                                                                                                                |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|Experience gains and losses of scheme liabilities                                                                                                                                                                                                                                               |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|Amount (£m)                                                                                                                                                                                                                                                                                     | 8        |   | (2       | ) | 1          |   | 7     |   |         |   | (9       | ) | (3         | ) | (12   | )
|Percentage of the present value of the scheme                                                                                                                                                                                                                                                   |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|liabilities at period end                                                                                                                                                                                                                                                                       | 14.1%    |   | 1.4%     |   | 20.0%      |   | 3.4%  |   |         |   | 5.4%     |   | 46.3%      |   | 5.7%  |  
|                                                                                                                                                                                                                                                                                                |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|Total amount recognised in the STRGL                                                                                                                                                                                                                                                            |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|Amount (£m)                                                                                                                                                                                                                                                                                     | 9        |   | 12       |   | 1          |   | 22    |   | (9       | ) | (47      | ) | (1         | ) | (57   | )
|Percentage of the present value of the scheme                                                                                                                                                                                                                                                   |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|liabilities at period end                                                                                                                                                                                                                                                                       | 15.8%    |   | 8.6%     |   | 20.0%      |   | 10.9% |   | 14.8%    |   | 35.1%    |   | 27.9%      |   | 28.3% |  
|                                                                                                                                                                                                                                                                                                |          |   |          |   |            |   |       |   |          |   |          |   |            |   |       |  
|Two of the overseas plans are
      closed to new entrants, therefore under the projected unit credit method,
      the current service cost will increase as a percentage of payroll as members
      of the scheme approach retirement.
The service cost for these schemes totals £2 million. |         

Contributions to funded plans in 2004 are expected to remain at similar levels to 2003.



|64 | Reuters Group PLC Annual Report and
        Form 20-F 2003
|-- | ----------------------------------------------------------

---



Back to Contents

24 Deferred taxation liabilities/(assets)

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |      |   |      |   |      |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---- | - | ---- | - | ---- | -
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 2003 |   | 2002 |   | 2001 |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | £m   |   | £m   |   | £m   |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |      |   |      |   |      |  
|Opening balance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | (233 | ) | (154 | ) | (103 | )
|Balance sheet reclassification                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 13   |   |     |   | (1   | )
|Profit and loss account                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | (20  | ) | (79  | ) | (50  | )
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |      |   |      |   |      |  
|Closing balance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | (240 | ) | (233 | ) | (154 | )
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |      |   |      |   |      |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |      |   |      |   |      |  
|The closing balance is analysed below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |      |   |      |   |      |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |      |   |      |   |      |  
|Timing differences:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |      |   |      |   |      |  
|Fixed asset related                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | (41  | ) | (39  | ) | (40  | )
|Tax losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | (52  | ) | (55  | ) | (32  | )
|Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | (147 | ) | (139 | ) | (82  | )
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |      |   |      |   |      |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | (240 | ) | (233 | ) | (154 | )
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |      |   |      |   |      |  
|Reuters Group has only provided
        for deferred tax liabilities in respect of dividends which are either
        accrued as receivable or where there is a binding agreement to remit
        the earnings of overseas subsidiary undertakings, joint ventures and
        associates. Reuters Group does not expect to remit any earnings from
        its overseas subsidiary undertakings, joint ventures and associates in
        the foreseeable future and therefore no tax is expected to be
payable.

|                                                                                                                                                                                                                                           |        |   |           |  |             |  |      |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------ | - | --------- |  | ----------- |  | ---- | -
|                                                                                                                                                                                                                                           |        |   | Valuation |  |             |  |      |  
|                                                                                                                                                                                                                                           | Assets |   | allowance |  | Liabilities |  | Net  |  
|                                                                                                                                                                                                                                           | £m     |   | £m        |  | £m          |  | £m   |  
|                                                                                                                                                                                                                                           |        |   |           |  |             |  |      |  
|Total timing differences at 31 December 2003                                                                                                                                                                                               |        |   |           |  |             |  |      |  
|Fixed asset related                                                                                                                                                                                                                        | (74    | ) | 16        |  | 17          |  | (41  | )
|Tax losses                                                                                                                                                                                                                                 | (155   | ) | 103       |  |            |  | (52  | )
|Other                                                                                                                                                                                                                                      | (163   | ) |          |  | 16          |  | (147 | )
|                                                                                                                                                                                                                                           |        |   |           |  |             |  |      |  
|                                                                                                                                                                                                                                           | (392   | ) | 119       |  | 33          |  | (240 | )
|                                                                                                                                                                                                                                           |        |   |           |  |             |  |      |  
|The valuation allowance of £16
          million in respect of fixed assets is made against assets in respect
          of which it is uncertain that suitable taxable income will be available
      when the timing differences reverse.

Similarly, the valuation allowance of £103 million in respect of losses
    is made where it is uncertain that suitable taxable income will arise. It has
    increased by £59
  million in 2003.

Other timing differences include reorganisation costs, accrued employee costs
    (including pension costs) and other provisions.

Reuters has not recognised the tax benefit of capital losses arising in the period.

Where appropriate, deferred tax assets and liabilities are shown net for balance
    sheet presentation purposes. The net closing deferred tax balance has been analysed
    as:

|                                                                            |      |   |      |   |      |  
|--------------------------------------------------------------------------- | ---- | - | ---- | - | ---- | -
|                                                                            | 2003 |   | 2002 |   | 2001 |  
|                                                                            | £m   |   | £m   |   | £m   |  
|                                                                            |      |   |      |   |      |  
|Deferred tax asset:                                                         |      |   |      |   |      |  
|Amounts falling due within one year                                         | (143 | ) | (113 | ) | (86  | )
|Amounts falling due after more than one year                                | (130 | ) | (147 | ) | (98  | )
|                                                                            |      |   |      |   |      |  
|                                                                            | (273 | ) | (260 | ) | (184 | )
|Deferred tax liability (included in provisions for liabilities and charges) | 33   |   | 27   |   | 30   |  
|                                                                            |      |   |      |   |      |  



|Reuters Group PLC Annual
      Report and Form 20-F 2003 | 65
|-------------------------------------------------------- | --

---



Back to Contents

Notes on the consolidated balance
  sheetcontinued

|25                                                                 | Other provisions
|------------------------------------------------------------------ | ----------------
|The movement
      in other provisions during 2003 was as follows:

|                         |            |          |        |       |       |   |    |   |      |  
|------------------------ | ---------- | -------- | ------ | ----- | ----- | - | -- | - | ---- | -
|                         |            |          | Legal/ |       | Other |   |    |   |     
|Rationalisation          | compliance | property | Other  | Total
|£m                       | £m         | £m       | £m     | £m   
|                         |            |          |        |       |       |   |    |   |     
|31 December 2002         | 144        |          | 1      |       | 8     |   | 6  |   | 159  |  
|Translation differences  | (8         | )        |       |       | (1    | ) |   |   | (9   | )
|Charged against profit   | 181        |          |       |       | 4     |   | 6  |   | 191  |  
|Utilised in the year     | (133       | )        |       |       | (9    | ) | (3 | ) | (145 | )
|Amortisation of discount |           |          |       |       | 1     |   |   |   | 1    |  
|Released                 | (19        | )        |       |       | (1    | ) | (2 | ) | (22  | )
|                         |            |          |        |       |       |   |    |   |      |  
|31 December 2003         | 165        |          | 1      |       | 2     |   | 7  |   | 175  |  
|                         |            |          |        |       |       |   |    |   |      |  

At the end of 2002, the rationalisation provision
      included costs relating to the unfinished business transformation plan. During
      2003, further restructuring programmes including Reuters Fast Forward programme
      and Instinet Groups restructuring programme were announced which included
      headcount reduction and property rationalisation. The obligations associated
      with these programmes are included in the rationalisation provision at the end
      of 2003. Severance-related provisions will be utilised during 2004 and property-related
    provisions will be utilised over the remaining lease periods.

The legal/compliance provision represents the
      expected cost of settling disputes arising from contractual arrangements with
    third-party suppliers.

Other property provisions reflect Reuters contractual
      liability at the balance sheet date to make good dilapidations under ongoing
    rental agreements outside the rationalisation programmes.

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

|                                                                                                                                                                                                                                          |            |         |         |          |          |  |        |   |        |   |       |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------- | ------- | ------- | -------- | -------- |  | ------ | - | ------ | - | ----- | -
|                                                                                                                                                                                                                                          |            |         |         |          |          |  |        |   | Profit |   |      
|Called-up                                                                                                                                                                                                                                 | Capital    | Share   |         | and loss | Share-  
|share                                                                                                                                                                                                                                     | redemption | premium | Other   | account  | holders
|capital                                                                                                                                                                                                                                   | reserve    | account | reserve | reserve  | equity  
|£m                                                                                                                                                                                                                                        | £m         | £m      | £m      | £m       | £m      
|                                                                                                                                                                                                                                          |            |         |         |          |          |  |        |   |        |   |      
|31 December 2000                                                                                                                                                                                                                          | 357        |         | 1       |          | 71       |  | (1,717 | ) | 2,441  |   | 1,153 |  
|Shares issued during the year                                                                                                                                                                                                             | 1          |         |        |          | 18       |  |       |   | (3     | ) | 16    |  
|Unrealised gain on deemed partial disposal
        of subsidiary undertaking                                                                                                                                                              |           |         |        |          |         |  |       |   | 11     |   | 11    |  
|Translation differences                                                                                                                                                                                                                   |           |         |        |          |         |  |       |   | 23     |   | 23    |  
|Loss for the year                                                                                                                                                                                                                         |           |         |        |          |         |  |       |   | (94    | ) | (94   | )
|                                                                                                                                                                                                                                          |            |         |         |          |          |  |        |   |        |   |       |  
|31 December 2001                                                                                                                                                                                                                          | 358        |         | 1       |          | 89       |  | (1,717 | ) | 2,378  |   | 1,109 |  
|Shares issued during the year                                                                                                                                                                                                             |           |         |        |          | 2        |  |       |   |       |   | 2     |  
|Unrealised gain on disposal of fixed asset
        investment                                                                                                                                                                             |           |         |        |          |         |  |       |   | 10     |   | 10    |  
|Unrealised gain on deemed partial disposal
        of subsidiary undertaking                                                                                                                                                              |           |         |        |          |         |  |       |   | 1      |   | 1     |  
|Unrealised gain on deemed partial disposal
        of associates                                                                                                                                                                          |           |         |        |          |         |  |       |   | 12     |   | 12    |  
|Translation differences                                                                                                                                                                                                                   |           |         |        |          |         |  |       |   | (95    | ) | (95   | )
|Loss for the year                                                                                                                                                                                                                         |           |         |        |          |         |  |       |   | (543   | ) | (543  | )
|                                                                                                                                                                                                                                          |            |         |         |          |          |  |        |   |        |   |       |  
|31 December 2002                                                                                                                                                                                                                          | 358        |         | 1       |          | 91       |  | (1,717 | ) | 1,763  |   | 496   |  
|Translation differences                                                                                                                                                                                                                   |           |         |        |          |         |  |       |   | (113   | ) | (113  | )
|Loss for the year                                                                                                                                                                                                                         |           |         |        |          |         |  |       |   | (97    | ) | (97   | )
|                                                                                                                                                                                                                                          |            |         |         |          |          |  |        |   |        |   |       |  
|31 December 2003                                                                                                                                                                                                                          | 358        |         | 1       |          | 91       |  | (1,717 | ) | 1,553  |   | 286   |  
|                                                                                                                                                                                                                                          |            |         |         |          |          |  |        |   |        |   |       |  
|During 2003, £nil
            million (2002: £2 million, 2001: £16 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.

Cumulative translation losses at 31 December
        2003 totalled £163 million (2002: cumulative losses £50 million,
    2001: cumulative gains £45 million).

In 1998 a court-approved capital reorganisation
         took place. In exchange for every 15 ordinary shares in Reuters Holdings
        PLC,
      shareholders received pro-rata 13 ordinary shares in Reuters Group PLC
        plus
  £13.60 in cash. The difference between the proforma nominal value of
  shares  in issue of Reuters Group PLC immediately prior to the reorganisation
  and the
      previously reported capital and reserves of Reuters Holdings PLC, excluding
   the profit and loss reserve, represents the merger difference which has since

      been reflected in the Other reserve. 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. Under US GAAP, the transaction
  was  deemed a share consolidation combined with a special dividend. Accordingly,

      earnings per share and per ADS and dividends per share and per ADS were
  retrospectively  restated in Reuters Groups US GAAP disclosures.



|66 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 
|-- | ---------------------------------------------------------- | 

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Back to Contents

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

|                                                                                  |         |    |         |  |         | 
|--------------------------------------------------------------------------------- | ------- | -- | ------- |  | ------- | 
|                                                                                  | 2003    |    | 2002    |  | 2001   
|£m                                                                                | £m      | £m
|                                                                                  |         |    |         |  |        
|Authorised                                                                        |         |    |         |  |         | 
|One Founders Share of £1                                                          |        |    |        |  |        | 
|2,100 million ordinary shares of 25 pence
        each                            | 525     |    | 525     |  | 525     | 
|                                                                                  |         |    |         |  |         | 
|                                                                                  | 525     |    | 525     |  | 525     | 
|                                                                                  |         |    |         |  |         | 
|Allotted, called-up and fully paid                                                |         |    |         |  |         | 
|One Founders Share of £1                                                          |        |    |        |  |        | 
|Ordinary shares of 25 pence each                                                  | 358     |    | 358     |  | 358     | 
|                                                                                  |         |    |         |  |         | 
|                                                                                  | 358     |    | 358     |  | 358     | 
|                                                                                  |         |    |         |  |         | 
|Number of ordinary shares of 25 pence each
        (millions)                     | 1,432.5 |    | 1,432.5 |  | 1,432.1 | 
|                                                                                  |         |    |         |  |         | 
|Shares allotted during the year in millions                                       | 2003    |    | 2002    |  | 2001    | 
|                                                                                  |         |    |         |  |         | 
|17,650 shares in Reuters Group PLC were
        issued for cash                   |         |    |         |  |         | 
|under employee share schemes at prices
        ranging from 90p to 135p per share |        |    | 0.4     |  | 3.0     | 
|                                                                                  |         |    |         |  |         | 
|The rights attaching to the Founders Share
        are set out on page 85.        |         |    |         |  |         | 
|                                                                                  |         |    |         |  |         | 

|28                                                                                                                                                                                                                                                                           | Employee share option
          plans
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------
|Reuters
              Group PLC operates share plans for the benefit of employees as
              explained in the remuneration report. Since the flotation of Reuters
              Holdings PLC in 1984, 104 million shares have been issued under
          these plans.

Activity relating to share options to subscribe
      for new shares for the three years ended 31 December 2003 was as follows:

|                                           |               |          |       |   |       |   |       |   |          | 
|------------------------------------------ | ------------- | -------- | ----- | - | ----- | - | ----- | - | -------- | 
|                                           |               |          |       |   |       |   |       |   | Weighted
|Discretionary                              | average      
|Save-as-you-                               | employee      | exercise
|earn                                       | and executive | Plan     | price
|plans                                      | plans         | 2000     | Total | £
|                                           |               |          |       |   |       |   |       |   |         
|Ordinary shares under option               |               |          |       |   |       |   |       |   |          | 
|in millions (including ADSs):              |               |          |       |   |       |   |       |   |          | 
|31 December 2000                           | 11.2          |          | 0.4   |   | 20.9  |   | 32.5  |   | 5.99     | 
|Granted                                    | 2.3           |          | 7.4   |   |      |   | 9.7   |   | 8.56     | 
|Exercised                                  | (2.0          | )        | (0.1  | ) | (0.9  | ) | (3.0  | ) | 5.10     | 
|Expired, cancelled or lapsed               | (1.1          | )        |      |   |      |   | (1.1  | ) | 7.98     | 
|                                           |               |          |       |   |       |   |       |   |          | 
|31 December 2001                           | 10.4          |          | 7.7   |   | 20.0  |   | 38.1  |   | 6.55     | 
|Granted                                    | 7.2           |          | 31.8  |   |      |   | 39.0  |   | 4.04     | 
|Exercised                                  | (0.2          | )        |      |   | (0.2  | ) | (0.4  | ) | 5.39     | 
|Expired, cancelled or lapsed               | (6.7          | )        | (0.9  | ) | (3.1  | ) | (10.7 | ) | 6.76     | 
|                                           |               |          |       |   |       |   |       |   |          | 
|31 December 2002                           | 10.7          |          | 38.6  |   | 16.7  |   | 66.0  |   | 5.10     | 
|Granted                                    | 28.0          |          | 25.8  |   |      |   | 53.8  |   | 1.53     | 
|Exercised                                  |              |          |      |   |      |   |      |   |         | 
|Expired, cancelled or lapsed               | (8.5          | )        | (8.0  | ) | (2.6  | ) | (19.1 | ) | 4.77     | 
|                                           |               |          |       |   |       |   |       |   |          | 
|31 December 2003                           | 30.2          |          | 56.4  |   | 14.1  |   | 100.7 |   | 3.24     | 
|                                           |               |          |       |   |       |   |       |   |          | 
|Number of participants at 31 December 2003 | 8,170         |          | 7,378 |   | 7,046 |   |       |   |          | 
|                                           |               |          |       |   |       |   |       |   |          | 

The following table summarises information
        relating to the number of shares under option and those which were exercisable
      at 31 December 2003.

|                         |              |             |             |          |          |  |         |  |       | 
|------------------------ | ------------ | ----------- | ----------- | -------- | -------- |  | ------- |  | ----- | 
|                         |              |             | Weighted    |          |          |  | Options |  |      
|average                  | exercisable  | Exercisable
|period                   | Weighted     | at          | weighted   
|Total shares             | remaining to | average     | 31 December | average 
|under option             | full vesting | exercise    | 2003        | exercise
|(million)                | (months)     | price       | (million)   | price   
|                         |              |             |             |          |          |  |         |  |      
|Range of exercise prices |              |             |             |          |          |  |         |  |       | 
|Ordinary shares (£)      |              |             |             |          |          |  |         |  |       | 
|0.01-2.00                | 34.6         |             | 25          |          | £1.05    |  |        |  |      | 
|2.01-5.00                | 30.5         |             | 23          |          | £2.74    |  | 5.4     |  | £2.71 | 
|5.01-7.00                | 23.3         |             | 14          |          | £5.57    |  | 16.0    |  | £5.57 | 
|7.01-9.00                | 7.7          |             | 11          |          | £8.53    |  | 4.2     |  | £8.48 | 
|9.01-11.00               | 0.6          |             | 12          |          | £9.75    |  | 0.2     |  | £9.71 | 
|ADSs (US$)               |              |             |             |          |          |  |         |  |       | 
|10.01-30.00              | 4.0          |             | 27          |          | US$11.03 |  |        |  |      | 
|                         |              |             |             |          |          |  |         |  |       | 
|                         | 100.7        |             |             |          |          |  | 25.8    |  |       | 
|                         |              |             |             |          |          |  |         |  |       | 



| | Reuters Group PLC Annual
          Report and Form 20-F 2003 | 67
| | ------------------------------------------------------------ | --

---



Back to Contents

Notes on the consolidated balance
      sheetcontinued

28 Employee
        share option planscontinuedIn
        August 1990 and January 1994, Reuters established ESOTs with the power to acquire
        shares in the open market. The trustee of
            both
            trusts is an offshore independent professional trustee. Shares purchased
            by the trusts, which are included within fixed asset investments on the consolidated
            balance sheet, will be used either to meet obligations under the companys
            restricted share plans described in the remuneration report on pages 18-19
            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.

SAYE options are issued at a 20% discount to
        the market price at the time of granting the options. This does not give rise
        to a charge against profit as Reuters has taken advantage of the exemption allowed
      under UITF 17 Employee share schemes.

29
        Related party transactionsDuring
        the year, Reuters Group 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       |   | Services   |   | Amounts      |   | 31       |  
|                                                                                                                                                                                                                                                                                                                        | December |   | provided/  |   | (collected)/ |   | December |  
|                                                                                                                                                                                                                                                                                                                        | 2002     |   | (received) |   | paid         |   | 2003     |  
|                                                                                                                                                                                                                                                                                                                        | £m       |   | £m         |   | £m           |   | £m       |  
|                                                                                                                                                                                                                                                                                                                        |          |   |            |   |              |   |          |  
|Amounts receivable                                                                                                                                                                                                                                                                                                      |          |   |            |   |              |   |          |  
|Radianz                                                                                                                                                                                                                                                                                                                 | 70       |   | 82         |   | (137         | ) | 15       |  
|Factiva                                                                                                                                                                                                                                                                                                                 | 9        |   | 47         |   | (52          | ) | 4        |  
|Other                                                                                                                                                                                                                                                                                                                   | 2        |   | 3          |   | (3           | ) | 2        |  
|                                                                                                                                                                                                                                                                                                                        |          |   |            |   |              |   |          |  
|                                                                                                                                                                                                                                                                                                                        | 81       |   | 132        |   | (192         | ) | 21       |  
|                                                                                                                                                                                                                                                                                                                        |          |   |            |   |              |   |          |  
|Amounts payable                                                                                                                                                                                                                                                                                                         |          |   |            |   |              |   |          |  
|Radianz                                                                                                                                                                                                                                                                                                                 | (73      | ) | (304       | ) | 355          |   | (22      | )
|Factiva                                                                                                                                                                                                                                                                                                                 | (8       | ) | (7         | ) | 15           |   |         |  
|Other                                                                                                                                                                                                                                                                                                                   | (5       | ) | (47        | ) | 46           |   | (6       | )
|                                                                                                                                                                                                                                                                                                                        |          |   |            |   |              |   |          |  
|                                                                                                                                                                                                                                                                                                                        | (86      | ) | (358       | ) | 416          |   | (28      | )
|                                                                                                                                                                                                                                                                                                                        |          |   |            |   |              |   |          |  
|The above amounts relate to the
              rendering or receiving of services between both parties, including
              agency arrangements and licence agreements. The other amounts principally
              relate to the Reuters Building at 3 Times Square, together with
          transactions with TSI.

In addition to the above amounts Reuters
          has a promissory note payable to Factiva with a balance of £1 million outstanding at the year end (2002: £4
      million).

Reuters also holds an interest bearing loan repayable
        to Factiva of £5 million (2002: £7 million). The convertible loan
        note due from Icor was increased to £8 million at the beginning of 2003,
        and at
        the balance sheet date was fully written down based on directors valuation.

30 Operating leases and other financial
        commitmentsMinimum payments for non-cancellable operating
      leases for terms in excess of one year from 31 December are as follows:

|                             |  |      |  |      |  |      | 
|---------------------------- |  | ---- |  | ---- |  | ---- | 
|                             |  | 2003 |  | 2002 |  | 2001 | 
|                             |  | £m   |  | £m   |  | £m   | 
|                             |  |      |  |      |  |      | 
|Year ended 31 December       |  |      |  |      |  |      | 
|2002                         |  |     |  |     |  | 102  | 
|2003                         |  |     |  | 91   |  | 90   | 
|2004                         |  | 97   |  | 81   |  | 77   | 
|2005                         |  | 83   |  | 68   |  | 64   | 
|2006                         |  | 73   |  | 62   |  | 57   | 
|2007                         |  | 63   |  | 57   |  | 50   | 
|2008                         |  | 54   |  | 47   |  | 46   | 
|Thereafter                   |  | 327  |  | 329  |  | 289  | 
|                             |  |      |  |      |  |      | 
|Total minimum lease payments |  | 697  |  | 735  |  | 775  | 
|                             |  |      |  |      |  |      | 

|   |                                                                  | 
|-- | ---------------------------------------------------------------- | 
|68 | Reuters Group PLC Annual Report and Form
              20-F 2003 | 

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Back to Contents

30 Operating leases and other financial commitmentscontinuedAt 31 December the Group had commitments to make payments during the following year under non-cancellable operating leases as follows:

|                               |      |    |                    |    |      |  |      |  |       | 
|------------------------------ | ---- | -- | ------------------ | -- | ---- |  | ---- |  | ----- | 
|                               |      |    | Land and buildings |    |      |  |      |  | Other | 
|                               |      |    |                    |    |      |  |      |  |       | 
|                               | 2003 |    | 2002               |    | 2001 |  | 2003 |  | 2002  | 
|£m                             | £m   | £m | £m                 | £m | £m  
|                               |      |    |                    |    |      |  |      |  |       | 
|Operating leases which expire: |      |    |                    |    |      |  |      |  |       | 
|Within one year                | 7    |    | 11                 |    | 11   |  | 2    |  | 2     | 
|In the second to fifth years   | 43   |    | 37                 |    | 48   |  | 6    |  | 4     | 
|Over five years                | 48   |    | 50                 |    | 49   |  |     |  |      | 
|                               |      |    |                    |    |      |  |      |  |       | 

Other
        financial commitmentsAt 31 December 2003, Reuters had a minimum commitment of £73 million (2002: £152 million, 2001: £252
        million) under a service level agreement with Savvis for the provision of a network
        delivery mechanism for the Bridge assets acquired during 2001. This commitment
      expires in September 2006.

At 31 December 2003, under a licence, distribution and maintenance agreement
        with TSI, Reuters had a minimum commitment of £14 million (2002: £17
        million, 2001: £28
        million) due to expire in February
        2005.

31 Acquisitions and disposalsOn
          28 March 2003, Reuters acquired a further 94% of Multex to take the Groups
      holding to 100%.

|                                                                                                                                                        |             |             |            |   |                             |   |      |  
|------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | ----------- | ---------- | - | --------------------------- | - | ---- | -
|                                                                                                                                                        |             |             | Fair value |   | Accounting
          policy |   |      |  
|Book value                                                                                                                                              | adjustments | adjustments | Total     
|£m                                                                                                                                                      | £m          | £m          | £m        
|                                                                                                                                                        |             |             |            |   |                             |   |      |  
|Fixed assets:                                                                                                                                           |             |             |            |   |                             |   |      |  
|Intangible                                                                                                                                              | 9           |             | 15         |   |                            |   | 24   |  
|Tangible                                                                                                                                                | 19          |             | (10        | ) | (2                          | ) | 7    |  
|Investments                                                                                                                                             | 3           |             | (2         | ) |                            |   | 1    |  
|Current assets:                                                                                                                                         |             |             |            |   |                             |   |      |  
|Cash1                                                                                                                                                   | 32          |             |           |   |                            |   | 32   |  
|Other                                                                                                                                                   | 19          |             |           |   | (3                          | ) | 16   |  
|Current liabilities                                                                                                                                     | (16         | )           | 2          |   |                            |   | (14  | )
|Long-term liabilities                                                                                                                                   | (3          | )           |           |   |                            |   | (3   | )
|                                                                                                                                                        |             |             |            |   |                             |   |      |  
|Net assets acquired                                                                                                                                     | 63          |             | 5          |   | (5                          | ) | 63   |  
|Cash consideration                                                                                                                                      |             |             |            |   |                             |   | (155 | )
|Cost of initial investment                                                                                                                              |             |             |            |   |                             |   | (4   | )
|Consideration satisfied by the transfer
          of shares                                                                                             |             |             |            |   |                             |   | (3   | )
|                                                                                                                                                        |             |             |            |   |                             |   |      |  
|Total consideration                                                                                                                                     |             |             |            |   |                             |   | (162 | )
|                                                                                                                                                        |             |             |            |   |                             |   |      |  
|Goodwill                                                                                                                                                |             |             |            |   |                             |   | 99   |  
|                                                                                                                                                        |             |             |            |   |                             |   |      |  
|1Cash
            acquired includes Multexs share of the cash balances of Multex Investor
          Europe and Multex Investor Japan at 28 March 2003. |             |             |            |   |                            

The fair value adjustments in respect of intangible
        fixed assets are due to the recognition of £15 million of developed product technology and content, which have been independently valued. The fair value
      adjustments to tangible fixed assets, investments, current assets and current liabilities are provisional, based on managements
      best estimates, and will be finalised in the 2004 financial statements.

Of the total consideration, £3 million will be satisfied by the transfer
        of shares from Reuters ESOT and will be settled during
        2004.

Included within the Group profit and loss account are
        revenues of £32 million in respect of the Multex post-acquisition results.

Prior to becoming subsidiary undertakings, Multex Investor Europe and Multex
        Investor Japan were joint ventures and accounted for as such. In accordance with
        FRS 2 Accounting for Subsidiary Undertakings, and in order to give
        a true and fair view, purchased goodwill has been calculated as the sum of the
        goodwill arising on the initial and subsequent purchase of shares in these entities,
        being the difference at the date of each purchase between the fair value of the
        consideration given and the fair value of the identifiable assets and liabilities
        attributable to the interest purchased. This represents a departure from the
        statutory method, under which goodwill is calculated as the difference between
        the fair value of the consideration and net assets acquired on the date that
        they became subsidiary undertakings. The statutory method would not give a true
        and fair view because it would result in the Groups share of these
        entities retained reserves, during the period that they were joint ventures
        being recharacterised as goodwill. The effect of this departure is to decrease
        retained profits by £24 million, and to decrease purchased goodwill by £24
        million.

DisposalsIn 2003, Reuters disposed of a number of small
        wholly owned subsidiary undertakings including Wall Street On Demand and Agence
        de Presse
        Médicale. These disposals resulted in a net profit of £3
        million.

During the year, Reuters disposed of certain equity investments including its
        20% holding in Datamonitor resulting in a gain of £11 million. The exercise
        of stock options during 2003 gave rise to a deemed partial disposal of 1.0% of
        Reuters equity interest in TSI. As a result, Reuters recorded a loss on disposal
        of fixed asset investments of £1
        million.

Gains on the disposal of fixed asset investments include £4 million arising
        from Reuters investment in Informa and £1 million for Reuters share of
        investments disposed of by associates.

| |                                                                    |   
| | ------------------------------------------------------------------ | --
| | Reuters Group PLC Annual
                Report and Form 20-F 2003 | 69

---



Back to Contents

Notes on the consolidated balance sheetcontinued

|31 Acquisitions and disposalscontinuedRealised net gains, all of which were
   recorded in the profit and loss account, were: |    | 
|----------------------------------------------------------------------------------------------------------------------------- | -- | 
|                                                                                                                              |    | 
|                                                                                                                              |    | 
|Reconciliation of gains                                                                                                       | £m | 
|                                                                                                                              |    | 
|On disposal of subsidiary undertaking                                                                                         | 3  | 
|On disposal of associates and joint ventures                                                                                  | 10 | 
|On disposal of fixed asset investments                                                                                        | 6  | 
|                                                                                                                              |    | 
|Recorded in the profit and loss account                                                                                       | 19 | 
|                                                                                                                              |    | 
|

32 Subsidiary undertakings, joint ventures and associatesThe principal subsidiary undertakings, joint ventures and associates at 31 December 2003, all of which are included in the consolidated financial statements, are shown below. The shares in Reuters Holdings Limited and
Reuters Finance PLC are held by Reuters Group PLC. The shares in the other companies are held by Reuters Holdings Limited, or its wholly-owned subsidiaries.

|Subsidiary
    undertakings                                         |             
|------------------------------------------------------------------- | ------------
|                                                                    |             
|                                                                    | Country     
|of                                                                  | area of     
|incorporation                                                       | operation   
|                                                                    |             
|Bridge Trading Company                                              | USA         
|Instinet Group Incorporated                                         | USA         
|Reuters AG                                                          | Germany     
|Reuters America LLC                                                 | USA         
|Reuters Australia Pty Limited                                       | Australia   
|Reuters Canada Limited                                              | Canada      
|Reuters España SA                                                   | Spain       
|Reuters Finance PLC*                                                | UK          
|Reuters Holdings Limited*                                           | UK          
|Reuters Hong Kong Limited                                           | Cook Islands
|Reuters Italia SpA                                                  | Italy       
|Reuters Japan Kabushiki Kaisha                                      | Japan       
|Reuters Limited                                                     | UK          
|Reuters Middle East Limited                                         | Cook Islands
|Reuters Nederland BV*                                               | Netherlands 
|Reuters SA                                                          | Switzerland 
|Reuters Services SA                                                 | France      
|Reuters Singapore Pte Limited                                       | Singapore   
|Reuters Transaction Services Limited                                | UK          
|                                                                    |             
|* Denotes investment companies. All others are operating companies. |             

|                                                                                                                                                                                                                         |           |             |           |  |            | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------- | ----------- | --------- |  | ---------- | 
|                                                                                                                                                                                                                         |           |             |           |  |            | 
|Joint ventures and
    associates                                                                                                                                                                                        |           |             |           |  |            | 
|                                                                                                                                                                                                                         |           |             |           |  |            | 
|                                                                                                                                                                                                                         | Country   |             | Principal |  | Percentage | 
|of                                                                                                                                                                                                                       | area of   | of equity  
|incorporation                                                                                                                                                                                                            | operation | shares held
|                                                                                                                                                                                                                         |           |             |           |  |            | 
|TIBCO Software Inc. (see note 33)                                                                                                                                                                                        | USA       |             | Worldwide |  | 48         | 
|Factiva LLC (joint venture)                                                                                                                                                                                              | USA       |             | Worldwide |  | 50         | 
|Radianz Limited (joint venture)                                                                                                                                                                                          | UK        |             | Worldwide |  | 51         | 
|                                                                                                                                                                                                                         |           |             |           |  |            | 
|On a diluted basis, after
        deducting shares under option,
Reuters Groups interest in the equity of TSI was reduced to 39%. See page
8 for the nature of the business of the above joint ventures and
associates. |          

The financial years for all the above undertakings
end on 31 December except for TSI which has a 30 November year end.

33 Post balance sheet eventsOn
      23 January 2004, Reuters entered into a sale and leaseback arrangement
  in respect of its freehold data centre in Hazelwood,
      Missouri. The lease term is 20 years. Proceeds from the sale were £23
      million.

On 28 January 2004, Reuters sold the freeholds of its current headquarters at
85 Fleet Street and the St. Brides building for approximately £30 million.
85 Fleet Street will be the subject of a short leaseback until Reuters moves
to leasehold premises at Canary Wharf in 2005. A charge of £17 million
was booked against profits in 2003 in anticipation of losses arising from the
disposal of these two properties.

On 3 February 2004, Reuters concluded the sale of 86 million shares in TSI. Total
proceeds were approximately £311 million and the net profit on disposal
was approximately £155 million. Following the sale, Reuters holding was
17 million shares or 8.8% of TSIs common stock and as a result Reuters
will
no
longer account for TSI as an associate.

On 19 February 2004, Reuters sold its 98% holding in Tower Group Holding Corp
for a profit of approximately £6 million.

No tax is expected to arise on any of the above transactions.

|   |                                                            | 
|-- | ---------------------------------------------------------- | 
|70 | Reuters Group PLC Annual Report and
        Form 20-F 2003 | 

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Balance sheet of Reuters Group PLCat 31 December

|                                                                  |    |    |        |   |        |   |       |  
|----------------------------------------------------------------- | -- | -- | ------ | - | ------ | - | ----- | -
|                                                                  |    |    | 2003   |   | 2002   |   | 2001  |  
|Notes                                                             | £m | £m | £m    
|                                                                  |    |    |        |   |        |   |       |  
|Fixed asset investment                                            | 34 |    | 5,246  |   | 2,672  |   | 8,681 |  
|Current assets                                                    |    |    |        |   |        |   |       |  
|Amounts owed by Group undertakings                                |    |    |       |   | 1,861  |   | 1,868 |  
|Current liabilities                                               |    |    |        |   |        |   |       |  
|Amounts owed to Group undertakings                                |    |    | (2,499 | ) | (1,227 | ) | (866  | )
|Other borrowings                                                  |    |    | (139   | ) | (411   | ) | (604  | )
|Proposed dividends                                                |    |    | (86    | ) | (86    | ) | (86   | )
|                                                                  |    |    |        |   |        |   |       |  
|Net current (liabilities)/assets                                  |    |    | (2,724 | ) | 137    |   | 312   |  
|                                                                  |    |    |        |   |        |   |       |  
|Total assets less current liabilities                             |    |    | 2,522  |   | 2,809  |   | 8,993 |  
|Other borrowings due after more than one year                     |    |    | (228   | ) | (352   | ) | (337  | )
|                                                                  |    |    |        |   |        |   |       |  
|Net assets                                                        |    |    | 2,294  |   | 2,457  |   | 8,656 |  
|                                                                  |    |    |        |   |        |   |       |  
|Capital and reserves                                              | 35 |    |        |   |        |   |       |  
|Called-up share capital                                           |    |    | 358    |   | 358    |   | 358   |  
|Capital redemption reserve                                        |    |    | 1      |   | 1      |   | 1     |  
|Share premium account                                             |    |    | 91     |   | 91     |   | 89    |  
|Merger reserve                                                    |    |    |       |   |       |   | 6,788 |  
|Other reserves                                                    |    |    | 699    |   | 699    |   |      |  
|Profit and loss account reserve                                   |    |    | 1,145  |   | 1,308  |   | 1,420 |  
|                                                                  |    |    |        |   |        |   |       |  
|Capital employed                                                  |    |    | 2,294  |   | 2,457  |   | 8,656 |  
|                                                                  |    |    |        |   |        |   |       |  
|(Loss)/profit attributable to ordinary shareholders               |    |    | (23    | ) | 27     |   | 34    |  
|                                                                  |    |    |        |   |        |   |       |  
|This balance sheet was approved by the directors on 3 March 2004. |    |    |        |   |        |   |       |  











|Tom GlocerChief Executive |  | David GrigsonFinance 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.



Notes on the balance sheet of Reuters Group PLC

34 Fixed asset investmentThe investment represents the shareholding of Reuters Group PLC in Reuters Holdings Limited.

|35 Capital
    and reserves                                                                                                                                                                            |          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------
|                                                                                                                                                                                                       |          
|                                                                                                                                                                                                       |          
|                                                                                                                                                                                                       | Called up
|                                                                                                                                                                                                       | share    
|                                                                                                                                                                                                       | capital  
|                                                                                                                                                                                                       | £m       
|                                                                                                                                                                                                       |          
|31 December 2002                                                                                                                                                                                       | 358      
|Loss for the year                                                                                                                                                                                      |         
|                                                                                                                                                                                                       |          
|31 December 2003                                                                                                                                                                                       | 358      
|                                                                                                                                                                                                       |          
|Following the approval of a
       High Court Scheme of Arrangement, the majority of the issued share capital
       of Reuters Holdings PLC was acquired byReuters
       Group PLC in February 1998. |          
|                                                                                                                                                                                                       |          
|The loss for the year mainly represents dividends paid to shareholders.                                                                                                                                |          

| |                                                            |   
| | ---------------------------------------------------------- | --
| | Reuters Group PLC Annual Report and
        Form 20-F 2003 | 71

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Accounting policies

Accounting basisThe financial statements are prepared under
the historical cost convention and in accordance with applicable accounting standards.
The acquisition of the remaining equity interests in Multex Investor Europe and
Multex Investor Japan in 2003 have been accounted for in accordance with FRS
2 Accounting for Subsidiary Undertakings which represents a departure
from the requirements of the Companies Act 1985 (see note
31). Basis of consolidationThe 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 Groups 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 and unamortised goodwill at the dates of acquisition
      plus the Groups share of post-acquisition reserves. Foreign currency translationOn consolidation, the profit and loss accounts
and cash flow statements of entities with non-sterling functional currencies
are translated into sterling at the average rates for the year. Exchange differences
arising on consolidation as a result of the translation of the profit and loss
account from the average rate to the year-end rate are accounted for through
reserves. Exchange differences that arise as a consequence of trading transactions and
the translation of monetary assets and liabilities are taken to the profit and
loss account. Foreign currency investments (including subsidiary undertakings,
joint ventures and associates) are translated at the 31 December rate, and the
associated exchange differences are taken directly to reserves. Exchange differences
attributable to foreign currency borrowings used to finance
the Groups foreign currency investments are taken directly to reserves. TreasuryReuters Group receives revenue and incurs expenses
in more than70 currencies and uses financial instruments
to hedge a portion of its net cash flow and operating profit. The derivative contracts are treated from inception as an economic hedge of the
underlying financial instrument, with matching accounting treatment and cash
flows. The derivative contracts have high correlation with the specific underlying
risks being hedged both at inception and throughout the hedge period. 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. The Group does not hold or issue derivative financial instruments for speculative
purposes.




RevenueRevenue represents the turnover, net of discounts,
derived from services provided to subscribers and sales of products applicable
to the year. Revenue from sales of subscription-based real-time and historical information
services are recognised rateably over the term of the subscription. Revenue from contracts for the outright sale of systems based product solutions,
which include the sale of fully developed software licences, is recognised at
the time of client acceptance. Short-term contracts are accounted for on a completed
contract basis. Long-term contracts are accounted for in accordance with the
contractual terms either on a percentage of completion basis or on a time and
materials as incurred basis. Revenue from associated maintenance and support services is recognised rateably
over the term of the maintenance contract. Where contracts allow Reuters to recharge
costs from communications suppliers and exchanges onwards to subscribers, this
income is recognised as revenue. Transaction products usage revenue is accounted for on a trade date basis. Securities transactionsSecurities transactions between Instinet counterparties
which pass through Instinet and in its role as agency brokers, 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. DevelopmentDevelopment expenditure is charged against profit
in the year in which it is incurred. Pensions and similar obligationsThe expected costs of defined benefit pensions
and post-retirement medical benefits are charged against profit so as to spread
the cost over the service lives of the employees affected. For defined contribution schemes the charge to the profit and loss account represents
contributions payable by Reuters Group during the period. Restricted share and Instinet long-term incentive plansCosts of the restricted share and Instinet long-term
incentive plans are charged to profit over the vesting period of the awards. Tangible fixed assetsDepreciation 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 depreciatedFreehold buildings
   Normally 50 yearsLeasehold property
   Over the term of the leaseComputer systems equipment,office equipment and motor vehicles
   2 to 5 years Stocks and contract work in progressStocks 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.




|   |                                                            | 
|-- | ---------------------------------------------------------- | 
|72 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 

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Short-term investmentsGovernment 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 is reported as part of profit. Movements in short-term investments are reported under the heading of management
of liquid resources in the cash flow statement. Debt issuanceMedium-term notes and commercial paper are stated
at the amount of the net proceeds plus accrued interest or any discount or premium.
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. LeasingOperating lease rentals are charged against
profit on a straight line basis over the period of the lease. Operating lease incentives received are initially deferred and subsequently recognised
over the minimum contract period. Deferred taxationTax deferred or accelerated by the effect of
timing differences is accounted for to the extent that a transaction or an event
that has occurred at the balance sheet date gives rise to an obligation to pay
more tax in
the future or a right to pay less tax in the future. However, deferred tax assets are only recognised to the extent that, based on
all available evidence, it is more likely than not that suitable taxable profits
will arise from which the reversal of the asset can be
deducted. Goodwill and other intangible assetsGoodwill is calculated as the difference between
the
fair value of the consideration paid and the fair value of the Groups share
of the net assets at the date of acquisition. No value is attributed to internally
generated intangible assets. Purchased goodwill and other intangibles are capitalised and amortised through
the profit and loss account on a straight line basis over their estimated useful
economic lives which are up to 20 years depending on the nature of the business
acquired. Impairment reviews are carried out at the end of the first financial
year after acquisition and where there is any indication of impairment. Impairment is measured by comparing the carrying value of the asset with the
higher of the net realisable value and the value in use. Any impairment charges
are recognised in the profit and loss account for the period
in which they arise. Interest in shares of Reuters Group PLCShares 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. Fixed asset investmentsFixed asset investments are held at cost net
of permanent diminution in values as assessed by the directors.




| |                                                            |   
| | ---------------------------------------------------------- | --
| | Reuters Group PLC Annual Report and Form
        20-F 2003 | 73

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Summary of differences between UK and USGenerally Accepted Accounting 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. a
    Revenue recognitionUnder UK GAAP, revenue from
        contracts for the outright sale of systems based product solutions, which
        include the sale of fully developed software licences, is recognised
        at the time of client acceptance. Under US GAAP, specific rules establish
        the criteria that must be met for revenue recognition. Under these rules,
        certain contracts with multiple elements require an amount of revenue
      to be deferred until all criteria are met for revenue to be recognised. The UK to US GAAP adjustment in the current
    year arises from the release of revenue deferred in prior years. No revenue
  has been deferred for the purposes of US GAAP. Under UK GAAP, soft dollar revenues are netted against operating costs in the
profit and loss account. Under US GAAP, soft dollar revenues are presented gross
in the revenues and operating costs (2003: £169
million, 2002: £192 million, 2001: £168 million). There is no difference
in net income as a result of the classification. Under UK GAAP, net interest income is classified below operating activities in
the profit and loss account. Under US GAAP, interest income arising on cash provided
as security on stock borrowing transactions related
to
Instinets clearing business, interest on fixed income securities and on
cash balances is recorded in revenue (2003: £6 million, 2002: £13
million, 2001: £14
million). b
    Software and website
      development costsUnder UK GAAP, costs of
        developing computer software products and websites are usually 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. Additionally, certain costs relating to website development
        incurred subsequent to the planning stage are also capitalised. The amortisation
        of the capitalised costs is based on the estimated future revenues or
      remaining estimated useful economic lives of the products involved. c
    Joint ventures
      and associatesUnder UK GAAP, the difference
        between the book value and fair value of the assets contributed to joint
        ventures and associates are recognised in the statement of total recognised
        gains and losses. Under US GAAP, the difference is released to the income
        statement over the anticipated life of the assets contributed to the
      venture. Under UK GAAP, stock compensation expenses
    are not required to be recorded in respect of certain joint ventures and
    associates stock option
plans. Under US GAAP, the Groups share of the results of joint ventures
and associates has been adjusted to reflect stock compensation charges where
appropriate. Under US GAAP, the Groups share of the results of joint ventures and associates
is adjusted to reflect the non-amortisation
of goodwill since 1 January 2002. d
   Gains
      on deemed disposal of subsidiary undertakings and associatesUnder UK GAAP,
      gains on the deemed partial disposal of subsidiary undertakings and associates
      involving non-qualifying consideration are recorded in the statement of
      total recognised gains and losses. Under US GAAP, these gains are recorded
      in the income statement and are calculated using asset and consideration
      values as determined under US GAAP.




e
    Loss on disposal
      of subsidiary undertakingsUnder UK GAAP, goodwill
        is amortised on a systematic basis whereas under US GAAP goodwill is
        not amortised but tested for impairment on an annual basis. Under US
        GAAP, therefore, the carrying value of goodwill can be higher, resulting
      in greater losses on disposal of subsidiary undertakings.f
    Loss/gain on sale
          of fixed asset
investmentsUnder UK GAAP, gains on
        the sale of fixed asset investments for non-cash consideration are recorded
        in the statement of total recognised gains and losses. Under US GAAP,
        these gains are recorded in the income
statement. Under UK GAAP, fixed asset investments are
    held in the balance sheet at cost net of permanent diminution in value as
    assessed by the directors. 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. Under US GAAP, broker-dealer
    fixed asset investments are stated at fair value with unrealised gains or
    loss included in the income
statement. g
    Goodwill and other
      intangiblesUnder UK GAAP, goodwill
        and other intangible assets are amortised. Under US GAAP, prior to 1
        July 2001, goodwill was amortised over its estimated useful life consistent
        with UK GAAP. In 2002, Reuters adopted the provisions of Financial Accounting
        Standard No. 142 (FAS 142), Goodwill and Other Intangible Assets,
        and as a result goodwill is no longer subject to amortisation under US
        GAAP. In addition, the non-amortisation of goodwill provisions of FAS
        142 were effective immediately for goodwill arising on all acquisitions
        completed after 30 June
2001. Under UK GAAP, goodwill impairment reviews
    are carried out at the end of the first financial year after acquisition
    and where there is any indication of impairment. Impairment is measured by
    comparing the carrying value of goodwill with the higher of the net realisable
  value and the value in use. Under US GAAP, the Group performed a transitional impairment test effective 1
January 2002, as required by FAS 142. Goodwill impairment reviews are also conducted
whenever the Group considers there to be an indication of impairment. Beginning
in 2002, Reuters also completes an annual goodwill impairment test, as required
by FAS 142. Under US GAAP, where the carrying value of a reporting unit exceeds its fair
value then a goodwill impairment is recorded based on the excess of the carrying
value of goodwill in a reporting unit over the implied fair
value of that goodwill. Under UK GAAP, the fair value of quoted securities issued to effect a business
combination is measured at the market price at the date of closing the acquisition.
Under US GAAP, the fair value of the securities issued is determined using the
market price for a reasonable period before and after the date that the terms
of the acquisition are agreed to and announced. Under UK GAAP, contingent consideration arising as part of a business combination
is included within goodwill and recorded as a liability at the time of the acquisition.
Under US GAAP, contingent consideration is recorded as an adjustment to goodwill
at the time it is realised. Both UK GAAP and US GAAP require purchase consideration in respect of subsidiaries
acquired to be allocated on the basis of fair values to the various net assets
of the acquiree at the date of acquisition. The excess of purchase consideration
over the fair value assigned to the net assets is treated as goodwill. Both UK
GAAP and US GAAP require separately identifiable intangible assets to be held
separately from goodwill. Under US GAAP a different definition of intangible
assets applies, therefore additional intangible assets may be identified under
US GAAP.


|74 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 
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Accounting Principlescontinued h
    Employee costsReuters grants options
        under save-as-you-earn (SAYE) 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. Under US GAAP, if a SAYE scheme is offered
    at a lower price than those offered previously and participants are able
    to transfer out of an existing scheme into the new scheme, variable accounting
    rules apply. Under these rules, a compensation charge is recorded on issue
    of the option for the intrinsic value of the award at the grant date, any
    subsequent movement in the share value results in a re-measuring of the compensation
    charge, which continues until the option is exercised. Variable plan accounting
    applies to all options in existing higher priced schemes and also to options
    in lower priced schemes to the extent that those options have been transferred
  from a higher priced scheme. Under UK GAAP, no compensation charge is recorded when the vesting terms of an
option award are accelerated, or when an option plan is amended with substantially
similar terms as the old plan. Under US GAAP, additional compensation cost is
recognised when the vesting of an option has been accelerated and those options
would otherwise have been forfeited unvested. Additional compensation cost is
also recognised where a new measurement date is established following the amendment
of a stock option plan where the exercise price is less than the market value
of the underlying shares on the new measurement date. Under UK GAAP, the liability for national insurance on stock options is accrued
based on the intrinsic value of the options on the date of grant and adjusted
for subsequent changes in the market value of the underlying shares. Under US
GAAP, this expense is recorded upon exercise of the stock options. Under UK GAAP, the compensation charge relating to certain stock based long-term
incentive plans is based on the original cost of shares held in the ESOT less
impairments. Under US GAAP, the compensation charge is based on the value of
the awards at each balance sheet date. Under both UK GAAP and US GAAP, the total compensation charge is adjusted to
take account of the expected outcome of the performance conditions and the compensation
charge is spread over the service period. Under UK GAAP, the expected costs under defined benefit pension and post-retirement
arrangements are spread over the service lives of employees entitled to those
benefits. Variations from regular cost are spread on a straight line basis over
the expected average remaining service lives of relevant current employees. Under
US GAAP, the annual pension cost comprises the estimated cost of benefits accruing
in the period adjusted for the amortisation
of the surplus
arising when FAS 87 Employers Accounting for Pensions was adopted.
The assumptions used to determine the annual pension cost under US GAAP are the
same as those used to determine the FRS 17 cost as set out in note 23 on page
63. Under UK GAAP, an accrual is made to reflect the cost
of employees unused vacation allowances only to the extent the Group is
liable to settle the obligation for cash. Under US GAAP, an accrual is made for
the cost of all unused vacation allowances at the point of entitlement, regardless
of whether a cash payment will be required. Under UK GAAP, the transfer of employees that held unvested stock option awards
to a joint venture does not give rise to a charge against profit. Under US GAAP,
the stock awards are considered to be held by non-employees and accordingly a
stock option expense relating to the fair value of the unvested awards is included
in share of operating loss in joint ventures over the remaining vesting
period. i
    RestructuringIn 2003, under US GAAP,
        Reuters adopted the provisions of Financial Accounting Standard No. 146
        (FAS 146), Accounting for Costs Associated with Exit or Disposal
        Activities. FAS 146 has been applied in respect of employee severance
        provisions and property
cost provisions.




Under UK GAAP, Reuters recognises provisions for employee severance charges once the Group has a constructive obligation to incur the costs. A constructive obligation is considered to exist when a detailed formal plan
is in place and a valid expectation has been raised in those affected. US GAAP requires that employee severance costs that are not one-time termination charges be recognised when it is probable that these costs will be incurred and the amount is
capable of being estimated. Under UK GAAP, Reuters recognises provisions for costs associated with the exit
of a property once the intention to exit has been announced. Under US GAAP, charges
for costs associated with the exit of properties are recognised upon vacation
of the property or legal termination of the lease contract. j
    DerivativesUnder US GAAP, the Group
        adopted FAS 133, Accounting for Derivative Instruments and Hedging
        Activities as amended by FAS 138, on 1 January 2001. FAS 133 introduced
        new rules in respect of hedge accounting and the recognition of movements
        in fair value through the income statement. As a result of the adoption,
        all derivatives and embedded derivative instruments, whether designated
        in hedging relationships or not, are carried on the balance sheet at
      fair value. The company has not designated any of its
    derivative instruments as qualifying hedge instruments under FAS 133. Accordingly,
    changes in the fair value of derivative and embedded derivative instruments
    have been
included within current earnings under US GAAP. Under current UK GAAP, the company has continued to apply hedge accounting and
is not required to record its derivative instruments or any of its embedded derivative
instruments on the balance sheet at fair
value. k
    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 and impairments. Under US GAAP, those held by the ESOT are
      regarded as treasury stock and recorded at cost as a deduction from shareholders equity.l
    InterestUnder UK GAAP, liabilities
        recorded in respect of contingent consideration arising as part of business
        combinations are discounted to net present value. The discount is unwound
        through the profit and loss account over the life of the liability. Under
        US GAAP, no liability is recorded in respect of contingent consideration,
      therefore the interest charge is adjusted as appropriate.m
    TaxationUnder UK GAAP, FRS 19, Deferred
        Tax, requires deferred taxes to be accounted for on all timing
        differences. Deferred tax assets are to be recognised to the extent that,
        on the basis of all available evidence, it can be regarded as more likely
        than not that there will be suitable taxable profits from which the future
        reversal of the underlying timing differences can be deducted. Assets
        not recognised are shown by way of a valuation allowance in the balance
        sheet. Under US GAAP, deferred taxes are accounted for in accordance
        with FAS 109, Accounting for Income Taxes 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.This has not given rise
        to a significant adjustment in the UK to US GAAP reconciliation. The
        adjustment is primarily the result of the deferred impact of the other
      US GAAP adjustments made in the reconciliation.n.
    DividendsUnder UK GAAP, dividends
        are provided for in the year in respect of which they are declared or
        proposed. Under US GAAP, dividends are recognised only in the period
      in which they are formally declared. The effects of these differing accounting
  principles are shown in notes 36-39.


|Reuters Group PLC Annual Report and Form
        20-F 2003 | 75
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Summary of differences between UK and US
Generally Accepted Accounting Principles (GAAP)continued

Cash flow statementThe cash flow statement set out on pages
49-54 has been prepared in conformity with UK FRS 1 (Revised) Cash Flow Statements.
The principal differences between this statement and cash flow statements presented
in
accordance with FAS 95 are as follows: 1   Under UK GAAP, net cash flow from operating activities is
determined before considering cash outflows from (a) returns on investments
and servicing of finance (2003: £28 million, 2002: £64 million, 2001: £7
million) and (b) dividends received from associates (2003: £3 million,
2002: £2 million, 2001: £2 million), and (c) taxes paid (2003: £33
million, 2002: £73 million, 2001: £173 million). Under US GAAP, net
cash flow from operating activities is determined
after these items. 2   Under UK GAAP capital expenditure, financial investments and
acquisitions (2003: £10 million, 2002: £6 million, 2001: £89
million) are classified separately while under US GAAP, they are classified as
investing activities. Under UK GAAP, movements in short-term investments (2003: £99 million increase,
2002: £378 million decrease, 2001: £448 million increase) are not
included in cash but classified as management of liquid resources. Under US GAAP,
short-term investments with maturity of three months or less at the date of acquisition
(2003: £37 million decrease, 2002: £234 million decrease, 2001: £410
million increase), are included in cash and cash equivalents. Only short-term
investments with a maturity of over three months (2003: £136 million increase,
2002: £144 million decrease, 2001: £38 million increase), are classified
as investing activity.




3   Under UK GAAP, dividends paid (2003: £140 million,
2002: £139 million, 2001: £227 million) are classified separately
while under US GAAP, dividends paid are classified as financing activities. Under
UK GAAP, the purchase of Reuters shares by the ESOTs (2003: £nil, 2002: £65
million, 2001: £48 million) is classified as investing activities whereas
under US GAAP, this is
classified as financing activities. Under UK GAAP, cash outflows relating to the movement
in bank overdrafts (2003: £11 million, 2002: £63 million, 2001: £16
million) 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:




|                                                                   |    |    |      |   |      |   |      |  
|------------------------------------------------------------------ | -- | -- | ---- | - | ---- | - | ---- | -
|                                                                   |    |    | 2003 |   | 2002 |   | 2001 |  
|Notes                                                              | £m | £m | £m  
|                                                                   |    |    |      |   |      |   |      |  
|Net cash inflow from operating activities                          | 1  |    | 371  |   | 247  |   | 709  |  
|Net cash outflow from investing activities                         | 2  |    | (352 | ) | (8   | ) | (402 | )
|Net cash (outflow)/inflow from financing activities                | 3  |    | (142 | ) | (450 | ) | 123  |  
|                                                                   |    |    |      |   |      |   |      |  
|Net (decrease)/increase in cash and cash equivalents under US GAAP |    |    | (123 | ) | (211 | ) | 430  |  
|Net (decrease)/increase in cash under UK GAAP                      |    |    | (97  | ) | 86   |   | 36   |  
|                                                                   |    |    |      |   |      |   |      |  



|76 | Reuters Group PLC Annual Report and Form
    20-F 2003 | 
|-- | ------------------------------------------------------ | 

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Notes on summary of differences
between UK and US Generally Accepted Accounting Principles
(GAAP)

|36 Adjustments to net income                                                       |                                              |                                                                           |       |    |       |   
|---------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------------------------------------------------------- | ----- | -- | ----- | --
|                                                                                   |                                              |                                                                           |       |    |       |   
|                                                                                   |                                              |                                                                           | 2003  |    | 2002  |   
|£m                                                                                 | £m                                           | £m                                                                       
|                                                                                   |                                              |                                                                           |       |    |       |   
|Profit/(loss) attributable
    to ordinary shareholders in accordance with UK GAAP | 43                                           |                                                                           | (404  | )  | 46    |   
|US GAAP adjustments                                                                |                                              |                                                                           |       |    |       |   
|                                                                                   | a.                                           | Software revenue recognition                                              | 11    |    | 3     |   
|                                                                                   | b.                                           | Amortisation of software and website
       development costs             |      |    | (1    | ) 
|                                                                                   | c.                                           | Joint ventures and associates                                             | 24    |    | 18    |   
|                                                                                   | d.                                           | Gains on deemed disposal of subsidiary
       undertakings and associates |      |    | 104   |   
|                                                                                   | e.                                           | Loss on disposal of subsidiary undertakings                               | (2    | )  |      |   
|                                                                                   | f.                                           | (Loss)/gain on sale of fixed asset investments                            | (1    | )  |      |   
|                                                                                   | g.                                           | Goodwill and other intangibles                                            | 52    |    | (34   | ) 
|                                                                                   | h.                                           | Employee costs                                                            | (28   | )  | (1    | ) 
|                                                                                   | i.                                           | Restructuring                                                             | (150  | )  |      |   
|                                                                                   | j.                                           | Derivative instruments                                                    | (33   | )  | (28   | ) 
|                                                                                   | k.                                           | Impairment of ESOT shares                                                 | 3     |    | 147   |   
|                                                                                   | l.                                           | Interest                                                                  | 1     |    |      |   
|                                                                                   | m.                                           | Taxation                                                                  |       |    |       |   
|                                                                                   |                                              | application of FAS 109                                                    |      |    |      |   
|                                                                                   |                                              | tax effect of US GAAP adjustments                                         | 39    |    | 42    |   
|                                                                                   | Minority interest
    in US GAAP adjustments | 3                                                                         |       | 38 |       | (2
|                                                                                   |                                              |                                                                           |       |    |       |   
|(Loss)/income before cumulative effect of change in accounting principle           | (38                                          | )                                                                         | (116  | )  | 87    |   
|Cumulative effect of change in accounting principle for FAS 142                    |                                             |                                                                           | (13   | )  |      |   
|Cumulative effect of change in accounting principle for FAS 133                    |                                             |                                                                           |      |    | 7     |   
|Tax effect of change in accounting principle                                       |                                             |                                                                           |      |    | (2    | ) 
|Minority interest effect of change in accounting principle                         |                                             |                                                                           | 2     |    |      |   
|                                                                                   |                                              |                                                                           |       |    |       |   
|Net (loss)/income attributable to ordinary shareholders in accordance with US GAAP | (38                                          | )                                                                         | (127  | )  | 92    |   
|                                                                                   |                                              |                                                                           |       |    |       |   
|                                                                                   |                                              |                                                                           |       |    |       |   
|                                                                                   |                                              |                                                                           |       |    |       |   
|                                                                                   |                                              |                                                                           | 2003  |    | 2002  |   
|pence                                                                              | pence                                        | pence                                                                    
|                                                                                   |                                              |                                                                           |       |    |       |   
|Earnings and dividends                                                             |                                              |                                                                           |       |    |       |   
|Before accounting change                                                           |                                              |                                                                           |       |    |       |   
|Basic earnings per ADS in accordance with US GAAP                                  | (16.3                                        | )                                                                         | (49.5 | )  | 37.5  |   
|Diluted earnings per ADS in accordance with US GAAP                                | (16.3                                        | )                                                                         | (49.5 | )  | 36.8  |   
|After accounting change                                                            |                                              |                                                                           |       |    |       |   
|Basic earnings per ADS in accordance with US GAAP                                  | (16.3                                        | )                                                                         | (54.3 | )  | 39.5  |   
|Diluted earnings per ADS in accordance with US GAAP                                | (16.3                                        | )                                                                         | (54.3 | )  | 38.7  |   
|                                                                                   |                                              |                                                                           |       |    |       |   
|Dividend paid per ADS (including UK tax credit for 2001 and 2002)                  | 60.0                                         |                                                                           | 66.7  |    | 108.0 |   
|                                                                                   |                                              |                                                                           |       |    |       |   
|Weighted average number of shares used in basic EPS calculation (millions)         | 1,396                                        |                                                                           | 1,395 |    | 1,404 |   
|Dilutive shares                                                                    | 18                                           |                                                                           |      |    | 28    |   
|Used in diluted EPS calculation                                                    | 1,414                                        |                                                                           | 1,395 |    | 1,432 |   
|                                                                                   |                                              |                                                                           |       |    |       |   
|                                                                                   |                                              |                                                                           |       |    |       |   

|37 Adjustments to
    shareholders equity                               |                                          |                                                             |      |     |       |   
|------------------------------------------------------------------------ | ---------------------------------------- | ----------------------------------------------------------- | ---- | --- | ----- | --
|                                                                         |                                          |                                                             |      |     |       |   
|                                                                         |                                          |                                                             | 2003 |     | 2002  |   
|£m                                                                       | £m                                       | £m                                                         
|                                                                         |                                          |                                                             |      |     |       |   
|Capital employed before minority interest
    in accordance with UK GAAP | 286                                      |                                                             | 496  |     | 1,109 |   
|US
         GAAP adjustments:                                            |                                          |                                                             |      |     |       |   
|                                                                         | a.                                       | Software revenue recognition                                |     |     | (11   | ) 
|                                                                         | b.                                       | Capitalised software development costs, net of amortisation |     |     |      |   
|                                                                         | c.                                       | Joint ventures and associates                               | (13  | )   | (37   | ) 
|                                                                         | f.                                       | Fixed asset investments                                     | 20   |     | 19    |   
|                                                                         | g.                                       | Goodwill and other intangibles                              | 120  |     | 71    |   
|                                                                         | g.                                       | Contingent consideration                                    | 24   |     | 29    |   
|                                                                         | h.                                       | Employee costs                                              | (44  | )   | (39   | ) 
|                                                                         | i.                                       | Restructuring                                               | (150 | )   |      |   
|                                                                         | j.                                       | Derivatives                                                 | (47  | )   | (14   | ) 
|                                                                         | k.                                       | Shares held by ESOTs                                        | (74  | )   | (68   | ) 
|                                                                         | m.                                       | Taxation                                                    | 44   |     | 6     |   
|                                                                         | n.                                       | Dividends                                                   | 86   |     | 86    |   
|                                                                         | Minority interest in US GAAP adjustments | (7                                                          | )    | (10 | )     | (2
|                                                                         |                                          |                                                             |      |     |       |   
|Shareholders equity in accordance
    with US GAAP                      | 245                                      |                                                             | 528  |     | 959   |   
|                                                                         |                                          |                                                             |      |     |       |   



| | Reuters Group PLC Annual Report and Form
    20-F 2003 | 77
| | ------------------------------------------------------ | --

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Notes on summary of differences
  between UK and USGenerally Accepted Accounting
  Principles (GAAP)continued

|38Statement
        of comprehensive  income
|--------------------------------------------
|                                            

|                                                             |                                                            |                                                                       |      |     |      |    |      |  
|------------------------------------------------------------ | ---------------------------------------------------------- | --------------------------------------------------------------------- | ---- | --- | ---- | -- | ---- | -
|                                                             |                                                            |                                                                       | 2003 |     | 2002 |    | 2001
|£m                                                           | £m                                                         | £m                                                                   
|                                                             |                                                            |                                                                       |      |     |      |    |     
|Net (loss)/income
      in accordance with US GAAP           | (38                                                        | )                                                                     | (127 | )   | 92   |   
|Other comprehensive (loss)/income,
      net of tax:         |                                                            |                                                                       |      |     |      |   
|                                                             | Unrealised gains on certain
      fixed asset investments: |                                                                       |      |     |      |    |     
|                                                             |                                                            | arising during year                                                   | 2    |     | (21  | )  | (109 | )
|                                                             |                                                            | less amounts taken to net income, net
      of losses                 |     |     | 3    |    |     |  
|                                                             | Foreign currency translation
      differences             | (119                                                                  | )    | (95 | )    | 26 |     
|                                                             | Derivative instruments:                                    |                                                                       |      |     |      |    |     
|                                                             |                                                            | cumulative effect of change in accounting
      principle for FAS 133 |     |     |     |    | (2   | )
|                                                             |                                                            | less amounts taken to net income                                      |     |     |     |    | 2    |  
|Adjustments to reflect minimum
      pension liability       | 4                                                          |                                                                       | (4   | )   |     |   
|                                                             |                                                            |                                                                       |      |     |      |    |      |  
|Comprehensive (loss)/income
      in accordance with US GAAP | (151                                                       | )                                                                     | (244 | )   | 9    |   
|                                                             |                                                            |                                                                       |      |     |      |    |      |  
|                                                             |                                                            |                                                                       |      |     |      |    |      |  

|39Summarised
        balance sheet  (US GAAP basis)
|---------------------------------------------------

|                                                     |       |    |       |   |       |  
|---------------------------------------------------- | ----- | -- | ----- | - | ----- | -
|                                                     | 2003  |    | 2002  |   | 2001 
|£m                                                   | £m    | £m
|                                                     |       |    |       |   |      
|Assets                                               |       |    |       |   |       |  
|Fixed tangible assets                                | 823   |    | 1,012 |   | 1,299 |  
|Current assets                                       | 1,531 |    | 1,850 |   | 2,462 |  
|Other assets                                         | 151   |    | 159   |   | 113   |  
|Goodwill and other intangibles                       | 495   |    | 489   |   | 499   |  
|                                                     |       |    |       |   |       |  
|Total assets                                         | 3,000 |    | 3,510 |   | 4,373 |  
|                                                     |       |    |       |   |       |  
|Liabilities and shareholders equity                 |       |    |       |   |       |  
|Current liabilities                                  | 1,985 |    | 2,167 |   | 2,628 |  
|Long-term liabilities                                | 568   |    | 552   |   | 572   |  
|Deferred taxes                                       |      |    | 21    |   | 48    |  
|Minority interest                                    | 202   |    | 242   |   | 166   |  
|Shareholders equity before deductions               | 490   |    | 781   |   | 1,163 |  
|Shares held by employee share ownership
      trusts | (245  | )  | (253  | ) | (204  | )
|                                                     |       |    |       |   |       |  
|Total shareholders equity                           | 245   |    | 528   |   | 959   |  
|                                                     |       |    |       |   |       |  
|Total liabilities and shareholders
      equity     | 3,000 |    | 3,510 |   | 4,373 |  
|                                                     |       |    |       |   |       |  

Goodwill and other intangibles are net of accumulated
  amortisation of £601 million (2002: £569 million, 2001: £551
  million). Software development costs are net of accumulated amortisation of
  £19 million (2002: £19 million, 2001: £18 million).

Included within current assets is a deferred
  tax asset of £12 million (2002: £nil, 2001: £nil).



|78 | Reuters Group PLC Annual Report and Form
      20-F 2003 | 
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Additional disclosures
    required by US GAAP
    Derivative instrumentsThe current year loss on derivative
    instruments is £33 million (2002: £28 million loss; 2001: £4
    million gain). At 31 December 2002, the balance sheet includes a derivative
    liability of £48 million. The current year loss includes a loss of £26
    million (2002: £19 million; 2001: £2 million) relating to currency
    forward contracts embedded within long term customer contracts. Recent Accounting PronouncementsEITF 00-21In January 2003, the Emerging Issues Task
  Force (EITF) issued EITF 00-21, Accounting for Revenue Arrangements with
  Multiple Deliverables. EITF 00-21 addresses the issues of (1) how to determine
  whether an arrangement involving multiple deliverables contains more than one
  unit of accounting; and (2) how arrangement consideration should be measured
  and allocated to the separate units of accounting in the arrangement. EITF 00-21
  does not change otherwise applicable revenue recognition criteria. EITF 00-21
  is effective for revenue arrangements entered into in fiscal periods beginning
  after 15 June 2003. This accounting pronouncement is not expected to have a
  significant impact on the Groups financial position or results of operations. FIN 45In November 2002, the FASB issued FASB
  Interpretation No. 45 (FIN 45), Guarantors Accounting and Disclosure
  Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
  Others. FIN 45 requires a liability to be recognised at the time a company
  issues a guarantee for the fair value of the obligations assumed under certain
  guarantee agreements. The provisions for initial recognition and measurement
  of guarantee agreements are effective on a prospective basis for guarantees
  that are issued or modified after 31 December 2002. Reuters has assessed the
  impact of FIN 45 and has identified no material guarantees issued or modified
  on or after 1 January 2003 requiring either provision or disclosure. The Group
  is in the process of assessing the impact on the financial statements of guarantees
  issued prior to 1 January 2003.




FIN 46In January 2003, the FASB issued FASB
  Interpretation No. 46 (FIN 46 or the Interpretation), Consolidation
  of Variable Interest Entities, an interpretation of ARB 51. FIN 46 addresses
  the consolidation of entities for which control is achieved through means other
  than through voting rights (variable interest entities or VIE)
  by clarifying the application of Accounting Research Bulletin No. 51, Consolidated
  Financial Statements to certain entities in which equity investors do
  not have the characteristics of a controlling financial interest or do not have
  sufficient equity at risk for the entity to finance its activities without additional
  subordinated financial support from other parties. FIN 46 provides guidance
  on how to determine when and which business enterprise (the primary beneficiary)
  should consolidate the VIE. In addition, FIN 46 requires that both the primary
  beneficiary and all other enterprises with a significant variable interest in
  a VIE make additional disclosures. FIN 46 was applied by Reuters Group to all
  VIEs created after 31 January 2003. Reuters will be required to apply
  FIN 46 to any VIE created before 1 February 2003 for the year ended 31 December
  2004. Reuters has assessed the impact of FIN 46 in relation to VIEs created
  after 31 January 2003 and has identified no entities requiring consolidation
  under the provisions of FIN 46. The Group is in the process of identifying VIEs
  created prior to 31 January 2003 and is assessing the impact on the Groups
  financial position.




| | Reuters Group PLC Annual
      Report and Form 20-F 2003 | 79
| | -------------------------------------------------------- | --

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Information for shareholders

Ordinary sharesAs of 3 March 2004, there were 1,398,169,006
ordinary shares outstanding, excluding 34,934,035 ordinary shares owned by certain
employee share ownership trusts (see note 28 on the consolidated balance sheet
on page
68). Major shareholdersThe company had received notice under section
198 of the UK Companies Act 1985, as at 3 March 2004 that the following parties
held notifiable interests in its shares: PercentageNumber
   of issuedof shares
   share capitalBrandes Investment Partners
   126,286,798
   
   8.81Fidelity Investments
   94,238,074
   
   6.58Merrill Lynch Investment Managers
   48,978,642
   
   3.42Legal & General Investment Management
   43,076,669
   
   3.01 The companys major shareholders do not
  have any different voting rights from the other ordinary shareholders. Capital
  Group Companies, Inc. has decreased its shareholding throughout 2003 and no
  longer held a notifiable interest on 3 March 2004. Similarly Franklin Templeton
  Investments sold a number of shares at the beginning of 2004 causing its holding
  to fall below the 3% notification threshold. There were relatively few other
  movements in the major
shareholders. The Founders ShareIndependence, integrity and freedom from bias
in the gathering and dissemination of news and information is fundamental to
Reuters Group. Reuters Founders Share Company Limited (the Founders Share Company)
was established to safeguard those qualities and holds a single Founders Share.
This share may be used to outvote all ordinary shares if other safeguards fail
and
there is an attempt to effect a change in control of the company. Control,
for this purpose, means 30% of the ordinary shares. The directors of the Founders
Share Company have a duty to ensure, as far as they are able by the proper exercise
of the powers vested in them, that the Reuters Trust Principles are observed
(see page
84). The Founders Share Companys directors are nominated by a Nomination Committee
which includes certain serving directors of the Founders Share Company, one person
nominated by each of four news associations, two people appointed by the Chairman
of Reuters Group PLC and two people appointed after consultation with the European
Commission on Human Rights. A director of the Founders Share Company may not
be a director or employee of Reuters Group. The current directors of the Founders Share Company are as follows:TrusteesinceLeonard Berkowitz
   1998The Honourable Mrs Anson GBM, CBE, JP
   2002Sir Michael Checkland
   1994Uffe Ellemann-Jensen, MP
   2001Robert Erburu
   1999Pehr Gyllenhammar (Chairman)
   1997Toyoo Gyohten
   2000Jacques De Larosiére de Champfeu KBE
   1999John Hector McArthur
   2001Sir Christopher Leslie George Mallaby GCMG, GCVO
   1998Mammen Matthew
   2002The Right Hon The Baroness Noakes DBE
   1998Sir William Purves CBE, DSO
   1998Jaakko Rauramo
   1999Dr Mark Wössner
   2001 Each Founders Share Company director is normally required to retire at the annual general meeting of the Founders Share Company following the fifth anniversary of his or her nomination or last renomination and will be
eligible for renomination (unless he or she has reached the age of 75).




Except as described above, to the best of Reuters Groups knowledge, the
company is not directly or indirectly owned or controlled by another corporation,
by any foreign government or by any other natural or legal person, severally
or jointly, and currently there are no arrangements that may, at a subsequent
date, result in a change in control of the company. Related party transactionsGeneral.Related
party transactions are principally with Radianz, Factiva, TSI and Instinet Group.
During 2003 and in accordance with inter-company agreements, Radianz provided
the Group with network services, totalling £306 million (see Material contracts on pages 87-88). Also during the year, Factiva provided picture archiving facilities, incorporation of its services in Reuters
products and the internal use of its information product, for a total cost of £7 million. Reuters Group provided both companies with technical and administrative support services of £82 million and £47 million respectively. In
addition, Reuters Group purchased £16 million of services from TSI. Reuters has entered into arrangements with many of its subsidiary undertakings,
joint ventures and associates in the normal course of business on commercial
terms. Reuters Group provided financial information services to many of the companies
with which it shares a common director. These services
totalled £11 million during 2003. It also purchased services totalling £24
million. All the above services were in the normal course of business and charged at commercial
rates. Only in the case of the transactions with Radianz and Factiva, described
above, and TSI, described below, were any of the amounts involved material to
either party. These services are ongoing and continued at historical levels to
the date of this report. Under the terms of the agreement with Dow Jones & Co. relating to the formation
of the Factiva joint venture, Reuters agreed to invest US$20 million in cash
in the venture over a period of five years. This element of the agreement is
evidenced by an interest-free promissory note. At 31 December 2003 the balance
outstanding under the note was US$2 million. Arrangements with TSIReuters owns the underlying intellectual property
and technology that was in existence at 31 December 1996 and that is incorporated
into many of TSIs products. Reuters licenses this technology to TSI pursuant
to a licence agreement. TSI owns all technology and related intellectual property
rights independently developed by TSI since 1 January 1997, including enhancements
and improvements to the licenced technology, which TSI itself licenses to Reuters
pursuant to the licence agreement. Through the third quarter of 2003, Reuters had a licence, distribution and maintenance
agreement with TSI pursuant to which Reuters was required to pay TSI certain
minimum distribution fees related to sales of
TSIs products to financial services market customers. Under this agreement,
Reuters obligations with respect to the minimum distribution fees were to expire
at the end of the calendar year 2003, and TSI was restricted until May 2004 from
selling its products and providing consulting services directly to companies
in the financial services market, except in limited circumstances, if Reuters
continued to pay the minimum distribution fees until that date. In October 2003,
Reuters entered into a revised commercial agreement with TSI. Pursuant to the
revised agreement, TSI has the right to market and sell its products to customers
in the financial services market, except that TSI will not be able to market
or sell risk management applications or market data systems for financial services
companies or to sell to financial services customers through four specified resellers
until May 2008. Reuters will continue to have the right to use TSI technology
internally and embedded within its products, and TSI will provide certain fee-based
support services to Reuters. The agreement provides that Reuters and TSI will
work together to migrate Reuters existing customers maintenance contracts
to TSI, and that Reuters will phase out its role as a general reseller of TSI
products by March 2005. Until its reseller rights are phased out, Reuters will
continue to make quarterly payments of US$5 million to TSI, subject to reduction
based on TSIs direct revenues from products and support sold to financial
services customers.




|80 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 
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At the same time, Reuters and TSI entered into
  an agreement pursuant to which TSI agreed to register sales by Reuters of its
  TSI shares under the US securities laws, and to repurchase up to US$115 million
  of its shares from Reuters, upon Reuters completing a single public offering
  of at least US$100 million of TSI shares. In February 2004, Reuters completed
  a registered public offering of 69 million TSI shares for US$473 million, (£261 million) and TSI
repurchased an additional 17 million shares for US$115 million, resulting in aggregate net proceeds to Reuters, after underwriting and transaction fees, of approximately US$563 million, (£311
million). Certain arrangements with Instinet GroupRGRS.Under
agreements between Reuters and Instinet Group, Instinet Group customers gain
the ability to submit orders to Instinet Group and to receive indications of
interest from Instinet Group over the RGRS network. Instinet Group is not required
to pay for orders it receives through RGRS. The US agreement (covering global
orders submitted via a US connection) term is to 17 December 2005 subject to
annual
renewal thereafter, and is subject to termination rights if Reuters ceases to
own a majority of Instinet Groups voting stock. The UK agreement (covering global orders submitted via a UK connection) was executed on 22 December 2003. The term is
indefinite with no renewal provisions and will continue until terminated by either party on six months notice. In addition, under a development agreement Reuters develops enhancements to the
RGRS interface so that customers can better access Instinet
Groups proprietary trading functionality. The initial term runs through
to 19 September 2004 subject to annual renewal thereafter and terminable by either
party on a change of control of Instinet Group, including if Reuters ceases to
own a majority of Instinet Groups
voting stock. NewportSM.Under
an agreement with Instinet Group, Reuters has the right to provide exclusively
the real-time market data for Instinet Groups NewportSM(patent pending) program trading application.
The agreement term is to19 September 2004 subject to annual renewal
thereafter and is terminable by either party on a change of control of Instinet
Group, including
if Reuters ceases to own a majority of Instinet Groups voting
stock. Market data.Reuters
is entitled to redistribute certain proprietary equity securities data from Instinet
Group under two data distribution agreements. Under a data distribution agreement
entered into at the time of the Instinet IPO, Reuters has the limited right to
be the exclusive data vendor distributing some of Instinet Groups proprietary
equity securities data. This agreement will terminate with effect from 17 May
2004. Reuters also has the right to redistribute a broader set of proprietary
equity securities data from Instinet Group under an agreement originally entered
into with Island ECN (which was acquired by Instinet Group in September
2002). This agreement, which will continue following the termination of the exclusive
arrangement, has a term until 28 June 2004 subject to annual renewal thereafter.
Reuters is not required to make payments in connection with any such
redistribution. Preferred soft-dollar arrangement.This
agreement establishes a preferred commercial and soft-dollar arrangement for
Instinet Group customers that purchase Reuters products and services. This is
available to certain customers who are increasing their level of business with
Instinet Group, Reuters or both. Reuters compensates Instinet Groups sales personnel for new sales of Reuters products and services,
and Instinet Group will pay Reuters an annual fee for various administrative and marketing services related to training of Instinet Groups personnel. The agreement term is to 19 September 2004 subject to annual renewal thereafter and is
terminable by either party on a change of control of Instinet Group, including if Reuters ceases to own a majority of Instinet Groups
voting stock.




Patent licensing agreement.Reuters
has granted Instinet Group a patent licence permitting Instinet Group to make,
use and sell products that include a system with functionality that identifies
counterparties to a transaction and enables communication between the counterparties
to negotiate the terms of the transaction. This licence is for the life of the
patent, although it may be terminated under customary
conditions. In addition, Reuters has the right to terminate in the event that
Instinet uses the patent to create products that compete with any of Reuters
products. Reuters also has the right to terminate the licence generally if it
ceases to own a
majority of Instinet Groups voting stock, subject to Instinet retaining
some rights to the patent for products existing on or before the date of such
termination. Instinet has also agreed that if it obtains a patent for a system
with substantially similar functionality, it would grant Reuters a licence to
that patent on terms no worse than the terms of this licence. Commission sharing agreement.Instinet Group has agreed to open accounts for some institutional clients that Bridge Trading introduces to Instinet Group, and to
rebate Bridge Trading portions of the commissions these customers pay at a commercially reasonable rate. This agreement is terminable at will by either party. Triad.Under an agreement with Bridge Trading, Instinet Group has the ability to deliver indications of interest and advertised trades to its customers and
potential customers through Reuters Triad network. Instinet Group pays standard commercial rates for indications of interest and advertised trades it delivers through Triad. The current term of the agreement is through 22 July 2004, subject to
annual renewal thereafter. Global Solutions Agreement. This agreement enables Instinet Group to license software from Reuters, usually on a one-time fee basis, on a worldwide basis. Reuters
has also agreed to provide software support for the licensed products. 3 Times Square sublease.Instinet Group is subject to an agreement with Reuters to sublease 360,000 square feet of office space at 3 Times Square in New York City.
The sublease term is until 2021, with a one-time right of termination in 2011. Corporate agreement.Reuters
and Instinet Group are parties to a corporate agreement providing for, among
other things: (i) Reuters rights to nominate directors to the Instinet Group
board; (ii) consent rights by Reuters with respect to specified significant transactions
so long as Reuters beneficially owns at least 35% but less than a majority of
Instinet Groups voting stock; (iii) consent rights with
respect to Instinet Group incurring more than US$400 million net indebtedness, other than in the ordinary course of its brokerage or similar businesses, so long as Reuters holds a majority of Instinet Groups outstanding voting stock; (iv)
restrictions on Instinet Group voluntarily taking any action reducing Reuters ownership to less than 51%; and (v) restrictions on Instinet Group becoming registered as a national securities exchange, without Reuters prior consent, if such
registration would materially affect Reuters ability to exercise its voting and other rights related to its ownership of Instinet common shares, so long as Reuters beneficially owns more than 30% of Instinet Groups
voting stock. See also Material contracts on page 87.




| | Reuters Group PLC Annual Report and Form
        20-F 2003 | 81
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Information for shareholderscontinued

Radianz An officer and former director of Reuters, David Ure, participates in an all employee stock option plan operated by Radianz. Under the terms of the plan, options may be granted, at not less than fair market value, to
directors and employees of Radianz. No further options were granted to David Ure in 2003. Trading markets
The companys ordinary shares are traded on the London Stock Exchange. American Depositary Shares (ADSs), each representing six ordinary shares, are traded on the Nasdaq Stock Market. The ADSs are evidenced by
American Depositary Receipts (ADRs) issued by JPMorgan Chase Bank, as Depositary under a Deposit Agreement, dated 18 February 1998 (the Deposit Agreement), among the company, the Depositary and ADR holders. The table below sets out, for the periods indicated (i) the reported high and low sales prices for the ordinary shares based on the Daily Official List of the London Stock Exchange and (ii) the reported high and low
sales prices of the ADSs on Nasdaq. The LondonStock Exchange
    
    
    
    NasdaqPounds per share
    
    US dollars per
      ADSHigh
    
    Low
    
    High
    
    LowAnnual market prices:1999
    10.10
    
    5.17
    
    96.63
    
    51.132000
    16.20
    
    7.59
    
    153.63
    
    74.252001
    11.58
    
    5.26
    
    103.44
    
    46.002002
    7.47
    
    1.61
    
    64.36
    
    15.122003
    2.68
    
    0.96
    
    27.09
    
    9.59Quarterly market prices:2002First quarter
    7.47
    
    5.05
    
    64.36
    
    44.00Second quarter
    5.62
    
    3.44
    
    48.46
    
    31.25Third quarter
    3.55
    
    2.16
    
    33.35
    
    20.15Fourth quarter
    2.36
    
    1.61
    
    22.06
    
    15.122003First quarter
    2.04
    
    0.96
    
    19.65
    
    9.59Second quarter
    2.00
    
    1.04
    
    20.27
    
    9.92Third quarter
    2.67
    
    1.70
    
    25.06
    
    17.52Fourth quarter
    2.68
    
    2.19
    
    27.09
    
    22.47Monthly market prices:2003August
    2.67
    
    2.33
    
    25.06
    
    22.58September
    2.57
    
    2.12
    
    24.41
    
    21.66October
    2.57
    
    2.19
    
    26.34
    
    22.47November
    2.68
    
    2.46
    
    27.09
    
    25.31December
    2.57
    
    2.28
    
    26.80
    
    24.202004January
    3.25
    
    2.35
    
    35.51
    
    25.35February
    4.29
    
    3.72
    
    49.15
    
    36.30March (to 3 March)
    4.00
    
    3.90
    
    44.61
    
    43.56




Analysis of shareholders
As of 3 March 2004, there were 1,398,169,006 Reuters ordinary shares in issue, including the shares referred to below but excluding ordinary shares held by employee share ownership trusts. There were 30,979
shareholders on the ordinary share register analysed in the chart below. As of the same date, 837,444 ordinary shares
  and 28,453,997 ADSs (representing 170,723,982 ordinary shares) were held on
  the record in the US. These ordinary shares and ADSs were held by 249 record
  holders and 2,192 record holders, respectively and represented 0.06% or evidenced
  ADSs respectively, representing 12.2% respectively of the total number of ordinary
  shares outstanding. Since certain of these ordinary shares and ADSs were held
  by brokers or other nominees, the number of record holders in the US may not
  be representative of the number of beneficial holders or of where the beneficial
  holders are resident. 1
      Investment
        trusts, unit trust mutual funds
    33
      %2
      Pension funds
    26
      %3
      ADSs
    12
      %4
      Foreign banks
    5
      %5
      Insurance
        companies
    5
      %6
      Private investors
    4
      %7
      Non-profit
        organisations
    2
      %8
      Foreign governments
    1
      %9
      Corporate
        holdings
    1
      %10
      Other/below
        analysis threshold (note1)
    11
      % Note1: Includes all holdings below 100,000
  shares, except for private investors, whose holdings are analysed below this
  level.




|82 | Reuters Group PLC Annual Report
      and Form 20-F 2003 | 
|-- | -------------------------------------------------------- | 

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Dividends
  The table below sets forth the amounts of interim, final and total dividends (excluding any associated UK tax credit discussed on page 84) paid in respect of each fiscal year indicated. Pound sterling amounts per share
have been translated into US cents per ADS (each representing six ordinary shares) at the actual rates of exchange used for each of the respective payments of interim and final dividends.

|                                                                                                                                                                                                                                                                                                                                            |        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------
|Fiscal year ended 31 December                                                                                                                                                                                                                                                                                                               |        
|                                                                                                                                                                                                                                                                                                                                            |        
|                                                                                                                                                                                                                                                                                                                                            | Interim
|                                                                                                                                                                                                                                                                                                                                            |        
|Dividends in accordance with UK GAAP                                                                                                                                                                                                                                                                                                        |        
|1999                                                                                                                                                                                                                                                                                                                                        | 3.65   
|2000                                                                                                                                                                                                                                                                                                                                        | 3.65   
|2001                                                                                                                                                                                                                                                                                                                                        | 3.85   
|2002                                                                                                                                                                                                                                                                                                                                        | 3.85   
|20031                                                                                                                                                                                                                                                                                                                                       | 3.85   
|                                                                                                                                                                                                                                                                                                                                            |        
|1 The
      final dividend in respect of 2003 is payable on 29 April 2004 to holders
          of ordinary shares on the register at 12 March 2004 and on 6 May 2004
          to
      holders of ADSs on the record at 12 March 2004 and will be converted into
           US dollars from sterling at the rate prevailing on 1 May 2004. |        
|See page 27 for a discussion
      of the Groups dividend policy.                                                                                                                                                                                                                                                                          |        



Memorandum and
    Articles of Association The following description summarises
    certain material rights of holders of the companys ordinary shares of
    25 pence each and material provisions of the companys Memorandum and
    Articles of Association (the Articles), the Memorandum and Articles of Association
    of Reuters Founders Share Company Limited (the Founders Share Company) and
    English law. The following description
    is a summary only and is qualified in its entirety by reference to the Articles
    (which have been filed with the SEC and Companies House) and the Companies
    Act. The summary that follows applies to both the current Articles and proposed
    new Articles of the company except the references to treasury shares which
    will only become applicable and relevant if shareholders approve the new Articles
    at the forthcoming annual general meeting. All of the outstanding ordinary shares are fully paid. Accordingly, no further contribution of capital may be required from the holders of such shares by Reuters. In this description, the term holder refers to the person registered in the register of members as the holder of the relevant share and the term beneficial owner refers to a person other than
the holder who has a beneficial interest in the relevant share. JPMorgan Chase Bank, which acts as Depositary under the Deposit Agreement relating to the American Depositary Shares, or ADSs, is the holder of the ordinary shares represented by the
outstanding ADSs.




General
Reuters Group PLC is incorporated under that name and is registered in England and Wales with registered number 3296375. Its objects are set out in the fourth clause of its Memorandum of Association and cover a wide
range of activities, including the following: 
      collecting information and
        supplying news and information servicesand products;
      acquiring and operating wireless
        installations, satellites and other meansof communication;
      utilising the Groups
        communications capabilities to provide variousfinancial and securities markets services; and
      carrying on
        any other business supplemental to the foregoingor capable of enhancing the Groups profitability or capitalisingon the Groups expertise. The Memorandum of Association provides a broad
  range of corporate powers to effect these objectives.




| | Reuters Group PLC Annual
      Report and Form 20-F 2003 | 83
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Information for shareholderscontinued

The Reuters Trust Principles and the Founders Share CompanyThe Articles contain two sets of restrictions
relating to the ownership of Reuters shares. These restrictions are intended
to ensure continued compliance with the following principles (the Reuters Trust
Principles) set
out in the Article F.114: •
   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. For the purposes of the Reuters Trust Principles, the Articles define the term
Reuters to mean Reuters Group PLC and every subsidiary of it from time to time
supplying news services. The first set of restrictions contained in the Articles applies to persons that
become interested in 15% or more of the ordinary shares outstanding
at any time (excluding any shares held by Reuters as
treasury shares). The term interested is defined in the Articles
by reference to provisions of the Companies Act which require persons to disclose
to public companies interests in voting shares in excess of a prescribed percentage.
Subject to certain exceptions, all shares held by a person who reaches the 15%
limit will be disenfranchised and the shares exceeding the 15% limit must be
disposed of. This set of restrictions is more fully described below under Rights
and
restrictions attaching to Reuters shares  Restrictions on ownership Disenfranchisement
and disposal of excess interests.




Second, the companys share capital includes the Founders Share, which is
held by the Founders Share Company, a company limited by guarantee consisting
of individuals, referred to as the Reuters Trustees, who constitute both its
members and directors. The Founders Share empowers the Founders Share Company
to cast such number of votes as will pass any resolution supported by and defeat
any resolution opposed by, the Founders Share Company if it believes that any
person or persons have obtained, or are seeking to obtain, control of Reuters
Group. Control for these purposes is defined as the ability to control the exercise

of 30% or more of the votes that may be cast on a poll at general meetings. Under
the Articles, the special rights attaching to the Founders Share may not be varied
or abrogated in any respect without the prior written consent of the Founders
Share Company. The rights attaching to the Founders Share are described in more
detail below under Rights and restrictions attaching shares  Voting
rights  Rights
conferred by Founders Share. The restrictions on interests in ordinary shares and the extraordinary voting
rights of the Founders Share may be characterised as anti-takeover provisions
to the extent they may have the effect of preventing a bid for control of Reuters
Group. Tender offers or other non-market acquisitions of shares are usually made
at prices above the prevailing market price of a companys shares. Acquisitions
of shares by persons attempting to acquire control through market purchases may
support the price of shares at market levels higher than otherwise would be the
case. The restrictions and extraordinary voting rights summarised in this section
may be expected to preclude such offers. DirectorsThe companys Articles provide for a board
of directors consisting of not fewer than five nor more than 15 directors. The
Articles require that, in performing their duties, the directors have due regard
for the Reuters Trust Principles insofar as, by the proper exercise of their
powers and in accordance with their other duties as directors, the directors
may do so. The Articles contain provisions that require the board of directors to include
at least five non-executive directors before a new executive director can be
appointed. Under the Articles, a director may not vote in respect of any contract, arrangement
or proposal in which the director, or any person connected with the director,
has any material interest other than by virtue of
the
directors interests in securities of, or otherwise in or through, the company.
This is subject to certain exceptions relating to proposals (a) giving the director
any guarantee, security or indemnity in respect of obligations incurred at the
request of or for the benefit of Reuters Group, (b) giving any guarantee, security
or indemnity to a third party in respect of obligations of Reuters Group for
which the director has assumed responsibility under an indemnity or guarantee,
(c) relating to an offer of securities of Reuters Group in which the director
may be entitled to participate or will be interested as an underwriter, (d) concerning
any other company in which the director is beneficially interested in less than
1% of the issued shares of any class of the company or the voting rights available
to its shareholders, (e) relating to the adoption, modification or operation
of any employee benefits plan which will provide the director with the same benefits
as other employees and (f) relating to any liability insurance that Reuters is
empowered to purchase for its directors or employees in respect of actions undertaken
as
directors or officers of Reuters Group.




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        20-F 2003 | 

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The directors are empowered to exercise all
  the powers of Reuters Group to borrow money, subject to the limitation that
  the aggregate principal amount outstanding in respect of monies borrowed by
  the Reuters Group shall not exceed a sum equal to two and a half times the
  companys share capital and aggregate reserves, calculated in the manner described in the Articles and £5,000 million, unless sanctioned by an ordinary resolution of the
companys shareholders. At each annual general meeting of Reuters shareholders at least one-third of
the directors (or, if their number is not a multiple of three, the number nearest
to but not greater than one-third) shall retire from office by rotation. The
directors to retire by rotation at the annual general meeting include any director
who is due to retire at the meeting by reason of age. A retiring director shall
be eligible for re-election. For additional information
see the
Directors report and Corporate governance which appear on pages 11 and
14. Directors are not required to hold shares in order to qualify as a director.
A director not holding any shares may nevertheless attend and speak at general
meetings of the company. Rights and restrictions attaching to shares 
DividendsHolders of ordinary shares are entitled to participate
in the payment of dividends pro rata to their holdings. The Founders Share is
not entitled to participate in the payment of dividends nor will any dividend
be paid on any shares held by Reuters in treasury. The Board may propose and
pay interim dividends and recommend a final dividend, in respect of any accounting
period out of the profits available for distribution under English law. A final
dividend may be declared by the shareholders in general meeting by ordinary resolution,
but no dividend may be declared in excess of the amount recommended by the Board. The company may allot ordinary shares in lieu of cash dividends, subject to shareholder
approval at the time the relevant dividend is declared. In addition, the company
may declare and pay equivalent dividends to shareholders outside the United Kingdom
in local currencies and pay such dividends to the Depositary for value on the
payment date. Voting rightsRights conferred by ordinary
shares.Voting at a general meeting of shareholders is by show of hands unless, before or on making known the result, a poll is
demanded in accordance with the Articles. If voting is by show of hands, each holder of ordinary shares who is present in person has one vote. On a poll, every holder of ordinary shares who is present in person or by proxy has one vote for every
ordinary share held. Voting rights attaching to any shares held in treasury by Reuters will not be
exercisable. Holders of a substantial number of ordinary shares may be disenfranchised under
the circumstances described under Restrictions on ownership below.




Rights conferred by Founders Share.The Founders Share confers upon the Founders Share Company the right to cast such number of votes as are necessary to defeat any
resolution which would vary or abrogate the rights of the Founders Share. The Articles provide that the alteration of specified articles relating to the Founders Share and the Reuters Trust Principles are deemed to constitute a variation of the
rights of the Founders Share. In addition, any resolution proposing the winding up of Reuters Group voluntarily, by the Court, or any reconstruction of Reuters Group, or any resolution which would attach to any share voting rights not identical in
all respects with those of the ordinary shares, is deemed to be a variation of the rights of the Founders Share. Additionally, if there are, in the opinion of the Founders Share Company, reasonable
grounds for believing that any person and his associates have obtained or are
attempting to obtain, directly or indirectly, control of Reuters Group, the Founders
Share Company is entitled in its absolute discretion to serve Reuters with a
written notice (a Founders Share Control Notice) to that effect. Control is defined
for these purposes as the ability to control the exercise of 30% or more of the
votes which may be cast on a poll at a general meeting. At all times after the
service of a Founders Share Control Notice and pending its rescission, the Founders
Share confers upon the Founders Share Company the right to cast on a poll such
number of votes as are necessary to ensure the effective passing of any resolution
in favour of which it votes and to ensure the defeat of any resolution against
which it votes. The Articles provide that the opinion of the Founders Share Company
in respect of the service or rescission of a Founders Share Control Notice shall
be final and binding and may not be challenged on any grounds whatsoever. The Founders Share Company is entitled at any time to serve Reuters with a written
request for an extraordinary general meeting and the directors are obliged to
comply with such request. If they do not comply, the Founders Share Company is
entitled to convene an extraordinary general meeting. If a Founders Share Control
Notice has been served, however, the Founders Share Company can convene an extraordinary
general meeting without first requesting that the
directors do so. One quarter of the Reuters Trustees present at the relevant
Trustees meeting can bind all the Founders Share Company directors to exercise
the voting rights attaching to the Founders Share so as to defeat a resolution
that would be deemed to be a variation of the rights attached to the Founders
Share. However, the vote of a majority of the Reuters Trustees (the chairman
of the Founders Share Company having a casting vote in the event of equality
of votes) is required to determine whether a Founders Share Control Notice should
be served and, if so, the manner in which the voting rights attaching to the
Founders Share shall be exercised (excluding the vote of any Reuters Trustee
who is associated with or materially financially interested in the person attempting
to obtain control of Reuters). Restrictions on ownershipOrdinary shares.Under
the Articles, a person is interested in shares if, among other things, he is interested directly, or through his family or one or
more companies, or through an interest in association with others pursuant to an agreement or understanding, or through a trust or if he controls the voting rights of others. The definition of interest in shares in
the Articles is made by reference, with specified variations, to certain provisions
of the Companies Act.




| |                                                            |   
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| | Reuters Group PLC Annual Report and Form
        20-F 2003 | 85



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Information for shareholderscontinued



Disclosure of interests in ordinary shares.The
  Articles provide for the disclosure of interests in Reuters ordinary shares
  by reference to the Companies Act provisions mentioned above, with specified
  variations. Under these provisions as currently in force, if a person acquires
  an interest in voting shares of a public company amounting to 10% or more of the voting shares of any class, or if
he increases or reduces such holding by at least 1% or if he ceases to have such holding, he is obliged to notify the company within two days of the day on which he acquired 10% or any such change in his interest took place. Further, if his interest
is a material interest the 10% referred to above is reduced to 3%. The Articles provide for disenfranchisement of shares which are the subject of
a notice under Section 212 of the Companies Act (which allows a company to require
disclosure of certain details concerning ownership of its shares) if the person
served with the notice is in default in answering it. The Articles also provide
for the imposition of restrictions on transferability of the shares concerned
and on the right to receive dividends if such shares represent at least 0.25%
of the class concerned. Such restrictions cannot, however, be imposed until the
expiry of 14 days after the date of the Section 212 notice. Any such restrictions
cease if the shares concerned are sold pursuant to a takeover offer or to an
unconnected third party or through the London Stock Exchange. The restrictions
on transferability only apply to certificated shares. Where a holder of uncertificated
shares is in default in answering a Section 212 notice, the Articles provide
that the Founders Share Company may require the Groups directors to apply
to the Court for such order as may be appropriate. Shares held by Reuters in treasury are disregarded for the purposes of calculating
a persons percentage interest when determining whether that person is obliged
to give notice of an interest in shares to Reuters. Disenfranchisement and disposals of excess interests.Subject
to certain exceptions described below, certain restrictions apply to persons
that become interested (as defined in the Articles) in 15% or more of the ordinary shares. If any person becomes interested in 15% or more of the outstanding shares (excluding any shares held by Reuters as treasury shares) (the Relevant
Shares), the directors are required to serve a Restriction Notice on that
person, on any other person known to the directors to have an interest in the
Relevant Shares and, if different, on the registered holder of the Relevant Shares.
While a Restriction Notice in respect of Relevant Shares is in force, a registered
holder of the Relevant Shares is not entitled to attend or vote, either in person
or by proxy, at any general meeting or at any meeting of the holders of any class
of Reuters
shares. In addition, a Restriction Notice will require such person to dispose
of any Relevant Shares exceeding the 15% limit and supply evidence to the company
that such disposal has occurred within 21 days or such longer period as the directors
consider reasonable. If such disposition is not made within the specified period,
the directors must as far as they are able, dispose of any shares exceeding the
15% limit. Under the Articles, any belief, resolution, decision or action of
the
directors held, made or taken pursuant to any of the provisions concerning restrictions
on ownership shall be conclusive, final and binding on all persons concerned
and may not be challenged on any grounds whatsoever. The restrictions are subject to certain modifications where a person becomes
interested in 15% or more of the issued shares of any class by reason of a rights
issue or an underwriting in the ordinary course of its
business.




The Founders Share.Ownership of the Founders Share is restricted to the Founders Share Company. Under its Memorandum of Association, the Founders Share Company is
not permitted, directly or indirectly, to dispose of the Founders Share or of any interest therein, or to grant any rights in respect of the Founders Share or any interest therein. Treasury Shares.Subject
to obtaining the necessary shareholder approval, Reuters may acquire and thereafter
hold up to 10% of its issued listed share capital in treasury. Any such acquisition
must be financed from the distributable profits of Reuters. Subject to certain
limited exceptions, the rights attaching to shares while held in treasury will
be suspended. Treasury shares may only be subsequently
disposed of by Reuters by way of cash sale, transfer for the purposes of or pursuant
to an employees share scheme or cancellation. Pre-emptive rights,
    new issues of shares, sale of treasury shares and repurchase of sharesHolders of ordinary shares have no
    pre-emptive rights under the Articles. However, the ability of the directors
    to cause the company to issue shares, securities convertible into shares
    or rights to shares, or to sell treasury shares, otherwise than pursuant
    to an employee share scheme, is restricted. Under the Companies Act, the directors are, with certain exceptions, unable to
allot any equity securities without express authorisation, which may be contained
in the Articles or given by its shareholders in general meeting, but which in
either event cannot last for more than five years. The Companies Act imposes
further restrictions on the issue of equity securities for cash or sale of treasury
shares for cash other than by offering them first to existing shareholders unless
the statutory requirement is displaced or modified by the shareholders in general
meeting or under the companys Articles. At Reuters annual general meeting to be held on 22 April 2004, a resolution will
be proposed to authorise the directors to allot relevant securities, as defined
in the Companies Act, including any equity securities, up to an aggregate nominal
amount of £107,400,000 until the earlier to occur of the annual general
meeting in 2005 or 22 July 2005. A resolution will also be proposed to authorise
equity securities as defined in the Companies Act to be issued within this limit
by way of a rights offer, or otherwise pro rata to existing shareholders, but
other issues of equity securities, except for shares issued pursuant to employee
share schemes, will be limited to an aggregate of £17,000,000 in nominal
value. Subject to applicable provisions of English law, the company may purchase its
ordinary shares. Currently, it has general authority to repurchase up to 143,252,325
ordinary shares at prices ranging from 25 pence and not more than 5% above the
average of the middle market quotations taken from the Daily Official List of
the London Stock Exchange for the five business days before the purchase is made.
At the Reuters annual general meeting on 22 April 2004, a resolution will be
proposed to increase this authority to 143,254,000 ordinary shares. Reuters undertakes
that the authority to purchase its own shares will only be exercised if to do
so would result in an increase in earnings per share and is in the best interests
of its shareholders.


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          Report and Form 20-F 2003 | 

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Rights in a winding upIf Reuters Group PLC is wound up, the liquidator
may, with the authority of an extraordinary resolution, divide among the holders
of ordinary shares and the Founders Share, pro rata to their holdings, Reuters
assets (after satisfaction of liabilities to creditors), provided, however, that
the
Founders Share Company may receive up to £1 and no more. Variation of rights and alteration of share capitalIf, at any time, the companys share capital
is divided into different classes of shares, the rights attached to any class
may be varied, subject to the provisions of the Companies Act, with the consent
in writing of holders of three-quarters in value of the shares of that class
or upon the adoption of an extraordinary resolution passed at a separate meeting
of the holders of the shares of the class. At every such separate meeting, all
of the provisions of the Articles relating to proceedings at a general meeting
apply, except that the quorum is to be the number of persons (which must be two
or more) who hold or represent by proxy not less than one-third in nominal value
of the issued
shares of the
class. The company can increase its share capital
      by ordinary resolution in conformity with the provisions of the Companies
      Act. However, new shares cannot have voting rights, which are not identical
      to those of ordinary shares without the prior written consent of the Founders
      Share Company.Furthermore, the
      company may issue shares with preferred and other special rights or restrictions,
      provided that the prior written consent of the Founders Share Company has
      been sought for issuing any shares with rights not identical to those of
      ordinary shares. The company can consolidate, divide and cancel any of
      its shares (other than the Founders Share) by extraordinary resolution
    and can reduce its share capital (other than the Founders Share). Annual general meetings and extraordinary general meetingsAnnual general meetings must be convened upon
advance written notice of 21 days. An extraordinary general meeting must be convened
upon advance written notice of 21 days for the passing of a special resolution
and 14 days for any other resolution, depending on the nature of the business
to be transacted. The notice must specify the nature of the business to be transacted
if it is other than routine business or if an extraordinary or a special resolution
is proposed. The notice may also specify a time, not more than 48 hours prior
to
the time fixed for the meeting, by which a person must be entered on the companys
register in order to have the right to attend and vote at the meeting. Limitations on voting and shareholdingThere are no limitations imposed by English
law or the
companys Articles on the right of non-residents or foreign persons to hold
or vote ordinary shares or ADSs, other than the limitations that would generally
apply to all of Reuters shareholders.




Material contracts
Instinet Group/Island merger agreementIn June 2002 Instinet Group entered into a merger
agreement with Island ECN. The agreement provided for Instinet Group to acquire
Island ECN for an aggregate of approximately 86 million shares of, and options
and warrants to acquire shares of, Instinet Group common stock. The agreement
also contemplated the payment of a US$1.00 per share dividend by Instinet Group
to its stockholders prior to the completion of the merger. In connection with
the merger agreement, Reuters entered into various stockholder and corporate
agreements with Instinet Group and certain stockholders of Island providing for,
among other things, director nomination rights and voting, restrictions on purchases,
sales and issuances of Instinet Group shares, approval rights regarding certain
transactions, and registration rights. Pursuant to these provisions, Reuters
was restricted from transferring its Instinet Group shares until September 2003,
and, with certain exceptions, is limited in acquiring additional shares of Instinet
Group without
the consent of Instinet Groups Board until September 2005, subject to earlier
termination in some circumstances. Savvis network services agreementIn connection with the Bridge acquisition in
2001, Reuters
entered into a binding term sheet with Savvis, Bridges network service
provider, under which Savvis agreed to provide internet protocol network services,
internet access and co-location services (the Services) necessary to continue
network services for the Bridge business and customers Reuters was acquiring.
The term sheet was formalised by an agreement entered into by the parties in
September 2001, which has subsequently been amended at various times. The agreement,
which has a five-year term, requires Reuters to purchase a minimum of US$92 million
(£56 million) worth of Services in the first year of the agreement, US$86
million
(£53 million) worth of Services in the second year, US$79 million (£45
million) worth of Services in the third year, US$43 million (£26 million)
worth of Services in the fourth year and US$29 million (£16 million) worth
of Services in the fifth year, subject to adjustment and reduction under certain
circumstances, including reductions (applied to later year minimums first) representing
the amount of payments made by Bridge to Savvis for Services while the Bridge
acquisition was pending. If Savvis does not meet certain required quality of
service levels, Reuters is entitled to credits and, in the event of a material
breach of such quality of service levels, Reuters is entitled to terminate the
agreement. Radianz  joint venture with
EquantIn 2000 Reuters established with Equant a joint
venture company (Radianz) to offer secure internet protocol network services
to the financial services industry. Reuters has transferred substantially all
of its telecommunications network assets into Radianz and now owns 51% of Radianz.
To secure the long-term availability of the Radianz network, Reuters entered
into a Network Services Agreement (the NSA) with Radianz in May 2000. The NSA
has an initial term ending on 1 July 2005 and thereafter remains in full force
and effect for successive one-year periods unless terminated by either party.
Among other things, either party may terminate the NSA after the end of the initial
term by one party
giving not less than six months notice which expires at the end of the
initial five-year period or any subsequent renewal year. On termination, Radianz
has agreed to provide reasonable assistance to Reuters to ensure that Reuters
can migrate
the services from Radianz to a third-party company.


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Information for shareholderscontinued

The standards for performance of services provided have been agreed between Reuters and Radianz. In addition, the NSA sets out the processes and procedures for managing the contract going forward. In particular the NSA
sets out details for monthly performance reviews to review capacity service levels, operational changes and orders, introduction of new services and ongoing requirements by Reuters. There is also provision for quarterly meetings to discuss the
contract and its operation and technical matters relating to the business continuity plans. Reuters has generally agreed to continue to use Radianz for its network services
  in support of global and strategic products during the term of the agreement.
  Detailed provisions in respect of rates and charges have been agreed between
  Radianz and Reuters which are believed to be competitive with the cost of reasonably
  comparable services. Radianz has agreed that it shall provide the network services
  to Reuters on terms which are no less favourable than reasonably comparable
  services offered to any other customer of Radianz, and Reuters has agreed to
  spend an agreed amount with Radianz annually. MultexIn February 2003 Reuters and Multex.com,
Inc. entered into a merger agreement providing for the acquisition by Reuters
of all of the outstanding equity of Multex at US$7.35 per share (other than the
6% interest already held by Reuters). The acquisition was completed in late March
2003. Certain Multex outstanding employee options with an exercise price less
than the US$7.35 per share acquisition price and which were scheduled to vest
through 2004 were cancelled upon completion of the acquisition. Holders of the
options instead became entitled to receive, on the date that their options would
have vested, ordinary shares of the company with a value, calculated as of the
date of completion, equal to the difference between the acquisition price and
the exercise price of the options. If the value of the ordinary shares has declined
between the date of completion and the date received by the applicable employees,
the shortfall will be paid to the applicable employees by Reuters in cash (the
maximum remaining cash exposure as of 31 December 2003 was approximately US$3.7
million (£2.3 million)). The net cash cost to Reuters of acquiring Multex,
other than the 6% interest already held by Reuters, was approximately US$207
million (£131 million) on a fully diluted basis, net of exercise prices
of all outstanding options and warrants with an exercise price below the acquisition
price including the options described above. This also takes account of estimated
transaction costs and cash which became available to Reuters as a result of the
acquisition.




Moneyline Transitional
    Services AgreementReuters is party to a Transitional Services
    Agreement (TSA) with Moneyline Telerate Holdings and certain of its subsidiaries
    (Moneyline) dated as of 2 June 2003. The TSA arises from Reuters and Moneylines
    respective acquisitions of certain assets out of bankruptcy from Bridge Information
    Systems, Inc. in late 2001 and formalises a term sheet the parties had been
    operating under since that time. Because the businesses Moneyline acquired
     the global Telerate business and certain businesses of Bridge in Europe
    and Asia  were dependent on the software, systems and support capabilities
    acquired by Reuters and because some of the operations acquired by Reuters
    in Europe and Asia were to a lesser extent dependent on the assets and operations
    acquired by Moneyline, the parties entered into the TSA pursuant to which
    each agreed to provide the other with certain software and/or services for
    a transitional period. Under the TSA, Moneyline has a limited right to sublicence to its own clients
  certain proprietary software acquired by Reuters from Bridge. Reuters also
  provides Moneyline with a variety of services  including data management,
  central system software development, technical operations and back office support  associated
  with management of the Bridge Data Network acquired by Reuters. Moneyline provides
  Reuters with facilities and maintenance for equipment supporting the data collection
  function of the Bridge Data Network in Europe and Asia, among other services. For the term of the TSA, Moneyline is restricted in its ability to sell equities
  information products in North America where Reuters acquired the business of
  Bridge. The term of the TSA commenced on 18 October 2001 and runs to 18 October
  2005, assuming Moneyline exercises its option to extend the TSA for a fourth
  year. Each party has a right to terminate services it is receiving under the
  TSA prior to the TSAs expiration. In addition, there is an obligation
  for each party to cancel services it is receiving if it is able to provide
  those services for itself or to contract for the services with a third party.
  Each party has a right to terminate the TSA in the event of a material breach
  by the other
party. For a discussion of other material contracts, see Related party transactions on
  pages 80-81 and Financing needs and capital structure on page 37.


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Information for US shareholdersExchange controlUnder English law and the Articles,
persons who are neither residents nor nationals of the UK may freely hold, vote
and transfer their ordinary shares in the same manner as UK residents or nationals. There are currently no UK foreign exchange control restrictions on remittances
of dividends to non-resident holders of ordinary shares or on the conduct of
Reuters operations. Exchange ratesThe following table sets forth, for
the periods indicated, the average or the high and low Noon Buying Rates for
pounds sterling in US dollars
per £1. Fiscal year ended31 December
   Average*
   Month
   High
   
   Low1999
   1.62
   August 2003
   1.62
   
   1.582000
   1.52
   September 2003
   1.66
   
   1.572001
   1.44
   October 2003
   1.70
   
   1.662002
   1.51
   November 2003
   1.72
   
   1.672003
   1.64
   December 2003
   1.78
   
   1.722004 (to 3 March)
   1.84
   January 2004
   1.85
   
   1.79February 2004
   1.90
   
   1.82 *
    The average exchange rates have been calculated
        using the Noon Buying Rates on the last trading day of each calendar
      month during the period. On 3 March 2004 the Noon Buying Rate was US$1.82 per £1. Fluctuations in the exchange rate between the pound sterling and the US dollar
will affect the US dollar amounts received by holders of the ADSs upon conversion
by the depositary of cash dividends paid in pounds sterling on the ordinary shares
and represented by the ADSs. Also, fluctuations in the exchange rate may affect
the relative market prices of the ADSs in the US and the ordinary shares in the
UK. For the effect on the Groups results of operations of fluctuations in the
exchange rates between the pound sterling and the other major currencies (including
the US dollar) in which revenues are received and expenditures are made by us,
see Operating and financial review on page 27. Taxation information for US shareholdersThe following discussion of taxation
is intended only as a descriptive summary and does not purport to be a complete
technical analysis or listing of all potential tax effects relevant to a decision
to acquire the
companys ordinary shares or ADSs. The following summaries of UK tax laws
are based on current tax laws, current UK Inland Revenue published practice and
the terms of the UK/US double tax treaty which came into effect on 31 March 2003
(the Treaty), as appropriate, all of which are subject to a change at any time,
possibly with retrospective effect.




1 UK taxation consequencesUK taxation of
dividends  refund of tax creditsUnder current UK taxation legislation,
no withholding tax will be deducted from dividends paid by the company. A shareholder
that is a company resident for UK tax purposes in the UK will not generally be
taxable on any
dividend it receives from the company. A shareholder who is an individual resident for tax purposes in the UK is entitled
to a tax credit on cash dividends paid by the company on ordinary shares equal
to one-ninth of the cash dividend or 10% of the dividend plus the tax credit.
Such shareholders will be taxable on the total of the dividend and the related
tax credit, which will be regarded as the top slice of the shareholders
income. The tax credit may be set off against a UK resident individual
shareholders total income tax liability, but no cash refund will be available,
save where ordinary shares are held in Personal Equity Plans and Individual Savings
Accounts, in which case, the tax credit on dividends received into such accounts
before 6 April 2004 will generally be repayable. A US holder (as defined under US taxation consequences) will not
receive any payment from the UK Inland Revenue in respect of a dividend from
the company nor will have any further UK tax to pay in respect of that dividend
either. UK taxation of capital gainsUnder the Treaty, capital gains on
disposals of ordinary shares or ADRs will generally be subject to tax only in
the jurisdiction of residence of the relevant holder as determined for the purposes
of the Treaty, unless the ordinary shares or ADSs are held as part of the business
property of a permanent establishment of that holder in the other jurisdiction
in which case such capital gains may be subject to tax in both jurisdictions. The Treaty also contains an anti-avoidance rule which will be relevant to individuals
who are residents of either the UK or the US and who have been resident of the
other jurisdiction (the US or the UK, as the case may be) at any time during
the six years immediately preceding the relevant disposal of shares or ADSs.
The New Treaty provides that, in such circumstances, capital gains arising from
the disposal may be subject to tax not only in the jurisdiction of which the
holder is resident at the time of the disposal, but also in that other jurisdiction. UK inheritance taxAn individual who is domiciled in
the US for the purposes of the UK/US estate and gift tax convention and who is
not a national of the UK for the purposes of that convention, generally will
not be subject to UK inheritance tax in respect of ordinary shares or ADSs on
the individuals death, or on a transfer of ordinary shares or ADSs during
the individuals lifetime. However, the individual will be subject to UK
inheritance tax if the ordinary shares or ADSs are part of the business property
of a permanent establishment of the individual in the UK, or pertain to a fixed
base in the UK of an individual who performs independent personal services. Special
rules apply to ordinary shares or ADSs held in trust. In the exceptional case,
where the disposition is subject both to UK inheritance tax and to US federal
gift or estate tax, the convention generally provides for any tax paid in the
UK to be credited against tax liable to be paid in the US, or for tax paid in
the US to be credited against the tax payable in the UK, based on priority rules
set out in the convention.


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Information for shareholderscontinued



UK stamp duty and stamp duty reserve taxNo UK stamp duty or interest thereon need be paid on the transfer of an ADS, or written agreement to transfer an ADS, provided that the instrument of transfer, or written agreement, is executed and remains outside the
  UK and does not relate to any matter or thing done, or to be done, in the UK, nor will UK stamp duty reserve tax (SDRT) be imposed in respect of any agreement for such a transfer of ADSs. UK stamp duty will generally be charged on conveyances
or transfers of ordinary shares, at the rate of 0.5% of the amount or value of
the consideration, if any, for the transfer (rounded up to the next multiple
of £5). SDRT will be imposed, at the rate of 0.5% of the amount
or value of the consideration for the transfer, if an agreement is made for the
transfer of ordinary shares, unless an instrument of transfer of the ordinary
shares in favour of the purchaser, or its nominee, is executed and duly stamped
within six years of the day that the agreement is made (or, in a case where the
agreement is conditional, the day that the condition is satisfied) in which case,
any
SDRT paid will be repaid (together with interest where the SDRT is not less than £25)
on a claim for repayment or, to the extent not paid, the charge to SDRT will
be cancelled. SDRT is in general payable by the purchaser of ordinary shares,
but there are regulations which provide for collection from other persons in
certain circumstances, including from CREST, where the relevant ordinary shares
are held in CREST. UK stamp duty or SDRT will generally be imposed on any instrument transferring ordinary shares to a person, or to a nominee or agent for such a person, whose business is or includes issuing depositary receipts (such as
the ADSs) for relevant securities. In these circumstances, stamp duty or SDRT will be charged at the rate of approximately 1.5% of the amount or value of the consideration for conveyance or transfer on sale or, otherwise, 1.5% of the value of the
security transferred at the date the instrument is executed. A transfer into CREST will not be subject to this charge. A transfer of ordinary shares from a depositary, or
  its agent or nominee, to a transferee, which results in the cancellation of
  the ADS,
which cancellation is liable to stamp duty as a conveyance or transfer on
sale because it completes a sale of such ordinary shares, will be liable to ad valorem stamp duty, at the rate of 0.5% of the amount or value of the consideration, if any, for the transfer. A transfer of ordinary shares from a depositary, or
its agent or nominee, to the ADS holder, which results in cancellation of the ADS but where there is no transfer of beneficial ownership, is not liable to duty as a conveyance or transfer on sale, but will be liable to a fixed stamp duty
of £5. 2 US taxation consequencesThe following is a summary of the material US federal income tax consequences of the ownership of ordinary shares or ADSs by a US holder that holds the ordinary shares or ADSs as capital assets and does not take into
account the specific circumstances of any particular investors, some of which may be subject to special rules including US holders who hold directly or indirectly 10% or more of the voting stock. In addition, the summary is based in part upon the
representations of the Depositary and the assumption that each obligation in the Deposit Agreement and any related agreement will be performed in accordance with its terms. For purposes of this discussion, a US holder is
any beneficial owner of ordinary shares or ADSs that is (i) a citizen or resident
for tax purposes of the US, (ii) a corporation organised under the laws of the
US or any US State, (iii) an estate the income of which is subject to US federal
income tax without regard to its source, or (iv) a trust if a court within the
US is able to exercise primary supervision over the administration of the trust
and
one or more US persons have the authority to control all substantial decisions
of the trust.


US taxation of dividendsThe dividend paid by the company generally will be included in the gross income of a US holder as ordinary income for US federal income tax purposes. For dividends paid prior to 1 May 2003 (or 1 May 2004 if, as
described below, the US holder has elected to extend the prior Treaty), the amount of dividend includable in income of a US holder includes any UK tax withheld from the dividend payment and amounts in respect of the UK tax credit. Such dividend will
not be eligible for the dividends-received deduction generally allowed to US corporations with respect to dividends from other US corporations. The amount of the dividend distribution includable in income of a US holder will be the US dollar value
of the pound sterling payments made, determined at the spot pound sterling/US dollar rate on the date such dividend distribution is includable in the income of the US holder, whether or not the payment is in fact converted into US dollars. Under recently enacted US federal income
    tax legislation,
an individual US holders qualified dividend income is subject
to tax at a reduced rate of tax of 15%. For this purpose, qualified dividend
 income includes dividends from foreign corporations if (a) the stock of such
corporation with respect to which such dividend is paid is readily tradeable
on an established securities market in the United States, including Nasdaq, or
(b) such
corporation is eligible for the benefits of a comprehensive tax treaty with the
US that includes an information exchange programme and is determined to be satisfactory
to the Secretary of the Treasury. The US Secretary of the Treasury has indicated
 that the Treaty is satisfactory for this purpose. Dividends will not however
qualify for the reduced rate if such corporation is treated for the tax year
in which dividends are paid (for the prior year), as a foreign investment
company,
a foreign personal holding company, or a passive foreign investment
company for US federal income tax purposes. Based on the nature of our
operations we do not believe that we would be treated as a foreign investment
company or a foreign personal holding company. We do not believe we are a passive
foreign
investment company. See the discussion on PFIC status on page 91. Accordingly
if our beliefs are correct, dividend distributions with respect to our shares
should be
treated as qualified dividend income and, subject to the US holders satisfaction
of the holding period requirements described below, should be eligible for the
reduced 15% US federal income tax rate. A US holder will not be entitled to the
reduced rate: (a) if the US holder has not held the ordinary shares or ADSs for
at least 61 days of the 120-day period beginning on the date which is 60 days
before the ex-dividend date; or (b) to the extent the US holder is under an obligation
to
make related payments on substantially similar or related property. Any days
during which a US holder has diminished its risk of loss on the ordinary shares
or ADSs are not counted towards meeting the 61-day holding period required by
the statute. In a recent news release the IRS indicated that it intends to give
current effect to a proposed legislative change changing the aforementioned 120
day period to a 121 day period. Our dividends generally will be foreign source
passive income for US
foreign tax credit purposes. As discussed above, the UK does not currently
  apply a withholding tax on dividends under its internal laws. However, if such
  a withholding tax were introduced, the United Kingdom would be entitled, under the Treaty,
to impose a withholding tax at a rate of up to 15% on dividends paid to a US
holder. Subject to applicable limitations, a US holder who was subject to any
such withholding should be entitled to claim a deduction for withheld tax or,
subject to the
holding period requirements mentioned below, a credit for such withholding tax
against such US holders US federal income tax liability. The US foreign
tax credit limitation may be reduced to the extent that dividends are eligible
for the
reduced rate described above. A US holder who is a US person for US federal
    income tax purposes and who was eligible for benefits under the former Income
    Tax Convention (Prior Treaty) between the United States and the United Kingdom
    which entered into force in 1980 (each such holder, an eligible US holder)
    may elect to continue to apply the provisions of the Prior Treaty with respect
    to dividends paid through 30 April 2004. The Prior Treaty will also apply
    to dividends paid prior to 1 May
2003 to eligible US holders that did not elect to extend the Treaty. An eligible
    US holder electing to apply the provisions of the Prior Treaty with respect
    to our dividends will be required to apply all of the provisions of the Prior
    Treaty for an entire 
    12-month period ending on 30 April 2004 (or the UK taxable
    year ending in 2004 with respect to income, capital gains and corporation
    taxes). Under the Prior Treaty, an electing eligible US holder who is a beneficial
    owner of an ordinary
share or ADS and of any cash dividend paid with respect thereto should be entitled
    to a foreign tax credit for UK withholding tax in an amount equal to one-ninth
    of any dividend paid through 30 April 2004 which, subject to applicable
limitations,




|90 | Reuters Group PLC Annual Report and
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would be creditable against such US holders US federal income tax liability. An electing eligible US holder must include the additional UK tax credit amount in its gross income as additional dividend income.
  Thus, for example, an eligible US holder that elects the benefits of the Prior Treaty and receives an £8 dividend should be considered to have received a dividend of £8.89 (£8 dividend plus a £0.89 gross tax credit) and to
  have paid £0.89 of UK tax. An eligible US holder makes an election to apply the provisions of the Prior Treaty with respect to a dividend by indicating on Line 5 of IRS Form 8833 (Treaty Based Return Position Disclosure Under Section 6114 or
  7701(b)) and filing IRS Form 8833 with the taxpayers US federal income
  tax return for the relevant year. Pursuant to this election, the US holder will
  be treated as having paid the UK tax on the date of distribution. US holders
  may be required to satisfy certain holding period requirements with respect to
  an ordinary share or ADR in order to claim the foreign tax credit for the UK
  tax, as discussed below. US holders should consult their tax
  advisors concerning their eligibility and the procedures for claiming the UK tax credit amount under the Prior Treaty.A US holder will not be eligible to claim a foreign tax credit for the UK tax credit
  amount with respect to dividends received on the ordinary shares or ADSs: (a) if the US holder has not held the ordinary shares or ADSs for at least 16 days of the 30-day period beginning on the date which is 15 days before the ex-dividend date; or
  (b) to the extent the US holder is under an obligation to make related payments on substantially similar or related property. Any days during which a US holder has diminished its risk of loss on the ordinary shares or ADSs are not counted towards
  meeting the 16-day holding period requirement. US taxation of capital gainsUpon
a sale or other disposition of ordinary shares or ADSs, a US holder will recognise
a gain or loss for US federal income tax purposes in an amount equal to the difference
between the US dollar value of the amount
realised and the US holders tax basis (determined in US dollars) in such ordinary shares or ADSs. Generally, such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the US holders
holding period for such ordinary shares or ADSs exceeds one year. Any such gain
or loss generally will be income or loss from sources within the US for foreign
tax credit limitation purposes. Long-term capital gain of a non-corporate US
holder is generally subject to
a maximum tax rate of 15%. The deductibility of a capital loss recognised on the
  sale or exchange of ordinary shares or ADSs is subject to limitations. If the ADSs or ordinary shares are publicly
    traded, a disposition of such ADSs or ordinary shares will be considered
    to occur on
  the trade date, regardless of the US holders method of accounting.
  A US  holder that uses the cash method of accounting calculates the US dollar
  value of the proceeds received on the sale as of the date that the sale settles.
  However, a US holder that uses the accrual method of accounting is required
  to calculate the
value of the proceeds of the sale as of the trade date and, therefore,
may realise foreign currency gain or loss, unless such US holder has elected
to use the settlement date to determine its proceeds of sale for purposes of
calculating such foreign currency gain or loss. In addition, a US holder that
receives foreign currency upon the sale or exchange of the ADSs or ordinary shares
and converts the foreign currency into US dollars subsequent to receipt will
have foreign exchange
gain or loss based on any appreciation or depreciation in the value of the foreign
currency against the US dollar. Foreign exchange gain or loss which will generally
be US source ordinary income or loss. Deposits and withdrawals of ordinary shares by US holders in exchange for ADSs will not result in the realisation of a gain or loss for US federal income tax purposes.


PFIC statusIf
a foreign company is a passive foreign investment company, or PFIC, based on either an income test or an asset test, then certain distributions and gain can be allocated rateably over a US
shareholders holding period, with the effect that the amount allocated to the current taxable year and any taxable year before we became a PFIC would be taxable as ordinary income in the current year, and the amount allocated to other taxable
years would be taxed at the highest rate in effect for that year on ordinary income and the tax is subject to an interest charge at the rate applicable to deficiencies for income tax imposed to recover the deemed benefit from the deferred payment of
the tax attributable to each such year. These consequences can be avoided if a US shareholder of a PFIC makes a timely election to treat the PFIC as a qualified electing fund, or
QEF, and is provided the information by the PFIC for such election. The consequence
of the election is that the shareholder of a QEF includes in income a pro rata
share of the ordinary earnings of the QEF as ordinary income and a pro rata share
of the net capital gain of the QEF as long-term capital gain.
The company does not intend to supply a US holder with the information needed
to report income and gain pursuant to a QEF election in the event the company
is classified as PFIC. Accordingly US holders should not assume they could make
a QEF
election if we became a PFIC. Alternatively, a US holder of PFIC stock that is publicly traded can elect to mark the stock to market annually, recognising as ordinary income or loss each year an amount equal to the difference as of the close of the
taxable year between the fair market value of the PFIC stock and the adjusted basis of the PFIC stock. Losses would be allowed only to the extent of net mark-to-market gain previously included by the US holder under the election for prior taxable
years. If the mark-to-market election were made, then the rules set forth above would not apply for periods covered by the election. The company reasonably believes that it was
    not a PFIC in 2003 and does not anticipate becoming a PFIC. However, the
    tests for determining PFIC status are applied annually and it is difficult
    to make accurate  predictions of future income and assets, which are relevant
    to this determination. Accordingly, we cannot assure US holders that the
    IRS would agree with our belief, nor can the company assure US holders that
    it will not become a PFIC. US holders
are urged to consult their own tax advisors about the PFIC rules, including the
    consequences to them of making a mark-to-market election with respect to
    our ordinary shares and ADSs in the event that we qualify as a PFIC. US information reporting and
backup withholdingA US holder is generally subject to information reporting requirements with respect to dividends paid in the US on ordinary shares or ADSs and proceeds paid from the sale, exchange, redemption or other disposition of
ordinary shares or ADSs. In addition, a US holder is subject to backup withholding (currently at a rate of 28%) on dividends paid in the US on ordinary shares or ADSs and proceeds paid from the sale, exchange, redemption or other disposition of
ordinary shares or ADSs unless the US holder is a corporation, provides an IRS Form W-9 or otherwise establishes a basis for exemption. Backup withholding is not an additional tax. The amount of any backup withholding will be allowed as a credit
against a US holder with US federal income tax liability and may be refunded, provided that certain information is furnished to the IRS.




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        Report and Form 20-F 2003 | 91
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Eleven year consolidated financial summary
for the year ended 31 December



|                                   |         |   |         |    |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|---------------------------------- | ------- | - | ------- | -- | ------- | - | ------- | - | ------- | - | ------- | - | ------- | - | ------- | - | ------- | - | ------- | - | ------- | -
|                                   | 2003    |   | 2002    |    | 2001    |   | 2000    |   | 1999    |   | 1998    |   | 1997    |   | 1996    |   | 1995    |   | 1994    |   | 1993    |  
|                                   | £m      |   | £m      |    | £m      |   | £m      |   | £m      |   | £m      |   | £m      |   | £m      |   | £m      |   | £m      |   | £m      |  
|                                   |         |   |         |    |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|Results                            |         |   |         |    |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|Revenue                            | 3,197   |   | 3,575   |    | 3,885   |   | 3,592   |   | 3,125   |   | 3,032   |   | 2,882   |   | 2,914   |   | 2,703   |   | 2,309   |   | 1,874   |  
|Net interest(payable)/receivable   | (29     | ) | (20     | )  | (9      | ) | 3       |   | (4      | ) | 2       |   | 80      |   | 61      |   | 60      |   | 51      |   | 60      |  
|Profit/(loss) before tax           | 49      |   | (493    | )  | 158     |   | 657     |   | 632     |   | 580     |   | 626     |   | 652     |   | 558     |   | 510     |   | 440     |  
|Taxation                           | 22      |   | 23      |    | 107     |   | 136     |   | 196     |   | 196     |   | 236     |   | 210     |   | 185     |   | 162     |   | 140     |  
|Profit/(loss) attributable to      |         |   |         |    |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|ordinary shareholders              | 43      |   | (404    | )  | 46      |   | 521     |   | 436     |   | 384     |   | 390     |   | 442     |   | 373     |   | 347     |   | 299     |  
|                                   |         |   |         |    |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|Net assets                         |         |   |         |    |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|Fixed assets                       | 1,266   |   | 1,516   |    | 1,963   |   | 1,868   |   | 1,205   |   | 1,098   |   | 1,046   |   | 1,026   |   | 999     |   | 687     |   | 571     |  
|Net current (liabilities)/assets   | (89     | ) | (190    | )  | (134    | ) | (293    | ) | (170    | ) | (577    | ) | 790     |   | 525     |   | 387     |   | 176     |   | 151     |  
|Long-term creditors                | (425    | ) | (354    | )  | (344    | ) | (310    | ) | (284    | ) | (16     | ) | (37     | ) | (41     | ) | (135    | ) | (87     | ) | (32     | )
|Provisions                         | (271    | ) | (245    | )  | (212    | ) | (112    | ) | (88     | ) | (116    | ) | (120    | ) | (51     | ) | (39     | ) | (36     | ) | (32     | )
|                                   |         |   |         |    |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|                                   | 481     |   | 727     |    | 1,273   |   | 1,153   |   | 663     |   | 389     |   | 1,679   |   | 1,459   |   | 1,212   |   | 740     |   | 658     |  
|                                   |         |   |         |    |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|Tangible fixed assets              |         |   |         |    |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|Additions                          | 130     |   | 154     |    | 276     |   | 282     |   | 244     |   | 296     |   | 361     |   | 372     |   | 304     |   | 319     |   | 268     |  
|Depreciation                       | 193     |   | 227     |    | 246     |   | 276     |   | 310     |   | 331     |   | 312     |   | 283     |   | 250     |   | 221     |   | 204     |  
|                                   |         |   |         |    |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|Development expenditure            | 171     |   | 200     |    | 294     |   | 323     |   | 197     |   | 200     |   | 235     |   | 202     |   | 191     |   | 159     |   | 110     |  
|                                   |         |   |         |    |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|                                   |         |   |         |    |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|                                   | 2003    |   | 2002    |    | 2001    |   | 2000    |   | 1999    |   | 1998    |   | 1997    |   | 1996    |   | 1995    |   | 1994    |   | 1993    |  
|                                   |         |   |         |    |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|Ratios                             |         |   |         |    |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|Earnings/(loss) per ordinary share | 3.1     | p | (29.0   | p) | 3.3     | p | 37.1    | p | 30.9    | p | 26.7    | p | 24.0    | p | 27.3    | p | 23.2    | p | 21.7    | p | 18.0    | p
|Dividends per ordinary share       | 10.0    | p | 10.0    | p  | 10.0    | p | 16.0    | p | 14.65   | p | 14.4    | p | 13.0    | p | 11.75   | p | 9.8     | p | 8.0     | p | 6.5     | p
|Book value per ordinary share1     | 15.2    | p | 30.7    | p  | 68.2    | p | 73.7    | p | 40.5    | p | 23.3    | p | 99.9    | p | 88.3    | p | 73.7    | p | 44.7    | p | 40.6    | p
|Profit before tax as a percentage  |         |   |         |    |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|of revenue                         | 1.5     | % | (13.8   | %) | 4.1     | % | 18.3    | % | 20.2    | % | 19.1    | % | 21.7    | % | 22.4    | % | 20.6    | % | 22.1    | % | 23.5    | %
|Return on tangible fixed assets2   | 4.9     | % | (80.0   | %) | 7.8     | % | 78.3    | % | 59.1    | % | 48.2    | % | 49.0    | % | 60.0    | % | 55.2    | % | 57.6    | % | 57.2    | %
|Return on equity3                  | 13.3    | % | (58.4   | %) | 4.6     | % | 65.0    | % | 92.2    | % | 78.5    | % | 25.6    | % | 33.7    | % | 34.8    | % | 50.8    | % | 39.5    | %
|                                   |         |   |         |    |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|UK corporation tax rate            | 30      | % | 30      | %  | 30      | % | 30      | % | 30      | % | 31      | % | 32      | % | 33      | % | 33      | % | 33      | % | 33      | %
|                                   |         |   |         |    |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|                                   |         |   |         |    |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|Infrastructure                     |         |   |         |    |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|Shares issued (millions)           | 1,433   |   | 1,433   |    | 1,431   |   | 1,429   |   | 1,423   |   | 1,422   |   | 1,694   |   | 1,689   |   | 1,677   |   | 1,668   |   | 1,662   |  
|Employees                          | 16,744  |   | 17,414  |    | 19,429  |   | 18,082  |   | 16,546  |   | 16,938  |   | 16,119  |   | 15,478  |   | 14,348  |   | 13,548  |   | 11,306  |  
|User accesses                      | 427,000 |   | 493,000 |    | 592,000 |   | 558,000 |   | 520,858 |   | 482,380 |   | 429,000 |   | 362,000 |   | 327,100 |   | 296,700 |   | 227,400 |  

Notes:

1999 and 2000 have been restated following adoption of FRS 19.

1997 and 1998 have been restated to reflect changes to reporting user accesses
in 1999.

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, for post-retirement medical benefits
made in 1992.

1993 has 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.

1993 and 1994 fixed assets have been restated to reflect the effect of UITF abstract
13 issued in 1995.

|Ratios:
|-------
|       
|1      
|       
|2      
|       
|3      

|   |                                                              | 
|-- | ------------------------------------------------------------ | 
|92 | Reuters Group PLC Annual
          Report and Form 20-F 2003 | 

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Cross reference guide to Form 20-F



The information in this document that is referenced in the following table, constitutes Reuters annual report on Form 20-F for the year 2003 and shall be deemed to be filed with the Securities and Exchange Commission
for all purposes. No other information is included in the 2003 Form 20-F.

|Item |                                                       | Page         | 
|---- | ----------------------------------------------------- | ------------ | 
|     |                                                       |              | 
|1    | Identity of directors, senior management and advisers | n/a          | 
|     |                                                       |              | 
|2    | Offer statistics and expected timetable               | n/a          | 
|     |                                                       |              | 
|3    | Key information                                       |              | 
|     | Selected financial data                               | 5            | 
|     | Exchange rates                                        | 89           | 
|     | Capitalisation and indebtedness                       | n/a          | 
|     | Reasons for offer and use of proceeds                 | n/a          | 
|     | Risk factors                                          | 40-41        | 
|     |                                                       |              | 
|4    | Information on the company                            |              | 
|     | History and development of the company                | 6-10, 83     | 
|     | Business overview                                     | 6-10         | 
|     | Organisational structure                              | 9, 70        | 
|     | Property, plant and equipment                         | 10           | 
|     |                                                       |              | 
|5    | Operating and financial review and prospects          |              | 
|     | Operating results                                     | 27-39        | 
|     | Liquidity and capital resources                       | 37-39        | 
|     | Research and development, patents and licences etc    | 36-37        | 
|     | Trend information                                     | 4, 27-37     | 
|     | Off-balance sheet arrangements                        | 39           | 
|     | Tabular disclosure of contracted obligations          | 38           | 
|     |                                                       |              | 
|6    | Directors, senior management and employees            |              | 
|     | Directors and senior management                       | 12-16        | 
|     | Compensation                                          | 17-24        | 
|     | Board practices                                       | 12, 15-17    | 
|     | Employees                                             | 11, 48       | 
|     | Share ownership                                       | 18-19, 22-24 | 
|     |                                                       |              | 
|7    | Major shareholders and related party transactions     |              | 
|     | Major shareholders                                    | 80, 82       | 
|     | Related party transactions                            | 80-82, 87-88 | 
|     | Interests of experts and counsel                      | n/a          | 
|     |                                                       |              | 
|8    | Financial information                                 |              | 
|     | Consolidated accounts and other financial information | See Item 17  | 
|     | Litigation                                            | 10           | 
|     | Dividend policy                                       | 27,83        | 
|     | Significant changes                                   | 70           | 
|     |                                                       |              | 
|9    | The offer and listing                                 |              | 
|     | Offer and listing details  price history of shares   | 82           | 
|     | Plan of distribution                                  | n/a          | 
|     | Markets                                               | 82           | 
|     | Selling shareholders                                  | n/a          | 
|     | Dilution                                              | n/a          | 
|     | Expenses of the issue                                 | n/a          | 
|     |                                                       |              | 

| |                                                                |   
| | -------------------------------------------------------------- | --
| | Reuters Group PLC Annual
            Report and Form 20-F 2003 | 93

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Cross reference guide to Form 20-Fcontinued

|Item       |  |                                                                                                                                     | Page                  | 
|---------- |  | ----------------------------------------------------------------------------------------------------------------------------------- | --------------------- | 
|           |  |                                                                                                                                     |                       | 
|10         |  | Additional information                                                                                                              |                       | 
|           |  | Share capital                                                                                                                       | n/a                   | 
|           |  | Memorandum and Articles of
      Association                                                                                        | 83-87                 | 
|           |  | Material contracts                                                                                                                  | 37, 80-82,
     87-88 | 
|           |  | Exchange controls                                                                                                                   | 89                    | 
|           |  | Taxation                                                                                                                            | 89-91                 | 
|           |  | Dividends and paying agents                                                                                                         | n/a                   | 
|           |  | Statement by experts                                                                                                                | n/a                   | 
|           |  | Documents on display                                                                                                                | 96                    | 
|           |  | Subsidiary information                                                                                                              | n/a                   | 
|           |  |                                                                                                                                     |                       | 
|11         |  | Quantitative
      and qualitative disclosures about market risk                                                                    | 38-39,
      51-54    | 
|           |  |                                                                                                                                     |                       | 
|12         |  | Description
      of securities other than equity securities                                                                        | n/a                   | 
|           |  |                                                                                                                                     |                       | 
|13         |  | Defaults,
      dividend arrearages and delinquencies                                                                               | n/a                   | 
|           |  |                                                                                                                                     |                       | 
|14         |  | Material modifications
      to the rights of security holders and use of proceeds                                                  | n/a                   | 
|           |  |                                                                                                                                     |                       | 
|15         |  | Controls
      and procedures                                                                                                       | 25                    | 
|           |  |                                                                                                                                     |                       | 
|16
      A |  | Audit
      committee financial expert                                                                                              | 15                    | 
|           |  |                                                                                                                                     |                       | 
|16
      B |  | Code
      of ethics                                                                                                                | 15                    | 
|           |  |                                                                                                                                     |                       | 
|16
      C |  | Principal
      accountant fees and services                                                                                        | 46                    | 
|           |  |                                                                                                                                     |                       | 
|17         |  | Financial
      statements                                                                                                          |                       | 
|           |  | Report
      of the auditors                                                                                                        | 26                    | 
|           |  | Consolidated
      profit and loss account for each of the three years in the period ended
      31 December 2003 and related notes | 42-48                 | 
|           |  | Consolidated
      cash flow statement for each of the three years in the period ended 31 December
      2003 and related notes     | 49-54                 | 
|           |  | Consolidated
      balance sheet as of 31 December 2003, 2002 and 2001 and related notes                                            | 55-71                 | 
|           |  | Accounting
      policies                                                                                                           | 72-73                 | 
|           |  | Summary
      of differences between UK and US GAAP and related notes                                                               | 74-79                 | 
|           |  | Report
      on remuneration and related matters                                                                                    | 17-24                 | 
|           |  |                                                                                                                                     |                       | 
|18         |  | Financial
      statements                                                                                                          | n/a                   | 
|           |  |                                                                                                                                     |                       | 

|   |                                                               | 
|-- | ------------------------------------------------------------- | 
|94 | Reuters Group PLC Annual Report and
           Form 20-F 2003 | 

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Glossary

|Term used in annual report          | US equivalent or brief description                                                                           
|----------------------------------- | -------------------------------------------------------------------------------------------------------------
|                                    |                                                                                                              
|Allotted                            | Issued                                                                                                       
|                                    |                                                                                                              
|Associates                          | Affiliates accounted for under the equity method                                                             
|                                    |                                                                                                              
|Called-up share capital             | Ordinary shares, issued and fully paid                                                                       
|                                    |                                                                                                              
|Capital allowances                  | Tax term equivalent to US tax depreciation allowances                                                        
|                                    |                                                                                                              
|Cash at bank and in hand            | Cash                                                                                                         
|                                    |                                                                                                              
|Class of business                   | Industry segment                                                                                             
|                                    |                                                                                                              
|Combined Code                       | A set of corporate governance principles and detailed codes of practice                                      
|                                    |                                                                                                              
|Creditors                           | Accounts payable                                                                                             
|                                    |                                                                                                              
|Creditors:                          |                                                                                                              
|Amounts falling due                 |                                                                                                              
|after more than one year            | Long-term debt                                                                                               
|                                    |                                                                                                              
|Creditors:                          |                                                                                                              
|Amounts falling                     |                                                                                                              
|due within one year                 | Current liabilities                                                                                          
|                                    |                                                                                                              
|Debtors                             | Accounts receivable                                                                                          
|                                    |                                                                                                              
|Destination (of revenue)            | The geographical area to which goods or services are supplied                                                
|                                    |                                                                                                              
|Freehold                            | Ownership with absolute rights in perpetuity                                                                 
|                                    |                                                                                                              
|Interest receivable                 | Interest income                                                                                              
|                                    |                                                                                                              
|Origin (of revenue)                 | The geographical area from which goods or services are supplied to a third party or another geographical area
|                                    |                                                                                                              
|Profit                              | Income                                                                                                       
|                                    |                                                                                                              
|Profit and loss account (statement) | Income statement                                                                                             
|                                    |                                                                                                              
|Profit and loss account reserve     |                                                                                                              
|(under capital and reserves)      | Retained earnings                                                                                            
|                                    |                                                                                                              
|Profit attributable to ordinary     |                                                                                                              
|shareholders                        | Net income                                                                                                   
|                                    |                                                                                                              
|Proposed dividend                   | Dividend declared by directors but not yet approved by shareholders                                          
|                                    |                                                                                                              
|Share capital                       | Ordinary shares, capital stock or common stock issued and fully paid                                         
|                                    |                                                                                                              
|Share premium account               | Additional paid-in capital or paid-in surplus (not distributable)                                            
|                                    |                                                                                                              
|Shares in issue                     | Shares outstanding                                                                                           
|                                    |                                                                                                              
|Stocks                              | Inventories                                                                                                  
|                                    |                                                                                                              
|Tangible fixed assets               | Property and equipment                                                                                       
|                                    |                                                                                                              



| |                                                                |   
| | -------------------------------------------------------------- | --
| | Reuters Group PLC Annual
            Report and Form 20-F 2003 | 95

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Financial
        diary for 2004Thursday 15 January
      Recurring revenue
        guidancestatement for first quarter2004 issuedTuesday 17 February
      Results for year 2003 announcedWednesday 10 March
      Ordinary shares go ex-dividendADSs go ex-dividendTuesday 16 March
      Annual report and Form 20-Ffiled with SEC and UKLA and madeavailable on Reuters websiteTuesday 23 March
      Annual report/review postedto shareholdersWednesday 21 April
      First quarter trading statementissuedThursday 22 April
      Annual general meetingTime: 11.30 amVenue: Lewis Media Centre,Millbank Tower, Millbank,London SW1P 4RSThursday 29 April
      Final dividend for 2003 payableto ordinary shareholders on theregister as at 12 March 2004Thursday 6 May
      Final dividend for 2003 payableto ADS holders on the recordas at 12 March 2004Tuesday 27 July
      Results for first six months of2004 announcedWednesday 28 July
      Ordinary shares go ex-dividendADSs go ex-dividendWednesday 1 September
      Interim dividend for 2004 payableto ordinary shareholders on theregister as at 30 July 2004Wednesday 8 September
      Interim dividend payable toADS holders on the record asat 30 July 2004Tuesday 19 October
      Third quarter trading statementissuedDocuments
        on displayDocuments referred
        to in this report are filed in the US with the SEC and can be read and
         copied at the SECs public reference room located at 450 Fifth
         Street,  NW Washington, DC 20549. Information on the operation of the
         public reference
        room can be obtained in the US by calling the SEC at 1-800-SEC-0330.
         Reuters  Group public filings with the SEC are also available on the
         website maintained
        by the SEC at www.sec.gov or through various Reuters products.




Where
        to find usCorporate
        headquarters
      
      American Depository
        Shares85 Fleet Street
      
      JPMorgan Chase BankLondon EC4P 4AJ
      
      JPMorgan Service CenterTel: 44 (0)20 7250 1122
      
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      Providence RI 02940-3013USARegistered in England No:
      
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      (for callers within the US)Tel: 1 781 575 4328(for callers outside the US)Investor queries
      
      Fax: 1 781 575 4082Miriam McKay London
      
      www.adr.com/shareholderTel: 44 (0)20 7542 7057Fax: 44 (0)20 7353 3002
      
      Electronic copiese-mail:
      
      The annual report and Form 20-Fmiriam.mckay@reuters.com
      
      and the annual review are availableon the internet atwww.about.reuters.com/ar2003.Media queriesSimon WalkerLondon
      
      ListingsTel: 44 (0)20 7542 7800
      
      London Stock Exchange (RTR.L)Fax: 44 (0)20 7542 5458
      
      and Nasdaq (RTRSY.O)e-mail:simon.walker@reuters.com
      
      Options on ordinary shares aretraded on the London TradedStephen Naru
      
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      and the Chicago Board OptionsFax: 1 646 223 5238
      
      Exchange list options one-mail:
      
      American Depository Sharesstephen.naru@reuters.com
      
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      Financial PRLloyds TSB Registrars
      
      Brunswick Group LimitedThe CausewayWorthing
      
      Form 20-FWest Sussex BN99 6DA
      
      This document is filed with
           the SEC and corresponds to the Form 10-K filed by US-based companies.

        Hard copies are available from the Investor Relations department. Electronic
          copies can be accessed through the internet on
        Reuters internet page (www.about.reuters.com) or from the SECs
        EDGAR database via the SECs home page at www.sec.gov.UKTel: 44 (0)870 600 3970(for callers within the UK)Tel: 44 (0)121 415 7047(for callers outside the UK)Fax: 44 (0)1903 833482




|96 | Reuters Group PLC Annual Report and Form
      20-F 2003
|-- | --------------------------------------------------------

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For more informationwww.about.reuters.com

---



Item 19. Exhibits

Exhibit Index

|1.1    | Memorandum and Articles of
          Association of Reuters Group PLC (incorporated by reference to Exhibit
          1.1 to the Annual Report on Form 20-F filed by Reuters Group PLC with
          respect to the fiscal year ended 31 December 2001).                                                                                                                                                                                                                                                                                                                                                                         
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2.1    | Deposit Agreement, dated 18
          February 1998 among Reuters Group PLC, Morgan Guaranty Trust Company
          of New York, as depositary, and all holders from time to time of American
          Depositary Receipts issued thereunder (incorporated by reference to
          Exhibit 2.2 to the Annual Report on Form 20-F filed by Reuters Group
          PLC with respect to the fiscal year ended 31 December 1997).                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.1.1  | Second Amended and Restated
          License, Maintenance and Distribution Agreement, dated October 1, 2003,
          between Reuters Limited and TIBCO Software Inc. (incorporated by reference
          to Exhibit 99.1 to the Registration Statement on Form S-3 File No.
          333-110304, filed by TIBCO on November 6, 2003, as amended)                                                                                                                                                                                                                                                                             
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.1.2  | Registration and Repurchase
          Agreement dated October 7, 2003, between Reuters Limited and TIBCO
          Software Inc. (incorporated by reference to Exhibit 4.3 to the Registration
          Statement on Form S-3 File No. 333-110304, filed by TIBCO on November
          6, 2003, as amended)                                                                                                                                                                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.2    | Network Services Agreement,
          dated 22 May 2000, between Reuters Limited and Proholdco Limited (subsequently
          renamed Radianz Limited) (incorporated by reference to Exhibit 4.4
          to Amendment No. 1 to the Annual Report on Form 20-F filed by Reuters
          Group PLC with respect to the fiscal year ended 31 December 2000).                                                                                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.3    | Network Services Agreement,
          dated 28 September 2001, between Reuters Limited and SAVVIS Communications
          Corporation, as amended (incorporated by reference to Exhibit 10.4
          to the Quarterly Report on Form 10-Q filed by SAVVIS on 29 November
          2001, Exhibit 10.57 to the Annual Report on Form 10 -K filed by SAVVIS
          on 28 February 2003, Exhibits 10.1 and 10.2 to the Quarterly Report
          on Form 10-Q filed by SAVVIS on 12 August 2003, and Exhibits 10.2 through
          10.5 to the Quarterly Report on Form 10 -Q filed by SAVVIS on 30 October
          2003).
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.4    | Transitional
            Services Agreement dated 2 June 2003 between Reuters Limited and
            Moneyline Telerate Holdings (portions of this exhibit have been omitted
            pursuant to a request for confidential treatment)                                                                                                                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.5    | Deed
            of Covenant dated 11 October 2002 made by Reuters Group PLC relating
            to the £1,500,000,000 Euro-commercial Paper Programme                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.5.1  | Amended
            and Restated Note Agency Agreement dated 11 October 2002 among Reuters
            Group PLC (as Issuer), Citibank, N.A. (as Issue Agent and Principal
            Paying Agent) and Dexia Banque Internationale a Luxembourg S.A. (as
            Paying Agent)                                                                                                                                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.5.2  | Dealer
            Agreement dated 11 October 2002 among Reuters Group PLC (as Issuer),
            Citibank International plc (as Arranger) and the various Dealers
            named therein                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.6    | Amended
            and Restated Programme Agreement dated 7 November 2003 among Reuters
            Group PLC (as Issuer and Guarantor), Reuters Finance PLC (as Issuer)
            and the various Initial Dealers named therein relating to the November
            2003 update of the £1,000,000,000 Euro Medium Term Note Programme                                                                                                                                                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.6.1  | Amended
            and Restated Trust Deed dated 7 November 2003 between Reuters Group
            PLC (as Issuer and Guarantor), Reuters Finance PLC (as Issuer) and
            Citicorp Trustee Company Limited (as Trustee)                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.6.2  | Amended
            and Restated Agency Agreement dated 7 November 2003 between Reuters
            Group PLC (as Issuer and Guarantor), Reuters Finance PLC (as Issuer),
            Citibank NA (as Agent), Citibank AG and BNP Paribas Luxembourg (as
            Paying Agents) and Citicorp Trustee Company Limited (as Trustee)                                                                                                                                                                                                                                                                                             
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.6.3  | Pricing
            Supplement dated 17 November 2003 relating to the issue by Reuters
            Finance PLC of €500,000,000 4.625% Guaranteed Notes due 19 November
            2010 under the £1,000,000,000 Euro Medium Term Note Programme                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.6.4  | Form
            of Permanent Global Note in respect of the issue by Reuters Finance
            PLC of €500,000,000 4.625% Guaranteed Notes due 19 November
            2010 under the £1,000,000,000 Euro Medium Term Note Programme                                                                                                                                                                                                                                                                                                                                                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.6.5  | Pricing
            Supplement dated 24 March 1999 relating to the issue by Reuters Group
            PLC of £200,000,000 5.375% Notes due 26 November 2004 under
            the £1,000,000,000 Euro Medium Term Note Programme                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.6.6  | Permanent
            Global Note dated 24 March 1999 relating to the issue by Reuters
            Group PLC of £200,000,000 5.375% Notes due 26 November 2004
            under the £1,000,000,000 Euro Medium Term Note Programme                                                                                                                                                                                                                                                                                                                                                                                               
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.7    | Syndicated
            Credit Facility Agreement, dated 25 April 2003, among Reuters Group
            PLC, HSBC Bank plc and J.P. Morgan plc, as arrangers, the financial
            institutions listed therein and HSBC Investment Bank Plc, as agent                                                                                                                                                                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.8    | Agreement and Plan of Merger,
          dated 9 June 2002, among Instinet Group Incorporated, Daiquiri Merger
          Corporation and Island Holding Company, Inc.(incorporated by reference
          to Exhibit 2.1 to the Current Report on Form 8-K (File No. 000-32717)
          filed by Instinet Group Incorporated on 14 June 2002).                                                                                                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.9    | Amended and Restated Agreement
          and Plan of Merger dated 24 February 2003 by and among Reuters Group
          PLC, Proton Acquisition Corporation and Multex.com, Inc. (incorporated
          by reference to the Tender Offer Statement on Schedule TO-T filed by
          Reuters Group PLC on 26 February 2003).                                                                                                                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.10.1 | Service
            Agreement of Thomas H. Glocer with Reuters Group PLC dated 10 February
            2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.10.2 | Service
            Agreement of David Grigson with Reuters Group PLC dated 21 June 2001,
            as amended 3 March 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.10.3 | Service
            Agreement of Devin Wenig with Reuters Group PLC dated 3 March 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.10.4 | Service
            Agreement of Devin Wenig with Reuters America LLC dated 3 March 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.10.5 | Engagement
            Letter of Niall FitzGerald with Reuters Group PLC dated 2 March 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.10.6 | Non-Executive Chairman Compensation
          Letter between Instinet Group Incorporated and Ian Strachan, dated
          January 1, 2003 (incorporated by reference to Exhibit 10.6 to the Annual
          Report on Form 10-K filed by Instinet Group on 28 March 2002)                                                                                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.11   | Rules of The Reuters Group
          PLC Long -Term Incentive Plan 1997 (incorporated by reference to Exhibit
          4.6 to the Annual Report on Form 20-F filed by Reuters Group PLC with
          respect to the fiscal year ended 31 December 2001).                                                                                                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.12   | Rules
            of the Reuters Group PLC Discretionary Stock Option Plan, as amended                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|8.1    | See Note 32 of the Notes to
          the Consolidated Financial Statements of Reuters Group PLC contained
          in the Annual Report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.1   | Consent
            of PricewaterhouseCoopers for incorporation by reference in the Registration
            Statements on Form S-8 of Reuters Group PLC of their report dated
            3 March 2004                                                                                                                                                                                                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|12.1   | Certification
            of Thomas H. Glocer filed pursuant to 17 CFR 240.13a-14(a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|12.2   | Certification
            of David J. Grigson filed pursuant to 17 CFR 240.13a-14(a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|13.1   | Certification
            of Thomas H. Glocer furnished pursuant to 17 CFR 240.13a-14(b) and
            18 U.S.C.§1350                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|13.2   | Certification
            of David J. Grigson furnished pursuant to 17 CFR 240.13a-14(b) and
            18 U.S.C.§1350                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



---



SIGNATURES

The registrant hereby certifies that it meets
    all of the requirements for filing on Form 20-F and that it has duly caused
    and authorised the undersigned to sign this annual report on its behalf.

|Date: 16 March 2004 | Reuters Group PLC
|------------------- | -----------------
|                    | (Registrant)     
|                    |                  
|                    | By               
|                    |                  
|                    |                  



---



Exhibit Index

|1.1    | Memorandum and Articles
          of Association of Reuters Group PLC (incorporated by reference to Exhibit
          1.1 to the Annual Report on Form 20-F filed by Reuters Group PLC with
        respect to the fiscal year ended 31 December 2001).                                                                                                                                                                                                                                                                                                                                                               
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2.1    | Deposit Agreement, dated 18
          February 1998 among Reuters Group PLC, Morgan Guaranty Trust Company
          of New York, as depositary, and all holders from time to time of American
          Depositary Receipts issued thereunder (incorporated by reference to Exhibit
          2.2 to the Annual Report on Form 20-F filed by Reuters Group PLC with
        respect to the fiscal year ended 31 December 1997).                                                                                                                                                                                      
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.1.1  | Second Amended and Restated
          License, Maintenance and Distribution Agreement, dated October 1, 2003,
          between Reuters Limited and TIBCO Software Inc. (incorporated by reference
          to Exhibit 99.1 to the Registration Statement on Form S-3 File No. 333-110304,
        filed by TIBCO on November 6, 2003, as amended)                                                                                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.1.2  | Registration and Repurchase
          Agreement dated October 7, 2003, between Reuters Limited and TIBCO Software
          Inc. (incorporated by reference to Exhibit 4.3 to the Registration Statement
          on Form S-3 File No. 333-110304, filed by TIBCO on November 6, 2003,
        as amended)                                                                                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.2    | Network Services Agreement,
          dated 22 May 2000, between Reuters Limited and Proholdco Limited (subsequently
          renamed Radianz Limited) (incorporated by reference to Exhibit 4.4 to
          Amendment No. 1 to the Annual Report on Form 20-F filed by Reuters Group
        PLC with respect to the fiscal year ended 31 December 2000).                                                                                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.3    | Network Services Agreement,
          dated 28 September 2001, between Reuters Limited and SAVVIS Communications
          Corporation, as amended (incorporated by reference to Exhibit 10.4 to
          the Quarterly Report on Form 10-Q filed by SAVVIS on 29 November 2001,
          Exhibit 10.57 to the Annual Report on Form 10 -K filed by SAVVIS on 28
          February 2003, Exhibits 10.1 and 10.2 to the Quarterly Report on Form
          10-Q filed by SAVVIS on 12 August 2003, and Exhibits 10.2 through 10.5
        to the Quarterly Report on Form 10 -Q filed by SAVVIS on 30 October 2003).
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.4    | Transitional Services Agreement
          dated 2 June 2003 between Reuters Limited and Moneyline Telerate Holdings
          (portions of this exhibit have been omitted pursuant to a request for
        confidential treatment)                                                                                                                                                                                                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.5    | Deed
            of Covenant dated 11 October 2002 made by Reuters Group PLC relating
            to the £1,500,000,000 Euro-commercial
        Paper Programme                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.5.1  | Amended and Restated Note Agency
          Agreement dated 11 October 2002 among Reuters Group PLC (as Issuer),
          Citibank, N.A. (as Issue Agent and Principal Paying Agent) and Dexia
        Banque Internationale a Luxembourg S.A. (as Paying Agent)                                                                                                                                                                                                                                                                                                                                                      
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.5.2  | Dealer Agreement dated 11 October
          2002 among Reuters Group PLC (as Issuer), Citibank International plc
        (as Arranger) and the various Dealers named therein                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.6    | Amended
            and Restated Programme Agreement dated 7 November 2003 among Reuters
            Group PLC (as Issuer and
          Guarantor), Reuters Finance PLC (as Issuer) and the various Initial Dealers
          named therein relating to the November 2003 update of the £1,000,000,000
        Euro Medium Term Note Programme                                                                                                                                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.6.1  | Amended and Restated Trust Deed
          dated 7 November 2003 between Reuters Group PLC (as Issuer and Guarantor),
          Reuters Finance PLC (as Issuer) and Citicorp Trustee Company Limited
        (as Trustee)                                                                                                                                                                                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.6.2  | Amended and Restated Agency
          Agreement dated 7 November 2003 between Reuters Group PLC (as Issuer
          and Guarantor), Reuters Finance PLC (as Issuer), Citibank NA (as Agent),
          Citibank AG and BNP Paribas Luxembourg (as Paying Agents) and Citicorp
        Trustee Company Limited (as Trustee)                                                                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.6.3  | Pricing
            Supplement dated 17 November 2003 relating to the issue by Reuters
            Finance PLC of €500,000,000
          4.625% Guaranteed Notes due 19 November 2010 under the £1,000,000,000
        Euro Medium Term Note Programme                                                                                                                                                                                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.6.4  | Form
            of Permanent Global Note in respect of the issue by Reuters Finance
            PLC of €500,000,000 4.625%
          Guaranteed Notes due 19 November 2010 under the £1,000,000,000
        Euro Medium Term Note Programme                                                                                                                                                                                                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.6.5  | Pricing
            Supplement dated 24 March 1999 relating to the issue by Reuters Group
            PLC of £200,000,000
          5.375% Notes due 26 November 2004 under the £1,000,000,000 Euro
        Medium Term Note Programme                                                                                                                                                                                                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.6.6  | Permanent
            Global Note dated 24 March 1999 relating to the issue by Reuters Group
            PLC of £200,000,000
          5.375% Notes due 26 November 2004 under the £1,000,000,000 Euro
        Medium Term Note Programme                                                                                                                                                                                                                                                                                                                                                                             
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.7    | Syndicated Credit Facility Agreement,
          dated 25 April 2003, among Reuters Group PLC, HSBC Bank plc and J.P.
          Morgan plc, as arrangers, the financial institutions listed therein and
        HSBC Investment Bank Plc, as agent                                                                                                                                                                                                                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.8    | Agreement and Plan of Merger,
          dated 9 June 2002, among Instinet Group Incorporated, Daiquiri Merger
          Corporation and Island Holding Company, Inc.(incorporated by reference
          to Exhibit 2.1 to the Current Report on Form 8-K (File No. 000-32717)
        filed by Instinet Group Incorporated on 14 June 2002).                                                                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.9    | Amended and Restated Agreement
          and Plan of Merger dated 24 February 2003 by and among Reuters Group
          PLC, Proton Acquisition Corporation and Multex.com, Inc. (incorporated
          by reference to the Tender Offer Statement on Schedule TO-T filed by
        Reuters Group PLC on 26 February 2003).                                                                                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.10.1 | Service Agreement of Thomas
        H. Glocer with Reuters Group PLC dated 10 February 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.10.2 | Service Agreement of David Grigson
        with Reuters Group PLC dated 21 June 2001, as amended 3 March 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.10.3 | Service Agreement of Devin Wenig
        with Reuters Group PLC dated 3 March 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.10.4 | Service Agreement of Devin Wenig
        with Reuters America LLC dated 3 March 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.10.5 | Engagement
        Letter of Niall FitzGerald with Reuters Group PLC dated 2 March 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.10.6 | Non-Executive Chairman Compensation
          Letter between Instinet Group Incorporated and Ian Strachan, dated January
          1, 2003 (incorporated by reference to Exhibit 10.6 to the Annual Report
        on Form 10-K filed by Instinet Group on 28 March 2002)                                                                                                                                                                                                                                                                                                                                             
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.11   | Rules of The Reuters Group PLC
          Long -Term Incentive Plan 1997 (incorporated by reference to Exhibit
          4.6 to the Annual Report on Form 20-F filed by Reuters Group PLC with
        respect to the fiscal year ended 31 December 2001).                                                                                                                                                                                                                                                                                                                                                             
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.12   | Rules of the Reuters Group PLC
        Discretionary Stock Option Plan, as amended                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|8.1    | See Note 32 of the Notes to
          the Consolidated Financial Statements of Reuters Group PLC contained
        in the Annual Report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.1   | Consent of PricewaterhouseCoopers
          for incorporation by reference in the Registration Statements on Form
        S-8 of Reuters Group PLC of their report dated 3 March 2004                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|12.1   | Certification of Thomas H. Glocer
        filed pursuant to 17 CFR 240.13a-14(a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|12.2   | Certification of David J. Grigson
        filed pursuant to 17 CFR 240.13a-14(a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|13.1   | Certification
            of Thomas H. Glocer furnished pursuant to 17 CFR 240.13a-14(b) and
        18 U.S.C.§1350                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|13.2   | Certification
            of David J. Grigson furnished pursuant to 17 CFR 240.13a-14(b) and
        18 U.S.C.§1350                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   



---