|UNITED STATESSECURITIES
AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 20-F



(Mark
One)
|--------------------------------------------------------------------------------------------

|[ _ ] |  | REGISTRATION STATEMENT
PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|----- |  | ----------------------------------------------------------------------------------------------
|      |  | OR                                                                                            

|[ X ] |  | ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|----- |  | ------------------------------------------------------------------------------------

For
the fiscal year ended December 31, 2000

| |  | 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 number 0-13456

|Reuters Group PLC(Exact Name of
Registrant as Specified in Its Charter)



(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 25 p 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 25 p each...............              
         1.429,147,519
| |  | --------------------------------------------------------------------------------

| |  | 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    X | No
|-------- | --

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

|Item 17 | Item 18X
|------- | --------

|
|

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|Reuters Group PLC Annual Report and Form 20-F 2000 | 
|-------------------------------------------------- | 

|
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|Focus and vision for 150 years.........
|---------------------------------------

|
|

|
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|REUTERS MARKS ITS 150TH ANNIVERSARY IN 2001. THOUGH THE WORLD HAS CHANGED, OUR
  FOCUS HAS NOT. WE ARE AN AGENT OF CHANGE, USING THE LATEST MEANS OF COMMUNICATION TO INFORM AND CONNECT OUR CUSTOMERS. IN
  1850 PAUL JULIUS REUTER USED PIGEONS TO FLY STOCK MARKET PRICES BETWEEN BRUSSELS AND AACHEN, BRIDGING THE LAST GAP IN THE
       EUROPEAN TELEGRAPH SYSTEM. THE FOLLOWING YEAR HE MOVED TO LONDON TO TRANSMIT NEWS AND PRICES TO EUROPE VIA THE NEWLY
                                                                                       OPENED DOVER-CALAIS SUBMARINE CABLE.TODAY, WE USE INTERNET-BASED TECHNOLOGIES TO SATISFY THE WORLDS THIRST FOR INFORMATION. OUR BLEND OF CONTENT,
TECHNOLOGY
AND CONNECTIVITY IS UNIQUE. WE USE THIS WINNING COMBINATION TO SERVE CUSTOMERS AND, IN SO DOING, TO CREATE VALUE FOR
SHAREHOLDERS.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Contents                                                |                                                      
|------------------------------------------------------- | -----------------------------------------------------
|1 Financial highlights                                  | 55 Reconciliation of movements in shareholders funds
|2 Five year summary                                     | 56 Notes on the consolidated balance sheet           
|3 Selected financial data                               | 70 Balance sheet of Reuters Group PLC                
|4 Description of business                               | 71 Notes on the balance sheet of Reuters Group PLC   
|10 Directors report                                    | 72 Accounting policies                               
|12 Directors and senior management                      | 74 Summary of differences between UK and US generally
|14 Corporate governance                                 | accepted accounting principles (GAAP)                
|15 Report on remuneration and related matters           | 79 Information for shareholders                      
|25 Statement of directors responsibilities             | 91 Financial diary for 2001                          
|26 Auditors report to the members of Reuters Group PLC | 92 Summary of 1999 and 2000 results                  
|27 Operating and financial review                       | 96 Eleven year consolidated financial summary        
|39 Consolidated profit and loss account                 | 98 Cross reference guide to Form 20-F                
|40 Notes on the consolidated profit and loss account    | 100 Glossary                                         
|47 Consolidated cash flow statement                     | IBC Where to find us                                 
|48 Notes on the consolidated cash flow statement        |                                                      
|54 Consolidated balance sheet                           |                                                      

|
|

|FINANCIAL
HIGHLIGHTS
|--------------------

|                                                                       |  | 2000£M   |   | 1999 £M |   | %CHANGE |   
|---------------------------------------------------------------------- |  | -------- | - | ------- | - | ------- | --
|                                                                      
|Revenue                                                                |  | 3,592    |   | 3,125   |   | 15      | % 
|Earnings before interest, tax, depreciation and amortisation (EBITDA) |  | 1,001    |   | 1,008   |   | (1      | %)
|Operating profit                                                       |  | 411      |   | 549     |   | (25     | %)
|Profit before tax                                                      |  | 657      |   | 632     |   | 4       | % 
|Pre-tax profit margin                                                  |  | 18.3     | % | 20.2    | %
|Taxation                                                               |  | 125      |   | 207     |   | (40     | %)
|Profit after tax                                                       |  | 532      |   | 425     |   | 25      | % 
|Post-tax profit margin                                                 |  | 14.8     | % | 13.6    | % |         |   
|Return on tangible fixed assets                                        |  | 79.9     | % | 57.5    | % |         |   
|Return on equity                                                       |  | 71.4     | % | 102.0   | % |         |   
|Free cash flow                                                         |  | 434      |   | 402     |   | 8       | % 
|Net (debt)/funds                                                       |  | (34      | ) | 41      |  
|                                                                      
|                                                                       | 
|                                                                      
|Basic earnings per ordinary share                                      |  | 37.9     | p | 30.2    | p | 26      | % 
|Earnings per ADS*                                                     |  | $   3.39 |   | $  2.70 |   | 26      | % 
|Dividends per ordinary share                                           |  | 16.0     | p | 14.65   | p | 9       | % 
|Dividends per ADS*                                                     |  | 96.0     | p | 87.9    | p | 9       | % 

| |  | EBITDA
includes profits and losses derived from the disposal of subsidiary undertakings and
fixed asset investments.
|- |  | --------------------------------------------------------------------------------------------------------------------

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

| |  | A
nominal exchange rate of US$1.49 = £1 has been used for convenience.
|- |  | ----------------------------------------------------------------------

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

|                                                                     |  | 2000£M |   | 1999 £M |   | %CHANGE |  
|-------------------------------------------------------------------- |  | ------ | - | ------- | - | ------- | -
|                                                                    
|Pre-tax profit excluding goodwill amortisation                       |  | 728    |   | 693     |   | 5       | %
|Adjusted earnings per ordinary share excluding goodwill amortisation |  | 43.0   | p | 34.5    | p | 24      | %
|                                                                    

|This report comprises the annual
report of Reuters 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 2000. A cross reference guide setting out the
information in this report that corresponds to the Form 20-F items is provided on pages
98-99.



The consolidated financial
statements of Reuters Group PLC included in this report are presented in pounds sterling (£).
On 29 December 2000, 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 $1.50 = £1: on 16 February 2001 the Noon Buying Rate was
$1.45 = £1. For additional information on exchange rates between the pound sterling
and the US dollar, see exchange rates on page 87.



Reuters 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 are explained on pages 74-75.



This report contains forward-looking
statements within the meaning of the United States Private Securities Litigation Reform
Act of 1995 with respect to Reuters financial condition, results of operations and
business and management strategy, plans and objectives for the company. For a discussion
of risks associated with these statements see risk factors on pages 36-38.

Reuters Group PLC Annual Report and Form 20-F 2000  1
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|
|

|FIVE
YEAR SUMMARY
|-----------------

| |  | 
| |  | 

| |  | 
| |  | 

## FOUR YEAR DIVISIONAL
REVENUE SUMMARY

|
|

|2  Reuters Group PLC Annual Report and Form 20-F 2000
|-----------------------------------------------------

|
|

|SELECTED
FINANCIAL DATA
|-----------------------

|The selected financial data set
forth below is derived, in part from, and should be read in conjunction with, the
consolidated financial statements and related notes, as well as the operating and
financial review. For a summary of the material differences between UK and US GAAP, see
pages 74-78.



CONSOLIDATED PROFIT AND
LOSS ACCOUNT DATA for the year ended 31 December
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                |  | NOTES |  | 2000                       |   | 1999  |   | 1998    |   | 1997  |   | 1996  |  
|--------------------------------------------------------------- |  | ----- |  | -------------------------- | - | ----- | - | ------- | - | ----- | - | ----- | -
|                                                                |  | BELOW |  | £m (except per share data)
|                                                               
|Amounts in accordance with UK GAAP:                             |  |       |  |                            |   |       |   |         |   |       |   |       |  
|Revenue                                                         |  |       |  | 3,592                      |   | 3,125 |   | 3,032   |   | 2,882 |   | 2,914 |  
|Operating profit                                                |  |       |  | 411                        |   | 549   |   | 550     |   | 541   |   | 592   |  
|Profit on ordinary activities before taxation                   |  |       |  | 657                        |   | 632   |   | 580     |   | 626   |   | 652   |  
|Profit after taxation attributable to ordinary shareholders     |  |       |  | 532                        |   | 425   |   | 384     |   | 390   |   | 442   |  
|Basic earnings per ordinary share                               |  |       |  | 37.9                       | p | 30.2  | p | 26.7    | p | 24.0  | p | 27.3  | p
|Diluted earnings per ordinary share                             |  |       |  | 37.3                       | p | 29.7  | p | 26.6    | p | 23.8  | p | 27.0  | p
|Basic earnings per ADS                                          |  |       |  | 227.4                      | p | 180.9 | p | 160.3   | p | 144.2 | p | 164.0 | p
|Diluted earnings per ADS                                        |  |       |  | 223.5                      | p | 178.4 | p | 159.7   | p | 143.1 | p | 161.7 | p
|Dividends declared per ordinary share (including UK tax credit) |  | 1     |  | 17.8                       | p | 16.3  | p | 16.5    | p | 16.3  | p | 14.7  | p
|Dividends declared per ADS (including UK tax credit)            |  | 1     | 
|Expressed in UK currency                                        |  |       |  | 106.7                      | p | 97.7  | p | 98.8    | p | 97.5  | p | 88.1  | p
|Expressed in US currency                                        |  | 2     |  | 154.5                      | c | 154.6 | c | 159.6   | c | 160.3 | c | 141.6 | c
|Weighted average number of ordinary shares (in millions)        |  |       |  | 1,404                      |   | 1,409 |   | 1,438   |   | 1,623 |   | 1,616 |  
|                                                                | 
|Amounts in accordance with US GAAP:                             | 
|Revenue                                                         |  |       |  | 3,586                      |   | 3,127 |   | 3,030   |   | 2,882 |   | 2,914 |  
|Income before taxes on income                                   |  |       |  | 652                        |   | 622   |   | 572     |   | 618   |   | 645   |  
|Net income                                                      |  |       |  | 534                        |   | 451   |   | 392     |   | 386   |   | 440   |  
|Basic earnings per ordinary share                               |  | 3     |  | 38.0                       | p | 32.0  | p | 27.8    | p | 27.4  | p | 31.4  | p
|Diluted earnings per ordinary share                             |  | 3     |  | 37.4                       | p | 31.6  | p | 27.7    | p | 27.2  | p | 31.0  | p
|Basic earnings per ADS                                          |  | 3     |  | 228.1                      | p | 192.1 | p | 166.6   | p | 164.5 | p | 188.3 | p
|Diluted earnings per ADS                                        |  | 3     |  | 224.3                      | p | 189.5 | p | 166.0   | p | 163.4 | p | 185.8 | p
|Dividends paid per ordinary share (including UK tax credit)     |  | 1,3   |  | 16.3                       | p | 16.3  | p | 121.3   | p | 17.5  | p | 14.8  | p
|Dividends paid per ADS (including UK tax credit)                |  | 1,3   |  |                            |   |       |   |         |   |       |   |       |  
|Expressed in UK currency                                        |  |       |  | 97.7                       | p | 97.7  | p | 727.5   | p | 104.7 | p | 88.7  | p
|Expressed in US currency                                        |  | 2     |  | 150.8                      | c | 156.4 | c | 1,190.0 | c | 168.7 | c | 135.0 | c
|Weighted average number of ordinary shares (in millions)        |  | 3     |  | 1,404                      |   | 1,409 |   | 1,411   |   | 1,407 |   | 1,401 |  
|                                                               

## CONSOLIDATED BALANCE
SHEET DATA at 31 December

|                                         
|-----------------------------------------
|Amounts in accordance with UK GAAP:      
|Total assets                             
|Long-term debt and provisions for charges
|Net assets                               
|Capital employed before minority interest
|Share capital                            
|Amounts in accordance with US GAAP:      
|Total assets                             
|Long-term debt                           
|Net assets/shareholders equity          
|                                         

|(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. For further information relating to dividends
and the UK taxation of dividends see pages 81 and 88.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Dividends
expressed in US currency 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 2000, payable to US shareholders on 3 May 2001, has been converted at the noon
buying rate on 16 February 2001 for convenience.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | In
1998 Reuters Holdings PLC consummated a court approved capital reorganisation in which
shares of Reuters Holdings were exchanged for a combination of shares of Reuters Group
and approximately £1.5 billion in cash (see note 26). Under US GAAP this
transaction was deemed a share consolidation combined with a special dividend and,
accordingly, earnings per share and per ADS and dividends per share and per ADS amounts
were retrospectively restated. Under UK GAAP no restatement was deemed appropriate as the
cash payment was considered a repurchase of shares and the number of new shares in
Reuters Group was set to facilitate comparability of per share amounts with those of
Reuters Holdings.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Reuters Group PLC Annual Report and Form 20-F 2000  3
|-----------------------------------------------------

|
|

|DESCRIPTION
OF BUSINESS
|-----------------------

|Reuters position as a leading global
information news and technology group is founded on its reputation for speed, accuracy,
integrity and impartiality combined with continuous technological innovation. Reuters
strength is based on its unique ability to offer customers around the world a combination
of content, technology and connectivity. Reuters reaches over 558,000 subscribers in
50,600 locations and makes extensive use of internet technologies for the widest
distribution of information and news. Around 73 million visitors per month access Reuters
content on some 1,400 internet websites. Reuters is the worlds largest international
text and television news agency with 2,157 journalists, photographers and camera
operators in 190 bureaux, serving 151 countries. On 31 December 2000, Reuters employed
18,082 staff in 204 cities in 100 countries.


In February 2000 Reuters announced a
range of major initiatives designed to accelerate its use of internet technologies and
open new markets. Reuters believes that internet technologies present two principal
opportunities: they enable Reuters to start serving a much wider market, including
individuals making financial decisions at work and at home, and they allow Reuters to
adopt a more cost-effective model for its core professional financial business.



Reuters Group PLC, whose
predecessors have conducted operations in London since 1851, was incorporated in England
and Wales on 24 December 1996 and became the parent company to the Reuters Groups
operations on 18 February 1998. Information regarding Reuters Groups significant
subsidiaries is provided in note 32. As used in this report, Reuters or Group refer
collectively to Reuters Group PLC and its consolidated subsidiaries. The company refers
to the parent Reuters Group PLC. Reuters corporate headquarters are located at 85 Fleet
Street, London EC4P 4AJ and its telephone number is +44 (0)20 7250 1122.


INFORMATION SOURCES


Reuters gathers exchange and
over-the-counter trading data, contributed data, reference data and general, financial
and business news.



Reuters obtains current trading
information for securities, commodities, options and futures from 263 exchanges and
over-the-counter markets. The information is normally transmitted electronically to
Reuters databases by a direct feed from the computerised reporting system maintained by
an exchange. Some 5,000 dealers and brokers in financial markets contribute their latest
quotations to Reuters databases. Data contributed by one contributor is available to all
other subscribers to the same product except those the contributor directs should be
precluded. Reuters also has a number of agreements with certain brokers, electronic
communications networks (ECNs) and specialist data vendors for the supply of key market
data.



Other numeric data such as corporate
and economic statistics and textual historical information is obtained from a wide range
of publications and other third party sources, including annual reports. Data is gathered
in either electronic or hard copy form and is edited by specialised Reuters staff.



Reuters staff also report and edit
general and specialised news for business and media subscribers in textual, video, photo
and audio form. Reuters reporting staff are supported by part-time staff in almost every
country. Many Reuters text journalists are financial or other market specialists.



As it is received, data is
automatically processed and stored on a continually updated basis so that subscribers can
retrieve it within seconds. Reuters information databases range from real-time
to over 10 years old.



Reuters is committed to taking an
active part in the development of a variety of standards based on the internet standard
for information known as XML (Extensible Markup Language). Reuters is participating in
the development of a number of industry standards such as NewsML for multi-media news,
FpML (Financial Products Markup Language) for derivatives, XBRL (Extensible Business
Reporting Language) for business reporting, and others. Reuters is also using XML
internally as part of its next generation architecture to enable more intelligent
processing and distribution of information across a variety of devices as well as enabling
superior integration of online information and transactions.



PRINCIPAL PRODUCTS


Reuters is focused on three business
areas. The first, Reuters Financial (RF), includes the content, technology and trading
operations of Reuters for financial services clients. The second, Reuterspace, is the
vehicle for development of new businesses outside the core financial markets. The third,
Instinet, is Reuters electronic brokerage business.



Reuters Financial (RF)


RF is now managed as one integrated
unit. In 2000 it consisted of two separately managed divisions, Reuters Information (RI)
and Reuters Trading Solutions (RTS).



Reuters Information


RI products include real-time
information and historical information databases focused on four main markets: foreign
exchange and money; commodities (including energy); fixed income; and equities. These
products are delivered to subscribers through personal computer-based Reuters Terminals
(RTs) or other Reuters workstation display software, through industry standard internet
browsers and through Reuters-supplied or third-party information management systems.
Reuters databases carry around two million individual instruments. RIs goal is to
provide a wide range of information services addressing segmented user needs. To this
end, RI offers high tier international products, middle tier domestic products and lower
tier off-trading floor products.
4  Reuters Group PLC Annual Report and Form 20-F 2000
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|RIs high tier information products
include 3000 Xtra and the 3000 range of products. 3000 Xtra, RIs flagship international
product, enables users, among other things, to personalise displays, integrate in-house
data sources, carry out complex analytics in Microsoft Excel, extract data for in-house
use, access rich content via Reuters own extranet and receive Reuters TV. Reuters 3000
range of information products combine the real-time features of its 2000 series with
access to historical data, analytics and graphing capabilities and news. The 2000 series
of products is formed from a number of content building blocks, each containing relevant
real-time prices and related data on a particular market. Both the 3000 and 2000 series
of products are grouped in different combinations to allow subscribers to select the
product or products specific to their needs.



Reuters middle tier information
products primarily focus on the needs of customers relating to individual geographic or
asset-class markets. Reuters Plus, an advanced equities trading and analytics tool for US
equities, includes real-time and historical data, time and sales, charting, Reuters news
and internet access. In 2000, Reuters launched Reuters Pro, a research tool focused on
the needs of US institutional equities professionals supporting buy-side institutions,
and Reuters Credit, which provides credit information on the worlds top publicly rated
issuers of debt and unrated loan obligors.



Reuters principal lower tier
offering is Reuters Investor which delivers Reuters information via the internet,
enabling subscribers to easily integrate a tailored segment of Reuters news and market
data into their own websites.



A range of optional products
produced by third parties to augment Reuters news and market data is also available to
subscribers. Reuters also provides funds information, shareholder and benchmarking
analysis under its Lipper brand. At 31 December 2000 Lipper tracked over 60,000 funds
domiciled in 45 countries with assets in excess of US$10.8 trillion. Historical
performance data goes back to 1959 and includes open-ended (mutual) funds, closed-ended
funds and variable annuity (unit-linked) funds.



Editorial. The news content for all
Reuters products is gathered by Reuters editorial operations. Reuters delivers financial
and media news worldwide, generally producing more than 10,000 news reports a day in over
20 languages. In addition to its textual news, Reuters provides television and news
pictures coverage, news graphics and operates a global financial television news channel
(RTV) for its clients in the financial markets.



Reuters Trading Solutions


RTS provides financial customers
with technology and solutions to improve operating efficiency and facilitate trading
throughout the enterprise. To this end it develops infrastructure applications and trade
execution facilities that enable connectivity to a variety of information sources. RTS
encompasses three business groupings, Transactions, Applications and Enterprise Solutions
and Retail Solutions.



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


Dealing 2000-1 enables fast
electronic communication among dealers to negotiate and conclude trades in foreign
exchange and other instruments. Dealing 2000-2, an electronic brokerage service for
interbank spot and forward foreign exchange dealers, automatically and anonymously
matches bid and offer orders using central computers, verifying that the counterparties
have sufficient and mutually acceptable credit. In 2000 Reuters launched the next
generation of transaction products, Dealing 3000, a full replacement for the Dealing 2000
product suite. Dealing 3000 uses Windows NT technology and allows traders to run
complementary applications alongside the dealing application.



Other transaction products include
Reuters InterTrade Direct, a fully managed, open order routing service facilitating
straight through processing in the global securities markets and automated dealing
systems which enable banks to provide their treasury clients with an integrated, online
trading service.



In October 2000 Reuters and three of
its major clients formed Atriax to create an electronic marketplace for the provision of
information and executable prices to enable foreign exchange trading amongst financial
and corporate institutions. At 31 December 2000 Atriax included over 50 banks as members
but the trading facility is not yet available.



Applications and Enterprise
Solutions. The Applications and Enterprise Solutions business provides technology and
solutions from pre-trade analytics to transaction management and processing, to multiple
communities. The product range includes market data systems, Reuters internet finance
platforms, the active enterprise product suite, trade and risk management systems and
exchange automation systems.



Market data systems, which are
marketed primarily under the TIB and Triarch names, facilitate access to information and
other services via the customers own in-house computer facilities and enable the capture
and management of financial transactions. Reuters is in the process of rolling out a new
Trading Systems Architecture (TSA) which provides more sophisticated delivery of
information and other services to the clients site, integrates them into the clients
business flow and facilitates further distribution over the internet. Incorporated into
the TSA are Reuters internet finance platforms which offer clients a powerful set of
infrastructure and development components for reaching target communities over the
internet.



The active enterprise product suite
allows automation of businesses by creating an integrated network of applications,
databases
Reuters Group PLC Annual Report and Form 20-F 2000  5
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------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|DESCRIPTION
OF BUSINESScontinued
|--------------------------------

|and information. Trade and risk
management systems provide dealing rooms and operational management with deal capture,
real-time position keeping, decision support tools and tactical risk management; local
and global credit and limit management; enterprise-wide risk analysis and integrated
advanced order management capabilities. Exchange automation systems provide distributed
components for routing, management and execution of orders or quotes for the financial
markets and for clients who require flexible and scaleable transaction systems.



Retail Solutions. The Retail
Solutions business focuses on selling solutions of content, technology and transaction
capabilities to financial services institutions  seeking to use the internet to service
retail customers.



Reuters Consulting. Reuters
Consulting was formed in 2000 to complement the three RTS business groupings in order to
focus on the provision of fully integrated and customised technology solutions that meet
the individual needs of Reuters clients. In 2000, Reuters Consulting unveiled its Global
Integration Laboratory, a facility for demonstrating the future of enterprise-wide,
e-business solutions in the financial markets.



Reuterspace


Reuterspace is focused on bringing
the skills of the Group in content, technology and distribution to new communities
outside the wholesale financial markets. The division aims to develop opportunities in
the business and consumer markets through internally generated initiatives, partnerships,
stakeholdings and acquisitions.



Consumer market activities include
the following:



Reuters Media is a world leader in
the growing online news distribution business, currently reaching 15% of internet users
through a worldwide set of news and information products available through more than 900
internet websites and in 14 languages. Reuters Media also provides video news services
and traditional news wire services for print and broadcast media globally.



Reuters Personal Finance is
developing a new range of web-based products and finance portals targeted at private
investors. Products will include access to Reuters content, a number of analytical tools
and a wide range of supplementary content and commentary.



Business market activities include
the following:


Reuters Enterprise provides high
value research/advisory information and news to information intensive business audiences
in specific industry sectors, including financial services, telecommunications and
healthcare, as well as more generally targeted company information and news. These
services are provided through subsidiaries and partners such as APM International SA,
Reuters Health Information (RHI), Tower Group, O R Telematique SA, and Yankee Group.



Reuters Mobile was established to
co-ordinate the development of mobile strategy, to promote awareness of, and facilitate
exchange of, mobile technology and to co-ordinate the development of a Reuters-wide
infrastructure featuring core mobile capabilities.



The Greenhouse Fund typically makes
minority investments in start-up companies whose technology or business models are of
relevance to Reuters. At 31 December 2000, the Greenhouse Fund held investments in 90
companies, representing a total investment of £243 million. While an IPO is no
longer intended for the Greenhouse Fund, Reuters anticipates bringing in strategic
investors.



Instinet


Instinet is the worlds largest
electronic agency securities broker and has created and operates an e-financial
marketplace. Through its electronic platforms, Instinet brings buyers and sellers
worldwide together so that they can trade different types of securities, such as equity
securities and fixed income (or debt) securities, and access research products, providing
them with price improvement for their trades, as well as information, reporting and
decision-making tools. Instinets customers can trade directly and anonymously with each
other, thereby creating an internal liquidity pool, as well as with other investors in
more than 40 established securities markets throughout the world. Affiliates of Instinet
are members of 20 securities exchanges. Instinets customers consist of institutional
investors, such as mutual funds, pension funds, insurance companies and hedge funds, as
well as securities brokers and dealers.



In addition to execution of their
equity securities trades on a global basis, Instinet offers its customers services that
enhance their ability to achieve their trading objectives, including 24-hour trading,
crossing services, block trading and program trading, as well as global clearance and
settlement of trades and access to Instinets proprietary research and analytics services
and those of other providers. In February 2000, Instinet acquired Lynch, Jones & Ryan, a
US broker-dealer focused on the plan sponsor and commission recapture business.



In 2000, Instinet introduced its new
global electronic platform for trading fixed income securities. At present, Instinet is
providing brokerage, execution and clearance and settlement services to many of the
largest banks and securities dealers in approximately 750 US government, euro-denominated
government and German mortgage bond (Pfandbriefe) securities. Instinet has also begun
providing its execution and clearing services on a wholesale basis primarily to
securities brokers and dealers. Purchasers of its wholesale services can provide their
customers with access to Instinets global institutional equities trading platform and,
in the US, to its correspondent clearing services as well.



To expand the scope of its
e-financial marketplace, Instinet has made a number of strategic investments in companies
with operations or technologies that Instinet believes
6  Reuters Group PLC Annual Report and Form 20-F 2000
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|
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|
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|will enable investors and issuers to
better achieve their trading and capital-raising objectives.


On 8 February 2001, Instinet filed a
Registration Statement with the US SEC for the initial public offering (IPO) of shares of
its common stock.



TIBCO Software Inc.


In 1999, Reuters subsidiary, TIBCO
Software Inc. (TSI) completed an IPO of its common stock on the Nasdaq Stock Market. At
31 December 2000 Reuters held approximately 57% of the outstanding shares of TSI but its
voting rights were restricted to 49% (and, accordingly, TSI is accounted for as an
associated undertaking). If all outstanding employee options were exercised Reuters
diluted shareholding of TSI would be about 42%. Reuters has the right to nominate four
TSI directors (out of a total of 11) for so long as Reuters holds 40% or more of TSIs
outstanding voting shares, three directors if it holds between 25% and 40% of the
outstanding voting shares, and two directors if it holds between 10% and 25% of the
outstanding voting shares.



Reuters owns the underlying TIB
intellectual property and technology that was in existence at 31 December 1996 and that
is incorporated into many of TSIs products, and 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 licensed TIB technology, which TSI licenses to Reuters pursuant to
the licence agreement. TIB technology is incorporated into the TIB market data distribution
systems offered by RTS.



PRINCIPAL CAPITAL
EXPENDITURES


Over the last three years, Reuters
has made a number of acquisitions, invested in several associated undertakings and other
investments, established some joint ventures and continued to invest in its Greenhouse
Fund. The principal acquisitions and investments (none of which exceeded a cost of £50
million) were:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | O
R Telematique SA, a leading online provider of company information;
|- | ---------------------------------------------------------------------

| | Yankee
Group Research Inc., an international technology research and advisory firm specialising
in sectors essential to e-business: the internet, e-commerce, telecommunications and
wireless services;
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Lynch,
Jones & Ryan Inc., (acquired by Instinet) a provider of specialised brokerage, research
and commission recapture services to pension plan sponsors and managers;
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Tower
Group Inc., (84%), a US research and advisory firm specialising on the impact of
information technology in the financial industry;
|- | ----------------------------------------------------------------------------------------------------------------------------------------

| | Liberty
SA (now known as Reuters InterTrade Direct), a provider of electronic links for the
global securities markets, offering order routing and order management services and links
to other trading processes such as clearing and settlement;
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Lipper
Analytical Services Inc., a provider of US mutual fund and global fund data;
|- | -----------------------------------------------------------------------------------

| | GL
Trade (33.5%), a developer of interactive software which link equities traders to
electronic exchanges in order to monitor the market and enter orders; and
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Diagram
fip SA, acquired early in 2001, a major European provider of financial software solutions
for the capital markets. Products include software packages and value-added services such
as consulting, training and integration for banks, brokers, fund and asset managers and
insurance companies. It also offers integrated corporate treasury systems.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|In May 2000 Reuters and Equant
Finance BV (Equant), established a joint venture company, Radianz Limited (Radianz), to
develop a secure internet protocol network for use by the financial services industry,
including Instinet. Reuters owns 51% of the new company but shares voting control and
does not consolidate Radianz for accounting purposes. Under the terms of agreement, on 1
July 2000 Reuters transferred £63 million of telecommunications network assets into
the new entity, along with approximately 400 staff, and sold its existing
telecommunications business, Reuters Connect Services, to the new company for £17
million in cash.



In February 2000 Reuters and
Multex.com Inc., a leading internet online intermediary for the financial services
marketplace, agreed to form a joint venture, Multex Investor Europe, to provide dedicated
broker research and investment information to European private investors. The joint
venture combines Multex.coms global research base and Reuters information and news. Both
parties own 50% of the venture. Early in 2001 Multex Investor Japan was formed to provide
similar services in Japan. A total of £21 million has been invested in these
ventures.



In mid-1999 Reuters and Dow Jones & Co.
formed a joint venture, Factiva, to develop a new web-based global service, to provide
corporate news, information and research data for many categories of business
professionals. By December 2000 Factiva was selling information from 7,000 sources to 1.5
million users. Information sources include Reuters and Dow Jones news wires in addition
to national, regional and local newspapers and trade publications. The content includes
information in 22 languages. Factiva also provides technology solutions to integrate
content into companies intranets or information portals. Reuters has invested
approximately £20 million in this venture.



Total capital expenditure for
acquisitions, investments in associates and other investments, excluding joint ventures,
during 2000 was £242 million (1999: £76 million; 1998: £141 million).
Additional investment in the Greenhouse Fund during 2000 totalled £184 million
(1999: £61 million; 1998: £10 million).


Reuters Group PLC Annual Report and Form 20-F 2000  7
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|DESCRIPTION
OF BUSINESScontinued
|--------------------------------

|Further information relating to
investments, acquisitions, joint ventures and disposals in 2000 is provided in notes 16
and 31.




DATA AND COMMUNICATIONS
NETWORKS


Reuters operates a number of
communications networks, employing various technologies, for distribution of its
products. Reuters is making increasing use of internet technology which is utilised in
the Reuters web communications network.



Reuters has two global technical
centres, two main technical centres and a number of smaller local data centres. Reuters
data centres are linked by communications services provided by Radianz using dedicated
international communications circuits that rely on satellite links, optical fibre cables
and coaxial cables. These circuits are leased by Radianz from various governmental and
private telecommunications operators including Equant. Communications between data
centres and Reuters subscribers are provided by Radianz in 11 countries and by Reuters directly or third parties elsewhere;
they mainly use dedicated terrestrial circuits which are leased from telecommunications
operators and are supplemented by a variety of other transmission systems. These include
satellite-based networks for delivery of services to small dish receivers on customer
premises. For further information regarding Radianz and the relationship between Radianz
and Reuters, see pages 79 and 87.



PRINCIPAL GEOGRAPHIC
MARKETS


Reuters products are distributed to
151 countries. Within business divisions, products are divided for financial reporting
purposes into three principal geographic areas: Europe, Middle East and Africa (including
the United Kingdom and Ireland); Asia/Pacific (including Japan); and The Americas. An
analysis of revenue, costs, contribution, and assets by these markets is provided under
the heading operating and financial review and in notes 1 and 13.



SUBSCRIBERS AND MARKETING


In general, Reuters information
products are billed by number of user accesses. User accesses include terminals, accesses
to datafeeds, slave screens and portable devices. The number of user accesses at the end
of each of the last three years is set forth below.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                     |  | AT 31 DECEMBER
|-------------------- |  | --------------
|000s                |  | 2000          
|                    
|Information products |  | 507           
|Dealing              |  | 21            
|Instinet             |  | 30            
|                    
|Total                |  | 558           
|                    

|Information relating to user
accesses and an analysis of revenue and subscribers by type are provided under the
heading operating and financial review and in note 22.



The majority of Reuters revenue is
recurring and generally covered by contracts of indefinite period, terminable on one or
two years notice. Individual services within a contract may be cancelled on twelve, six
or three months notice. In general, charges are based upon the particular products
purchased by a subscriber and the number of user accesses. Payment terms are generally in
advance. Charges for certain other Reuters products vary according to volume of use.
These include Instinet, Dealing 2000-2, Dealing 3000 Spot Matching and certain
information products.



Under its agreements with Dealing
2000-2 and Dealing 3000 Spot Matching subscribers, Reuters accepts liability for direct
net loss incurred by subscribers solely as a result of a transmission or processing fault
that is shown to be caused by the negligence or wilful misconduct of Reuters. Reuters
only accepts this liability in full for trades with a value of up to $15 million; for
trades above $15 million, Reuters agreements with subscribers provide that Reuters
liability is limited on a pro rata basis.



Reuters sells its products through a
variety of channels. At 31 December 2000, Reuters sales and marketing force consisted of
5,141 persons. To support the Reuters brand, which Reuters believes to be of significant
value, Reuters increased its investment in advertising in 2000, using television for the
first time as a medium to reach a wider public.



EQUIPMENT SUPPLY AND
SERVICING


Reuters central computers are
presently supplied principally by Sun Microsystems and Compaq Computer Corporation
(Compaq), with a smaller number of computers from International Business Machines
Corporation (IBM), Sequent Information Systems and other manufacturers. Reuters central
computers are installed and normally maintained by the supplier and operated by Reuters
personnel.



Radianzs communications network
uses equipment supplied and supported by Cisco Systems Inc., and Nortel Networks
Corporation which is installed and operated by Radianz staff in 11 countries and by
Reuters staff elsewhere. Database application software is supplied by Oracle Corporation.
Tivoli Systems, a subsidiary of IBM, supplies software for network and system management
requirements.



Reuters installs and provides first
level maintenance for the majority of its client sites either directly or in some
countries via sub-contractors. These installations are usually based on equipment
supplied either by IBM or Compaq. Some clients specify and supply such equipment
themselves and may be responsible for its maintenance. All Reuters application software
on central computers and client site systems is maintained by Reuters.



COMPETITION


Reuters faces competition in all
market sectors and geographical areas. Some rival vendors compete across a range of
markets and in most major financial centres. Other vendors are more specialised, either
in markets or location.



Reuters Financial


Competitors in the provision of
information products for the financial markets include Bloomberg LP (Bloomberg), Bridge
Information Systems Inc. (Bridge), Quick Corporation of Japan, Telekurs AG of Switzerland
and Thomson Corporations Thomson Financial unit. Competition to the Lipper funds
information business comes from Morningstar Inc., the
8  Reuters Group PLC Annual Report and Form 20-F 2000
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|Micropal unit of Standard & Poors,
a division of the McGraw-Hill Companies Inc., Value Line Inc., and Thomson Corporations
CDA Weisenberger.


The Electronic Broking Service (EBS)
competes with the foreign exchange spot matching service provided by Reuters Dealing
2000-2 and Dealing 3000 Spot Matching. The EBS partnership comprises a number of leading
European, US and Japanese banks.



Reuters money and foreign exchange
transaction products also compete with voice brokers in the relevant markets.



Competitors in the supply of Reuters
market data systems include Misys plc (Misys), CSK Software, a subsidiary of CSK
Corporation, Bridge and a large number of other vendors. The main competitors to the
Active Enterprise product suite are IBM (MQ Series), New Era of Networks, Inc. (Neon),
VITRIA Technology, Inc., BAE Systems plc, and Mercator Software, Inc. In the provision of
trade and risk management systems, on a global basis Reuters competes with SunGard Data
Systems Inc., Misys and Algorithmics Inc.



Reuterspace


Competition for the supply of
company, financial and industry specific information is fragmented among numerous,
geographically specific entities and new internet-based businesses. Competition in the
supply of news to the media is mainly from Associated Press, Agence France Presse and
Bloomberg News, a subsidiary of Bloomberg.



Instinet


Instinet competes with, among
others, traditional and electronic trading methods in use on US and international
securities exchanges, Nasdaqs trading services that enable members of the National
Association of Securities Dealers, Inc. (the NASD) to trade electronically in Nasdaq
quoted stocks, the Institutional XPressand NYSeDirect+products of the New
York Stock Exchange and other broker-dealers (including many of its own customers) which
offer competing services; as well as ECNs, including Bloomberg Tradebook LLC, a
subsidiary of Bloomberg, and the Island System.


GOVERNMENT REGULATIONS


Reuters Financial


Reuters Limited is regulated as a
service company by the UK Financial Services Authority (FSA) under the Financial Services
Act 1986.



The use of communications links is
subject to government licensing in several countries.



Reuters Transaction Services Limited
(RTSL), through which Reuters operates Dealing 2000-2 and Dealing 3000 Spot Matching is
subject to regulation by the FSA equivalent to that applied to broking participants in
the London foreign exchange market, including capital adequacy requirements. The
operations of RTSLs Singapore branch are subject to oversight by the Monetary Authority
of Singapore and those of the Hong Kong branch by The Hong Kong Monetary Authority.
Reuters InterTrade Direct SA, through which Reuters operates Reuters InterTrade Direct,
is regulated as a service company by the FSA under the Financial Services Act 1986.



Instinet


As a registered broker-dealer, a
member of the NASD and other self-regulatory organisations in the US and other countries
in which it operates, and as a registered alternative trading system in the US, Instinet
is subject to substantial regulation under the US securities laws and their equivalents
in other countries, including but not limited to net capital requirements. The regulatory
framework generally applies directly to Instinet affiliates that are registered or
licensed in various jurisdictions.



PROPERTY, PLANT AND
EQUIPMENT


Reuters principal properties are its
corporate headquarters (96,000 sq. ft.) in London, its two global technical centres in
London (324,000 sq. ft.) and Geneva (144,000 sq. ft.) and its two other main technical
centres in New York (44,000 sq. ft.) and Singapore (180,000 sq. ft.). The London and New
York properties 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.



Reuters has entered into a venture
with Rudin Times Square Associates LLC, to develop and operate an 855,000 square foot
building in the Times Square section of New York City, to be known as The Reuters
Building. Each of Rudin and Reuters are to invest approximately $45 million of equity
toward the cost of the base building and partial build-out allowance estimated at $362
million, with the balance being funded through non-recourse financing. At 31 December
2000, Reuters had contributed $20 million of this equity.



The interior build-out, technology
infrastructure, security system, furniture and fittings, exterior signage, public
exhibition space, moving and other related costs for Reuters is estimated at $134
million, with expenditure to 31 December 2000 totalling $35million.



Reuters will lease a total of
671,464 sq ft. from the venture and expects to begin moving staff into the building in
March 2001. The lease for the bulk of the space will expire in 2021, with an option to
extend. Reuters has secured its lease position with a $120 million letter of credit.



LEGAL PROCEEDINGS


Reuters and its subsidiaries are
parties to legal proceedings that are considered to be either ordinary routine litigation
incidental to their business or not material to Reuters consolidated financial position
or profitability.
Reuters Group PLC Annual Report and Form 20-F 2000  9
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|
|

|DIRECTORS
REPORT
|-----------------

|The directors submit their annual
report and audited financial statements for the year ended 31 December 2000.


Activities


Reuters activities are described on
page 4. A detailed review of Reuters activities during 2000 and likely future
developments is given on pages 4-9 and pages 27-38. Details of post balance sheet events
are set out in note 33.



Share capital and
dividends


Details of the changes in the
authorised and called-up share capital are set out in notes 26 and 27 on pages 63-64.
Details of significant shareholdings are given on page 79.



An interim dividend of 3.65p per
ordinary share was paid on 6 September 2000. The directors recommend a final dividend of
12.35p per ordinary share, giving a total of 16.0p per ordinary share for the year (1999:
14.65p). Subject to shareholders approval at the annual general meeting, the final
dividend will be paid on 26 April 2001 to members on the register at the close of
business on 16 March 2001.



Employees


The total number of employees at 31
December 2000 was 18,082 (31 December 1999: 16,546).



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



To encourage employees involvement
and to ensure that employees are aware of the financial and economic factors affecting
the Group, extensive use is made of the companys intranet as a communications tool.
Meetings between management and employee representatives, including, where appropriate,
union representatives, are held regularly so that the views of employees can be taken
into account in making decisions which are likely to affect their interests. Reuters
European Employees Forum operates as a pan-European works council. Reuters believes its
relationship with its labour unions is satisfactory. The involvement of employees in the
companys performance is encouraged through employees share plans.



The directors record with deep
regret the death of Kurt Schork who died while reporting for Reuters in Sierra Leone. The
directors also record with regret the deaths in service of Yu Fai Chan, David Kirby,
Veselin Pavkovic, Navdeep Ranawat, Roswitha Sediqie-Siepen and Eliane Vanden Bossche.



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



Charitable contributions


Reuters made a grant of £3.2
million in 2000 to fund the educational and humanitarian work of Reuters Foundation, the
Groups charitable trust (£3.3 million in 1999). In addition, Reuters regional
management made direct charitable donations of £1.2 million in cash and £13.7
million in kind, which includes the value of information services, equipment and
employees time provided free of charge for educational and humanitarian purposes. The
overall total of Group charitable giving, in cash and in kind, amounted to £18.1
million in 2000 or 2.7% of pre-tax profit (£16.6 million or 2.6% in 1999).



More information on the work of
Reuters Foundation is contained in the annual review and on the Foundations website:
www.foundation.reuters.com.



No political contributions are made.



Creditor payment terms


It is Reuters normal procedure to
agree terms of transactions, including payment terms, with suppliers in advance. Payment
terms vary, reflecting local practice throughout the world. It is Reuters policy that
payment is made on time, provided suppliers perform in accordance with the agreed terms.
Group trade creditors at 31 December 2000 were equivalent to 34 days purchases during
the year.



Auditors


Resolutions will be placed before
the annual general meeting to re-appoint PricewaterhouseCoopers as auditors and to permit
the directors to fix their remuneration.



Directors


The names and biographical details
of current directors are given on pages 12-13. A non-executive director is not required
to hold shares of Reuters in order to qualify as a director. Executive directors are
encouraged to hold a shareholding in the company equivalent to at least 100% of basic
salary after three years as a director, rising to 200% of basic salary after five years as a director. A director not
holding any shares may nevertheless attend and speak at general meetings of Reuters. A
statement of directors remuneration and their interests in shares and options of the
company and its subsidiaries is set out on pages 15-24.



The following changes to the Board
composition occurred during 2000. Dennis Malamatinas, Ed Kozel and Ian Strachan were
appointed non-executive directors. Bob Bauman and Sir David Walker retired as
non-executive directors at the annual general meeting in April. In January 2000, John
Parcell resigned as an executive director and left the company. André Villeneuve resigned
as an executive
10  Reuters Group PLC Annual Report and Form 20-F 2000
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|director in February
2000 to concentrate on his role as non-executive  Chairman of Instinet and David
Ure resigned as an executive director in July 2000 to concentrate on his role as
non-executive  Chairman of Radianz, the joint venture with Equant.  Philip Green,
Tom Glocer and David  Grigson were  appointed  executive  directors in February,
June and August 2000  respectively,  and in December it was  announced  that Tom
Glocer would be appointed as Chief  Executive on the  retirement of Peter Job in
July 2001.



Sir Christopher Hogg, Peter Job,
Roberto Mendoza and Dick Olver retire by rotation and are proposed for re-election as
directors at the forthcoming annual general meeting. Tom Glocer, David Grigson and Ian
Strachan, having been appointed by the Board since the last annual general meeting, also
retire and are proposed for re-election at the annual general meeting. Biographical
information on these directors is set out on pages 12-13. As non-executive directors, Sir
Christopher Hogg, Roberto Mendoza, Dick Olver and Ian Strachan do not have service
contracts. Details of the remuneration of Sir Christopher Hogg and the non-executive
directors and information on the service contracts and remuneration of Peter Job, Tom
Glocer and David Grigson are set out on pages 15-16.



By order of the Board

/s/ Rosemary MartinRosemary Martin
Company Secretary16 February 2001
Reuters Group PLC Annual Report and Form 20-F 2000  11
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
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|DIRECTORS
AND SENIOR MANAGEMENT
|-------------------------------

|The directors and senior managers of
Reuters are:
|-------------------------------------------------

|NAME                                |  | POSITION                                                             |  | POSITIONHELD SINCE |  | DATE OFNEXT RE-APPOINTMENT BYSHAREHOLDERS | 
|----------------------------------- |  | -------------------------------------------------------------------- |  | ------------------ |  | ----------------------------------------- | 
|                                   
|Directors                           |  |                                                                      |  |                    |  |                                           | 
|Sir Christopher Anthony Hogg        |  | Chairman; Director(1)                                                |  | 1985; 1984         |  | 2001                                      | 
|Peter James Denton Job              |  | Chief Executive; Director                                            |  | 1991; 1989         |  | 2001                                      | 
|Thomas Henry Glocer                 |  | Chief Executive Designate; Director                                  |  | 2000; 2000         |  | 2001                                      | 
|David John Grigson                  |  | Finance Director; Director                                           |  | 2000; 2000         |  | 2001                                      | 
|Sir John Anthony Craven             |  | Director(1)                                                          |  | 1997               |  | 2002                                      | 
|Philip Nevill Green                 |  | Chief Executive, Reuters Financial; Director                         |  | 2001; 2000         |  | 2003                                      | 
|Edward Kozel                        |  | Director(1)                                                          |  | 2000               |  | 2003                                      | 
|Dennis Malamatinas                  |  | Director(1)                                                          |  | 2000               |  | 2003                                      | 
|Jean-Claude Marchand                |  | Chairman, Reuters Information and Group Marketing Director; Director |  | 2000; 1996         |  | 2002                                      | 
|Roberto G Mendoza                   |  | Director(1)                                                          |  | 1998               |  | 2001                                      | 
|Richard Lake Olver                  |  | Director(1)                                                          |  | 1997               |  | 2001                                      | 
|Robert Oscar Rowley                 |  | Chief Executive, Reuterspace; Director                               |  | 2000; 1990         |  | 2002                                      | 
|Charles James Francis Sinclair      |  | Director(1)                                                          |  | 1994               |  | 2002                                      | 
|Ian Charles Strachan                |  | Director(1)                                                          |  | 2000               |  | 2001                                      | 
|Senior managers                     | 
|Rosemary Elisabeth Scudamore Martin |  | Company Secretary                                                    |  | 1999               | 
|Stephen Francis Mitchell            |  | General Counsel                                                      |  | 1998               | 
|David Granger Ure                   |  | Strategic adviser to the Board and Non-executive Chairman of Radianz |  | 2000               | 
|André-Francoise Helier Villeneuve   |  | Non-executive Chairman of Instinet                                   |  | 1989               | 
|Geoffrey Arthur Weetman             |  | Director of Human Resources                                          |  | 1998               | 
|                                   

|(1) |  | Non-executive
director.
|--- |  | -----------------------

|Sir Christopher Hogg. Non-executive
Chairman of Allied Domecq PLC since 1996. Non-executive director of GlaxoSmithKline plc
since 1993 and 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
1993-2000. Former Chairman of Courtaulds PLC 1980-1996 (Chief Executive 1979-1991).
Former non-executive director of the Bank of England 1992-1996. Member of the Audit and
Remuneration Committees and Chairman of the Nomination Committee. Age 64.


Peter Job. Joined Reuters as a journalist in 1963.
From 1971 worked to develop the companys business in Latin
America, Africa, Asia and the Middle East. From 1978 until 1991 headed
the company's operations in Asia. He has announced his retirement from
Reuters effective July 2001. Non-executive director of Schroders plc,
GlaxoSmithKline plc, TIBCO Software Inc., and Instinet Group LLC.
Former non-executive director of Diageo plc. Member of the Nomination
Committee. Age 59.



Tom Glocer. In December 2000 named
to succeed Peter Job as Chief Executive of Reuters in July 2001. Former CEO Reuters
Information (2000) and President & Senior Company Officer, Reuters America (1998-2000).
Previously CEO Reuters Latin America (1997). Joined Reuters in 1993 as Vice President and
Deputy General Counsel, Reuters America and appointed Executive Vice President and
General Counsel, Reuters America Holdings in 1995. Prior to joining Reuters he was a
mergers and acquisitions lawyer with Davis Polk & Wardwell in New York, Paris and Tokyo.
Non-executive director of Giant Bear Inc., Instinet Group LLC and of the New York City
Investment Fund. Age 41.



David Grigson. Joined Reuters in
August 2000 from Emap plc where he was Group Finance Director and Chairman of Emap
Digital. Formerly with Saatchi & Saatchi Plc (1984-1989) and Esso UK (1980-1984). Age 46.



Sir John Craven. Non-executive
Chairman of Lonmin Plc since 1997. Non-executive director of Gleacher & Co LLC since 2000.
Former member of the Board of Managing Directors of Deutsche Bank AG and former Executive
Chairman of Deutsche Morgan Grenfell Group plc (1989-1997). Former non-executive director
of Rothmans International BV. Member of the Audit, Remuneration and Nomination
Committees. Nominated as Reuters senior independent non-executive director. Age 60.



Philip Green. Joined Reuters in
September 1999 as Chief Executive, Trading Solutions. Former Chief Operating Officer,
Europe
12  Reuters Group PLC Annual Report and Form 20-F 2000
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|and Africa, at DHL International,
based in Brussels. Joined DHL in 1990 as Regional Director, Northern Europe having
previously worked in both UK and US. Non-executive director of SKF AB. On the Advisory
Board of the London Business School. Age 47.



Ed Kozel. Managing Director of Open
Range LLC. Non-executive director of Cisco Systems, Inc, Yahoo! and TIBCO Software Inc.
From 1989 to 2000 worked for Cisco Systems, Inc., in a number of roles, more recently as
the Chief Technical Officer and Senior Vice President Business Development. Prior to 1989
worked with SRI International in California. Member of the Remuneration and Nomination
Committees. Age 45.



Dennis Malamatinas. Chief Executive,
Priceline Europe. Former CEO, Burger King Corporation (1997-2000). From 1979 to 2000 he
held a number of executive positions, first with PepsiCo and then with Grand Metropolitan
plc (now known as Diageo plc). From 1998 to 2000 he was a non-executive director of
Diageo plc. Member of the Audit, Remuneration and Nomination Committees. Age 45.



Jean-Claude Marchand. Chief
Executive, Global Sales and Operations (1998-1999). Managing Director, Continental
Europe, Middle East and Africa (1994-1998). Joined Reuters in 1971 as a sales executive
and became Sales and Marketing Manager, Asia in 1978. A Swiss national, he has held
senior management positions in Europe since 1979. Non-executive director of i2i, Radianz
Limited and Sila Communications Limited. Age 54.



Roberto Mendoza. Former Vice
Chairman and a 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. Non-executive Chairman of Egg plc and a non-executive director of Prudential plc,
ACE Limited and Vitro SA. Member of the Audit, Remuneration and Nomination Committees.
Age 55.


Dick Olver. A group managing
director of BP Amoco PLC and CEO, Exploration and Production. Member of the Institute of
Civil Engineers. A governor of New Hall School. Member of the Remuneration and Nomination
Committees and Chairman of the Audit Committee. Age 54.



Rob Rowley. Finance Director from
1990 to 2000. Joined Reuters in 1978 taking financial responsibility for Europe in 1981.
Became Joint Company Secretary in 1988. Group Financial Controller in 1989, and Company
Secretary from 1991 to 1993. Responsible for new business information products, media and
new business ventures since 1996. Non-executive director of Prudential plc. Age 51.



Charles Sinclair. Group Chief
Executive of Daily Mail and General Trust plc since 1988. Non-executive director of
Euromoney Institutional Investor plc and Schroders plc. Fellow of the Institute of
Chartered Accountants. Member of the Audit and Nomination Committees and Chairman of the Remuneration Committee. Age
52.



Ian Strachan. Non-executive director
of Transocean Sedco Forex and Instinet Group LLC. Former Deputy Chairman of Invensys plc
(1999-2000). Former CEO of BTR plc (1996-1999). Former Deputy CEO (1991-1995) and CFO
(1987-1991) of Rio Tinto plc. Former non-executive director of Commercial Union plc
(1990-1996). Former CFO of Johnson & Higgins (1986-1987). Held various senior positions in
Exxon (1970-1986) including Chairman and CEO of the Esso Group of companies in Hong Kong
and China (1982-1983). Member of the Audit, Remuneration and Nomination Committees. Age
57.



Rosemary Martin. Joined Reuters in
1997 as Deputy Company Secretary. Former Partner in London law firm Rowe & Maw.



Stephen Mitchell. Joined Reuters in
1996 as Deputy General Counsel. Acted as General Counsel for Reuters America during 1997.
Company Secretary 1998 to 1999. Former Partner in Australian law firm Freehill,
Hollingdale & Page.



David Ure. Former Executive Director
responsible for group technical strategy and Reuters Trading Solutions division. From
1992 to 1998, responsible for group marketing and technical policy. Prior to that he
headed Reuters operations in Europe, Middle East and Africa. He joined the company in
1968 as a trainee journalist. Non-executive director of TIBCO Software Inc., and Multex
Investor Europe Limited.



André Villeneuve. During 1999 acted
as Executive Director of Strategic Planning. Headed Reuters geographical operating units
from 1992 to 1998 and managed the companys business in North America from 1983 to 1991
including Latin America from 1989. He joined Reuters as a journalist in 1967.



Geoff Weetman. Joined Reuters in
1973 as a Regional Accountant based in Switzerland. Following a brief spell in London, he
moved to Asia and held a number of senior positions in Hong Kong and Japan, finally
becoming Managing Director, Reuters Asia, in 1992. He returned to London in 1997 and for
a year acted as Managing Director of Media and New Business Ventures.



Reuters Group PLC Annual Report and Form 20-F 2000  13
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|CORPORATE
GOVERNANCE
|--------------------

|Reuters is committed to high
standards of corporate governance and has complied throughout 2000 with the principles of
corporate governance set out in Section 1 of the Combined Code save that the service
contracts of Peter Job, Rob Rowley and Jean-Claude Marchand are terminable by the
company, in effect, on two years notice. However, consistent with the companys move
towards having executive directors service contracts terminable on not more than one
years notice, Philip Greens appointment is terminable on one years notice and David
Grigsons appointment can be terminated on one years notice after an initial period
ending in August 2001.


The Board and executive


The Board is responsible for the
Groups system of corporate governance and is ultimately accountable for the Groups
activities throughout the world. As at 16 February 2001, there were six executive
directors and eight independent non-executive directors, including the Chairman who is
responsible for running the Board. Each year the directors, other than the Chairman, meet
to review the role of the Chairman (Sir John Craven, the senior independent non-executive
director, chairing the meeting) and once a year the Chairman and the non-executive
directors meet to review the performance of the executive directors.



The Board is scheduled to meet at
least six times a year and, in addition, it has an annual strategy review meeting. A
schedule of matters is reserved for the Boards decision. The directors are bound by the
companys articles to pay due regard to the Reuters Trust Principles. The Board views
these as central to Reuters standing and commercial success and gives support to the
Reuters Founders Share Company Limited in its duty of safeguarding them. The Trust
Principles and other relevant information are set out on page 82.



Regular and ad hoc reports and
presentations to the Board and its committees ensure that the directors are supplied, in
a timely fashion, with the information they need. The directors also have access to the
company secretary and they may take independent professional advice at the companys
expense, although no such advice was sought during 2000.



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



The Board delegates specific
responsibilities to the following committees:



The Group Executive: this committee
is chaired by the Chief Executive and is authorised to implement strategy and to manage
the Group. During 2000 the Group Executive comprised the executive directors, André Villeneuve
(Chairman of Instinet), David Ure (Chairman of Radianz and adviser to the Reuters Board),
Geoffrey Weetman (Director of Human Resources), Stephen Mitchell (General Counsel) and
Rosemary Martin (Secretary).



The Audit Committee: chaired by Dick
Olver and comprising all the non-executive directors other than Ed Kozel. This committee
meets at least twice a year with the Chief Executive, the Finance Director, the Head of
Audit and Global Risk Assurance and the external auditors and reviews the processes for
financial reporting, internal control, risk assessment, the audit and compliance
assurance, the independence of the Groups internal and external auditors and the
effectiveness of the Groups system of accounting, its internal financial controls and
the internal and external audit functions.



The Remuneration Committee: this
committee meets as required. Its remit is to determine specific remuneration packages for
each of the executive directors and any other remuneration issues which affect the
interests of shareholders, in particular remuneration or option plans using shares. The
committee is chaired by Charles Sinclair and its members are Sir Christopher Hogg, Sir
John Craven, Ed Kozel, Dennis Malamatinas, Roberto Mendoza, Dick Olver and Ian Strachan.



The Nomination Committee: this
committee, which meets when required, comprises the non-executive directors and the Chief
Executive and is chaired by Sir Christopher Hogg. It makes recommendations to the Board
about future appointments of directors and the Chief Executive.



Relations with
shareholders


The executive directors meet
regularly with institutional shareholders and analysts. Investor relations departments in
London and New York are dedicated to improving communications between Reuters and its
shareholders. The companys annual general meeting is used as an opportunity to
communicate with private investors. At its annual general meeting the company announces
the level of proxies lodged on each resolution and the balance for and against the
resolution after the resolution has been voted on by a show of hands. The results of
voting (including the levels of voting abstentions) at the annual general meeting in 2001
will be available on the companys website: www.reuters.com.



Directors
responsibilities, internal controls and financial reporting


The directors responsibilities and
the Groups process for internal controls and financial reporting are set out on page 25.
14  Reuters Group PLC Annual Report and Form 20-F 2000
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|REPORT
ON REMUNERATION AND RELATED MATTERS
|------------------------------------------

|Remuneration objectives



Last year, we said that remuneration
policy has never been more important than it is today. That statement is as valid now as
it was then. We believe that the main limitation on what Reuters can achieve in its
chosen area of activity is our ability to source, motivate and harness the skills of our
people. The competition for those people is as intense as ever and Reuters must ensure
that it is winning the war for talent.



The benchmark for remuneration in
our industry continues to be US practice. The talents which our staff possess are truly
international and the industry in which we stand is ever more mobile. Both large and
start-up companies in the US offer stock options which pay out on the basis of a
companys stock price, with no other performance links. Reuters believes that, to
compete, it must be prepared to do the same. However, individuals must demonstrate
performance to earn options.



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



All staff in Reuters should also be
given the opportunity to share in the companys success and support its values. Since the
beginning of its life as a public company, Reuters has offered save-as-you-earn share
rewards to its staff all over the world. Another all-employee option scheme, Plan 2000,
will mature in 2001.



Remuneration policies


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



Annual bonuses: Reuters provides
annual incentive bonuses to encourage management to achieve predetermined annual
performance targets.



Competitive market compensation:
annual cash compensation packages for senior managers should be capable of reaching the
upper quartile of the market where maximum performance bonus is earned.



Benefits: Reuters provides benefits
according to local practice.



Pensions: as appropriate to the
local market.



Long-term benefits, including share
plans: Reuters seeks to provide long-term benefits which are competitive in the
appropriate market and consistent with the interests of shareholders. Certain
subsidiaries and joint venture companies have incentive plans which enable their key
executives and employees to acquire shares in their company.



Executive directors
remuneration


The 2000 remuneration packages of
executive directors consisted of annual salary, health and car benefits, prolonged
disability insurance, an annual cash bonus plan, pension contributions and participation
in a performance-linked share plan and all-employee share schemes.



In setting the 2000 salary levels
the Remuneration Committee was assisted by reports prepared by independent professional
consultants which compared Reuters remuneration packages with the median levels of the
FTSE top 50 companies.




For 2000 the executive directors
bonuses were capped at 70% of salary and for all directors other than the Chief Executive
depended on the extent to which three targets were met. The first target, covering 20% of
the bonus, related to the growth in operating profit before goodwill at constant exchange
rates. The second target, covering 40% of the bonus, was based on the growth of
divisional profits and the third target, 40% of the bonus, was based on the achievement
of the Groups year 2000 strategic targets. The Chief Executives bonus goals were split
equally between the companys operating profit and achieving the strategic targets. Bonus
targets were substantially met.



Directors bonuses amounted to 1.3%
of total cash bonuses paid to all employees of the Group.



Executive directors
service contracts


The appointment of two new
directors, Philip Green and David Grigson, are terminable by the company on one years
notice. Both appointments have an initial term of two years expiring at the end of August
2001 and July 2002, respectively. The arrangements with them provide that any termination
payment will not exceed an amount equal to the sum of the directors annual salary, bonus
and 12 months pension contributions paid by the company. Peter Job, Rob Rowley and
Jean-Claude Marchand benefit from an effective two-year notice period. The Remuneration
Committee considers this notice period is appropriate having regard, amongst other
things, to their long years of service. The termination benefits for Peter Job, Rob
Rowley and Jean-Claude Marchand will not exceed twice the sum of annual salary and
benefits. Tom Glocers service contract is currently under negotiation.



Remuneration of the
non-executive directors


The Chairmans remuneration
comprises salary, life assurance, prolonged disability insurance and pension.



Basic remuneration of the other
non-executive directors is determined by ordinary resolution of the shareholders in
general meeting and rose from £33,000 per annum to £35,000 per annum with
effect from 1 January 2000.
Reuters Group PLC Annual Report and Form 20-F 2000  15
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|REPORT
ON REMUNERATION AND RELATED MATTERS continued
|----------------------------------------------------

## DIRECTORS
AND EXECUTIVE OFFICERS REMUNERATION

|                                                       |  | 2000            | 1999
|------------------------------------------------------ |  | --------------- | ----
|                                                       |  | SALARY/FEES£000 |     
|                                                      
|Chairman:                                              |  |                 |     
|Sir Christopher Hogg                                   |  | 250             |     
|                                                      
|Non-executive directors:                               | 
|Bob Bauman (resigned 18 April 2000)                    |  | 15              |     
|Sir John Craven                                        |  | 35              |     
|Michael Green (resigned 20 April 1999)                 |  |                |     
|Ed Kozel (appointed 31 March 2000)                     |  | 27              |     
|Dennis Malamatinas (appointed 1 January 2000)          |  | 35              |     
|Roberto Mendoza                                        |  | 35              |     
|Dick Olver                                             |  | 42              |     
|Charles Sinclair                                       |  | 45              |     
|Ian Strachan (appointed 10 May 2000)                   |  | 44              |     
|Sir David Walker (resigned 18 April 2000)              |  | 12              |     
|                                                      
|Total for non-executive directors (excluding Chairman) |  | 290             |     
|                                                      
|Executive directors:                                   | 
|Tom Glocer (appointed 5 June 2000)                     |  | 264             |     
|Philip Green (appointed 7 February 2000)               |  | 306             |     
|David Grigson (appointed 1 August 2000)                |  | 147             |     
|Peter Job, Chief Executive                             |  | 605             |     
|Jean-Claude Marchand                                   |  | 352             |     
|John Parcell (resigned 15 January 2000)                |  | 1,203           |     
|Rob Rowley                                             |  | 372             |     
|David Ure (resigned 24 July 2000)                      |  | 207             |     
|André Villeneuve (resigned 7 February 2000)            |  | 44              |     
|                                                      
|Total for executive directors                          |  | 3,500           |     
|                                                      
|Total emoluments of directors                          |  | 4,040           |     
|                                                      
|Non-director executive officers as a group (7 persons) |  | 1,389           |     
|                                                      
|Total emoluments of directors and executive officers   |  | 5,429           |     
|                                                      

|Ian Strachan was appointed a
non-executive director of Instinet on 5 September 2000. His fees include £21,379
earned from Instinet.



At the time of his resignation, John
Parcell received a lump sum payment of £1,189,000, which comprised an amount of
£689,000 equivalent to two years salary and £500,000 in respect of foregone
long-term incentive plan awards.



All bonus entitlements were paid in
cash except that Peter Job and David Ure waived their bonus entitlements in lieu of the
company making equivalent contributions to individual money purchase pension plans on
their behalf.



Non-director Executive Officers are
members of the Reuters Group Executive Committee and are identified as senior managers on
page 12 of this report. Tom Glocer and Philip Green were also members of this committee
prior to their appointment as directors.
16  Reuters Group PLC Annual Report and Form 20-F 2000
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|
|

|Directors pension
arrangements


The executive directors who joined
the pension arrangements in the UK prior to April 1999 are entitled to a pension of
two-thirds of basic salary on retirement from Reuters at the normal retirement age of 60.
Post retirement increases are expected to be in line with inflation (guaranteed up to the
level of 5% per annum and discretionary above that level). Reduced pensions are payable
on early retirement before age 60. Enhanced terms may apply on early retirement.



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



Pension contributions for executive
directors are expressed as an average contribution rate, which for 2000 was 21.025%, of
basic salaries.



The Chairman has been admitted as a
member of the Reuters Pension Fund for the purpose only of providing a fixed lump sum
benefit of £300,000 for his dependants in the event of his death in service.



Pension benefits earned by the above
directors are:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                            |  | AT 31 DECEMBER 2000OR AT DATE OFRESIGNATION |  |                 | ACCRUEDPENSION ENTITLEMENT
|------------------------------------------- |  | ------------------------------------------- |  | --------------- | --------------------------
|                                            |  | AGE                                         |  | YEARS OFSERVICE |                           
|                                           
|Sir Christopher Hogg                        |  | 64                                          |  | 15              |                           
|Peter Job                                   |  | 59                                          |  | 36              |                           
|Jean-Claude Marchand                        |  | 54                                          |  | 29              |                           
|John Parcell (resigned 15 January 2000)     |  | 54                                          |  | 30              |                           
|Rob Rowley                                  |  | 51                                          |  | 22              |                           
|David Ure (resigned 24 July 2000)           |  | 53                                          |  | 32              |                           
|André Villeneuve (resigned 7 February 2000) |  | 56                                          |  | 32              |                           
|                                           

|On his resignation from the Board,
John Parcell took early retirement with an immediate pension equal to his deferred
pension payable from age 60, but unreduced for early payment.



Newly appointed executive directors
participate in defined contribution pension arrangements. The pension contributions in
respect of these three directors were:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                         |  | AGE |  | YEARS OFSERVICE |  | COMPANY PENSION
                                                                                                                         CONTRIBUTION
                                                                                                               DURING PERIOD
                                                                                                                       £000 | 
|---------------------------------------- |  | --- |  | --------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|                                        
|Tom Glocer (appointed 5 June 2000)       |  | 41  |  | 7               |  | 22                                                                                                                                                                                                                                                                                                                                                                                                             | 
|David Grigson (appointed 1 August 2000)  |  | 46  |  | 5 months        |  | 8                                                                                                                                                                                                                                                                                                                                                                                                              | 
|Philip Green (appointed 7 February 2000) |  | 47  |  | 1               |  | 22                                                                                                                                                                                                                                                                                                                                                                                                             | 
|                                        

|Under an unfounded 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.



The total amount set aside or
accrued by Reuters in 2000 to provide pension and similar benefits for the directors,
including employers contributions to individual money purchase pension plans on behalf
of Peter Job and David Ure, was £1.3 million and for the directors and the
non-director executive officers as a group, was £2.1 million.
Reuters Group PLC Annual Report and Form 20-F 2000  17
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|REPORT
ON REMUNERATION AND RELATED MATTERS continued
|----------------------------------------------------

|LONG-TERM PLANS
BENEFITING EXECUTIVE DIRECTORS


Long-term incentive
share plan


Since 1993, Reuters has operated a
long-term incentive share plan under which annual awards of share rights are made to
executive directors and certain key executives. Vesting of the awards depends on
performance in terms of total return to shareholders over a three- to five-year period.
Awards vesting under the plan are not released until at least five years from the date of
grant. Under the terms of the plan the number of share rights awarded annually to each
executive is determined by dividing his annual salary by the average of the daily closing
price of Reuters shares for the previous year.


In 2000 the Remuneration Committee
approved an amendment to the plan permitting the grant of an award to an individual who,
under the terms of the plan, would not otherwise be eligible, or at an amount that
exceeds that allowed by the plan rules, or under terms that vary from the plan rules.
This change was permitted by the UK Listing Authority (UKLA). David Grigson received his
2000 award under these provisions. Eligibility under the normal terms of the plan is
limited to those holding the position of director or senior executive on or before 30
June in the year of the grant. David Grigson joined Reuters on 1 August 2000 and his 2000
award was part of his recruitment terms.


The table over shows the number of
shares underlying long-term awards to each executive director and the non-director
executive officers as a group, by year of grant:




18  Reuters Group PLC Annual Report and Form 20-F 2000
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|
|

|LONG-TERM PLANS
BENEFITING EXECUTIVE DIRECTORS continued
|--------------------------------------------------------

|                                  |  |              |  | NUMBER OF AWARDS                                        |  |                     |  |                     
|--------------------------------- |  | ------------ |  | ------------------------------------------------------- |  | ------------------- |  | --------------------
|                                  |  | YEAR OFGRANT |  | UNRELEASED AT31 DECEMBER1999 OR LATERDATE OFAPPOINTMENT |  | AWARDEDDURINGPERIOD |  | RELEASEDDURINGPERIOD
|                                 
|Peter Job                         |  | 1995         |  | 16,523                                                  |  |                    |  | 16,523              
|                                  |  | 1996         |  | 61,218                                                  |  |                    |  |                    
|                                  |  | 1997         |  | 68,812                                                  |  |                    |  |                    
|                                  |  | 1999         |  | 85,990                                                  |  |                    |  |                    
|                                  |  | 1999         |  | 90,516                                                  |  |                    |  |                    
|                                  |  | 2000         |  |                                                        |  | 73,567              |  |                    
|                                 
|                                  |  |              |  | 323,059                                                 |  | 73,567              |  | 16,523              
|                                 
|Tom Glocer                        |  | 1999         |  | 9,855                                                   |  |                    |  |                    
|(appointed 5 June 2000)           |  | 1999         |  | 42,596                                                  |  |                    |  |                    
|                                  |  | 2000         |  | 33,518                                                  |  |                    |  |                    
|                                 
|                                  |  |              |  | 85,969                                                  |  |                    |  |                    
|                                 
|David Grigson                     | 
|(appointed 1 August 2000)         |  | 2000         |  |                                                        |  | 42,579              |  |                    
|                                 
|Philip Green                      |  | 1999         |  | 100,000                                                 |  |                    |  |                    
|(appointed 7 February 2000)       |  | 2000         |  |                                                        |  | 24,320              |  |                    
|                                 
|                                  |  |              |  | 100,000                                                 |  | 24,320              |  |                    
|                                 
|Jean-Claude Marchand              |  | 1995         |  | 6,921                                                   |  |                    |  | 6,921               
|                                  |  | 1996         |  | 38,805                                                  |  |                    |  |                    
|                                  |  | 1997         |  | 48,994                                                  |  |                    |  |                    
|                                  |  | 1999         |  | 55,956                                                  |  |                    |  |                    
|                                  |  | 1999         |  | 60,564                                                  |  |                    |  |                    
|                                  |  | 2000         |  |                                                        |  | 47,667              |  |                    
|                                 
|                                  |  |              |  | 211,240                                                 |  | 47,667              |  | 6,921               
|                                 
|John Parcell                      |  | 1995         |  | 6,435                                                   |  |                    |  |                    
|(resigned 15 January 2000)        |  | 1996         |  | 25,207                                                  |  |                    |  |                    
|                                  |  | 1997         |  | 32,342                                                  |  |                    |  |                    
|                                  |  | 1999         |  | 40,486                                                  |  |                    |  |                    
|                                  |  | 1999         |  | 49,373                                                  |  |                    |  |                    
|                                 
|                                  |  |              |  | 153,843                                                 |  |                    |  |                    
|                                 
|Rob Rowley                        |  | 1995         |  | 10,303                                                  |  |                    |  | 10,303              
|                                  |  | 1996         |  | 38,171                                                  |  |                    |  |                    
|                                  |  | 1997         |  | 42,663                                                  |  |                    |  |                    
|                                  |  | 1999         |  | 53,322                                                  |  |                    |  |                    
|                                  |  | 1999         |  | 55,626                                                  |  |                    |  |                    
|                                  |  | 2000         |  |                                                        |  | 45,235              |  |                    
|                                 
|                                  |  |              |  | 200,085                                                 |  | 45,235              |  | 10,303              
|                                 
|David Ure (resigned 24 July 2000) |  | 1995         |  | 11,139                                                  |  |                    |  | 11,139              
|                                  |  | 1996         |  | 41,268                                                  |  |                    |  |                    
|                                  |  | 1997         |  | 44,728                                                  |  |                    |  |                    
|                                  |  | 1999         |  | 55,956                                                  |  |                    |  |                    
|                                  |  | 1999         |  | 58,425                                                  |  |                    |  |                    
|                                 
|                                  |  |              |  | 211,516                                                 |  |                    |  | 11,139              
|                                 
|André Villeneuve                  |  | 1995         |  | 11,139                                                  |  |                    |  |                    
|(resigned 7 February 2000)        |  | 1996         |  | 41,268                                                  |  |                    |  |                    
|                                  |  | 1997         |  | 44,728                                                  |  |                    |  |                    
|                                  |  | 1999         |  | 55,956                                                  |  |                    |  |                    
|                                  |  | 1999         |  | 58,425                                                  |  |                    |  |                    
|                                 
|                                  |  |              |  | 211,516                                                 |  |                    |  |                    
|                                 
|Non-director executive officers   |  | 1995         |  | 6,435                                                   |  |                    |  | 6,435               
|as a group (3 persons)            |  | 1996         |  | 25,207                                                  |  |                    |  |                    
|                                  |  | 1997         |  | 38,947                                                  |  |                    |  |                    
|                                  |  | 1999         |  | 126,384                                                 |  |                    |  |                    
|                                  |  | 2000         |  |                                                        |  | 69,956              |  |                    
|                                 
|                                  |  |              |  | 196,973                                                 |  | 69,956              |  | 6,435               
|                                 

|The gains on release are based on
1520p, being the selling price of Reuters ordinary shares, net of commission, on the day
of the release.
Reuters Group PLC Annual Report and Form 20-F 2000  19
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|REPORT
ON REMUNERATION AND RELATED MATTERS continued
|----------------------------------------------------

|LONG-TERM PLANS BENEFITING EXECUTIVE
DIRECTORS continued


The 1995 awards to John Parcell and
André Villeneuve were vested at the dates of their resignations from the Board when
the mid-market closing prices of Reuters ordinary shares were 901p and 1007p
respectively. Both awards were subsequently released.



No unreleased awards at 31 December
2000 were vested. However, on 1 January 2001 the 1996 awards vested 84%.



Performance
under the long-term incentive plan is measured over a three- to
five-year period by comparing the total shareholder return (TSR) of
Reuters with that of other companies comprising the FTSE 100 at the
beginning of the period. Awards vest only after the expiration of this
period. The average of the daily closing prices for the immediately
preceding 12 months is used as the initial and ending share prices
when calculating the TSR.


The companies comprising the
comparator group are ranked according to each companys TSR for the measurement period
with the company having the highest, or best, TSR ranked first. Reuters position on the
list determines the extent to which plan awards will vest. The pre-set vesting criteria
for awards are shown in the table below together with the actual ranking for each award
at 31 December 2000. Between the two vesting extremes awards vest on a graduated scale.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                 |  | PRESET VESTING CRITERIA   |  |                             
|-------------------------------- |  | ------------------------- |  | ----------------------------
|DATE MEASUREMENTPERIOD COMMENCED |  | RANKINGS FOR 100% VESTING |  | RANKINGS FOR    ZERO VESTING
|                                
|1 January 1996                   |  | 1 to 25                   |  | 75 to 100                   
|1 January 1997                   |  | 1 to 26                   |  | 66 to 100                   
|1 January 1998                   |  | 1 to 26                   |  | 66 to 100                   
|1 January 1999                   |  | 1 to 26                   |  | 66 to 100                   
|1 January 2000                   |  | 1 to 26                   |  | 66 to 100                   
|                                

|The obligations under the plan, and
those of the performance-related share plan discussed below, will be met from shares held
by Reuters employee share ownership trusts (ESOTs). The costs are charged to profit over
the vesting periods.



LONG-TERM PLANS
BENEFITING EXECUTIVES OTHER THAN DIRECTORS



Performance-related
share plan


Since 1995 Reuters has operated a
performance-related share plan for senior executives not participating in the long-term
incentive share plan. Under this plan, the performance-related share plan, awards have
been made to approximately 1,100 executives. The rules for vesting are similar to those
currently operating for the long-term incentive share plan. The 1998 award vested 100% on
1 January 2001.



Participants in the 2000 award
received rights to a total of 2.9 million shares (1999: 3.8 million; 1998: 1.9 million).



Deferred bonus share
plans


Deferred bonus share awards were
granted in early 2000 to 104 senior managers, excluding the executive directors. The
awards were made as a special 1999 deferred bonus and are conditional on continued
employment, generally for a two-year retention period ending in February 2002 when they
will be released. The 1.4 million shares awarded will be met from shares held by Reuters
ESOTs. Included in the awards were grants to non-director executive officers of, in
aggregate, 180,000 shares.



Discretionary stock
option plan (DSO)


A new global discretionary stock
option plan was approved by the Remuneration Committee in October 2000. Options with an
aggregate face value not exceeding £140 million are being granted to approximately
4,000 executives, excluding executive directors. One half of the options (4.5 million
shares) were granted in December 2000 at an exercise price equivalent to the market value
at the date of grant of 1139p. Vesting will occur over four years, generally 25% per
annum, expiring seven years after grant. Reflecting the addition of the new option
scheme, the number of participants and size of awards to be granted in 2001 under the
performance-related share plan described above, will be less than in prior years.



Current obligations under this plan will be met from shares held by the ESOTs.
20  Reuters Group PLC Annual Report and Form 20-F 2000
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|
|

|LONG-TERM PLANS OF
SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES



Instinet Group LLC  Instinet
2000 stock option plan


During 2000, a plan was established
permitting the grant of options for up to 10% of the number of outstanding shares of
common stock of Instinet Group LLC. Under the terms of the plan, options may
be granted to directors and employees of Instinet at an exercise price of not less than
fair market value at the date of grant. Options vest in instalments over a four-year
period with a term not exceeding 10 years.



At 31 December 2000, options
outstanding related to 6,892,850 Instinet shares, equivalent to 3.8% of Instinets common
stock. Included were options relating to 167,000 shares granted to an executive officer
of Reuters, at an exercise price of $15 per share, vesting through March 2004 and
expiring in March 2007. Options have been granted to approximately 1,600 employees and
have an exercise price of $15.00 or $16.30 per share with a term of seven years.



Radianz Limited  Radianz
2000 stock option plan


Radianz, the joint
venture between Reuters and Equant, has adopted an all-employee share
option plan covering up to 15% of its equity. Under the terms of the plan, options may be
granted, at not less than fair market value, to directors and employees of Radianz.
Options will become exercisable according to a vesting schedule, generally covering a
period of four years and expiring at the end of seven years.



Obligations under the option plan
are to be met from shares held by the Radianz Employee Trust. At 31 December 2000 options
outstanding related to approximately 10.9% of Radianz issued capital.



Included in those outstanding, were
options relating to 2,350,571 shares granted to an executive officer of Reuters. The
options are at an exercise price of $6.81 per share, vesting through July 2004 and
expiring in July 2007. These options represent 1% of Radianz share capital on a fully
diluted basis.



TIBCO Finance Technology
Inc.  stock option plan


Following the
creation, in late 1996, of TSI, to exploit middleware
products outside the finance industry, an option plan was established over TSI
shares for employees of TIBCO Finance Technology, a wholly owned subsidiary of
Reuters. These options are being satisfied through existing TSI shares owned
by Reuters. As at 31 December 2000 options had been granted to TIBCO Finance employees
equivalent to approximately 15% of TSI on a diluted basis.



Other subsidiaries


A number of small subsidiaries in
the Group operate profit sharing plans or option plans over their own unissued shares.



ALL-EMPLOYEE SHARE PLANS



Plan 2000


In 1998 an all-employee option plan
was introduced. All staff had the chance to apply for a single award of options to
acquire 2000 shares, generally at an exercise price of 550p per share being the market
price at the date of grant. At 31 December 2000 options to acquire a total of 24,724,000
shares were outstanding to over 12,000 employees and are generally exercisable in
September 2001, expiring in September 2005.



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


Employees are eligible to save a
fixed sum each month and to use these funds to exercise options over Reuters shares.
Generally, the exercise price is fixed at 20% below the market price at the start of the
savings period. The maximum monthly savings is £250 for up to five years.



Reuters also offers an employee
stock purchase plan for most US-based employees in which employees can elect to
participate in lieu of the SAYE Plan. Monthly savings are transferred to a designated
broker who purchases ADSs at available market prices for the accounts of the employees.
Reuters Group PLC Annual Report and Form 20-F 2000  21
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|REPORT
ON REMUNERATION AND RELATED MATTERS continued
|----------------------------------------------------

|DIRECTORS
AND EXECUTIVE OFFICERS OPTIONS



Vested options on Reuters Group PLC ordinary shares held by
directors and executive officers during 2000 were as follows:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                        |  | NUMBER OF OPTIONS
|--------------------------------------- |  | -----------------
|                                        |  | DATE OFGRANT     
|                                       
|Sir Christopher Hogg                    |  |                  
|SAYE                                    |  | Mar 1997         
|                                        |  | Mar 1999         
|                                       
|                                        |  |                  
|                                       
|Peter Job                               | 
|SAYE                                    |  | Mar 1997         
|                                        |  | Mar 1998         
|Plan 2000                               |  | Sep 1998         
|                                       
|                                        |  |                  
|                                       
|Tom Glocer (appointed 5 June 2000)      | 
|Executive                               |  | Feb 1994         
|SAYE                                    |  | Mar 1999         
|Plan 2000                               |  | Sep 1998         
|                                       
|                                        |  |                  
|                                       
|Jean-Claud Marchand                     | 
|SAYE                                    |  | Sep 1996         
|                                        |  | Mar 1997         
|Plan 2000                               |  | Sep 1998         
|                                       
|                                        |  |                  
|                                       
|John Parcell (resigned 15 January 2000) | 
|Executive                               |  | Aug 1992         
|SAYE                                    |  | Mar 1997         
|Plan 2000                               |  | Sep 1998         
|                                       
|                                        |  |                  
|                                       
|Rob Rowley                              | 
|SAYE                                    |  | Mar 1997         
|                                        |  | Mar 1998         
|Plan 2000                               |  | Sep 1998         
|                                       
|                                        |  |                  
|                                       
|David Ure (resigned 24 July 2000)       | 
|Plan 2000                               |  | Sep 1998         
|                                       

|22  Reuters Group PLC Annual Report and Form 20-F 2000
|------------------------------------------------------

|
|

|
|

|DIRECTORS AND EXECUTIVE
OFFICERS OPTIONS continued
|----------------------------------------------------

|                                            |  | NUMBER OF OPTIONS
|------------------------------------------- |  | -----------------
|                                            |  | DATE OFGRANT     
|                                           
|André Villeneuve (resigned 7 February 2000) |  |                  
|SAYE                                        |  | Mar 1997         
|                                            |  | Mar 1998         
|Plan 2000                                   |  | Sep 1998         
|                                           
|                                            |  |                  
|                                           
|Non-director executive officers             | 
|as a group (3 persons)                      | 
|SAYE                                        |  | Sep 1996         
|                                            |  | Mar 1997         
|                                            |  | Mar 1998         
|                                            |  | Mar 1999         
|                                            |  | Mar 2000         
|DSO                                         |  | Dec 2000         
|Plan 2000                                   |  | Sep 1998         
|                                           
|                                            |  |                  
|                                           

|No options were granted to, or
exercised by, directors during their period of office in 2000 (1999: none exercised). The closing mid-market
price of Reuters ordinary shares on 24 July 2000 was 1258p and on 31 December 2000,
1133p. During 2000 the price for Reuters ordinary shares ranged between 758.5p and 1620p.



The number of options outstanding
under all option plans for ordinary shares of Reuters Group PLC at 31 December 2000
related to 36,318,946 shares. The number of shares issued under share options granted
over the 10 years to 31 December 2000, combined with the total options outstanding at 31
December 2000 relating to the same grants, was approximately 5.5% of issued capital at
that date. This compares with a maximum authorised level of 10%. At 31 December 2000 the
ESOTs held 24,512,865 ordinary shares, approximately 1.7% of issued share
capital. The authorised limit is 5%.

Reuters Group PLC Annual Report and Form 20-F 2000  23
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|REPORT
ON REMUNERATION AND RELATED MATTERS continued
|----------------------------------------------------

|DIRECTORS
AND EXECUTIVE OFFICERS INTERESTS





The interests of directors and
executive officers in the issued share capital of the company and in shares underlying
savings schemes, options and incentive plans were as follows:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                   |  |                       | INTERESTS AT 16 FEBRUARY 2001
|---------------------------------- |  | --------------------- | -----------------------------
|                                   |  | SHARES AT 31 DECEMBER |                              
|                                   |  | 2000                  |                              
|                                  
|Directors:                         |  |                       |                              
|Sir Christopher Hogg               |  | 31,693                |                              
|Peter Job                          |  | 216,510               |                              
|Tom Glocer                         |  | 10,266                |                              
|David Grigson                      |  |                      |                              
|Sir John Craven                    |  | 6,846                 |                              
|Philip Green                       |  | 2,000                 |                              
|Jean-Claude Marchand               |  | 32,346                |                              
|Robert Mendoza                     |  | 8,000                 |                              
|Dick Olver                         |  | 3,000                 |                              
|Rob Rowley                         |  | 138,665               |                              
|Charles Sinclair                   |  | 10,062                |                              
|Ian Strachan                       |  | 1,500                 |                              
|                                   | 
|Non-director executive officers as | 
|a group (5 persons):               |  | 312,530               |                              
|                                  

|Directors
were the beneficial holders of all shares listed, except for shares
held by family members of Peter Job: 11,117 shares (1999: 3,050) and
Rob Rowley: 5,606 shares (1999: 5,606). No director or executive
officer beneficially owns 1% or more of the companys issued
share capital.



None of the directors has notified
the company of an interest in any other shares, transactions or arrangements which
require disclosure. There have been no movements in the interests of the directors in the
share capital of the Group companies since 31 December 2000 other than the lapsing of 16%
of their 1996 awards under the long-term incentive plan.



On behalf of the Board



/s/ Christopher Hogg



Sir Christopher HoggChairman16
February 2001
24  Reuters Group PLC Annual Report and Form 20-F 2000
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|STATEMENT
OF DIRECTORS RESPONSIBILITIES
|----------------------------------------

|Financial reporting


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



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



The directors have reviewed the
Groups budget and cash flow forecast for the year to 31 December 2001 and outline
projections for the subsequent year in the light of the sound financial position and
borrowing facilities at 31 December 2000. 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.



Internal controls


The 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 for directors on
internal control, Internal Control: Guidance for Directors on the Combined Code (the
Turnbull guidance).



The Board confirms that there is a
process for identifying, evaluating and managing significant risks faced by the Group.
This process has been in place for the full financial year and is ongoing. It is
regularly reviewed by the Group Executive Committee and by the Board and accords with the
Turnbull guidance. The Board considers it 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.



During 2000, the directors were not
aware of any control breakdowns which resulted in a material loss.



The Board appointed the Group
Executive Committee as a sub-committee for the purpose of monitoring, on a continual
basis during the year, the effectiveness of the Groups internal control system.



Using a common risk management
framework throughout the business, each Division (Reuters Information, Reuters Trading
Solutions, Reuterspace and Instinet) summarises the risks that could impede the
achievement of its objectives. For each significant risk, an overview of the risk, how it
is managed and any improvement actions required are documented. Following each review, a
report is submitted to and reviewed by the Group Executive Committee. A common risk
assessment process has also been adopted by other corporate functions such as Finance,
and major project teams.



At the year end, before producing
the statement on internal control in the annual report and accounts, the Group Executive
Committee considers the operation and effectiveness of the Groups internal control
system. This review includes consideration of each of the most significant risks the
Group faces and how well these are controlled and managed. Based on this review, the
Chief Executive provides a written report (Reuters Group Risk Radar) to the Board
detailing how the Group is managing its significant risks.



The control system includes written
policies and control procedures, clearly drawn lines of accountability and delegation of
authority and comprehensive reporting and analysis against approved budgets. In a growing
group of the size, complexity and geographical diversity of Reuters it should be expected
that breakdowns in established control procedures might occur. There are supporting
policies and procedures for reporting and management of control breakdowns.



In addition, the Group monitors its
internal financial control system through management reviews, control self-assessment,
and a programme of internal audits. Internal Audit independently reviews the controls in
place to manage significant risks and reports to the Audit Committee twice a year. The
Audit Committee reviews the assurance procedures, including compliance controls, on a
bi-annual basis and reports its findings to the Board.



The Groups external auditors,
PricewaterhouseCoopers, have audited the financial statements and have reviewed the work
of the internal auditors and the internal control systems to the extent they consider
necessary to support their audit report. The Audit Committee has met the internal
auditors and PricewaterhouseCoopers to discuss the results of their work.



By order of the Board




/s/ Rosemary Martin
Rosemary MartinCompany Secretary16
February 2001
Reuters Group PLC Annual Report and Form 20-F 2000  25
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|AUDITORS
REPORT TO THE MEMBERS OF REUTERS GROUP PLC
|----------------------------------------------------

|Audit report


We have audited the financial
statements on pages 39-73, which have been prepared under the historical cost convention
and the accounting policies set out on pages 72-73, and the summary of differences
between UK and US generally accepted accounting principles on pages 74-78.



Respective
responsibilities of directors and auditors


The directors are responsible for
preparing the annual report and Form 20-F as described on page 25. This includes
responsibility for preparing financial statements in accordance with applicable United
Kingdom law and accounting standards. Our responsibility is to audit the financial
statements in accordance with the relevant legal and regulatory requirements, United
Kingdom Auditing Standards issued by the Auditing Practices Board and the Listing Rules
of the Financial Services Authority.



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



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



We review whether the corporate
governance statements on pages 14-15 reflects the companys compliance with the seven
provisions of the Combined Code specified for our review by the Listing Rules, and we
report if it does not. We are not required to consider whether the Boards statements on
internal control cover all risks and controls, or to form an opinion on the effectiveness
of the Groups corporate governance procedures or its risk and control procedures.



Basis of audit opinion


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



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



United Kingdom opinion


In our opinion the financial
statements give a true and fair view of the state of affairs of the company and the Group
at 31 December 2000 and of the profit and cash flows of the Group for the year then ended
and have been properly prepared in accordance with the United Kingdom Companies Act 1985.



United States opinion


In our opinion the financial
statements present fairly, in all material respects, the financial position of the Group
at 31 December 2000, 1999 and 1998 and the results of its operations and cash flows for
each of the three years in the period ended 31 December 2000, all expressed in pounds
sterling in conformity with accounting principles generally accepted in the United
Kingdom.



Accounting principles generally
accepted in the United Kingdom vary in certain significant respects from accounting
principles generally accepted in the United States. The application of the latter would
have affected the determination of consolidated net income for each of the three years in
the period ended 31 December 2000, and consolidated shareholders equity at 31 December
2000, 1999 and 1998, all expressed in pounds sterling, as shown in the summary of
differences between UK and US generally accepted accounting principles set out on pages
74-78.

/s/ PricewaterhouseCoopers

PricewaterhouseCoopersChartered
Accountantsand Registered AuditorsLondon16 February 2001
26  Reuters Group PLC Annual Report and Form 20-F 2000
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|OPERATING
AND FINANCIAL REVIEW
|------------------------------

|The following review has been
prepared in accordance with both the recommendation of the UK Accounting Standards Board
in their statement entitled Operating and Financial Review, and the US requirement for an
Operating and Financial Review and Prospects.


Under US law all statements other
than statements of historical fact included in this review are, or may be deemed to be,
forward-looking statements within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. Certain important factors
that could cause actual results to differ materially from those discussed in such
forward-looking statements are described under Risk Factors on pages 36-38 as well as
elsewhere in this review. All written and oral forward-looking statements made on or
after the date hereof and attributable to Reuters are expressly qualified in their
entirety by such factors.



1.  FINANCIAL PERFORMANCE
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                            |  | 2000 £M |   | 1999 £M |   | 1998 £M |  
|--------------------------- |  | ------- | - | ------- | - | ------- | -
|                           
|Revenue                     |  | 3,592   |   | 3,125   |   | 3,032   |  
|                           
|Operating profit            | 
| divisions                 |  | 609     |   | 603     |   | 611     |  
| business transformation   |  | (139    | ) |        |   |        |  
|                           
|Normalised operating profit |  | 470     |   | 603     |   | 611     |  
|TIBCO Software/Reuters      | 
|Business Briefing           |  |        |   | (7      | ) | (15     | )
|Associates/investment       | 
|income                      |  | (16     | ) | (1      | ) | 7       |  
|Net interest receivable/    | 
|(payable)                   |  | 3       |   | (4      | ) | 2       |  
|                           
|Normalised PBT              |  | 457     |   | 591     |   | 605     |  
|Goodwill amortisation       |  | (71     | ) | (61     | ) | (51     | )
|Net gains on disposals      |  | 271     |   | 102     |   | 26      |  
|                           
|Reported PBT                |  | 657     |   | 632     |   | 580     |  
|Dividend per share          |  | 16.0    | p | 14.65   | p | 14.4    | p
|Normalised EPS              |  | 21.7    | p | 27.8    | p | 29.1    | p
|Basic EPS                   |  | 37.9    | p | 30.2    | p | 26.7    | p
|                           

|Underlying growth excludes
acquisitions and disposals and significant once-off items in the period under review and
is stated at comparable exchange rates.



Normalised profits and earnings
exclude amortisation of goodwill and gains/losses on the disposal of subsidiaries and
fixed asset investments.



Actual revenue increased 15% to
£3,592 million. Underlying revenue increased 13% in 2000, compared with 2% in 1999.



Divisional profit before business
transformation costs increased 1% in 2000 to £609 million, compared with a 1% fall
in 1999. Underlying divisional operating profit grew 11% in 2000, compared to 3% in 1999.



Divisional profit includes
recognised net currency hedging gains which were £5 million in 2000, compared with
£9 million in 1999 and £45 million in 1998. Actual rates performance in 2000
was adversely impacted by the strength of sterling against the euro, partially offset by
sterlings weakness against the US dollar and Japanese yen.



In February 2000 Reuters announced a
programme to invest a total of £500 million to accelerate the migration of its core
financial business to an internet business model and to develop web-enabled internal
systems and processes. In 2000 expenditure on the programme amounted to £139
million (for further details, see page 28).



Normalised operating profit, which
includes business transformation costs, fell 21% in 2000 compared with a 1% fall in 1999.



The normalised operating profit
margin in 2000 was 13.1%, compared with a 19.3% margin in 1999 and one of 20.2% in 1998.
Excluding business transformation costs, the normalised operating profit margin was 16.9%
in 2000.



Reuters share of net operating
losses (before goodwill) in associates and joint ventures rose from £3 million in
1999 to £21 million in 2000. In 2000 a profit of £2 million from TSI was more
than offset by losses reported from the new joint ventures and associates Radianz, Sila
Communications and Multex Investor Europe. TSI and Reuters Business Briefing (RBB, now
part of Factiva) became associated companies in 1999. In 1998 there was a profit of
£4 million from associates and joint ventures.



Income from fixed asset investments
was £5 million in 2000 compared to £2 million in 1999 and £3 million in
1998.



The £3 million net interest
income in 2000 reflected £13 million of interest receivable from associates and
joint ventures and £10 million of net interest payable. This compared with a £4
million net interest expense in 1999 and £2 million net interest income in 1998.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                     |  | £M   |   | £M  
|------------------------------------ |  | ---- | - | ----
|                                    
|1999 Normalised PBT                  |  |      |   | 591 
|Core Reuters                         | 
|Underlying growth in RF (+19%)       |  | 83   |  
|Business transformation              |  | (139 | )
|Investment in RS                     |  | (52  | )
|                                    
|                                     |  |      |   | (108
|Instinet                             | 
|Investment                           |  | (44  | )
|Underlying growth in equities (+44%) |  | 65   |  
|                                    
|                                     |  |      |   | 21  
|Other movements                      |  |      |   | (47 
|                                    
|2000 Normalised PBT                  |  |      |   | 457 
|                                    

|Normalised profit before tax fell by
23% in 2000 to £457 million, compared with a decrease of 2% in 1999. The decline in
2000 reflected increased investment in new initiatives at Instinet and Reuterspace and
business transformation costs, partly offset by higher underlying growth in Reuters
Financial and Instinets equities business.


Reported profit before tax grew by
4% to £657 million in 2000, compared with an increase of 9% in 1999.



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

Reuters Group PLC Annual Report and Form 20-F 2000  27
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|OPERATING
AND FINANCIAL REVIEW continued
|----------------------------------------

|1998 was £51 million of which £5 million was
in respect of associates.


Net gains on disposal were £271
million compared to £102 million in 1999 and £26 million in 1998. A follow-on
public offering in March 2000 of 4.8 million TSI shares resulted in a book profit for
Reuters of £160 million. This was subsequently reduced by £3 million as a
result of the exercise of options held by TIBCO Finance employees. Reuters has sold no
shares in TSI other than to meet its obligations under an option plan of TIBCO Finance, a
wholly owned Reuters subsidiary, and received no proceeds from the sale of TSI shares
other than the exercise price of such options.



Profits on disposal of Greenhouse
investments in 2000 were £83 million compared to £37 million in 1999 and
£26 million in 1998. The profit in 2000 was offset in part by a write-down of
£30 million to reflect a decline in the carrying value of certain investments. No
write-downs were booked in 1999 or 1998.



The disposal of Reuters interest in
Safetynet generated a further profit of £37 million in 2000.



Earnings before interest, taxation,
depreciation and amortisation (EBITDA) declined 19% to £730 million on a normalised
basis and fell 1% to £1,001 million on a reported basis. This compares with a fall
in 1999 of 3% on a normalised basis and growth of 5% on a reported basis.



The tax charge for 2000 is based on
an effective tax rate of 17% on profit before goodwill amortisation, compared with a rate
of 30% in 1999 (31% in 1998) and the current UK corporate tax rate of 30%. The lower
effective tax rate reflects the beneficial tax consequences of the gain arising from the
TSI follow-on share offer (on which no tax arises) and from tax deductions arising from
the exercise of TSI stock options held by TIBCO Finance employees. On a normalised basis
the tax rate for 2000 was 33%, down from 34% in 1999. Changes to UK legislation affecting
UK based multinationals and other adverse mix effects are expected to add between 1% and
3% to the Groups effective rate of tax on normalised profits.



The final dividend rose to 12.35p
which, when added to the interim dividend of 3.65p per share, amounts to an increase of
9% for the full year. As announced in February 2000, during the period of business
transformation, Reuters dividend policy will be aligned to the results of Reuters
Financial, which comprises Reuters Information and Reuters Trading Solutions divisions.



Basic earnings per share grew by 26%
in 2000 compared to an increase of 13% in 1999. Normalised earnings per share decreased
22% in 2000 compared to a 5% decrease in 1999.



Business transformation


Transformation initiatives have been
categorised into two groups:



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



Organisation and process
transformation that will create an organisation structure that is aligned to the emerging
opportunities in each of our different customer segments supported by web-enabled
internal systems and processes that maximise the economies of our global scale.



Expenditure on business
transformation was £139 million in 2000 compared to an original estimate of £150
million. This was made up of £88 million on new product architecture and £51
million on organisation and process transformation. Costs in 2000 were incremental to the
existing base and included expenditure on consultants, contractors and severance. Reuters
anticipates further costs of £150 million in 2001 and is committed to delivering
£150 million of savings to the bottom line by 2003, with a majority of the savings
expected to flow through to profit and operating margins in 2002.




Research and development


Research and development expenditure
totalled £276 million in 2000 compared with £197 million in 1999 and £200
million in 1998. This expenditure excludes costs associated with business transformation.
Of the total expenditure, £152 million related to Reuters Financial (1999: £146
million), £27 million to Reuterspace (1999: £5 million), £81 million to
Instinet (1999: £41 million) and a further £16 million (1999: £5
million) related to the Chief Technology Office (CTO).


Activities in 2000 included
enhancements to the data capture systems; redesign of the client-facing interface at
Instinet; further development of the Fixed Income and retail products at Instinet; the
retail Personal Finance portal; and corporate security and software process improvements
by the CTO.



Cash flow
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                 |  | REUTERSFINANCIAL£M |   | REUTERSPACE£M |    | INSTINET   £M |   | TOTAL   £M |  
|---------------- |  | ------------------ | - | ------------- | -- | ------------- | - | ---------- | -
|                
|Operating profit |  | 517                |   | (67           | )  | 157           |   | 607        |  
|Depreciation     |  | 216                |   | 14            |    | 46            |   | 276        |  
|Capex            |  | (190               | ) | (20           | )  | (64           | ) | (274       | )
|Working capital  | 
|movements        |  | (10                | ) | 11            |    | 44            |   | 45         |  
|                
|Divisional cash  | 
|flow             |  | 533                |   | (62           | )  | 183           |   | 654        |  
|                 | 
|Cash conversion  |  | 103                | % | (93           | %) | 117           | % | 108        | %
|                 | 
|Business         | 
|transformation   |  |                    |   |               |    |               |   | (97        | )
|Acquisitions/    | 
|Investments      |  |                    |   |               |    |               |   | (463       | )
|Disposals        |  |                    |   |               |    |               |   | 145        |  
|Dividends        |  |                    |   |               |    |               |   | (205       | )
|Taxation         |  |                    |   |               |    |               |   | (159       | )
|Other            |  |                    |   |               |    |               |   | 50         |  
|                
|Net movement     |  |                    |   |               |    |               |   | (75        | )
|                

|Divisional cash conversion is the
percentage of divisional operating profit, before business

28  Reuters Group PLC Annual Report and Form 20-F 2000
|----------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|
|

|transformation costs, converted into
cash. Strong performances were demonstrated by Reuters Financial and Instinet.



2.  OPERATING
PERFORMANCE


Revenue by type
|------------------------------------------------------------------------------------------------------------------------------------------------------------------

|          |  | YEAR TO 31 DECEMBER
|--------- |  | -------------------
|          |  | 2000%              
|         
|Recurring |  | 71                 
|Usage     |  | 24                 
|Outright  |  | 5                  
|         
|Total     |  | 100                
|         

|Recurring revenue is principally
derived from the sale of subscription services. During the last three years over
two-thirds of recurring revenue was generated by Reuters Financial and the majority of
the remainder within Reuterspace.



Usage-based revenue is principally
derived from Instinet and Reuters Financials Dealing 2000-2 product. The proportional
increase in 2000 was attributable to the growth in Instinet revenues.



Outright revenue comprises once-off
solution sales including information management systems and risk management software. The
vast majority of this revenue was generated by Reuters Financial in each of the last
three years.



Divisional performance


Divisional performance, as discussed
below, excludes business transformation costs and goodwill. Net currency gain comprises
profits on hedging activities offset by balance sheet revaluation losses.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                            |  | YEAR TO 31 DECEMBER
|--------------------------- |  | -------------------
|                            |  | 2000£M             
|                           
|Reuters Information         |  | 283                
|Reuters Trading Solutions   |  | 234                
|                           
|Reuters Financial           |  | 517                
|Reuterspace                 |  | (67                
|Instinet                    |  | 157                
|                           
|                            |  | 607                
|Net currency gain           |  | 2                  
|                           
|Divisional operating profit |  | 609                
|                           

|Reuters Financial


Reuters Financial had a strong end
to 2000 and expects top line growth in the first half of 2001 to match the pace set in
the second half of last year. Underlying operating profit grew by 19% in 2000 reflecting
tight cost control partially balanced by parallel running in our technical centres as
Reuters prepares for deployment of internet technology and the build up of Reuters
Consulting.



The calculation of underlying profit
excludes the beneficial impact in 1999 of the reversal of the £25 million data feed
accrual.



Reuters Information


Reuters Information (RI) provides
information products for finance professionals. The divisions focus is on four main
markets: foreign exchange and money; commodities (including energy); fixed income and
equities.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                 |  | YEAR TO 31 DECEMBER
|---------------- |  | -------------------
|                 |  | 2000£M             
|                
|Revenue          |  | 1,737              
|                
|Operating profit |  | 283                
|Operating margin |  | 16.3               
|                

|                         |  | YEAR TO 31 DECEMBER
|------------------------ |  | -------------------
|RI REVENUE ANALYSIS      |  | 2000£M             
|                        
|High tier (international |  |                    
|products)                |  | 795                
|Middle tier (domestic    | 
|products)                |  | 225                
|Lower tier (off trading  | 
|floor etc)               |  | 24                 
|Other revenue (site fees |  |                    
|exchange fees, 3rd party |  |                    
|data etc)                |  | 693                
|                        
|Total revenue            |  | 1,737              
|                        

|Overall revenue growth of 7% was
driven by strong sales in domestic and off trading floor products reflecting our strategy
to broaden the revenue base beyond our high tier real-time users. Revenue growth in 1999
was 6%.


High end revenues include 3000 Xtra,
our new flagship product, which sold over 27,000 accesses with a number of notable major
sales such as Merrill Lynch and Lehman Brothers. By 31 December 2000, we had installed
10,800 positions.



Middle tier growth showed the
success of our strategy in the US where Reuters Plus continued to do well with over
60,000 accesses sold by the end of 2000.



There was strong demand for our
lower tier products. Reuters Investor was a major contributor to growth in the US and
Europe.



The 10% increase in Other revenue
reflected the growth in demand for broader information sets and add on services.
Approximately 40% of Other revenue was recovery of exchange, installation and
communication fees for which there is an almost equal and opposite cost.



On a geographic basis we saw strong
underlying growth in The Americas (up 12%), Japan (up 7%) and in the main European
geographies (up 8%).


The operating margin continued to
improve from 15.6% in 1999 to 16.3% in 2000 (1998: 10.3%). Strong revenue growth
throughout the

Reuters Group PLC Annual Report and Form 20-F 2000  29
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|OPERATING
AND FINANCIAL REVIEW continued
|----------------------------------------

|year and the continued tight control
over costs both contributed to the margin improvement.



Reuters Trading Solutions





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

|                 |  | YEAR TO 31 DECEMBER
|---------------- |  | -------------------
|                 |  | 2000£M             
|                
|Revenue          |  | 822                
|                
|Operating profit |  | 234                
|Operating margin |  | 28.5               
|                

|Revenue declined in the first half
of 2000 reflecting the low order book at the beginning of the year. The pick-up in orders
following Y2K delivered improved growth in the second half resulting in actual revenue
growth in 2000 of 5%. In 1999 there was a revenue decline of 6% actual and 5% on an
underlying basis.



Fourth quarter revenue growth was
flattered by comparison to the equivalent quarter last year which was impacted by the
pre-millennium slowdown.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                            |  | YEAR TO 31 DECEMBER
|--------------------------- |  | -------------------
|RTS REVENUE ANALYSIS        |  | 2000£M             
|                           
|Transactions                |  | 402                
|Applications and Enterprise |  |                    
|Solutions                   |  | 385                
|Retail Solutions            |  | 35                 
|                           
|Total revenue               |  | 822                
|                           

|Underlying revenue in Transactions
fell 2% in 2000, compared to 7% in 1999, reflecting the continuing slow decline of the
foreign exchange market.



The roll out of Dealing 3000 is
progressing well. Approximately 20% of the installed Dealing base had been upgraded by
the end of the year.



The fall in Conversational Dealing
products revenue was offset by good growth in Dealing 2000-2 and sales of Automated
Dealing Systems for the Treasury market.



Applications and Enterprise
Solutions revenues recovered from 1999 as predicted, driven by sales of middleware and
order routing solutions, with particularly strong fourth quarter growth.



Retail Solutions products for
providers of personal financial services grew strongly, albeit off a low base.



Reuters Consulting was formed during
the year to deliver integrated client solutions around a range of Reuters content and
technology.





Operating margins declined by 1% to
28.5% due to the change in mix of revenues and investments made in growth areas, notably
Reuters Consulting and Retail Solutions.



Reuterspace


The Reuterspace (RS) strategy is to
utilise existing Reuters assets to exploit new market opportunities beyond the
traditional wholesale financial market.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                 |  | YEAR TO 31 DECEMBER
|---------------- |  | -------------------
|                 |  | 2000£M             
|                
|Revenue          |  | 235                
|                
|Operating loss   |  | (67                
|Operating margin |  | (28.               
|                

|Underlying revenue growth of 16% in
2000 was driven primarily by growth in online media revenues which more than doubled, but
was partially offset by reduced revenue from television. Underlying revenue growth in
1999 was 9%.


Actual revenue growth of 50%
compared to 2% growth in 1999 was boosted by the acquisitions of The Tower Group (1999),
The Yankee Group and O R Telematique (ORT). These acquisitions reflect the divisions
strategy of building large scale business audiences seeking value added information and
e-solutions.



Increased investment in the Retail
Finance Portals, reuters.com and online media expansion as well as business incubation
initiatives contributed to the higher loss in 2000. Branding costs also increased
significantly, to £10 million from £1 million in 1999. Investment in
Reuterspace is expected to continue at similar levels to that seen in 2000.



The balance of operating losses in
Reuterspace comprised the cost of operating the Greenhouse Fund and the central business
development groups.

30  Reuters Group PLC Annual Report and Form 20-F 2000
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|
|

|The primary purpose of the
Greenhouse Fund is to assist Reuters technology planning and to improve time to market of
technology within the Reuters product offering.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |  | YEAR TO 31 DECEMBER
|---------------------- |  | -------------------
|GREENHOUSE PERFORMANCE |  | 2000£M             
|                      
|Profits from disposals |  | 83                 
|Write-down             |  | (30                
|                      
|                       |  | 53                 
|                      
|Investments            | 
|Quoted at market value |  | 99                 
|Unquoted at cost       |  | 219                
|                      

|In 2000, the Greenhouse Fund
invested £184 million, comprising investment in 50 new companies and follow-on
funding of existing investments, bringing the total number of investments to 90. A number
of disposals were made in the year, realising a pre-tax profit of £83 million, up
from £37 million in 1999 and £26 million in 1998.



At 31 December 2000 the market value
of quoted investments was £99 million, compared to £438 million at the end of
1999 and £47 million at the end of 1998. Unquoted investments cost £219
million, compared to £57 million in 1999 and £10 million in 1998.



The write-down reflects the fact
that the market value of certain quoted investments and the estimated value of some
unquoted investments have fallen below their carrying value.



While an IPO is no longer intended
for the Greenhouse Fund, Reuters anticipates bringing in strategic investors.



Instinet


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

|                 |  | YEAR TO 31 DECEMBER
|---------------- |  | -------------------
|                 |  | 2000£M             
|                
|Revenue          |  | 804                
|                
|Operating profit |  | 157                
|Operating margin |  | 19.5               
|                

|Actual revenues increased 53%
and underlying increased 40% in 2000, primarily due to increased trading volumes and in
the case of actual revenues, the acquisition of Lynch, Jones & Ryan. The 1999 growth was 18%
and 15% respectively. The revenue split in 2000 was 76% US and 24% International.


Underlying US revenue growth was 34%
and International was 61%. US revenue growth was generated from increased volumes of
equities traded and the expansion of the Instinet third party clearing services. The
International revenue was predominantly generated from transactions in Europe.



Instinets average share of the
Nasdaq market was 13.7% for 2000 compared with 13.3% for 1999 and 14.3% for 1998. The
average revenue per share traded in 2000 declined by 8%.



Instinets Fixed Income product was
launched in 2000 with revenues in the year of £3 million.



Instinet decided not to proceed with
the launch of its retail brokerage product. Instead, Instinet plans to offer the service
through traditional and online securities brokers and through its wholesale operations.



Operating margin declined to 19.5%
from 24.5% in 1999 due to investment in the retail and Fixed Income products, investment
in trading capacity to accommodate increased volumes and the build up of corporate costs
prior to the IPO.



On 8 February 2001, Instinet filed a
Registration Statement with the US Securities and Exchange Commission with respect to the
previously announced IPO of a minority stake.



For information concerning certain
rules that could affect Instinets business see risk factor: Changes in regulatory
requirements could cause Instinet and its affiliates to incur significant expenses or
impair their ability to conduct their businesses, on page 38.



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

|             |  | YEAR TO 31 DECEMBER
|------------ |  | -------------------
|REVENUE      |  | 2000£M             
|            
|EMA          |  | 1,689              
|The Americas |  | 1,344              
|Asia/Pacific |  | 559                
|            
|Total        |  | 3,592              
|            

|Reuters Group PLC Annual Report and Form 20-F 2000  31
|------------------------------------------------------

|
|

|OPERATING
AND FINANCIAL REVIEW continued
|----------------------------------------

|Revenue growth in Europe, Middle
East and Africa (EMA) in 2000 was 3% actual and 5% on an underlying basis compared to an
actual 1% fall and an underlying increase of 1% in 1999. The biggest impetus of growth in
this region was Instinet International which grew 61% on an underlying basis.


Actual revenue growth in The
Americas was 37% and 23% underlying in 2000 compared to an actual increase of 11% in 1999
and a 10% underlying increase. There was strong underlying revenue growth across the
whole region but North America, in particular, grew 6%, and Instinet US grew 34%.



Actual revenue growth in
Asia/Pacific was 11% in 2000 compared with 3% in 1999. Underlying growth was 4% in 2000
compared with 4% decline in 1999. Underlying revenue growth in most countries was
relatively flat except for Japan, which grew by 10%.



Joint ventures and
associates


Excluded from operating profit is
the performance of a number of strategic alliances, joint ventures and minority stakes.
The more significant of these include:



Radianz, a joint venture with Equant
that became operational from 1 July 2000. Radianz plans to develop the worlds largest
secure internet protocol network for financial markets. Although Reuters owns 51% of the
joint venture its control is limited to 50%. Reuters has contributed most of its network
assets to Radianz. Reuters share of Radianz operating losses in 2000 was £9 million.



TIBCO Software Inc. (TSI), a US
publicly traded company which enables businesses to integrate enterprise applications and
deliver personalised information through enterprise portals, was spun off by Reuters in
1999.



Reuters has a 57% economic interest
in TSI but its voting rights are restricted to 49% and accordingly TSI is accounted for
as an associate. If all outstanding employee options over TSI shares were exercised,
Reuters shareholding in TSI would be 42%. Reuters share of TSIs profits in 2000 was
£2 million (1999: £3 million loss).



Factiva, a 50%-owned joint venture
with Dow Jones formed in 1999 that combines the businesses of RBB and Dow Jones
Interactive. Reuters share of Factivas losses in 2000 was £1 million, compared
with £4 million in 1999.



Multex Investor Europe, a 50%-owned
joint venture with Multex.com Inc., formed in February 2000 to provide dedicated broker
research and investment information to private investors in Europe. Reuters share of
Multex Investor Europe losses was £4 million in the year. Reuters holds a 6.2%
stake in Multex.com Inc. In addition, Multex Investor Japan, a 50%-owned joint venture
with Multex.com Inc., was formed in February 2001 to provide similar services in Japan.



Atriax, a consortium formed in late
2000, owned 25% by Reuters, that aims to become the premier e-market place for foreign
exchange by bringing together the worlds liquidity providers offering institutional and
corporate services.



Sila Communications, a 40%-owned
venture with Aether Systems created in May 2000 to provide wireless data service in
Europe. Reuters share of Silas losses in 2000 was £7 million. Reuters owns a 7.2%
interest in Aether Systems.



3.  GROUP COSTS


Divisional costs exclude business
transformation, goodwill and currency hedging.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  | YEAR TO 31 DECEMBER
|----------------------- |  | -------------------
|COST BY DIVISION        |  | 2000£M             
|                       
|RI                      |  | 1,454              
|RTS                     |  | 588                
|                       
|RF                      |  | 2,042              
|RS                      |  | 302                
|Instinet                |  | 647                
|Business transformation |  | 139                
|TSI/RBB                 |  |                   
|Goodwill/other          |  | 51                 
|                       
|Total                   |  | 3,181              
|                       

|Actual costs in RF grew by 7% in
2000 compared with no growth in 1999. Underlying costs in RF grew 3% compared with a
decline of 1% in 1999. The increase reflects costs to support revenue growth offset by
tight cost control. RF margin has remained at approximately 20.2% during the last two
years, an improvement of 1.4% against the 1998 margin of 18.8%.


Actual costs in RS grew 76% in 2000
and fell 5% in 1999. Underlying growth was 42% in 2000 compared with a 4% increase in
1999. This reflects a growth in investment in new business on initiatives such as the
retail portal and online media.



Instinet actual costs grew 63% in
2000 compared with 36% cost growth in 1999, while underlying costs grew 47% in 2000
compared with 33% in 1999. This reflects the growth in revenue and a significant increase
in costs to support the expansion of the business.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  | YEAR TO 31 DECEMBER
|----------------------- |  | -------------------
|COST BY FUNCTION        |  | 2000£M             
|                       
|Production and          |  |                    
|communications          |  | 1,731              
|Selling and marketing   |  | 621                
|Support services and    | 
|administration          |  | 633                
|Business transformation |  | 139                
|Goodwill amortisation   |  | 59                 
|Net currency gain       |  | (2                 
|                       
|Total                   |  | 3,181              
|% change                | 
|Actual                  |  | 24                 
|Underlying              |  | 19                 
|                       

|Production and
communications


This comprises costs involved in the
development and delivery of Reuters products and content to its clients. Actual costs
increased by 11% in 2000 compared to a 1% decline in 1999. The growth in costs is
distorted by the data feed accrual reversal in 1999. Excluding this reversal, the growth
in costs in 2000 was 9% reflecting revenue growth and the impact of Radianz.

32  Reuters Group PLC Annual Report and Form 20-F 2000
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|
|

|Selling and marketing


These costs relate to sales,
marketing and client support services. Actual selling and marketing costs increased by
21% in 2000 (compared to growth of 7% in 1999), largely due to a significant expansion of
Instinets business. Excluding Instinets costs, growth was 8% in line with revenue
growth.



Support services and
administration


This represents the cost of
maintaining the companys internal infrastructure, including internal systems, property
and office costs, finance and legal and general management costs. Actual costs increased
by 36% compared to growth of 10% in 1999. The increase was primarily due to an increase
in support and management costs at Instinet together with costs associated with the
acquisition of new subsidiaries.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  | YEAR TO 31 DECEMBER
|----------------------- |  | -------------------
|COST BY TYPE            |  | 2000£M             
|                       
|Staff                   |  | 1,176              
|Services                |  | 807                
|Depreciation            |  | 276                
|Data                    |  | 296                
|Communications          |  | 245                
|Space                   |  | 198                
|Other                   |  | 44                 
|Business transformation |  | 139                
|                       
|Total                   |  | 3,181              
|% change                | 
|Actual                  |  | 24                 
|Underlying              |  | 19                 
|                       

|Actual staff costs rose by 19% in
2000 compared to 6% in 1999. The increase was principally due to acquisitions, additional
staff required at Instinet to support higher trading volumes and a provision made for
severance costs in relation to the realignment of Instinets retail business. Excluding
Instinet, acquisitions and disposals, staff costs for 2000 rose 10% reflecting a
combination of increased headcount and salary rises.



Actual services costs increased 26%
in 2000 compared to 10% in 1999 reflecting increased settlement and clearing costs at
Instinet and higher levels of branding and consulting expenditure.


Depreciation decreased by 11% in
2000 and by 6% in 1999 due to lower subscriber capital expenditure in 1999, and the
transfer of assets from Reuters to Radianz in June 2000.



Data costs increased 30% in 2000 in
part reflecting the data feed accrual reversal in 1999. Excluding the once-off reversal,
data costs increased 17% in 2000 and 5% in 1999 reflecting the growth in exchange fees
costs and the demand for more third party data.



Actual communication costs increased
38% in 2000 compared with a fall of 1% in 1999. Growth in communications costs in 2000 is
distorted by a charge for the use of network assets which were transferred to Radianz in
June 2000.



Actual space costs increased 15% in
2000 compared with 9% in 1999 mainly due to the expansion of Instinet and the impact of
acquisitions.



4.  SHAREHOLDER
VALUE


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

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

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

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

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

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

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

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




Reuters rankings over recent
three-year measurement periods and the short measurement periods to 31 December 2000 are
set out below:






5.  FINANCIAL
NEEDS AND RESOURCES


Additions to tangible fixed assets
were £282 million in 2000, £38 million higher than 1999 and £14 million
lower than 1998. Subscriber equipment expenditure was £72 million in 2000, compared
with £65 million in 1999 and £119 million in 1998. Other equipment additions
were £210 million in 2000, £31 million higher than 1999 and £33 million
higher than 1998. The increase in other equipment additions was primarily relating to
property, software upgrades and new acquisitions.



Reuters spent £463 million on
acquisitions and fixed asset investments in the year compared to £135 million in
1999 and £157 million in 1998. In 2000, £40 million was spent on Reuters
shares acquired by an employee share ownership trust compared with £68 million in
1999 and £7 million in 1998. Cash receipts from
Reuters Group PLC Annual Report and Form 20-F 2000  33
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|OPERATING
AND FINANCIAL REVIEW continued
|----------------------------------------

|the sale of fixed asset investments,
principally relating to Greenhouse Fund disposals and the sale of Reuters interest in
Safetynet, were £80 million compared to £39 million in 1999 and £34
million in 1998.



Reuters paid dividends of £205
million in the year, £207 million in 1999 and £188 million in 1998.



Net debt at 31 December 2000
amounted to £34 million, compared with net funds of £41 million at 31
December 1999 and net debt of £3 million at 31 December 1998. Net debt at 31
December 2000 comprised cash and short-term investments of £647 million offset by
gross debt of £681 million.



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



At 31 December 2000 Reuters Group
PLC had available a committed syndicated loan facility of £500 million which
expires in December 2002, all undrawn at 31 December 2000.



A £1.5 billion Euro Commercial
Paper Programme was established in 1998. At 31 December 2000, Reuters had outstanding
obligations of £230 million under this programme, repayable at various dates up to
March 2001.



In 1998 Reuters also established a
£1.0 billion Euro Medium Term Note Programme. At 31 December 2000, Reuters had
raised funds of £326 million under this programme, repayable at various dates from
February 2001 up to November 2004.



6.  TREASURY
MANAGEMENT


Over 85% of Reuters revenue is
denominated in non-sterling currencies. Reuters also has significant costs denominated in
foreign currencies with a different mix from revenue. Reuters profits are, therefore,
exposed to currency fluctuations. The approximate proportion of operating profit
excluding goodwill amortisation and currency gains attributable to each key currency
group was as follows:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                             |  | YEAR TO 31 DECEMBER
|---------------------------- |  | -------------------
|OPERATING PROFIT BY CURRENCY |  | 2000               
|                            
|Continental Europe           |  |                    
|Euro currencies              |  | 107                
|Other                        |  | 18                 
|US dollar                    |  | 57                 
|Japanese yen                 |  | 22                 
|Sterling                     | 
|Depreciation                 |  | (58                
|Other                        |  | (66                
|Other                        |  | 20                 
|                            
|Total                        |  | 100                
|                            

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



In broad terms, using the 2000 mix
of profits, the impact of an additional unilateral 1% strengthening of sterling would
have been a reduction of approximately £10 million in operating profits before
hedging (1999: £10 million, 1998: £9 million).



Exchange rate movements had an
adverse impact on reported revenue and operating profit before hedging, mainly due to the
strength of sterling against European currencies.






A substantial proportion of Reuters
cash investments are held in US dollar assets. Reuters decided in 2000 to issue a
proportion of its gross borrowings in US dollars in order to better align the net
interest expense and to hedge the translation exposure on the US dollar investments.


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



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

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

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

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

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

34  Reuters Group PLC Annual Report and Form 20-F 2000
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|
|

|Reuters estimates that at 31
December 2000 there is a 5% chance that profits forecast for the coming 12 months will
deteriorate by more than £77 million as a result of currency fluctuations before
hedging and £42 million after hedging (actual 1999: £52 million before
hedging and £27 million after hedging). These figures represent the value at risk.



During 2000 the average value at
risk on forecast profits for the coming 12 months was as follows:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|VALUE AT RISK |  |         |  | BEFORE
               HEDGING£M |  | AFTERHEDGING£M | 
|------------- |  | ------- |  | ------------------------------- |  | -------------- | 
|             
|2000          |  | Average |  | 64                              |  | 32             | 
|              |  | High    |  | 78                              |  | 42             | 
|              |  | Low     |  | 49                              |  | 27             | 
|              | 
|1999          |  | Average |  | 60                              |  | 33             | 
|             

|The results of currency and interest
rate hedging activities for the three years to December 2000 are summarised below:
|-----------------------------------------------------------------------------------------------------------------------

|RECOGNISED GAINS/LOSSES |  | 2000£M |   | 1999£M |   | 1998£M | 
|----------------------- |  | ------ | - | ------ | - | ------ | 
|                       
|Currency hedging        |  | 5      |   | 9      |   | 45     | 
|Interest rate hedging   |  | (3     | ) | (1     | ) | 2      | 
|                       

|Recognised currency hedging gains
were lower in 2000 compared with 1999 due mainly to the relative strength of the US dollar
and Japanese yen in 2000.



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

|CURRENCY HEDGING            |  | GAINS£M |  | LOSSES£M |   | NET£M |  
|--------------------------- |  | ------- |  | -------- | - | ----- | -
|                           
|Unrecognised at 1/1/00      |  | 16      |  | (12      | ) | 4     |  
|Arising in previous years   | 
| recognised in             | 
|2000                        |  | 15      |  | (10      | ) | 5     |  
| not recognised in         | 
|2000                        |  | 1       |  | (2       | ) | (1    | )
|Arising in 2000             | 
| not recognised in         | 
|2000                        |  | 14      |  | (14      | ) |      |  
|                           
|Unrecognised at 31/12/00    |  | 15      |  | (16      | ) | (1    | )
|                           
|Of which:                   | 
| expected to be            | 
|recognised in 2001          |  | 11      |  | (14      | ) | (3    | )
| expected to be            | 
|recognised in 2002 or later |  | 4       |  | (2       | ) | 2     |  
|                           

|There were unrecognised losses of
£1 million on currency rate hedging at 31 December 2000 compared with unrecognised
gains of £4 million at 31 December 1999, and unrecognised losses of £6
million in 1998. The deterioration reflects the net impact of the strength of the US
dollar at the end of 2000, compared with the end of 1999 and rate changes since euro and
Japanese yen hedges were undertaken.



Net cash flows are mainly converted
into sterling and either applied to reduce debt or invested in money market instruments
with financial institutions holding strong credit ratings. Interest rates are managed
using a mix of financial instruments, which commence and mature at various dates through
to November 2004. All interest rate hedging relates to the use of interest rate swaps to
shorten the interest rate profile on medium term fixed rate notes issued.



Unrecognised losses of £2
million on interest rate hedging at 31 December 2000 are a result of the increase in
sterling interest rates since interest rate swaps were put in place and are offset by
compensating adjustments to the fair value of the fixed rate notes issued.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|INTEREST RATE HEDGING       |  | GAINS£M |  | LOSSES£M |   | NET£M |  
|--------------------------- |  | ------- |  | -------- | - | ----- | -
|                           
|Unrecognised at 1/1/00      |  |        |  | (17      | ) | (17   | )
|Arising in previous years   | 
| recognised at             | 
|December 2000               |  |        |  | (7       | ) | (7    | )
| not recognised at         | 
|December 2000               |  |        |  | (10      | ) | (10   | )
|Arising in 2000             | 
| not recognised at         | 
|December 2000               |  | 3       |  | 5        |   | 8     |  
|                           
|Unrecognised at 31/12/00    |  | 3       |  | (5       | ) | (2    | )
|                           
|Of which:                   | 
| expected to be            | 
|recognised in 2001 or later |  | 2       |  | (1       | ) | 1     |  
| expected to be            | 
|recognised in 2002 or later |  | 1       |  | (4       | ) | (3    | )
|                           

|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 £1 million (1999 and 1998: £1
million) excluding the impact of hedging.



7.  US GAAP


Reconciliations of net income and
shareholders equity from UK to US GAAP are set out on pages 76-77.



Under UK GAAP certain quoted
investments such as those made by the Greenhouse Fund are reflected on the balance sheet
as fixed assets at cost, whereas under US GAAP such investments are marked to market and
adjusted through the US statement of comprehensive income. In 2000 the adjustment was an
unrealised loss of £270 million whereas in 1999 the adjustment was an unrealised
gain of £425 million.



The market value of quoted
technology and other companies can change significantly. On a portfolio basis, a 10% move
in the market price of the quoted investments in the Greenhouse Fund at 31 December 2000
would increase/decrease the value of the Fund by £10 million. Quoted investments
are also exposed to exchange rate fluctuations. A strengthening

Reuters Group PLC Annual Report and Form 20-F 2000  35
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|OPERATING
AND FINANCIAL REVIEW continued
|----------------------------------------

|of sterling against the US dollar
would reduce the market value of the Greenhouse Fund.



Derivative instruments
and hedging activities


US Statement of Financial Accounting
Standard No 133 Accounting for Derivative Instruments and Hedging Activities (FAS 133) as
amended by FAS 138, became effective for Reuters on 1 January 2001. FAS 133 which
requires all derivative instruments to be carried on the balance sheet at fair value
introduces rules in respect of hedge accounting and the recognition of movements in fair
value through the income statement.



Reuters expects that it will not
designate any of its derivative instruments as qualifying hedge instruments under FAS 133
and, accordingly, expects to record changes in the fair value of its derivative
instruments in each current earnings period. The company will record a transition
adjustment in its accounting records to comply with FAS 133. The transition adjustment
will be calculated using the assumption that none of the hedging relationships that
existed prior to the adoption of FAS 133 will qualify for hedge accounting after the
adoption of FAS 133.



Under UK GAAP, Reuters will continue
to apply hedge accounting and accordingly expects to present a US GAAP adjustment for
2001 and in subsequent years. At this time, Reuters plans no significant change to its
risk management strategies due to the adoption of FAS 133.



The impact FAS 133 will have on the
US GAAP results in Reuters financial statements for the year ended 31 December 2001 is
currently being assessed.




8.  RISK
FACTORS



Forward-looking
statements


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


Unfavourable conditions
in financial markets may have a significant adverse effect on Reuters business


Reuters business is dependent upon
the health of the financial markets and the participants in those markets. Reuters
dealing products and Instinet are particularly dependent upon the level of activity in
the foreign exchange and equity and fixed income markets respectively. A period of
sustained economic downturn or volatility and lack of liquidity in financial markets may
lead to reduced demand for Reuters products and can therefore have a significant adverse
effect on Reuters revenues and results of operations. In addition, Reuters business could
be adversely affected by consolidations and rationalisations among clients in the
financial services and other industries.


Currency fluctuations
may have a negative impact on Reuters reported revenue and earnings


Reuters reports results in UK pounds
sterling but receives revenue and incurs expenses in more than 60 currencies and is
thereby exposed to the impact of fluctuations in currency rates. The euros
continuing weakness relative to the pound in 2000 restricted revenue and earnings growth.
A continuation of the euros weakness could further restrict reported revenue and
earnings for 2001. Reuters currency exposure is actively hedged. For additional
information concerning currency fluctuations see Treasury Management on pages 34-35.


Reuters faces increased
competition from new and existing information providers using internet-based services


The availability of public internet
technology is reducing barriers for entry to new information providers, creating
additional competition and new price/cost dynamics in the industry. It is also increasing
the availability of commoditised data in cheaper forms and the loss of control over
intellectual property. As a publishing medium, it is creating new outlets for content
providers. If Reuters is unable to cope effectively with increased competitive pressure
arising from the above factors, its revenues and results of operation would be adversely
affected.


Reuters is exposed to a
decline in the market valuation of internet and technology companies, including companies
in which it has invested


Reuters strategy is based on
developing internet-based products and reducing costs through internet-based
infrastructure. Due to the increasing importance of the internet to Reuters core
business, the value of Reuters shares may be adversely affected by a decline in the value
of internet and other technology stocks generally or changes in investors expectations
regarding the internet or prospects for companies with internet activities. In addition,
Reuters has entered into joint ventures with, and made strategic investments






36  Reuters Group PLC Annual Report and Form 20-F 2000
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|
|

|in, a number of internet and
technology companies, including investments made through the Greenhouse Fund in
internet-related companies. The market value of a number of these companies fluctuated
widely and generally decreased during 2000, in part as a result of external market
factors. In particular, the market value of Reuters interest in TSI during 2000
(excluding shares subject to employee options) varied from a high of $14 billion to a low
of $3 billion. In addition, Reuters subsidiary Instinet is progressing towards an IPO of
a minority stake. 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 may not be able
to realise the anticipated benefits of its internet transformation strategy


In February 2000, Reuters announced a business transformation
initiative, intended to accelerate the migration of its core
businesses to web-enabled internal systems and processes. In 2000,
expenditures in connection with the transformation amounted to
£139 million. Reuters expects to make significant additional
expenditures of £150 million on business transformation in 2001.
While Reuters expects that the transformation will produce significant
competitive advantages and cost savings, there can be no assurance
that these benefits will be realised in full or at all. In addition,
Reuters may not be able to successfully implement its transformation
strategy or adapt its businesses to internet commerce. Furthermore,
Reuters faces risks associated with implementing its new business
model in the competitive and rapidly changing internet environment.


Reuters may experience
difficulties or delays in developing new technology


Products in the information
technology industry are complex and Reuters is becoming increasingly dependent
on commercial off-the-shelf software. As a result, Reuters, like other
information vendors and software suppliers, may encounter difficulties or delays
in the development, implementation and market acceptance of new products.


Reuters business model
may be disrupted by the emergence of new technologies


There is a risk that
technology not in the mainstream will quickly enter the market and disrupt
Reuters existing business models. Reuters has an active technology foresight
programme, designed to recognise and assess early innovations. However, there
can be no assurance that Reuters reaction will be appropriate and timely and
that Reuters would not be negatively affected by the emergence of new
technologies.


Reuters business is
dependent on the operation of its and Radianz's networks and systems





Reuters business is dependent on its ability
to process speedily substantial quantities of data and transactions on its computer-based networks
and systems and those of Radianz. Any failure or interruption of such systems
due to factors beyond Reuters control would have a material adverse effect on
Reuters business and results of operations. Although Reuters seeks to minimise
these risks as far as commercially reasonable through security controls and
active business continuity programmes, there can be no assurance that adverse
events will not occur.


Reuters business will be
adversely affected if it cannot accommodate increased network traffic


The SEC is requiring the US
securities industry to change the pricing format under which stocks and options
are traded from fractions to decimals. These requirements are expected to be
completed by April 2001. In addition to decimalisation, market events such as
the emergence of online trading throughout Europe and the US, high market
volatility, and the multiple listing of options, will likely result in a
significant increase in information update rates, which may impact Reuters
product and network performance from time to time. While Reuters has implemented
a number of capacity management initiatives, there can be no assurance that its
infrastructure, networks and desktop applications and systems will be able to
successfully accommodate the accelerated growth of peak traffic volumes
currently forecast by industry specialists.


Reuters may not be able to
complete successfully the planned IPO of Instinet and may be exposed to
increased volatility if the IPO is completed


Reuters subsidiary,
Instinet, has filed a Registration Statement with the SEC in the US for an IPO
of a minority stake. However, Reuters can give no assurance that Instinet will
succeed in completing the IPO, which may be adversely affected by market
conditions, regulatory decisions or other factors. If the IPO is delayed or not
completed, Reuters results of operations may be adversely affected because it
will have already incurred costs in connection with its preparation. In
addition, Reuters may not realise the anticipated proceeds from the IPO or other
benefits, including a market valuation of its interest in Instinet.


Reuters also can give no
assurance regarding the level of the initial offering price or the market
performance of Instinet shares after the IPO, if completed. Reuters shares may
experience additional volatility following an Instinet IPO as a result of
changes in the price of Instinet shares.


Instinet and other
Reuters affiliates may be exposed to losses from broker activities



Certain Reuters subsidiaries act as
brokers in the financial markets but do not undertake trading on their own account.
Companies within the Instinet group operate as agency brokers in the equities and fixed
income markets and as a clearing firm engaged in correspondent clearing. In addition,
RTSL operates the Dealing 2000-2 and 3000 electronic brokerage services. These brokers
could incur losses from broken trades and, in respect of equities and fixed income, the




Reuters Group PLC Annual Report and Form 20-F 2000  37
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|OPERATING
AND FINANCIAL REVIEW continued
|----------------------------------------

|failure of a counterparty. While
Reuters and Instinet seek to mitigate these risks by computerised systems, procedural
controls and contractual agreements with customers, there can be no assurance that these
measures will prevent losses from occurring.


Changes in regulatory
requirements could cause Instinet and its affiliates to incur significant
expenses or impair their ability to conduct their businesses


Instinet and its affiliates
are subject to extensive regulation in the US, including regulation by the SEC
and the National Association of Securities Dealers Inc (NASD), which oversees
the activities of US-registered broker-dealers and regulates the Nasdaq stock
market, and in other countries in which they operate. In the United States,
recent regulatory changes affecting Instinet include new rules regarding
alternative trading systems and rules governing market-maker and exchange
specialist usage. In addition, on 10 January 2001, the SEC approved a proposed
NASD rule change, generally referred to as Super-Montage, which will
significantly change the nature of trading in Nasdaq-quoted securities. These
changes could cause Instinet to receive fewer orders in Nasdaq-quoted
securities, which are the largest component of Instinets equity securities
business, and also could cause fewer of the orders Instinet receives to be
executed. Further, new SEC rules such as the disclosures of order routing and
execution practices and the SEC-mandated move to decimalisation in April 2001
would require Instinet to modify its systems and may significantly affect its
business.


Reuters is unable to
predict accurately, at this time, the impact of any proposed or potential
changes to the regulatory environment in which Instinet and its affiliates
operate, which may include additional changes to the Nasdaq market place
considered by the NASD or the adoption by authorities in other jurisdictions of
new methods for regulating electronic over-the-counter trading. Any of the above
or other regulatory changes may cause Instinet and its affiliates to incur
substantial compliance costs or may impair their ability to conduct their
businesses or to compete effectively.


Reuters does not have
management control over some of its ventures



Reuters has entered into a number of joint ventures, which it does not control, such as
the Radianz joint venture.
In addition, Reuters does not have management control over a number of companies
in which it has invested, including TSI, where Reuters voting interests are
restricted to 49%. Although Reuters generally seeks Board representation or
other means of participating in the management of companies or joint ventures in
which it invests, Reuters ability to affect the performance of these companies
or joint ventures may be limited where it does not exercise management control.


Reuters is dependent on
Radianz for the provision of certain network services


Reuters has outsourced the
day-to-day operation of most of its legacy and internet protocol networks to
Radianz, its new joint venture with Equant. Radianz will source the majority of
its requirements from Equant and will seek to provide network services to
companies in addition to Reuters and Instinet. 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 should
Reuters and Radianz develop conflicting network strategies in the future.
Reuters business could be adversely affected as a result.


Reuters may be exposed
to adverse governmental action in countries where it conducts reporting activities



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




38  Reuters Group PLC Annual Report and Form 20-F 2000
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|CONSOLIDATED
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER
|-------------------------------------------------------------------

|                                                            |  | NOTES |  | 2000£M |   | 1999£M |   | 1998£M |  
|----------------------------------------------------------- |  | ----- |  | ------ | - | ------ | - | ------ | -
|                                                           
|Revenue: Group and share of joint ventures                  |  |       |  | 3,678  |   | 3,160  |   | 3,032  |  
|less share of joint ventures revenue                        |  |       |  | (86    | ) | (35    | ) |       |  
|                                                           
|Group revenue                                               |  | 1     |  | 3,592  |   | 3,125  |   | 3,032  |  
|Operating costs                                             |  | 2     |  | (3,181 | ) | (2,576 | ) | (2,482 | )
|                                                           
|Operating profit                                            |  |       |  | 411    |   | 549    |   | 550    |  
|Share of operating results in:                              | 
|Joint ventures                                              |  |       |  | (17    | ) | (6     | ) |       |  
|Associates                                                  |  |       |  | (16    | ) | (11    | ) | (1     | )
|Profit on disposals of subsidiary undertakings              |  | 31    |  | 10     |   | 52     |   |       |  
|Profit on disposals of fixed assets/investments             |  | 31    |  | 291    |   | 50     |   | 26     |  
|Income from fixed asset investments                         |  |       |  | 5      |   | 2      |   | 3      |  
|Amounts written off fixed asset investments                 |  |       |  | (30    | ) |       |   |       |  
|Net interest receivable/(payable)                           |  | 3     |  | 3      |   | (4     | ) | 2      |  
|                                                           
|Profit on ordinary activities before taxation               |  |       |  | 657    |   | 632    |   | 580    |  
|Taxation on profit on ordinary activities                   |  | 4     |  | (125   | ) | (207   | ) | (196   | )
|                                                           
|Profit after taxation attributable to ordinary shareholders |  |       |  | 532    |   | 425    |   | 384    |  
|Dividends                                                   |  | 5     |  | (224   | ) | (206   | ) | (203   | )
|                                                           
|Retained profit                                             |  |       |  | 308    |   | 219    |   | 181    |  
|                                                           
|                                                            | 
|Basic earnings per ordinary share                           |  | 6     |  | 37.9   | p | 30.2   | p | 26.7   | p
|Diluted earnings per ordinary share                         |  | 6     |  | 37.3   | p | 29.7   | p | 26.6   | p

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


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



CONSOLIDATED STATEMENT
OF TOTAL RECOGNISED GAINS AND LOSSESFOR THE YEAR ENDED 31 DECEMBER
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                |  | NOTES |  | 2000£M |  | 1999£M |  | 1998£M |  
|--------------------------------------------------------------- |  | ----- |  | ------ |  | ------ |  | ------ | -
|                                                               
|Profit after taxation attributable to ordinary shareholders     |  |       |  | 532    |  | 425    |  | 384    |  
|Unrealised gains on formation of joint ventures  and associates |  | 31    |  | 73     |  |       |  |       |  
|Unrealised gain on deemed disposal of associate                 |  | 31    |  | 39     |  |       |  |       |  
|Unrealised gains on disposals of fixed asset investments        |  | 4     |  | 13     |  |       |  |       |  
|Translation differences taken directly to reserves              |  |       |  | 40     |  | 10     |  | (1     | )
|                                                               
|Total recognised gains and losses relating to the year          |  |       |  | 697    |  | 435    |  | 383    |  
|                                                               

|A detailed statement showing the
movement in capital and reserves is set out in note 26.
Reuters Group PLC Annual Report and Form 20-F 2000  39
|-----------------------------------------------------------------------------------------------------------------------------------------------

|
|

|NOTES
ON THE CONSOLIDATED PROFIT AND LOSS ACCOUNT
|-------------------------------------------------

|1.  SEGMENTAL
ANALYSIS


The tables below are a segmental
analysis of revenue, costs and profit which reflects the way in which Reuters is
managed. Following the Groups reorganisation which became effective on 1 January 1999
the Group is managed on a divisional basis, comprising Reuters Information, Reuters
Trading Solutions (together referred to as Reuters Financial), Reuterspace and Instinet.
For comparability the divisional results exclude Reuters Business Briefing (RBB) and
TIBCO Software Inc. (TSI). RBB is now part of the Factiva joint venture which became
effective in July 1999. TSI was floated on the Nasdaq stock market in July 1999 and is
now accounted for as an associate.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|By division                          |  | 2000£M |   | %CHANGE |    | 1999£M |   | %CHANGE |    | 1998£M |  
|------------------------------------ |  | ------ | - | ------- | -- | ------ | - | ------- | -- | ------ | -
|                                    
|Revenue                              |  |        |   |         |    |        |   |         |    |        |  
|Reuters Information                  |  | 1,737  |   | 7       | %  | 1,619  |   | 6       | %  | 1,531  |  
|Reuters Trading Solutions            |  | 822    |   | 5       | %  | 780    |   | (6      | %) | 827    |  
|                                    
|Reuters Financial                    |  | 2,559  |   | 7       | %  | 2,399  |   | 2       | %  | 2,358  |  
|Reuterspace                          |  | 235    |   | 50      | %  | 157    |   | 2       | %  | 154    |  
|Instinet                             |  | 804    |   | 53      | %  | 525    |   | 18      | %  | 446    |  
|                                    
|Divisional revenue                   |  | 3,598  |   | 17      | %  | 3,081  |   | 4       | %  | 2,958  |  
|TSI/RBB                              |  |       |   |        |    | 52     |   | 42      | %  | 89     |  
|Share of joint ventures revenue      |  | 86     |   | 146     | %  | 35     |   |        |    |       |  
|Intra-group revenue                  |  | (6     | ) | (16     | %) | (8     | ) | (47     | %) | (15    | )
|                                    
|Gross revenue                        |  | 3,678  |   | 16      | %  | 3,160  |   | 4       | %  | 3,032  |  
|Less share of joint ventures revenue |  | (86    | ) | 146     | %  | (35    | ) |        |    |       |  
|                                    
|Group revenue                        |  | 3,592  |   | 15      | %  | 3,125  |   | 3       | %  | 3,032  |  
|                                    
|Costs                                | 
|Reuters Information                  |  | (1,454 | ) | 7       | %  | (1,366 | ) | (1      | %) | (1,373 | )
|Reuters Trading Solutions            |  | (588   | ) | 7       | %  | (550   | ) | 3       | %  | (541   | )
|                                    
|Reuters Financial                    |  | (2,042 | ) | 7       | %  | (1,916 | ) |        |    | (1,914 | )
|Reuterspace                          |  | (302   | ) | 76      | %  | (172   | ) | (5      | %) | (181   | )
|Instinet                             |  | (647   | ) | 63      | %  | (396   | ) | 36      | %  | (291   | )
|                                    
|Divisional costs                     |  | (2,991 | ) | 20      | %  | (2,484 | ) | 4       | %  | (2,386 | )
|TSI/RBB                              |  |       |   |        |    | (59    | ) |        |    | (104   | )
|Business transformation              |  | (139   | ) |        |    |       |   |        |    |       |  
|Intra-group costs                    |  | 6      |   | (16     | %) | 8      |   | (47     | %) | 15     |  
|                                    
|Group costs                          |  | (3,124 | ) | 23      | %  | (2,535 | ) | 3       | %  | (2,475 | )
|                                    
|Profit                               | 
|Reuters Information                  |  | 283    |   | 12      | %  | 253    |   | 60      | %  | 158    |  
|Reuters Trading Solutions            |  | 234    |   | 2       | %  | 230    |   | (20     | %) | 286    |  
|                                    
|Reuters Financial                    |  | 517    |   | 7       | %  | 483    |   | (9      | %) | 444    |  
|Reuterspace                          |  | (67    | ) | 346     | %  | (15    | ) | (44     | %) | (27    | )
|Instinet                             |  | 157    |   | 22      | %  | 129    |   | (17     | %) | 155    |  
|Net currency gain                    |  | 2      |   | (67     | %) | 6      |   | (85     | %) | 39     |  
|                                    
|Divisional profit                    |  | 609    |   | 1       | %  | 603    |   | (1      | %) | 611    |  
|Business transformation              |  | (139   | ) |        |    |       |   |        |    |       |  
|TSI/RBB                              |  |       |   |        |    | (7     | ) | 53      | %  | (15    | )
|                                    
|Total                                |  | 470    |   | (21     | %) | 596    |   |        |    | 596    |  
|                                    
|Goodwill                             | 
|Reuters Information                  |  | (14    | ) | 4       | %  | (13    | ) | (11     | %) | (15    | )
|Reuters Trading Solutions            |  | (20    | ) | (23     | %) | (26    | ) | 35      | %  | (20    | )
|                                    
|Reuters Financial                    |  | (34    | ) | (14     | %) | (39    | ) | 11      | %  | (35    | )
|Reuterspace                          |  | (14    | ) | 367     | %  | (3     | ) | (59     | %) | (7     | )
|Instinet                             |  | (11    | ) | 147     | %  | (5     | ) | 27      | %  | (4     | )
|                                    
|Total goodwill                       |  | (59    | ) | 26      | %  | (47    | ) | 2       | %  | (46    | )
|                                    
|Operating profit                     |  | 411    |   | (25     | %) | 549    |   |        |    | 550    |  
|                                    

|40  Reuters Group PLC Annual Report and Form 20-F 2000
|------------------------------------------------------

|
|

|
|

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


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

|By geography                   |  | 2000£M |   | %CHANGE |    | 1999£M |   | %CHANGE |    | 1998£M |  
|------------------------------ |  | ------ | - | ------- | -- | ------ | - | ------- | -- | ------ | -
|                              
|Revenue                        |  |        |   |         |    |        |   |         |    |        |  
|Europe, Middle East and Africa |  | 1,689  |   | 3       | %  | 1,643  |   | (1      | %) | 1,663  |  
|The Americas                   |  | 1,344  |   | 37      | %  | 979    |   | 11      | %  | 880    |  
|Asia/Pacific                   |  | 559    |   | 11      | %  | 503    |   | 3       | %  | 489    |  
|                              
|                               |  | 3,592  |   | 15      | %  | 3,125  |   | 3       | %  | 3,032  |  
|                              
|Operating costs where incurred | 
|Europe, Middle East and Africa |  | (1,023 | ) | 8       | %  | (948   | ) | (3      | %) | (973   | )
|The Americas                   |  | (899   | ) | 22      | %  | (737   | ) | 19      | %  | (618   | )
|Asia/Pacific                   |  | (264   | ) | 4       | %  | (255   | ) | 1       | %  | (259   | )
|                              
|                               |  | (2,186 | ) | 13      | %  | (1,940 | ) | 5       | %  | (1,850 | )
|                              
|Profit                         | 
|Europe, Middle East and Africa |  | 666    |   | (4      | %) | 695    |   | 1       | %  | 690    |  
|The Americas                   |  | 445    |   | 84      | %  | 242    |   | (8      | %) | 262    |  
|Asia/Pacific                   |  | 295    |   | 19      | %  | 248    |   | 8       | %  | 230    |  
|                              
|                               |  | 1,406  |   | 19      | %  | 1,185  |   |        |    | 1,182  |  
|                              
|Central costs                  | 
|Other                          |  | (858   | ) | 34      | %  | (642   | ) | (4      | %) | (671   | )
|Business transformation        |  | (139   | ) |        |    |       |   |        |    |       |  
|Net currency gain              |  | 2      |   | (67     | %) | 6      |   | (85     | %) | 39     |  
|                              
|Operating profit               |  | 411    |   | (25     | %) | 549    |   |        |    | 550    |  
|                              

|United Kingdom and Ireland revenue
was £522 million (1999: £541 million, 1998: £581 million). With the
exception of Instinet, Reuters products are delivered and sold through a common network
and geographical infrastructure.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Revenue by type |  | 2000£M |  | %CHANGE |   | 1999£M |  | %CHANGE |    | 1998£M | 
|--------------- |  | ------ |  | ------- | - | ------ |  | ------- | -- | ------ | 
|               
|Recurring       |  | 2,537  |  | 9       | % | 2,338  |  | 5       | %  | 2,219  | 
|Usage           |  | 863    |  | 42      | % | 609    |  | 6       | %  | 572    | 
|Outright        |  | 192    |  | 8       | % | 178    |  | (26     | %) | 241    | 
|               
|                |  | 3,592  |  | 15      | % | 3,125  |  | 3       | %  | 3,032  | 
|               

|Recurring revenue is derived from
the sale of subscription services, including maintenance contracts. Usage revenue is
principally derived from Instinet, Dealing 2000-2 and Dealing 3000 Spot Matching.
Outright revenue comprises once-off sales including information and risk management
solutions.
Reuters Group PLC Annual Report and Form 20-F 2000  41
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|NOTES
ON THE CONSOLIDATED PROFIT AND LOSS ACCOUNT continued
|-----------------------------------------------------------

|2.  OPERATING COSTS
|-------------------

|Costs by type                              |  | 2000£M |   | %CHANGE |    | 1999£M |   | %CHANGE |    | 1998£M |  
|------------------------------------------ |  | ------ | - | ------- | -- | ------ | - | ------- | -- | ------ | -
|                                          
|Wages, salaries, commission and allowances |  | 1,081  |   | 24      | %  | 869    |   | 8       | %  | 805    |  
|Social security costs                      |  | 81     |   | 17      | %  | 69     |   | (5      | %) | 73     |  
|Other pension costs (see note 23)          |  | 56     |   | 12      | %  | 49     |   | (2      | %) | 50     |  
|                                          
|Staff                                      |  | 1,218  |   | 23      | %  | 987    |   | 6       | %  | 928    |  
|Services                                   |  | 895    |   | 40      | %  | 641    |   | 10      | %  | 586    |  
|Depreciation                               |  | 276    |   | (11     | %) | 310    |   | (6      | %) | 331    |  
|Data                                       |  | 296    |   | 30      | %  | 227    |   | (6      | %) | 242    |  
|Communications                             |  | 245    |   | 38      | %  | 178    |   | (1      | %) | 178    |  
|Space                                      |  | 202    |   | 17      | %  | 172    |   | 9       | %  | 158    |  
|Cost of sales and other                    |  | 31     |   | (21     | %) | 39     |   | (23     | %) | 52     |  
|Goodwill amortisation                      |  | 59     |   | 26      | %  | 47     |   | 2       | %  | 46     |  
|Reimbursement of costs                     |  | (39    | ) | 105     | %  | (19    | ) |        |    |       |  
|Currency hedging activities  net gain     |  | (5     | ) | (44     | %) | (9     | ) | (80     | %) | (45    | )
|Foreign currency translation  net loss    |  | 3      |   |        |    | 3      |   | (44     | %) | 6      |  
|                                          
|                                           |  | 3,181  |   | 23      | %  | 2,576  |   | 4       | %  | 2,482  |  
|                                          

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

|Costs by function                                       |  | 2000£M |   | %CHANGE |    | 1999£M |   | %CHANGE |    | 1998£M |  
|------------------------------------------------------- |  | ------ | - | ------- | -- | ------ | - | ------- | -- | ------ | -
|                                                       
|Production and communications                           |  | 1,731  |   | 11      | %  | 1,556  |   | (1      | %) | 1,571  |  
|Selling and marketing                                   |  | 621    |   | 21      | %  | 513    |   | 7       | %  | 479    |  
|Support services and administration                     |  | 633    |   | 36      | %  | 466    |   | 10      | %  | 425    |  
|Business transformation                                 |  | 139    |   |        |    |       |   |        |    |       |  
|Goodwill amortisation                                   |  | 59     |   | 26      | %  | 47     |   | 2       | %  | 46     |  
|Net currency gain                                       |  | (2     | ) | (67     | %) | (6     | ) | (85     | %) | (39    | )
|                                                       
|                                                        |  | 3,181  |   | 23      | %  | 2,576  |   | 4       | %  | 2,482  |  
|                                                       
|Costs include:                                          | 
|Development expenditure                                 |  | 323    |   | 64      | %  | 197    |   | (2      | %) | 200    |  
|Operating lease expenditure:                            | 
|Hire of equipment                                       |  | 10     |   | 11      | %  | 9      |   | (18     | %) | 11     |  
|Other, principally property                             |  | 83     |   | 5       | %  | 79     |   | 8       | %  | 73     |  
|Advertising                                             |  | 50     |   | 76      | %  | 29     |   | 19      | %  | 24     |  
|Reversal of third party data feed accrual               |  |       |   |        |    | (25    | ) |        |    |       |  
|                                                       
|Fees payable to PricewaterhouseCoopers were as follows: | 
|Audit fees:                                             | 
|United Kingdom                                          |  | 0.9    |   | (10     | %) | 1.0    |   | 11      | %  | 0.9    |  
|Overseas                                                |  | 0.9    |   |        |    | 0.9    |   |        |    | 0.9    |  
|                                                       
|                                                        |  | 1.8    |   | (5      | %) | 1.9    |   | 6       | %  | 1.8    |  
|                                                       
|Non-audit services:                                     | 
|United Kingdom                                          |  | 5.9    |   | 26      | %  | 4.7    |   | 24      | %  | 3.8    |  
|Overseas                                                |  | 7.2    |   | 22      | %  | 5.9    |   | (3      | %) | 6.1    |  
|                                                       
|                                                        |  | 13.1   |   | 24      | %  | 10.6   |   | 7       | %  | 9.9    |  
|                                                       
|                                                        |  | 14.9   |   | 19      | %  | 12.5   |   | 7       | %  | 11.7   |  
|                                                       

|42  Reuters Group PLC Annual Report and Form 20-F 2000
|------------------------------------------------------

|
|

|
|

|2.  OPERATING COSTS continued


The United Kingdom audit fee of
£0.9 million includes £10,000 in respect of the parent company audit.


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

|                                                               |  | 2000£M |  | %CHANGE |    | 1999£M |  | %CHANGE |    | 1998£M | 
|-------------------------------------------------------------- |  | ------ |  | ------- | -- | ------ |  | ------- | -- | ------ | 
|                                                              
|Litigation support, due diligence and other audit related work |  | 2.3    |  | (63     | %) | 6.3    |  | 62      | %  | 3.9    | 
|Management consultancy                                         |  | 7.1    |  | 344     | %  | 1.6    |  | (56     | %) | 3.6    | 
|Taxation advice                                                |  | 3.7    |  | 37      | %  | 2.7    |  | 13      | %  | 2.4    | 
|                                                              
|                                                               |  | 13.1   |  | 24      | %  | 10.6   |  | 7       | %  | 9.9    | 
|                                                              

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


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)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                |  | 2000£M |   | 1999£M |   | 1998£M |  
|----------------------------------------------- |  | ------ | - | ------ | - | ------ | -
|                                               
|Interest receivable:      Listed investments    |  | 5      |   | 4      |   | 14     |  
|Unlisted investments                            |  | 19     |   | 42     |   | 60     |  
|Share of joint ventures and associates interest |  | 13     |   |       |   |       |  
|                                               
|                                                |  | 37     |   | 46     |   | 74     |  
|                                               
|Interest payable:                               | 
|Bank loans                                      |  | (3     | ) | (3     | ) | (6     | )
|Other borrowings                                |  | (31    | ) | (47    | ) | (66    | )
|                                               
|                                                |  | (34    | ) | (50    | ) | (72    | )
|                                               
|                                                |  | 3      |   | (4     | ) | 2      |  
|                                               

|Reuters Group PLC Annual Report and Form 20-F 2000  43
|------------------------------------------------------

|
|

|NOTES
ON THE CONSOLIDATED PROFIT AND LOSS ACCOUNT continued
|-----------------------------------------------------------

|4.  TAXATION ON PROFIT ON
ORDINARY ACTIVITIES
|---------------------------------------------

|                                                        |  | 2000£M |   | 1999£M |   | 1998£M |  
|------------------------------------------------------- |  | ------ | - | ------ | - | ------ | -
|                                                       
|UK corporation tax                                      |  |        |   |        |   |        |  
|Current tax on income for the period                    |  | 292    |   | 91     |   | 53     |  
|Adjustments in respect of prior periods                 |  | (40    | ) | 9      |   | 3      |  
|                                                       
|                                                        |  | 252    |   | 100    |   | 56     |  
|Double taxation relief                                  |  | (264   | ) | (14    | ) | (10    | )
|                                                       
|                                                        |  | (12    | ) | 86     |   | 46     |  
|                                                       
|Foreign tax                                             | 
|Current tax on income for the period                    |  | 133    |   | 103    |   | 152    |  
|Share of joint ventures and associates tax              |  | 1      |   |       |   |       |  
|Adjustments in respect of prior periods                 |  | 15     |   | 7      |   | (9     | )
|                                                       
|                                                        |  | 149    |   | 110    |   | 143    |  
|                                                       
|Deferred taxation (see note 24)                         |  | (12    | ) | 11     |   | 7      |  
|                                                       
|                                                        |  | 125    |   | 207    |   | 196    |  
|                                                       
|Reconciliation to the UK nominal tax rate:              | 
|Effective tax rate                                      |  | 19.0   | % | 32.7   | % | 33.8   | %
|UK nominal tax rate                                     |  | 30.0   | % | 30.3   | % | 31.0   | %
|Taxes as shown in these financial statements            |  | 125    |   | 207    |   | 196    |  
|Corporation tax on pre-tax profit at UK nominal rate    |  | 197    |   | 191    |   | 180    |  
|                                                       
|Difference                                              |  | (72    | ) | 16     |   | 16     |  
|                                                       
|The difference is principally due to:                   | 
|Non-tax deductible amortisation of goodwill             |  | 21     |   | 17     |   | 16     |  
|Book profit on TSI public share issues not taxable      |  | (47    | ) | (16    | ) |       |  
|Tax deduction arising from exercise of employee options |  | (60    | ) | (1     | ) |       |  
|Other differences                                       |  | 14     |   | 16     |   |       |  
|                                                       
|                                                        |  | (72    | ) | 16     |   | 16     |  
|                                                       

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


Included in the tax charge of £125
million is tax of £34 million arising on the profit on disposal of fixed asset
investments and partial disposal of subsidiary and associated undertakings.


Unrealised gains on disposals of
fixed asset investments are net of tax of £3 million.
44  Reuters Group PLC Annual Report and Form 20-F 2000
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|
|

|5.  DIVIDENDS
|-------------

|                      |  | 2000£M |  | 1999£M |  | 1998£M | 
|--------------------- |  | ------ |  | ------ |  | ------ | 
|                     
|Interim               |  | 51     |  | 52     |  | 48     | 
|Final (2000 proposed) |  | 173    |  | 154    |  | 155    | 
|                     
|                      |  | 224    |  | 206    |  | 203    | 
|                     
|Per ordinary share    |  | PENCE  |  | PENCE  |  | PENCE  | 
|                     
|Interim               |  | 3.65   |  | 3.65   |  | 3.4    | 
|Final (2000 proposed) |  | 12.35  |  | 11.00  |  | 11.0   | 
|                     
|                      |  | 16.00  |  | 14.65  |  | 14.4   | 
|                     

|6.  EARNINGS PER ORDINARY
SHARE



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

|Weighted average number in millions                       |  | 2000  |   | 1999  |   | 1998  |  
|--------------------------------------------------------- |  | ----- | - | ----- | - | ----- | -
|                                                         
|Ordinary shares in issue                                  |  | 1,426 |   | 1,424 |   | 1,449 |  
|Non-vested shares held by employee share ownership trusts |  | (22   | ) | (15   | ) | (11   | )
|                                                         
|Basic earnings per share denominator                      |  | 1,404 |   | 1,409 |   | 1,438 |  
|Issuable on conversion of options                         |  | 24    |   | 20    |   | 5     |  
|                                                         
|Diluted earnings per share denominator                    |  | 1,428 |   | 1,429 |   | 1,443 |  
|                                                         

|7.  REMUNERATION OF
DIRECTORS



The report on remuneration and
related matters on pages 15-24 includes details of directors emoluments, pension
arrangements, long-term incentive schemes and stock option plans; those details form part
of these financial statements.

Reuters Group PLC Annual Report and Form 20-F 2000  45
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|NOTES
ON THE CONSOLIDATED PROFIT AND LOSS ACCOUNT continued
|-----------------------------------------------------------

|8.  EMPLOYEE INFORMATION


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

|By division                         |  | 2000   |  | 1999   |  | 1998   | 
|----------------------------------- |  | ------ |  | ------ |  | ------ | 
|                                   
|Reuters Information                 |  | 8,631  |  | 9,239  |  | 9,306  | 
|Reuters Trading Solutions           |  | 4,387  |  | 4,105  |  | 3,887  | 
|                                   
|Reuters Financial                   |  | 13,018 |  | 13,344 |  | 13,193 | 
|Reuterspace                         |  | 2,226  |  | 1,344  |  | 1,541  | 
|Instinet                            |  | 2,021  |  | 1,379  |  | 1,181  | 
|TSI/RBB                             |  |       |  | 595    |  | 775    | 
|                                   
|                                    |  | 17,265 |  | 16,662 |  | 16,690 | 
|                                   
|By location                         | 
|                                   
|Europe, Middle East and Africa      |  | 8,790  |  | 8,476  |  | 8,723  | 
|The Americas                        |  | 6,064  |  | 5,676  |  | 5,404  | 
|Asia/Pacific                        |  | 2,411  |  | 2,510  |  | 2,563  | 
|                                   
|                                    |  | 17,265 |  | 16,662 |  | 16,690 | 
|                                   
|By function                         | 
|                                   
|Production and communications       |  | 9,274  |  | 8,873  |  | 8,912  | 
|Selling and marketing               |  | 4,844  |  | 5,005  |  | 5,136  | 
|Support services and administration |  | 3,147  |  | 2,784  |  | 2,642  | 
|                                   
|                                    |  | 17,265 |  | 16,662 |  | 16,690 | 
|                                   
|The above include:                  | 
|Development staff                   |  | 2,460  |  | 2,445  |  | 2,426  | 
|Journalists                         |  | 2,071  |  | 2,040  |  | 2,048  | 
|                                   

|The average number of employees
during 2000 included 340 temporary staff.


46  Reuters Group PLC Annual Report and Form 20-F 2000
|----------------------------------------------------------------------------------------------------------------------------------

|
|

|CONSOLIDATED
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER
|---------------------------------------------------------------

|                                                                               |  | NOTES |  | 2000£M |   | 1999£M |   | 1998£M |  
|------------------------------------------------------------------------------ |  | ----- |  | ------ | - | ------ | - | ------ | -
|                                                                              
|Net cash inflow from operating activities                                      |  | 9     |  | 852    |   | 821    |   | 998    |  
|Dividends received from associates                                             |  |       |  | 2      |   | 2      |   | 9      |  
|Returns on investments and servicing of finance                                | 
|Interest received                                                              |  |       |  | 25     |   | 50     |   | 76     |  
|Interest paid                                                                  |  |       |  | (35    | ) | (51    | ) | (72    | )
|Income from fixed asset investments                                            |  |       |  | 3      |   | 2      |   | 3      |  
|                                                                              
|Net cash (outflow)/inflow from returns on investments and servicing of finance |  |       |  | (7     | ) | 1      |   | 7      |  
|Taxation paid                                                                  |  |       |  | (159   | ) | (167   | ) | (219   | )
|Capital expenditure and financial investment                                   | 
|Purchase of tangible fixed assets                                              |  |       |  | (274   | ) | (256   | ) | (307   | )
|Sale of tangible fixed assets                                                  |  |       |  | 20     |   | 1      |   | 2      |  
|Purchase of fixed asset investments                                            |  |       |  | (304   | ) | (166   | ) | (22    | )
|Sale of fixed asset investments                                                |  |       |  | 80     |   | 39     |   | 34     |  
|                                                                              
|Net cash outflow on capital expenditure and financial investment               |  |       |  | (478   | ) | (382   | ) | (293   | )
|Acquisitions and disposals                                                     |  | 10    |  | (146   | ) | (27    | ) | (138   | )
|Equity dividends paid                                                          |  |       |  | (205   | ) | (207   | ) | (188   | )
|                                                                              
|Cash (outflow)/inflow before management of liquid resources and financing      |  |       |  | (141   | ) | 41     |   | 176    |  
|Management of liquid resources                                                 | 
|Net (increase)/decrease in short-term investments                              |  | 10    |  | (2     | ) | 476    |   | 313    |  
|Financing                                                                      | 
|Return of surplus capital                                                      |  |       |  |       |   |       |   | (1,482 | )
|Proceeds from the issue of shares                                              |  |       |  | 28     |   | 25     |   | 13     |  
|Shares repurchased                                                             |  |       |  |       |   | (25    | ) |       |  
|Net increase/(decrease) in borrowings                                          |  | 10    |  | 126    |   | (542   | ) | 972    |  
|                                                                              
|Net cash inflow/(outflow) from financing                                       |  |       |  | 154    |   | (542   | ) | (497   | )
|                                                                              
|Increase/(decrease) in cash                                                    |  | 11    |  | 11     |   | (25    | ) | (8     | )
|                                                                              

|                                                         |  | NOTES |  | 2000£M |   | 1999£M |   | 1998£M |  
|-------------------------------------------------------- |  | ----- |  | ------ | - | ------ | - | ------ | -
|                                                        
|Reconciliation of net cash flow to movement in net funds |  |       |  |        |   |        |   |        |  
|Increase/(decrease) in cash                              |  |       |  | 11     |   | (25    | ) | (8     | )
|Cash (inflow)/outflow from movement in borrowings        |  |       |  | (126   | ) | 542    |   | (972   | )
|Cash outflow/(inflow) from movement in liquid resources  |  |       |  | 2      |   | (476   | ) | (313   | )
|                                                        
|Change in net funds resulting from cash flows            |  |       |  | (113   | ) | 41     |   | (1,293 | )
|Net funds arising on acquisitions                        |  |       |  | 12     |   |       |   |       |  
|Translation differences                                  |  |       |  | 26     |   | 3      |   |       |  
|                                                        
|Movement in net (debt)/funds                             |  |       |  | (75    | ) | 44     |   | (1,293 | )
|Opening net funds/(debt)                                 |  |       |  | 41     |   | (3     | ) | 1,290  |  
|                                                        
|Closing net (debt)/funds                                 |  | 11    |  | (34    | ) | 41     |   | (3     | )
|                                                        

|Reuters Group PLC Annual Report and Form 20-F 2000  47
|------------------------------------------------------

|
|

|NOTES
ON THE CONSOLIDATED CASH FLOW STATEMENT
|---------------------------------------------

|9.  NET CASH
INFLOW FROM OPERATING ACTIVITIES


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

|                                                   |  | 2000£M |   | 1999£M |   | 1998£M |  
|-------------------------------------------------- |  | ------ | - | ------ | - | ------ | -
|                                                  
|Operating profit                                   |  | 411    |   | 549    |   | 550    |  
|Depreciation                                       |  | 276    |   | 310    |   | 331    |  
|Goodwill amortisation                              |  | 59     |   | 47     |   | 46     |  
|(Increase)/decrease in stocks                      |  | (3     | ) | 1      |   | 3      |  
|Increase in debtors                                |  | (414   | ) | (236   | ) | (103   | )
|Increase in creditors                              |  | 504    |   | 112    |   | 171    |  
|Profit on disposal of subsidiaries                 |  |       |   |       |   | (5     | )
|Loss on disposal of fixed assets                   |  | 10     |   | 12     |   | 3      |  
|Amortisation of interests in own shares            |  | 18     |   | 18     |   | 3      |  
|Miscellaneous, principally translation differences |  | (9     | ) | 8      |   | (1     | )
|                                                  
|Net cash inflow from operating activities          |  | 852    |   | 821    |   | 998    |  
|                                                  

|10.  ANALYSIS
OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT
|--------------------------------------------------------------------------

|                                                                     |  | 2000£M |   | 1999£M |   | 1998£M |  
|-------------------------------------------------------------------- |  | ------ | - | ------ | - | ------ | -
|                                                                    
|Acquisitions and disposals (including joint ventures and associates) |  |        |   |        |   |        |  
|Cash consideration:                                                  | 
|Subsidiary undertakings (see note 31)                                |  | (130   | ) | (31    | ) | (90    | )
|Joint ventures (see note 31)                                         |  | (47    | ) | (3     | ) |       |  
|Associated undertakings (see note 31)                                |  | (31    | ) | (3     | ) | (46    | )
|Deferred payments for acquisitions in prior years                    |  | (8     | ) | (1     | ) | (7     | )
|                                                                    
|                                                                     |  | (216   | ) | (38    | ) | (143   | )
|Less cash acquired                                                   |  | 8      |   | 4      |   | 1      |  
|                                                                    
|                                                                     |  | (208   | ) | (34    | ) | (142   | )
|Cash received from disposals:                                        | 
|Subsidiary undertakings                                              |  | 21     |   | 7      |   | 4      |  
|Associated undertakings                                              |  | 41     |   |       |   |       |  
|                                                                    
|                                                                     |  | (146   | ) | (27    | ) | (138   | )
|                                                                    
|Management of liquid resources                                       | 
|Increase in term deposits                                            |  | (3,719 | ) | (3,920 | ) | (7,145 | )
|Decrease in term deposits                                            |  | 3,842  |   | 4,277  |   | 7,250  |  
|Purchase of certificates of deposit                                  |  | (108   | ) | (226   | ) | (580   | )
|Sale of certificates of deposit                                      |  | 113    |   | 352    |   | 597    |  
|Purchase of listed/unlisted securities                               |  | (989   | ) | (360   | ) | (465   | )
|Sale of listed/unlisted securities                                   |  | 859    |   | 353    |   | 656    |  
|                                                                    
|                                                                     |  | (2     | ) | 476    |   | 313    |  
|                                                                    
|Financing                                                            | 
|Increase/(decrease) in short-term borrowings                         |  | 99     |   | (799   | ) | 986    |  
|Increase/(decrease) in long-term borrowings                          |  | 27     |   | 257    |   | (14    | )
|                                                                    
|                                                                     |  | 126    |   | (542   | ) | 972    |  
|                                                                    

|48  Reuters Group PLC Annual Report and Form 20-F 2000
|------------------------------------------------------

|
|

|
|

|11.  ANALYSIS
OF NET FUNDS
|--------------------------

|                       |  |                          |   |              |   |                           |   |                         |   | BANK/OTHERBORROWINGS      
|---------------------- |  | ------------------------ | - | ------------ | - | ------------------------- | - | ----------------------- | - | --------------------------
|                       |  | CASH ATBANK ANDIN HAND£M |   | OVERDRAFTS£M |   | TOTALCASH ANDOVERDRAFTS£M |   | SHORT-TERMINVESTMENTS£M |   | FALLINGDUEWITHINONE YEAR£M
|                      
|31 December 1998       |  | 44                       |   | (13          | ) | 31                        |   | 962                     |   | (992                      
|Cash flow              |  | 77                       |   | (102         | ) | (25                       | ) | (476                    | ) | 799                       
|Exchange movements     |  | (2                       | ) | 1            |   | (1                        | ) | 4                       |   |                          
|                      
|31 December 1999       |  | 119                      |   | (114         | ) | 5                         |   | 490                     |   | (193                      
|Cash flow              |  | (4                       | ) | 15           |   | 11                        |   | 2                       |   | (99                       
|Exchange movements     |  | 2                        |   |             |   | 2                         |   | 24                      |   |                          
|Arising on acquisition |  |                         |   |             |   |                          |   | 14                      |   | (2                        
|                      
|31 December 2000       |  | 117                      |   | (99          | ) | 18                        |   | 530                     |   | (294                      
|                      

|12.  DERIVATIVES AND
OTHER FINANCIAL INSTRUMENTS



A substantial portion of Reuters
revenue is receivable in foreign currencies with terms of payment up to six months in
advance. As such, Reuters is subject to currency exposure from committed revenue. In
addition, Reuters is subject to interest rate risk from borrowings and the investment of
cash balances. Reuters seeks to limit these risks by entering into a mix of derivative
financial instruments which include forward contracts, options (including cylinders),
swaps and forward rate agreements. A more detailed discussion on Reuters treasury
management can be found on pages 34-35.


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

Reuters Group PLC Annual Report and Form 20-F 2000  49
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|NOTES ON THE CONSOLIDATED CASH FLOW STATEMENT continued
|-------------------------------------------------------

|12.  DERIVATIVES
AND OTHER FINANCIAL INSTRUMENTS continued


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

|                                    | 2000
|----------------------------------- | ----
|                                    |     
|                                   
|Currency management                 |     
|Foreign exchange forward contracts: |     
|Contracts in profit                 |     
|Contracts in loss                   |     
|Foreign currency options:           |     
|Contracts in profit                 |     
|Contracts in loss                   |     
|                                   
|                                    |     
|                                   
|Interest rate management            |     
|Interest rate swaps                 |     
|Interest rate collars               |     
|Forward rate agreements             |     
|                                   
|                                    |     
|                                   

|Carrying values are amounts
recorded in the balance sheet and comprise deferred option premia, which are
recognised over the period to which the option relates.


The foreign exchange forward
contracts are held 42% in US dollars (1999: 22%, 1998: 10%). The remaining contracts were
principally in Japanese yen and European currencies.



Foreign exchange forward
contracts and options mature at dates up to 20 months from the balance sheet
date. Interest rate swaps commence and mature at various dates through to
November 2004.


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 weighted average fixed rate
receivable on the interest rate swaps at 31 December 2000 was 5% (1999: 6%, 1998: 7%) and
the weighted average variable rate payable was 6% (1999: 7%, 1998: 6%). The weighted
average variable rate is based on the rate implied in the yield curve at the balance
sheet date.



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


Tables containing
information on hedging gains and losses are set out on page 35.
50   Reuters Group
PLC Annual Report and Form 20-F 2000
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|
|

|12.   DERIVATIVES
AND OTHER FINANCIAL INSTRUMENTS continued


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

|                                      | 2000 | 1999            | 1998
|------------------------------------- | ---- | --------------- | ----
|                                      |      | CARRYINGVALUE£M |     
|                                     
|Derivative instruments                |      | 3               |     
|Other financial assets:               |     
|Fixed asset investments               |      | 371             |     
|Long-term debtors                     |      | 19              |     
|Short-term investments and cash       |      | 647             |     
|Other financial liabilities:          |     
|Short-term borrowings                 |      | (393            | )   
|Long-term borrowings                  |      | (288            | )   
|Other long-term financial liabilities |      | (11             | )   
|                                     

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


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



Financial instrument
sensitivity analysis



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


The estimated changes in
the fair value of foreign exchange instruments are based on an instantaneous 10%
change in the value of sterling against all other currencies from the levels
applicable at 31 December 2000 with all other variables remaining constant. The
+10% case represents a 10% strengthening of sterling against all other
currencies and the 10% case represents a 10% weakening of sterling.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                  |  | FAIR VALUE |   | FAIR VALUECHANGE FAVOURABLE/(ADVERSE)EXCHANGE RATE MOVEMENT
|----------------- |  | ---------- | - | -----------------------------------------------------------
|                  |  | £M         |   | £M                                                         
|                 
|                  |  |            |   | +10                                                        
|                 
|Foreign exchange: | 
|Forward contracts |  | 6          |   | 28                                                         
|Currency options  |  | (7         | ) | 25                                                         
|                 
|                  |  | (1         | ) | 53                                                         
|                 

|The estimated changes in
the fair value of interest rate instruments are based on an instantaneous change
of 1% in the specific rate of interest from the levels effective at 31 December
2000 with all other variables remaining constant.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                             |  | FAIR VALUE |   | FAIR VALUE CHANGE(ADVERSE)/FAVOURABLEINTEREST RATE MOVEMENT
|---------------------------- |  | ---------- | - | -----------------------------------------------------------
|                             |  | £M         |   | £M                                                         
|                            
|                             |  |            |   | +1                                                         
|Interest rate swap contracts |  | (2         | ) | (6                                                         
|                            

|Reuters Group PLC Annual Report and Form 20-F 2000  51
|------------------------------------------------------

|
|

|NOTES
ON THE CONSOLIDATED CASH FLOW STATEMENT continued
|-------------------------------------------------------

|12.  DERIVATIVES
AND OTHER FINANCIAL INSTRUMENTS continued



Monetary assets and
liabilities by currency, excluding the functional currency of each operation at
31 December 2000, were:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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


The currency and interest
rate profile of the Groups financial assets at 31 December 2000 was:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                
|----------------
|                
|                
|Sterling        
|US dollar       
|Other           
|                
|31 December 2000
|                
|31 December 1999
|31 December 1998
|                

|Sterling and US dollar
short-term floating rate investments include £73 million (1999: £202
million; 1998: £623 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.




52  Reuters Group PLC Annual Report and Form 20-F 2000
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|
|

|12.  DERIVATIVES
AND OTHER FINANCIAL INSTRUMENTS continued


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


The currency and interest
rate profile of the Groups financial liabilities, after allowing for
cross-currency swaps, at 31 December 2000 was:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                 |  |         |  |                             | BORROWINGS | FIXED RATE BORROWINGS   
|---------------- |  | ------- |  | --------------------------- | ---------- | ------------------------
|                 |  | TOTAL£M |  | OTHERFINANCIALLIABILITIES£M |            | FLOATINGRATEBORROWINGS£M
|                 |  |        
|Sterling         |  | 609     |  | 4                           |            | 605                     
|US dollar        |  | 40      |  |                            |            | 40                      
|Euro             |  | 26      |  |                            |            | 26                      
|Other            |  | 17      |  | 7                           |            | 10                      
|                 |  |        
|31 December 2000 |  | 692     |  | 11                          |            | 681                     
|                 |  |        
|31 December 1999 |  | 580     |  | 12                          |            | 568                     
|31 December 1998 |  | 1,015   |  | 6                           |            | 1,005                   
|                 |  |        

|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 2000 was 6% (1999: 5%,
1998: 4%).


Total financial liabilities
are repayable as follows:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                  |  | 2000£M |  | 1999£M |  | 1998£M | 
|------------------------------------------------- |  | ------ |  | ------ |  | ------ | 
|                                                 
|Within one year                                   |  | 394    |  | 307    |  | 1,011  | 
|Between one and two years                         |  | 94     |  | 41     |  | 4      | 
|Between two and five years                        |  | 204    |  | 232    |  |       | 
|                                                 
|                                                  |  | 692    |  | 580    |  | 1,015  | 
|                                                 
|Bank borrowings secured against freehold property |  |       |  |       |  | 3      | 
|                                                 

|In December 1997, Reuters
Group PLC entered into syndicated credit facilities for £1.5 billion to
cover payments due to shareholders under the capital reorganisation. A facility
of £1.0 billion expired on 2 December 1998. The remaining £0.5
billion which is at variable interest rates based on LIBOR, the London Interbank
Offer Rate, is committed and may be drawn and redrawn up to one month prior to
its maturity in December 2002. At 31 December 2000, the
facility was undrawn.



In March 1998 Reuters
established a Euro Commercial Paper Programme. This provides access to
£1.5 billion of uncommitted short-term finance of which £1.3 billion
was unused at 31 December 2000. In December 1998 Reuters established a
£1.0 billion Euro Medium Term Note Programme of which £674 million was
unused at 31 December 2000.




In addition, at 31 December
2000 Reuters had unused, short-term, uncommitted bank borrowing facilities
denominated in various currencies, the sterling equivalent of which was
approximately £544 million, at money market rates varying principally
between 3% and 10%, depending on the currency.

Reuters Group PLC Annual Report and Form 20-F 2000  53
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|CONSOLIDATED
BALANCE SHEET AT 31 DECEMBER
|-----------------------------------------

|                                                        |  | Notes |  | 2000£M |   | 1999£M |   | 1998£M |  
|------------------------------------------------------- |  | ----- |  | ------ | - | ------ | - | ------ | -
|                                                       
|Fixed assets                                            |  |       |  |        |   |        |   |        |  
|Intangible assets: Goodwill                             |  | 14    |  | 237    |   | 177    |   | 204    |  
|Tangible assets                                         |  | 15    |  | 632    |   | 698    |   | 779    |  
|Investments                                             |  | 16    | 
|Investments in joint ventures:                          | 
|Share of gross assets                                   |  |       |  | 237    |   | 29     |   |       |  
|Share of gross liabilities                              |  |       |  | (79    | ) | (16    | ) |       |  
|                                                        |  |       | 
|                                                        |  |       |  | 158    |   | 13     |   |       |  
|Share of net assets of associates                       |  |       |  | 353    |   | 95     |   | 45     |  
|Other investments                                       |  |       |  | 488    |   | 222    |   | 70     |  
|                                                       
|                                                        |  |       |  | 1,868  |   | 1,205  |   | 1,098  |  
|                                                       
|Current assets                                          | 
|Stocks                                                  |  | 17    |  | 7      |   | 4      |   | 6      |  
|Debtors (see note below)                                |  | 18    |  | 1,297  |   | 834    |   | 595    |  
|Short-term investments                                  |  | 19    |  | 530    |   | 490    |   | 962    |  
|Cash at bank and in hand                                |  |       |  | 117    |   | 119    |   | 44     |  
|                                                       
|                                                        |  |       |  | 1,951  |   | 1,447  |   | 1,607  |  
|Creditors: Amounts falling due within one year          |  | 20    |  | (2,295 | ) | (1,679 | ) | (2,184 | )
|                                                       
|Net current liabilities                                 |  |       |  | (344   | ) | (232   | ) | (577   | )
|                                                       
|Total assets less current liabilities                   |  |       |  | 1,524  |   | 973    |   | 521    |  
|Creditors: Amounts falling due after more than one year |  | 21    |  | (310   | ) | (284   | ) | (16    | )
|Provisions for liabilities and charges:                 | 
|Pensions and similar obligations                        |  | 23    |  | (50    | ) | (39    | ) | (36    | )
|Deferred taxation                                       |  | 24    |  | (28    | ) | (23    | ) | (14    | )
|Other provisions                                        |  | 25    |  | (34    | ) | (26    | ) | (66    | )
|                                                       
|Net assets                                              |  |       |  | 1,102  |   | 601    |   | 389    |  
|                                                       
|Capital and reserves                                    |  | 26    | 
|Called-up share capital                                 |  |       |  | 357    |   | 355    |   | 354    |  
|Capital redemption reserve                              |  |       |  | 1      |   | 1      |   |       |  
|Share premium account                                   |  |       |  | 71     |   | 42     |   | 16     |  
|Other reserve                                           |  |       |  | (1,717 | ) | (1,717 | ) | (1,717 | )
|Profit and loss account reserve                         |  |       |  | 2,390  |   | 1,920  |   | 1,719  |  
|                                                       
|Shareholders equity                                    |  |       |  | 1,102  |   | 601    |   | 372    |  
|Non-equity minority interests                           |  |       |  |       |   |       |   | 17     |  
|                                                       
|Capital employed                                        |  |       |  | 1,102  |   | 601    |   | 389    |  
|                                                       

|Debtors and net current liabilities
include amounts due after more than one year of £59 million (1999: £46 million,
1998: £40 million).


The balance sheet of
Reuters Group PLC is shown on page 70.


The financial statements on
pages 39-73 and the summary of differences between UK and US generally accepted
accounting principles on pages 74-78 were approved by the directors on 16
February 2001.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|/s/  Peter JobPeter Job, Chief Executive |  | /s/  David GrigsonDavid Grigson, Finance Director
|---------------------------------------- |  | -------------------------------------------------

|54  Reuters Group PLC Annual Report and Form 20-F 2000
|------------------------------------------------------

|
|

|RECONCILIATION
OF MOVEMENTS IN SHAREHOLDERS FUNDS FOR THE YEAR ENDED 31 DECEMBER
|---------------------------------------------------------------------------------

|                                                               |  | 2000£M |  | 1999£M |   | 1998£M |  
|-------------------------------------------------------------- |  | ------ |  | ------ | - | ------ | -
|                                                              
|Retained profit                                                |  | 308    |  | 219    |   | 181    |  
|Translation differences taken directly to reserves             |  | 40     |  | 10     |   | (1     | )
|Unrealised gains on formation of joint ventures and associates |  | 73     |  |       |   |       |  
|Unrealised gain on deemed disposal of associate                |  | 39     |  |       |   |       |  
|Unrealised gains on disposals of fixed asset investments       |  | 13     |  |       |   |       |  
|Return of surplus capital to shareholders                      |  |       |  |       |   | (1,482 | )
|Shares issued during the year                                  |  | 28     |  | 25     |   | 13     |  
|Shares repurchased during the year                             |  |       |  | (25    | ) |       |  
|                                                              
|Net movement in shareholders equity                           |  | 501    |  | 229    |   | (1,289 | )
|Opening shareholders equity                                   |  | 601    |  | 372    |   | 1,661  |  
|                                                              
|Closing shareholders equity                                   |  | 1,102  |  | 601    |   | 372    |  
|                                                              

|Reuters Group PLC Annual Report and Form 20-F 2000  55
|------------------------------------------------------

|
|

|NOTES
ON THE CONSOLIDATED BALANCE SHEET
|---------------------------------------

|13.  SEGMENTAL
ANALYSIS



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

|                                             | TOTAL ASSETS | NON-INTEREST BEARINGNET ASSETS
|-------------------------------------------- | ------------ | ------------------------------
|By division                                  |              | 2000£M                        
|                                            
|Reuters Information                          |              | 614                           
|Reuters Trading Solutions                    |              | 305                           
|                                            
|Reuters Financial                            |              | 919                           
|Reuterspace                                  |              | 420                           
|Instinet                                     |              | 1,030                         
|TSI/RBB                                      |              |                              
|Central                                      |              | 1,450                         
|                                            
|Total assets/non-interest bearing net assets |              | 3,819                         
|Interest bearing net (liabilities)/assets    |              |                               
|                                            
|                                             |              |                               
|                                            
|                                            
|                                             | TOTAL ASSETS | NON-INTEREST BEARINGNET ASSETS
|By location                                  |              | 2000£M                        
|                                            
|Europe, Middle East and Africa               |              | 1,975                         
|The Americas                                 |              | 1,171                         
|Asia/Pacific                                 |              | 258                           
|Central                                      |              | 415                           
|                                            
|Total assets/non-interest bearing net assets |              | 3,819                         
|                                            
|Fixed assets                                 |              | 1,868                         
|Current assets                               |              | 1,951                         
|                                            
|                                             |              | 3,819                         
|                                            

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


56
  Reuters Group PLC Annual Report and Form 20-F 2000
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|
|

|14.  INTANGIBLE
ASSETS: GOODWILL
|--------------------------------

|                        |  | COST£M |   | AMORTISATION£M |   | NET BOOKAMOUNT£M |  
|----------------------- |  | ------ | - | -------------- | - | ---------------- | -
|                       
|31 December 1999        |  | 539    |   | (362           | ) | 177              |  
|Additions (see note 31) |  | 121    |   |               |   | 121              |  
|Disposals               |  | (16    | ) | 14             |   | (2               | )
|Charged in the year     |  |       |   | (59            | ) | (59              | )
|                       
|31 December 2000        |  | 644    |   | (407           | ) | 237              |  
|                       

|15.  TANGIBLE
ASSETS
|--------------------

|                               |  | FREEHOLDPROPERTY£M |   | LEASEHOLDPROPERTY£M |   | COMPUTERSYSTEMSEQUIPMENT£M |   | OFFICEEQUIPMENTAND MOTORVEHICLES£M |   | TOTAL£M |  
|------------------------------ |  | ------------------ | - | ------------------- | - | -------------------------- | - | ---------------------------------- | - | ------- | -
|                              
|Cost                           |  |                    |   |                     |   |                            |   |                                    |   |         |  
|31 December 1999               |  | 198                |   | 156                 |   | 1,680                      |   | 242                                |   | 2,276   |  
|Translation differences        |  |                   |   | 4                   |   | 17                         |   | 2                                  |   | 23      |  
|Additions                      |  | 12                 |   | 29                  |   | 183                        |   | 58                                 |   | 282     |  
|Owned by subsidiaries acquired |  |                   |   |                    |   | 2                          |   | 2                                  |   | 4       |  
|Disposals                      |  | (11                | ) | (1                  | ) | (347                       | ) | (19                                | ) | (378    | )
|                              
|31 December 2000               |  | 199                |   | 188                 |   | 1,535                      |   | 285                                |   | 2,207   |  
|                              
|Depreciation                   | 
|31 December 1999               |  | 63                 |   | 81                  |   | 1,265                      |   | 169                                |   | 1,578   |  
|Translation differences        |  |                   |   | 1                   |   | 11                         |   | 2                                  |   | 14      |  
|Charged in the year            |  | 5                  |   | 17                  |   | 214                        |   | 40                                 |   | 276     |  
|Owned by subsidiaries acquired |  |                   |   |                    |   | 1                          |   |                                   |   | 1       |  
|Disposals                      |  | (3                 | ) | (1                  | ) | (273                       | ) | (17                                | ) | (294    | )
|                              
|31 December 2000               |  | 65                 |   | 98                  |   | 1,218                      |   | 194                                |   | 1,575   |  
|                              
|Net book amount                | 
|31 December 2000               |  | 134                |   | 90                  |   | 317                        |   | 91                                 |   | 632     |  
|                              
|31 December 1999               |  | 135                |   | 75                  |   | 415                        |   | 73                                 |   | 698     |  
|                              

|Net book amount of leasehold property |  | 2000£M |  | 1999£M |  | 1998£M | 
|------------------------------------- |  | ------ |  | ------ |  | ------ | 
|                                     
|Long-term leaseholds                  |  | 19     |  | 14     |  | 14     | 
|Short-term leaseholds                 |  | 71     |  | 61     |  | 60     | 
|                                     
|                                      |  | 90     |  | 75     |  | 74     | 
|                                     
|Contracted capital commitments        |  | 18     |  | 15     |  | 35     | 
|                                     

|Reuters Group PLC Annual Report and Form 20-F 2000  57
|------------------------------------------------------

|
|

|NOTES
ON THE CONSOLIDATED BALANCE SHEET continued
|-------------------------------------------------

|16.  INVESTMENTS
|----------------

|                                         |  | INTERESTS INOWN SHARES£M |   | INTERESTS INJOINT VENTURES£M |   | INTERESTS INASSOCIATES£M |   | OTHERINVESTMENTS£M |   | TOTAL£M |  
|---------------------------------------- |  | ------------------------ | - | ---------------------------- | - | ------------------------ | - | ------------------ | - | ------- | -
|                                        
|Net assets/cost                          |  |                          |   |                              |   |                          |   |                    |   |         |  
|31 December 1999                         |  | 95                       |   | 2                            |   | 67                       |   | 127                |   | 291     |  
|Translation differences                  |  |                         |   | 1                            |   | 18                       |   |                   |   | 19      |  
|Additions                                |  | 40                       |   | 156                          |   | 252                      |   | 286                |   | 734     |  
|Share of (losses)/profit arising in year |  |                         |   | (11                          | ) | 2                        |   |                   |   | (9      | )
|Dividends received                       |  |                         |   |                             |   | (2                       | ) |                   |   | (2      | )
|Amounts written off                      |  | (18                      | ) |                             |   |                         |   | (30                | ) | (48     | )
|Disposals                                |  |                         |   |                             |   | (4                       | ) | (13                | ) | (17     | )
|Reclassifications                        |  |                         |   | 2                            |   | (1                       | ) | 1                  |   | 2       |  
|                                        
|31 December 2000                         |  | 117                      |   | 150                          |   | 332                      |   | 371                |   | 970     |  
|                                        
|Goodwill                                 | 
|31 December 1999                         |  |                         |   | 11                           |   | 28                       |   |                   |   | 39      |  
|Arising in the year                      |  |                         |   |                             |   | 2                        |   |                   |   | 2       |  
|Charged in the year                      |  |                         |   | (3                           | ) | (9                       | ) |                   |   | (12     | )
|                                        
|31 December 2000                         |  |                         |   | 8                            |   | 21                       |   |                   |   | 29      |  
|                                        
|Net book amount                          | 
|31 December 2000                         | 
|Net assets/cost                          |  | 117                      |   | 150                          |   | 332                      |   | 371                |   | 970     |  
|Goodwill                                 |  |                         |   | 8                            |   | 21                       |   |                   |   | 29      |  
|                                        
|                                         |  | 117                      |   | 158                          |   | 353                      |   | 371                |   | 999     |  
|                                        
|31 December 1999                         | 
|Net assets/cost                          |  | 95                       |   | 2                            |   | 67                       |   | 127                |   | 291     |  
|Goodwill                                 |  |                         |   | 11                           |   | 28                       |   |                   |   | 39      |  
|                                        
|                                         |  | 95                       |   | 13                           |   | 95                       |   | 127                |   | 330     |  
|                                        
|Listed investments at 31 December 2000   | 
|Carrying value                           |  | 117                      |   |                             |   | 303                      |   | 42                 |   | 462     |  
|Market value                             |  | 278                      |   |                             |   | 3,268                    |   | 200                |   | 3,746   |  
|                                        

|Had all listed investments
been disposed of on 31 December 2000, tax of approximately £34 million
would have been payable on the assumption that none of the earnings would be
repatriated. The market value excludes TSI shares held by Reuters which will be
transferred to TIBCO Finance employees on the exercise of outstanding options.


The net book amount of
interests in own shares represents the cost less amounts written off in respect
of 25 million Reuters ordinary shares held by employee share ownership trusts
(ESOTs). These were acquired in the open market using funds provided by Reuters.
The write-off reflects employee interests under incentive plans which are
charged against profit over the vesting period of the awards (see pages 18-20).
The ESOTs have waived dividend and voting rights on these shares.


In February 2000 Reuters
and Multex.com Inc., formed a joint venture Multex Investor Europe Limited, in
which Reuters has a 50% interest. In June 2000 Reuters and Equant formed a joint
venture, Radianz Limited. Although Reuters owns 51% of the joint venture its
control is limited to 50%.


In 1998 Reuters entered
into a venture with Rudin Times Square Associates LLC. At 31 December 2000
Reuters had invested US$20 million (£13 million) and had guaranteed
the future injection of approximately US$25 million (£17 million).


Other investments consist
principally of Greenhouse Fund investments and Stock Exchange seats.
58  Reuters Group PLC Annual Report and Form 20-F 2000
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|
|

|17.  STOCKS
|-----------

|                          |  | 2000£M |   | 1999£M |   | 1998£M |  
|------------------------- |  | ------ | - | ------ | - | ------ | -
|                         
|Contract work in progress |  | 7      |   | 4      |   | 10     |  
|Less progress payments    |  | (2     | ) | (2     | ) | (9     | )
|                         
|                          |  | 5      |   | 2      |   | 1      |  
|Equipment stocks          |  | 2      |   | 2      |   | 5      |  
|                         
|                          |  | 7      |   | 4      |   | 6      |  
|                         

## 18.  DEBTORS

|                                                                      |  | 2000£M |   | 1999£M |   | 1998£M |  
|--------------------------------------------------------------------- |  | ------ | - | ------ | - | ------ | -
|                                                                     
|Trade debtors                                                         |  | 288    |   | 197    |   | 197    |  
|Less allowance for doubtful accounts                                  |  | (31    | ) | (28    | ) | (28    | )
|                                                                     
|                                                                      |  | 257    |   | 169    |   | 169    |  
|Instinet counterparty debtors                                         |  | 662    |   | 432    |   | 204    |  
|Other debtors                                                         |  | 153    |   | 99     |   | 90     |  
|Prepayments and accrued income                                        |  | 83     |   | 58     |   | 67     |  
|Deferred taxation (see note 24)                                       |  | 80     |   | 63     |   | 65     |  
|Amounts owed by joint ventures and associates                         |  | 62     |   | 13     |   |       |  
|                                                                     
|                                                                      |  | 1,297  |   | 834    |   | 595    |  
|                                                                     
|Amounts falling due after more than one year (included in the above): | 
|Deferred taxation                                                     |  | 40     |   | 27     |   | 24     |  
|Other debtors                                                         |  | 19     |   | 19     |   | 16     |  
|                                                                     
|                                                                      |  | 59     |   | 46     |   | 40     |  
|                                                                     

|19.  SHORT-TERM
INVESTMENTS
|---------------------------

|                        |  |          |  | 2000£m |  | 1999£m |  | 1998£m | 
|----------------------- |  | -------- |  | ------ |  | ------ |  | ------ | 
|                       
|Listed                  |  |          |  |        |  |        |  |        | 
|Government securities:  |  | UK       |  |       |  | 2      |  | 2      | 
|                        |  | Overseas |  | 127    |  | 180    |  | 115    | 
|Other deposits          |  | Overseas |  | 48     |  |       |  |       | 
|                       
|                        |  |          |  | 175    |  | 182    |  | 117    | 
|                       
|Unlisted                | 
|Certificates of deposit |  | UK       |  | 2      |  | 1      |  | 127    | 
|Term deposits:          |  | UK       |  | 67     |  | 156    |  | 511    | 
|                        |  | Overseas |  | 8      |  | 100    |  | 103    | 
|Other deposits:         |  | UK       |  | 9      |  | 21     |  | 3      | 
|                        |  | Overseas |  | 269    |  | 30     |  | 101    | 
|                       
|                        |  |          |  | 355    |  | 308    |  | 845    | 
|                       
|                        |  |          |  | 530    |  | 490    |  | 962    | 
|                       

|Reuters Group PLC Annual Report and Form 20-F 2000  59
|------------------------------------------------------

|
|

|NOTES
ON THE CONSOLIDATED BALANCE SHEET continued
|-------------------------------------------------

|20.  CREDITORS: AMOUNTS
FALLING DUE WITHIN ONE YEAR
|---------------------------------------------------

|                                                             |  | 2000£M |  | 1999£M |  | 1998£M | 
|------------------------------------------------------------ |  | ------ |  | ------ |  | ------ | 
|                                                            
|Trade creditors                                              |  | 183    |  | 118    |  | 126    | 
|Accruals                                                     |  | 465    |  | 352    |  | 369    | 
|Instinet counterparty creditors                              |  | 570    |  | 328    |  | 186    | 
|Deferred income                                              |  | 78     |  | 50     |  | 43     | 
|Amounts owed to joint ventures and associates                |  | 76     |  | 18     |  |       | 
|Other creditors                                              |  | 58     |  | 42     |  | 35     | 
|Other taxation and social security                           |  | 54     |  | 47     |  | 33     | 
|                                                            
|                                                             |  | 1,484  |  | 955    |  | 792    | 
|Bank overdrafts                                              |  | 99     |  | 114    |  | 13     | 
|Bank loans                                                   |  | 25     |  | 2      |  | 3      | 
|Other borrowings                                             |  | 269    |  | 191    |  | 989    | 
|Current UK corporation and overseas taxation                 |  | 245    |  | 263    |  | 232    | 
|Proposed dividend                                            |  | 173    |  | 154    |  | 155    | 
|                                                            
|                                                             |  | 2,295  |  | 1,679  |  | 2,184  | 
|                                                            
|                                                            
|Current UK corporation and overseas taxation comprises:      | 
|                                                             |  | 2000£M |  | 1999£M |  | 1998£M | 
|                                                            
|UK corporation tax                                           |  | 72     |  | 138    |  | 105    | 
|Overseas taxes                                               |  | 173    |  | 125    |  | 127    | 
|                                                            
|                                                             |  | 245    |  | 263    |  | 232    | 
|                                                            
|                                                            
|21.  CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR | 

|                                |  | 2000£M |  | 1999£M |  | 1998£M | 
|------------------------------- |  | ------ |  | ------ |  | ------ | 
|                               
|Term notes and commercial paper |  | 287    |  | 261    |  |       | 
|Bank borrowings                 |  | 1      |  |       |  | 4      | 
|Accruals                        |  | 15     |  | 14     |  | 12     | 
|Amounts owed to joint ventures  |  | 7      |  | 9      |  |       | 
|                               
|                                |  | 310    |  | 284    |  | 16     | 
|                               

|22.  CONCENTRATION
OF CREDIT RISK



Reuters is exposed to
concentrations of credit risk. Reuters invests in UK and US government
securities and with high credit quality financial institutions. Reuters limits
the amount of credit exposure to any one financial institution. Reuters is also
exposed to credit risk from its trade debtors which are concentrated in the
financial community. Reuters estimates that approximately 60% of its subscribers
are financial institutions, 25% are corporations in other sectors of the
business community, 7% are from the news media and 8% are government
institutions and individuals worldwide (1999: 59%, 27%, 6% and 8% respectively).


Instinet is exposed to the
possibility of trades between its counterparties failing to settle. Due to the
settlement mechanisms employed, the maximum exposure is generally limited to the
market movement between the trade date and the settlement date. There are no
material unprovided off-balance sheet exposures or positions in respect of
trades undertaken on or prior to 31 December 2000.




60  Reuters Group PLC Annual Report and Form 20-F 2000
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|
|

|23.  PENSIONS
AND SIMILAR OBLIGATIONS


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





Defined contribution
plans


Reuters operates 28 defined
contribution plans covering approximately 66% of its employees, of which the
largest plan, the Reuters Pension Fund, covers approximately 19% of employees.
Members of this plan contribute 6% of basic salaries and Reuters is required to
make an annual contribution of 9.525% of members basic salaries regardless
of the funding status of the plan. Reuters does not have the ability to recover
assets held by the plan, nor can it be required to make additional payments to
the plan over and above the annual contributions referred to above. Custodial
responsibility for the assets of the plan rests with two substantial and
independent UK investment managers.





Defined benefit plans


Reuters also operates 33 defined benefit plans covering
approximately 16% of employees. Individually, these plans are of a
relatively minor nature. They are subject to regular valuations based
on the accepted actuarial practice and standards within the country in
which the plan is established. The largest plans are directly invested
and others are invested in insurance contracts. The remainder are
internally funded in accordance with local practice with provisions in
the subsidiary undertakings to recognise the pension obligations.

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


Post-retirement medical
benefits


In the US, Reuters provides
unfunded post-retirement medical benefits to certain US employees. The principal
assumptions used in the most recent actuarial valuation undertaken at 31
December 2000 were that health care costs would increase by 9% per annum per
head over the next year decreasing to 5% by 2005 and remain at 5% thereafter.


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

|                                      |  | 2000£M |   | 1999£M |   | 1998£M |  
|------------------------------------- |  | ------ | - | ------ | - | ------ | -
|                                     
|Opening balance                       |  | 39     |   | 36     |   | 28     |  
|Profit and loss account (see note 2): | 
|Defined contribution plans            |  | 38     |   | 36     |   | 35     |  
|Defined benefit plans                 |  | 15     |   | 10     |   | 14     |  
|Post-retirement medical benefits      |  | 3      |   | 3      |   | 1      |  
|                                     
|                                      |  | 56     |   | 49     |   | 50     |  
|Utilised in the year                  |  | (45    | ) | (46    | ) | (42    | )
|                                     
|Closing balance                       |  | 50     |   | 39     |   | 36     |  
|                                     

|Reuters Group PLC Annual Report and Form 20-F 2000  61
|------------------------------------------------------

|
|

|NOTES
ON THE CONSOLIDATED BALANCE SHEET continued
|-------------------------------------------------

|24.  DEFERRED TAXATION
LIABILITIES/(ASSETS)
|-------------------------------------------

|                                       |  | £M2000 |   | £M1999 |   | £M1998 |  
|-------------------------------------- |  | ------ | - | ------ | - | ------ | -
|                                      
|Opening balance                        |  | (40    | ) | (51    | ) | (58    | )
|Profit and loss account                |  | (12    | ) | 11     |   | 7      |  
|                                      
|Closing balance                        |  | (52    | ) | (40    | ) | (51    | )
|                                      
|The closing balance is analysed below: | 
|                                      
|Timing differences:                    | 
|Fixed asset related                    |  | 5      |   | 5      |   | 7      |  
|Other                                  |  | (57    | ) | (45    | ) | (58    | )
|                                      
|                                       |  | (52    | ) | (40    | ) | (51    | )
|                                      

|Reuters has provided for
all potential deferred tax liabilities in respect of timing differences and has
provided for deferred UK income and foreign withholding taxes that will be
triggered by the expected future remittance of earnings by overseas subsidiary
undertakings. Reuters has not provided for deferred UK income and foreign
withholding taxes relating to unremitted earnings where remittance of these
earnings is not currently anticipated in the foreseeable future. Reuters
estimates that these unrecognised taxes would total approximately £593
million at 31 December 2000 assuming repatriation at that date. The increase
from 1999 (£166 million) arises from changes in UK law and practice in the
year.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|TOTAL TIMING DIFFERENCES AT 31 DECEMBER 2000 |  | ASSETS£M |   | VALUATIONALLOWANCE£M |  | LIABILITIES£M |  | NET£M |  
|-------------------------------------------- |  | -------- | - | -------------------- |  | ------------- |  | ----- | -
|                                            
|Fixed asset related                          |  | (54      | ) | 40                   |  | 19            |  | 5     |  
|Unrecognised tax losses                      |  | (29      | ) | 29                   |  |              |  |      |  
|Other                                        |  | (94      | ) | 11                   |  | 26            |  | (57   | )
|                                            
|                                             |  | (177     | ) | 80                   |  | 45            |  | (52   | )
|                                            

|The valuation allowance
decreased by £1 million during 2000. Where appropriate, deferred tax
assets and liabilities are netted for balance sheet presentation purposes. The
net deferred tax balance has been analysed as:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                            |  | 2000£M |   | 1999£M |   | 1998£M |  
|--------------------------------------------------------------------------- |  | ------ | - | ------ | - | ------ | -
|                                                                           
|Deferred tax asset (included in debtors - see note 18)                      |  | (80    | ) | (63    | ) | (65    | )
|Deferred tax liability (included in provisions for liabilities and charges) |  | 28     |   | 23     |   | 14     |  
|                                                                           

|62  Reuters Group PLC Annual Report and Form 20-F 2000
|------------------------------------------------------

|
|

|
|

|25.  OTHER PROVISIONS



The movement in other provisions during 2000 was as follows:
|-------------------------------------------------------------------------------------

|                       |  | RATIONALISATION£M |   | LEGAL/COMPLIANCE£M |   | PROPERTY£M |   | OTHER£M |   | TOTAL£M |  
|---------------------- |  | ----------------- | - | ------------------ | - | ---------- | - | ------- | - | ------- | -
|                      
|31 December 1999       |  | 13                |   | 7                  |   | 3          |   | 3       |   | 26      |  
|Charged against profit |  | 17                |   | 5                  |   | 2          |   | 5       |   | 29      |  
|Utilised in the year   |  | (10               | ) | (5                 | ) | (1         | ) | (1      | ) | (17     | )
|Released               |  | (2                | ) | (1                 | ) |           |   | (1      | ) | (4      | )
|                      
|31 December 2000       |  | 18                |   | 6                  |   | 4          |   | 6       |   | 34      |  
|                      

|At the end of 1999, the
costs of a number of incomplete rationalisation programmes were provided for.
During 2000 these programmes were implemented and a number of new ones were
introduced in respect of the business transformation initiative.


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


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



26. CAPITAL AND RESERVES
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                               |  | CALLED-UPSHARECAPITAL£M |   | CAPITALREDEMPTIONRESERVE£M |  | SHAREPREMIUMACCOUNT£M |  | OTHERRESERVE£M |   | PROFIT ANDLOSSACCOUNTRESERVE£M |   | SHARE-HOLDERSEQUITY£M |  
|-------------------------------------------------------------- |  | ----------------------- | - | -------------------------- |  | --------------------- |  | -------------- | - | ------------------------------ | - | ---------------------- | -
|                                                              
|31 December 1997 (pro forma - see below)                       |  | 408                     |   |                           |  |                      |  | (290           | ) | 1,543                          |   | 1,661                  |  
|Capital reorganisation (see below)                             |  | (55                     | ) |                           |  |                      |  | (1,427         | ) |                               |   | (1,482                 | )
|Shares issued during the year                                  |  | 1                       |   |                           |  | 16                    |  |               |   | (4                             | ) | 13                     |  
|Translation differences                                        |  |                        |   |                           |  |                      |  |               |   | (1                             | ) | (1                     | )
|Retained earnings for the year                                 |  |                        |   |                           |  |                      |  |               |   | 181                            |   | 181                    |  
|                                                              
|31 December 1998                                               |  | 354                     |   |                           |  | 16                    |  | (1,717         | ) | 1,719                          |   | 372                    |  
|Shares issued during the year                                  |  | 2                       |   |                           |  | 26                    |  |               |   | (3                             | ) | 25                     |  
|Shares repurchased during the year                             |  | (1                      | ) | 1                          |  |                      |  |               |   | (25                            | ) | (25                    | )
|Translation differences                                        |  |                        |   |                           |  |                      |  |               |   | 10                             |   | 10                     |  
|Retained earnings for the year                                 |  |                        |   |                           |  |                      |  |               |   | 219                            |   | 219                    |  
|                                                              
|31 December 1999                                               |  | 355                     |   | 1                          |  | 42                    |  | (1,717         | ) | 1,920                          |   | 601                    |  
|Shares issued during the year                                  |  | 2                       |   |                           |  | 29                    |  |               |   | (3                             | ) | 28                     |  
|Unrealised gains on formation of joint ventures and associates |  |                        |   |                           |  |                      |  |               |   | 73                             |   | 73                     |  
|Unrealised gain on deemed disposal of associate                |  |                        |   |                           |  |                      |  |               |   | 39                             |   | 39                     |  
|Unrealised gains on disposals of fixed asset investments       |  |                        |   |                           |  |                      |  |               |   | 13                             |   | 13                     |  
|Translation differences                                        |  |                        |   |                           |  |                      |  |               |   | 40                             |   | 40                     |  
|Retained earnings for the year                                 |  |                        |   |                           |  |                      |  |               |   | 308                            |   | 308                    |  
|                                                              
|31 December 2000                                               |  | 357                     |   | 1                          |  | 71                    |  | (1,717         | ) | 2,390                          |   | 1,102                  |  
|                                                              

|Reuters Group PLC Annual Report and Form 20-F 2000  63
|------------------------------------------------------

|
|

|NOTES
ON THE CONSOLIDATED BALANCE SHEET continued
|-------------------------------------------------

|26.  CAPITAL AND RESERVES
continued



During 2000 £31
million was received by Reuters Group PLC on the issue of shares in respect of
the exercise of options awarded under various share option plans. Employees paid
£28 million to the Group for the issue of these shares and the balance of
£3 million comprised contributions to the qualifying employee share trust
(QUEST) from subsidiary undertakings.


Cumulative translation gains at 31 December 2000 totalled £22 million (1999: cumulative losses £18 million, 1998:
cumulative losses £28 million).



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



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



27.  SHARE CAPITAL
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                   |  | 2000£M  |  | 1999£M  |   | 1998£M  |  
|------------------------------------------------------------------ |  | ------- |  | ------- | - | ------- | -
|                                                                  
|Authorised                                                         |  |         |  |         |   |         |  
|One Founders Share of £1                                           |  |        |  |        |   |        |  
|49,998 redeemable preference shares of £1                          |  |        |  |        |   |        |  
|2,100 million ordinary shares of 25p each                          |  | 525     |  | 525     |   | 525     |  
|                                                                  
|                                                                   |  | 525     |  | 525     |   | 525     |  
|                                                                  
|Allotted and called-up                                             | 
|One Founders Share of £1                                           |  |        |  |        |   |        |  
|Ordinary shares of 25p each                                        |  | 357     |  | 355     |   | 354     |  
|                                                                  
|                                                                   |  | 357     |  | 355     |   | 354     |  
|                                                                  
|Number of ordinary shares of 25p each (millions)                   |  | 1,429.1 |  | 1,422.7 |   | 1,421.6 |  
|                                                                  
|Shares allotted/(repurchased) during the year in millions          |  | 2000    |  | 1999    |   | 1998    |  
|                                                                  
|Capital reorganisation                                             |  |        |  |        |   | (218.1  | )
|Shares in Reuters Group PLC issued for cash under employee         | 
|share schemes at prices ranging from 150p to 929p per share        |  | 6.4     |  | 5.8     |   | 4.3     |  
|Shares repurchased                                                 |  |        |  | (4.7    | ) |        |  
|                                                                  
|                                                                   |  | 6.4     |  | 1.1     |   | (213.8  | )
|                                                                  
|The rights attaching to the Founders Share are set out on page 82. |  |         |  |         |   |         |  

|64  Reuters Group PLC Annual Report and Form 20-F 2000
|------------------------------------------------------

|
|

|
|

|28.  EMPLOYEE SHARE
OPTION PLANS



Reuters operates share
plans for the benefit of employees as explained in the report on remuneration.
Since the flotation of Reuters Holdings PLC in 1984, Reuters has issued 101
million shares under these plans.


Activity relating to share
options for the two years ended 31 December 2000 was as follows:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|SAVE-AS-YOU-EARN PLANS                                     |  | EXECUTIVEPLANS |   | PLAN2000 |   | TOTAL  |   | WEIGHTEDAVERAGEEXERCISEPRICE |  
|---------------------------------------------------------- |  | -------------- | - | -------- | - | ------ | - | ---------------------------- | -
|                                                          
|Ordinary shares under option in millions (including ADSs): |  |                |   |          |   |        |   |                              |  
|31 December 1998                                           |  | 17.1           |   | 1.6      |   | 25.7   |   | 44.4                         |  
|Granted                                                    |  | 2.6            |   |         |   | 2.4    |   | 5.0                          |  
|Exercised                                                  |  | (4.2           | ) | (0.7     | ) | (0.9   | ) | (5.8                         | )
|Expired, cancelled or lapsed                               |  | (0.9           | ) | (0.1     | ) | (1.2   | ) | (2.2                         | )
|                                                          
|31 December 1999                                           |  | 14.6           |   | 0.8      |   | 26.0   |   | 41.4                         |  
|Granted                                                    |  | 2.6            |   |         |   |       |   | 2.6                          |  
|Exercised                                                  |  | (5.0           | ) | (0.4     | ) | (1.0   | ) | (6.4                         | )
|Expired, cancelled or lapsed                               |  | (1.0           | ) |         |   | (0.3   | ) | (1.3                         | )
|                                                          
|31 December 2000                                           |  | 11.2           |   | 0.4      |   | 24.7   |   | 36.3                         |  
|                                                          
|Number of participants at 31 December 2000                 |  | 10,090         |   | 38       |   | 12,896 |  
|                                                          

|The above options will be
satisfied by the issue of new shares.


The following table
summarises information relating to the number of shares under option and those
which were exercisable at 31 December 2000.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|RANGE OF EXERCISE PRICES |  | TOTAL SHARESUNDER OPTION(MILLION) |  | WEIGHTEDAVERAGEPERIODREMAINING TOFULL VESTING(MONTHS) |  | WEIGHTEDAVERAGEEXERCISEPRICE |  | OPTIONSEXERCISABLEAT31 DECEMBER2000(MILLION) |  | EXERCISABLEWEIGHTEDAVERAGEEXERCISEPRICE | 
|------------------------ |  | --------------------------------- |  | ----------------------------------------------------- |  | ---------------------------- |  | -------------------------------------------- |  | --------------------------------------- | 
|                        
|Ordinary shares          |  |                                   |  |                                                       |  |                              |  |                                              |  |                                         | 
|£3.01 - £5.00            |  | 3.2                               |  | 13                                                    |  | £4.73                        |  | 0.3                                          |  | £4.32                                   | 
|£5.01 - £7.00            |  | 26.4                              |  | 10                                                    |  | £5.56                        |  | 0.1                                          |  | £5.02                                   | 
|£7.01 - £9.00            |  | 2.3                               |  | 15                                                    |  | £8.14                        |  |                                             |  |                                        | 
|£9.01 - £11.00           |  | 2.3                               |  | 35                                                    |  | £9.92                        |  |                                             |  |                                        | 
|ADSs                     | 
|$40.01 - $70.00          |  | 1.3                               |  | 16                                                    |  | $58.08                       |  |                                             |  |                                        | 
|$70.01 - $100.00         |  | 0.6                               |  | 29                                                    |  | $82.06                       |  |                                             |  |                                        | 
|$100.01 - $130.00        |  | 0.2                               |  | 39                                                    |  | $119.50                      |  |                                             |  |                                        | 
|                        
|                         |  | 36.3                              |  |                                                       |  |                              |  | 0.4                                         
|                        

|In August 1990 and January
1994, Reuters established employee share ownership trusts with the power to
acquire shares in the open market. The trustee of both trusts, an offshore
subsidiary of Reuters, is being managed under contract by an independent
management company. Shares purchased by the trusts will be used either to meet
obligations under the companys restricted share plans described in the
report on remuneration and related matters on pages 15-24
or to satisfy the exercise of options granted, or to be granted, under other
employee share option plans. Alternatively, new shares may be issued to satisfy
these option obligations.



Reuters Group PLC Annual Report and Form 20-F 2000  65
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|NOTES
ON THE CONSOLIDATED BALANCE SHEET continued
|-------------------------------------------------

|29.  RELATED PARTY
TRANSACTIONS



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

|                   |  | 31 DECEMBER1999£M |   | AMOUNTSINVOICED£M |   | AMOUNTS(COLLECTED)/PAID£M |   | 31 DECEMBER2000£M |  
|------------------ |  | ----------------- | - | ----------------- | - | ------------------------- | - | ----------------- | -
|                  
|Amounts receivable |  |                   |   |                   |   |                           |   |                   |  
|Radianz            |  |                  |   | 87                |   | (45                       | ) | 42                |  
|Factiva            |  | 13                |   | 25                |   | (21                       | ) | 17                |  
|Other              |  |                  |   | 4                 |   | (1                        | ) | 3                 |  
|                  
|                   |  | 13                |   | 116               |   | (67                       | ) | 62                |  
|                  
|Amounts payable    | 
|Radianz            |  |                  |   | (110              | ) | 61                        |   | (49               | )
|Factiva            |  | (13               | ) | (41               | ) | 35                        |   | (19               | )
|Other              |  | (3                | ) | (14               | ) | 12                        |   | (5                | )
|                  
|                   |  | (16               | ) | (165              | ) | 108                       |   | (73               | )
|                  

|The above amounts relate to
the rendering or receiving of services between both parties, including agency
arrangements and licence agreements. The Other amounts principally comprise
transactions with TIBCO Software Inc.


In addition to the above
amounts:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) |  | Reuters
has a promissory note payable to Factiva with a balance of £10 million outstanding
at the year end (1999: £11 million).
|--- |  | -------------------------------------------------------------------------------------------------------------------------------

|(b) |  | Reuters
disposed of a wholly owned subsidiary to Radianz for £17 million.
|--- |  | -------------------------------------------------------------------------

|30.  OPERATING
LEASES


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

|                             |  | 2000£M |  | 1999£M |  | 1998£M | 
|---------------------------- |  | ------ |  | ------ |  | ------ | 
|                            
|Year ended 31 December       |  |        |  |        |  |        | 
|1999                         |  |       |  |       |  | 70     | 
|2000                         |  |       |  | 79     |  | 64     | 
|2001                         |  | 97     |  | 72     |  | 61     | 
|2002                         |  | 82     |  | 64     |  | 54     | 
|2003                         |  | 70     |  | 55     |  | 46     | 
|2004                         |  | 59     |  | 45     |  | 38     | 
|2005                         |  | 47     |  | 36     |  | 32     | 
|Thereafter                   |  | 325    |  | 266    |  | 225    | 
|                            
|Total minimum lease payments |  | 680    |  | 617    |  | 590    | 
|                            

|66  Reuters Group PLC Annual Report and Form 20-F 2000
|------------------------------------------------------

|
|

|
|

|30.  OPERATING
LEASES continued



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

|                              
|------------------------------
|                              
|                              
|Operating leases which expire:
|Within one year               
|In the second to fifth years  
|Over five years               
|                              

|31.  ACQUISITIONS AND DISPOSALS


During 2000, Reuters
acquired a number of subsidiary undertakings including 100% holdings in O R
Telematique SA (ORT), Yankee Group Research, Inc., (Yankee) and Lynch, Jones
& Ryan, Inc., (LJR). In addition, investments in joint ventures and
associated undertakings included Multex Investor Europe Limited, Radianz
Limited, Atriax Holdings Limited and Sila Communications Limited. Disposals
included Safetynet Group Limited and there were deemed disposals of a number of
associated undertakings including TSI.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  | BOOK VALUE |  
|----------------------- |  | ---------- | -
|ACQUISITIONS            |  | ORT£M      |  
|                       
|Tangible fixed assets   |  | 1          |  
|Fixed asset investments |  |           |  
|Current assets:         | 
|Cash                    |  | 12         |  
|Other                   |  | 17         |  
|Current liabilities     |  | (14        | )
|Long-term liabilities   |  | (2         | )
|                       
|                        |  | 14         |  
|Cash consideration      |  | (40        | )
|                       
|Goodwill                |  | 26         |  
|                       

|Included within the Group
profit and loss account in 2000 are revenues of £70 million in respect of
acquisitions during the year. Had they been acquired on 1 January 2000 their
contribution to Group revenue would have been £92 million. Their impact on
profit was immaterial.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|CREATION OF JOINT VENTURES AND ASSOCIATES |  | RADIANZ£M |   | OTHERS£M |   | TOTAL£M |  
|----------------------------------------- |  | --------- | - | -------- | - | ------- | -
|                                         
|Book value of assets contributed:         |  |           |   |          |   |         |  
|Cash                                      |  | (25       | ) | (35      | ) | (60     | )
|Other                                     |  | (63       | ) |         |   | (63     | )
|Fair value of net assets acquired         |  | 144       |   | 52       |   | 196     |  
|                                         
|Gains                                     |  | 56        |   | 17       |   | 73      |  
|                                         

|The gains of £73
million are unrealised and hence are recorded in the statement of total
recognised gains and losses (STRGL).


Reuters Group PLC Annual Report and Form 20-F 2000  67
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|NOTES
ON THE CONSOLIDATED BALANCE SHEET continued
|-------------------------------------------------

|31.  ACQUISITIONS AND
DISPOSALS continued
|-----------------------------------------

|DEEMED DISPOSALS       |  | TSI£M |  | OTHERS£M |   | TOTAL£M |  
|---------------------- |  | ----- |  | -------- | - | ------- | -
|                      
|Increase in net assets |  | 195   |  | 9        |   | 204     |  
|Consideration          |  | 1     |  | (2       | ) | (1      | )
|                      
|Gains                  |  | 196   |  | 7        |   | 203     |  
|                      

|Of the above gains
£164 million are shown in the profit and loss account, reflecting
principally the profit of £157 million generated by the follow-on offering
in March 2000 of 4.8 million TSI shares and the exercise of stock options.
Unrealised gains of £39 million arose from a share-based acquisition by
TSI.



Actual
disposals


In addition to the deemed
disposals, actual disposals resulted in consideration of £62 million
realising gains of £46 million which are recorded in the profit and loss
account. Of these gains £37 million related to Safetynet Group Limited and
£8 million related to Reuters Connect Services Limited, a wholly owned
subsidiary of Reuters which was sold to Radianz subsequent to the creation of
Radianz.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|RECONCILIATION OF GAINS                       |  | REALISED£M |  | UNREALISED£M |  | TOTAL£M | 
|--------------------------------------------- |  | ---------- |  | ------------ |  | ------- | 
|                                             
|On formation of joint ventures and associates |  |           |  | 73           |  | 73      | 
|On deemed disposals                           |  | 164        |  | 39           |  | 203     | 
|On actual disposals                           |  | 46         |  |             |  | 46      | 
|On disposal of Greenhouse investments         |  | 83         |  | 13           |  | 96      | 
|On disposal of tangible fixed assets          |  | 8          |  |             |  | 8       | 
|                                             
|Recorded in the profit and loss account/STRGL |  | 301        |  | 125          |  | 426     | 
|                                             

|68  Reuters Group PLC Annual Report and Form 20-F 2000
|------------------------------------------------------

|
|

|
|

|32.  SUBSIDIARY AND
ASSOCIATED UNDERTAKINGS AND JOINT VENTURES



The
principal subsidiary undertakings, associated undertakings and joint ventures at
31 December 2000, all of which are included in the consolidated financial
statements, are shown below. The shares in Reuters Investments Limited are held
by Reuters Group PLC. The shares in the other companies are held by Reuters
Investments Limited or its wholly-owned subsidiaries.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|SUBSIDIARY UNDERTAKINGS                       |  | COUNTRYOFINCORPORATION |  | PRINCIPALAREA OFOPERATION |  | PERCENTAGEOF EQUITYSHARES HELD | 
|--------------------------------------------- |  | ---------------------- |  | ------------------------- |  | ------------------------------ | 
|                                             
|Instinet Group LLC                            |  | USA                    |  | USA                       |  | 100                            | 
|Reuters AG                                    |  | Germany                |  | Germany                   |  | 100                            | 
|Reuters America Inc                           |  | USA                    |  | USA                       |  | 100                            | 
|Reuters Australia Pty Limited                 |  | Australia              |  | Australia                 |  | 100                            | 
|Reuters Eastern Europe Limited                |  | UK                     |  | Russia                    |  | 100                            | 
|Reuters Espana SA                             |  | Spain                  |  | Spain                     |  | 100                            | 
|Reuters GmbH                                  |  | Austria                |  | Austria                   |  | 100                            | 
|Reuters Hong Kong Limited                     |  | Cook Islands           |  | Hong Kong                 |  | 100                            | 
|Reuters Investments Limited                   |  | UK                     |  | UK                        |  | 100                            | 
|Reuters Italia SpA                            |  | Italy                  |  | Italy                     |  | 100                            | 
|Reuters Limited                               |  | UK                     |  | Worldwide                 |  | 100                            | 
|Reuters Nederland BV                          |  | Netherlands            |  | Netherlands               |  | 100                            | 
|Reuters SA                                    |  | Switzerland            |  | Continental Europe        |  | 100                            | 
|Reuters Services SARL                         |  | France                 |  | France                    |  | 100                            | 
|Reuters Singapore Pte Limited                 |  | Singapore              |  | Singapore                 |  | 100                            | 
|Reuters Transaction Services Limited          |  | UK                     |  | Worldwide                 |  | 100                            | 
|Reuters Information Services (Canada) Limited |  | Canada                 |  | Canada/USA                |  | 100                            | 
|TIBCO Finance Technology Inc.                 |  | USA                    |  | Worldwide                 |  | 100                            | 
|                                             

|The financial years for the
above subsidiary undertakings end on 31 December.


Associated undertakings
and joint ventures



The principal associated
undertakings and joint ventures at 31 December 2000 were:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                              
|----------------------------------------------
|TIBCO Software Inc.                           
|Factiva LLC (joint venture)                   
|Radianz Limited (joint venture)               
|Multex Investor Europe Limited (joint venture)
|Sila Communications Limited                   
|                                              

|On a diluted basis, after deducting
shares under option, Reuters interest in the equity of TIBCO Software Inc., reduces to
42%.



33.  POST BALANCE SHEET
EVENTS



On 8 February 2001, Reuters
announced that Instinet, its wholly owned electronic brokerage subsidiary, had
filed a Registration Statement with the SEC for a proposed initial public
offering (IPO). Instinet intends to apply for quotation of its common stock on
the Nasdaq Stock Market. It is expected that the IPO will be completed by the
middle of 2001. This will be a primary offering of common stock all of which
will be issued by Instinet. Following the IPO, Reuters will continue to own a
substantial majority of Instinets common stock.



Reuters Group PLC Annual Report and Form 20-F 2000  69
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|BALANCE
SHEET OF REUTERS GROUP PLC AT 31 DECEMBER
|-------------------------------------------------

|                                             |  | Notes |  | 2000£M |   | 1999£M |   | 1998£M |  
|-------------------------------------------- |  | ----- |  | ------ | - | ------ | - | ------ | -
|                                            
|Fixed asset investment                       |  | 34    |  | 8,679  |   | 8,655  |   | 8,640  |  
|Amounts owed by Group undertakings           |  |       |  | 795    |   | 589    |   | 1,144  |  
|Other borrowings                             |  |       |  | (558   | ) | (448   | ) | (989   | )
|Proposed dividends                           |  |       |  | (173   | ) | (154   | ) | (155   | )
|                                            
|Net assets                                   |  |       |  | 8,743  |   | 8,642  |   | 8,640  |  
|                                            
|Capital and reserves:                        |  | 35    | 
|Called-up share capital                      |  |       |  | 357    |   | 355    |   | 354    |  
|Capital redemption reserve                   |  |       |  | 1      |   | 1      |   |       |  
|Share premium account                        |  |       |  | 71     |   | 42     |   | 16     |  
|Merger reserve                               |  |       |  | 6,788  |   | 6,788  |   | 6,788  |  
|Profit and loss account reserve              |  |       |  | 1,526  |   | 1,456  |   | 1,482  |  
|                                            
|Capital employed                             |  |       |  | 8,743  |   | 8,642  |   | 8,640  |  
|                                            
|                                            
|Profit attributable to ordinary shareholders |  |       |  | 294    |   | 205    |   | 343    |  

|This balance sheet was approved by
the directors on 16 February 2001.
|---------------------------------------------------------------------

|/s/  Peter JobPeter Job, Chief Executive |  | /s/  David GrigsonDavid Grigson, Finance Director
|---------------------------------------- |  | -------------------------------------------------

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

70  Reuters Group PLC Annual Report and Form 20-F 2000
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|NOTES
ON THE BALANCE SHEET OF REUTERS GROUP PLC
|-----------------------------------------------

|34.  FIXED ASSET
INVESTMENT


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





35. CAPITAL
AND RESERVES
|-----------------------------------------------------------------------------------------------------------------------------------------------------------

|                              |  | CALLED UPSHARECAPITAL£M |  | CAPITALREDEMPTIONRESERVE£M |  | SHAREPREMIUMACCOUNT£M |  | MERGERRESERVE£M |  | PROFIT ANDLOSSACCOUNTRESERVE£M |  | TOTAL£M | 
|----------------------------- |  | ----------------------- |  | -------------------------- |  | --------------------- |  | --------------- |  | ------------------------------ |  | ------- | 
|                             
|31 December 1999              |  | 355                     |  | 1                          |  | 42                    |  | 6,788           |  | 1,456                          |  | 8,642   | 
|Shares issued during the year |  | 2                       |  |                           |  | 29                    |  |                |  |                               |  | 31      | 
|Retained profit for the year  |  |                        |  |                           |  |                      |  |                |  | 70                             |  | 70      | 
|                             
|31 December 2000              |  | 357                     |  | 1                          |  | 71                    |  | 6,788           |  | 1,526                          |  | 8,743   | 
|                             

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


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

Reuters Group PLC Annual Report and Form 20-F 2000  71
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|ACCOUNTING
POLICIES
|-------------------

|Accounting basis



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



Basis of
consolidation


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

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

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

|Foreign
currency translation


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

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

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

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

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

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



Treasury


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



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


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



Revenue


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



Instinet
transactions


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



Development


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



Pensions and similar
obligations



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



Restricted share and
Instinet long-term incentive plans



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



Tangible fixed
assets


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

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

|Stocks and contract work
in progress



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



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


Net realisable value is the
estimated market value less selling costs.
72  Reuters Group PLC Annual Report and Form 20-F 2000
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|
|

|Short-term
investments


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


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


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



Debt issuance


Medium-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.



Leasing


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


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


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



Deferred
taxation




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



Goodwill


Purchased goodwill is
capitalised and amortised through the profit and loss account on a straight-line
basis over its estimated useful economic life which is between five and 20 years
depending on the nature of business acquired. Impairment reviews of goodwill are
carried out at the end of the first financial year after acquisition and where
there is any indication of impairment.


Interest in shares of
Reuters Group PLC



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



Fixed asset
investments



Fixed 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 2000  73
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|SUMMARY
OF DIFFERENCES BETWEEN UK AND US GENERALLY 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.  Software revenue
recognition


Under UK GAAP, revenue and
related direct costs from contracts for the outright sale of software systems
are recognised at the time of client acceptance when no further costs are
expected to be incurred. Under US GAAP, specific rules were introduced effective
January 1998 establishing 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 for revenue recognition are met.


b.  Software and website
development costs



Under 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 associated undertakings



Certain employees that held
unvested stock option awards were transferred to a joint venture in 2000.
Following the transfer, the stock awards are considered to be held by
non-employees under US GAAP. Accordingly, 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. Under UK GAAP, no such
adjustment is recorded.



Under UK
GAAP, the difference between the book value and fair value of the
assets contributed to a joint venture is 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.


d.  Gains on
deemed disposal of associates


Under UK GAAP, gains on the
partial deemed disposal of associates involving non-qualifying consideration are
recorded in the statement of total recognised gains and losses. Under US GAAP,
the company has adopted a policy whereby these gains are recorded in the profit
and loss account.


e.  Gains on
exchange of investments



Under UK GAAP, gains on the
non-cash sales of fixed asset investments are recorded within the statement of
total recognised gains and losses. Under US GAAP, these gains are recorded in
the profit and loss account.


f.  Goodwill
and other acquisition accounting adjustments


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



g.  Employee
costs


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


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
to 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 for 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.


h.  Taxes on
income




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





i.  Dividends


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


j.  Shares
held by employee share ownership trusts (ESOTs)



Under UK GAAP, shares held
by the ESOTs are recorded as fixed asset investments at cost less amounts
written off. Under US GAAP, those shares not fully vested are regarded as
treasury stock and recorded at cost as a deduction from shareholders
equity.
74  Reuters Group PLC Annual Report and Form 20-F 2000
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|
|

|k.  Fixed
asset investments



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


The effects of these differing
accounting principles are shown in notes 36-39.




Cash flow
statement




The cash flow statement set out on pages
47-49 has been prepared in conformity with UK Financial Reporting
Standard No 1 (Revised) Cash Flow Statements. The principal differences between
this statement and cash flow statements presented in accordance with US
Financial Accounting Standard No 95 are as follows:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

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

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

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

|                                                                    |  | 2000£M |   | 1999£M |   | 1998£M |  
|------------------------------------------------------------------- |  | ------ | - | ------ | - | ------ | -
|                                                                   
|Net cash inflow from operating activities                           |  | 688    |   | 657    |   | 795    |  
|Net cash outflow from investing activities                          |  | (624   | ) | (409   | ) | (431   | )
|Net cash outflow from financing activities                          |  | (54    | ) | (610   | ) | (764   | )
|                                                                   
|Net increase/(decrease) in cash and cash equivalents under US GAAP  |  | 10     |   | (362   | ) | (400   | )
|Net increase/(decrease) in cash under UK GAAP (see notes 4-5 above) |  | 11     |   | (25    | ) | (8     | )
|                                                                   

|Reuters Group PLC Annual Report and Form 20-F 2000  75
|------------------------------------------------------

|
|

|SUMMARY
OF DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)
|----------------------------------------------------------------------------------------

|36.  ADJUSTMENTS
TO NET INCOME
|------------------------------

|                                                                           |  | 2000£M    |   | 1999£M    |   | 1998£M    |  
|-------------------------------------------------------------------------- |  | --------- | - | --------- | - | --------- | -
|                                                                          
|Profit attributable to ordinary shareholders in accordance with UK GAAP    |  | 532       |   | 425       |   | 384       |  
|US GAAP adjustments:                                                       | 
|a. Software revenue recognition                                            |  | (6        | ) | 2         |   | (2        | )
|b. Capitalised website development costs                                   |  | 3         |   |          |   |          |  
|b. Amortisation of software development costs                              |  | (2        | ) | (2        | ) | (2        | )
|c. Associated undertakings                                                 |  | (16       | ) |          |   |          |  
|d. Gains on deemed disposal of associate                                   |  | 25        |   |          |   |          |  
|e. Gain on exchange of investments                                         |  | 16        |   |          |   |          |  
|f. Goodwill and other acquisition accounting adjustments                   |  | (3        | ) | (2        | ) | (3        | )
|g. Employee costs (i)                                                      |  | (22       | ) | (8        | ) | (1        | )
|h. Income taxes                                                            | 
|Application of FAS 109                                                     |  | (1        | ) | 35        |   | 13        |  
|Tax effect of US GAAP adjustments                                          |  | 8         |   | 1         |   | 3         |  
|                                                                          
|Net income in accordance with US GAAP                                      |  | 534       |   | 451       |   | 392       |  
|                                                                          
|                                                                          
|                                                                           |  | 2000PENCE |   | 1999PENCE |   | 1998PENCE |  
|                                                                          
|Earnings and dividends (ii)                                                | 
|Basic earnings per ADS in accordance with US GAAP                          |  | 228.1     |   | 192.1     |   | 166.6     |  
|Diluted earnings per ADS in accordance with US GAAP                        |  | 224.3     |   | 189.5     |   | 166.0     |  
|                                                                          
|Dividend paid per ADS (including UK tax credit)                            |  | 97.7      |   | 97.7      |   | 99.8      |  
|Deemed special dividend paid per ADS                                       |  |          |   |          |   | 627.7     |  
|                                                                          
|Total dividend paid per ADS                                                |  | 97.7      |   | 97.7      |   | 727.5     |  
|                                                                          
|Weighted average number of shares used in basic EPS calculation (millions) |  | 1,404     |   | 1,409     |   | 1,411     |  
|Issuable on conversion of options                                          |  | 24        |   | 20        |   | 5         |  
|                                                                          
|Used in diluted EPS calculation                                            |  | 1,428     |   | 1,429     |   | 1,416     |  
|                                                                          

|Additional disclosures
required by US GAAP



(i)  Employee
costs


The company has complied
with Financial Accounting Standard No 123, Accounting for Stock-Based
Compensation (FAS 123). Reuters has continued to apply the methodologies set out
in APB Opinion 25, Accounting for Stock Issued to Employees and other US GAAP
literature in calculating its US GAAP adjustments for share option plans and
awards of share rights. Had Reuters elected to recognise compensation expense
based upon the fair value at grant date for awards made in 1995 to 2000 under
these plans consistent with the alternative methodology set out in FAS 123, net income in
2000 in accordance with US GAAP would have been £2 million lower (1999:
£8 million lower), and earnings per ADS and diluted earnings per ADS would
both have been 1.0p lower (1999: 3.6p lower) than the figures shown above.
Differences arising in earlier years were not material.


The fair value of the
options granted are estimated using a European binomial option pricing model.
The range of assumptions applied to options granted in 2000 were: dividend yield
of 1.2%-1.7%, volatility of 44%-52% and risk-free investment rates of
6.72%-6.8%.



(ii)  Capital
reorganisation


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

76  Reuters Group PLC Annual Report and Form 20-F 2000
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|
|

|36.  ADJUSTMENTS
TO NET INCOME continued



(iii)  Derivative
instruments and hedging activities


Financial Accounting
Standard No 133, Accounting for Derivative Instruments and Hedging Activities
(FAS 133) as amended by FAS 138, became effective for Reuters on 1 January 2001.
FAS 133, which requires all derivatives to be carried on the balance sheet at
fair value, introduces new rules in respect of hedge accounting and the
recognition of movements in fair value through the income statement.


Reuters expects that it
will not designate any of its derivative instruments as qualifying hedge
instruments under FAS 133 and, accordingly, the company expects to record
changes in the fair value of its derivative instruments in current earnings each
period. The company will record a transition adjustment in its accounting
records to comply with FAS 133. The transition adjustment will be calculated
using the assumption that none of the hedging relationships that existed prior
to the adoption of FAS 133 will qualify for hedge accounting after the adoption
of FAS 133.


Under UK GAAP, Reuters will
continue to apply hedge accounting and accordingly expects to present a US GAAP
adjustment for 2001 and in subsequent years. At this time, Reuters plans no
significant change to its risk management strategies due to the adoption of FAS
133.


The impact that FAS 133
will have on the US GAAP results in Reuters financial statements for the year
ended 31 December 2001 is currently being assessed.


37.  ADJUSTMENTS
TO SHAREHOLDERS EQUITY
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                          |  | 2000£M |   | 1999£M |   | 1998£M |  
|------------------------------------------------------------------------- |  | ------ | - | ------ | - | ------ | -
|                                                                         
|Capital employed before minority interest in accordance with UK GAAP      |  | 1,102  |   | 601    |   | 372    |  
|US GAAP adjustments:                                                      | 
|a. Software revenue recognition                                           |  | (6     | ) |       |   | (2     | )
|b. Capitalised software and website development costs net of amortisation |  | 6      |   | 4      |   | 6      |  
|c. Investments in joint ventures and associates                           |  | (81    | ) |       |   |       |  
|f. Goodwill and other acquisition accounting adjustments                  |  | 4      |   | 4      |   | (16    | )
|g. Liabilities                                                            |  | (73    | ) | (42    | ) | (28    | )
|h. Deferred taxes                                                         |  | 18     |   | (123   | ) | (10    | )
|i. Dividends not formally declared or paid during the year                |  | 174    |   | 154    |   | 155    |  
|j. Shares held by employee share ownership trusts                         |  | (117   | ) | (95    | ) | (45    | )
|k. Fixed asset investments                                                |  | 159    |   | 606    |   | 72     |  
|                                                                         
|Shareholders equity in accordance with US GAAP                           |  | 1,186  |   | 1,109  |   | 504    |  
|                                                                         
|                                                                         
|38.  STATEMENT OF COMPREHENSIVE INCOME                                    | 
|                                                                          |  | 2000£M |   | 1999£M |   | 1998£M |  
|                                                                         
|Net income in accordance with US GAAP                                     |  | 534    |   | 451    |   | 392    |  
|Other comprehensive income, net of tax:                                   | 
|Unrealised gains on certain fixed asset investments:                      | 
|Arising during year                                                       |  | (270   | ) | 425    |   | 37     |  
|Less gains in net income                                                  |  | (43    | ) | (10    | ) | (19    | )
|Foreign currency translation differences                                  |  | 40     |   | 10     |   | (1     | )
|                                                                         
|Comprehensive income in accordance with US GAAP                           |  | 261    |   | 876    |   | 409    |  
|                                                                         

|Reuters Group PLC Annual Report and Form 20-F 2000  77
|------------------------------------------------------

|
|

|SUMMARY
OF DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)
|----------------------------------------------------------------------------------------

|39.  SUMMARISED
BALANCE SHEET (US GAAP BASIS)
|---------------------------------------------

|                                               |  | 2000£M |   | 1999£M |   | 1998£M |  
|---------------------------------------------- |  | ------ | - | ------ | - | ------ | -
|                                              
|Assets                                         |  |        |   |        |   |        |  
|Fixed tangible assets                          |  | 1,584  |   | 1,534  |   | 889    |  
|Current assets                                 |  | 1,886  |   | 1,401  |   | 1,565  |  
|Other assets                                   |  | 60     |   | 46     |   | 42     |  
|Software development costs                     |  | 6      |   | 4      |   | 6      |  
|Goodwill and other intangibles                 |  | 247    |   | 188    |   | 220    |  
|                                              
|Total assets                                   |  | 3,783  |   | 3,173  |   | 2,722  |  
|                                              
|Liabilities and shareholders equity           | 
|Current liabilities                            |  | 2,130  |   | 1,556  |   | 2,102  |  
|Long-term liabilities                          |  | 458    |   | 362    |   | 75     |  
|Deferred taxes                                 |  | 9      |   | 146    |   | 24     |  
|Minority interest                              |  |       |   |       |   | 17     |  
|                                              
|Shareholders equity before deductions         |  | 1,349  |   | 1,236  |   | 562    |  
|Shares held by employee share ownership trusts |  | (163   | ) | (127   | ) | (58    | )
|                                              
|Total shareholders equity                     |  | 1,186  |   | 1,109  |   | 504    |  
|                                              
|Total liabilities and shareholders equity     |  | 3,783  |   | 3,173  |   | 2,722  |  
|                                              

|Goodwill and other intangibles are
net of accumulated amortisation of £477 million (1999: £415 million, 1998:
£370 million). Software development costs are net of accumulated amortisation of
£16 million (1999: £14 million, 1998: £12 million).

78  Reuters Group PLC Annual Report and Form 20-F 2000
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|INFORMATION
FOR SHAREHOLDERS
|----------------------------

|MAJOR SHAREHOLDERS




Ordinary shares


As of 16 February 2001,
there were 1,404,617,643 ordinary shares outstanding, excluding 24,690,616
ordinary shares owned by certain employee share ownership trusts (see note 16).
Reuters has received notice under section 198 of the Companies Act 1985, that on
16 February 2001, The Capital Group Companies, Inc., and its affiliates together
held, in their capacity as investment managers, 51,935,504 ordinary shares
(representing 3.63% of Reuters share capital). On that date, to Reuters
knowledge, all directors and officers of Reuters as a group (19 persons) had an
interest in an aggregate of 773,418 ordinary shares, representing approximately
0.05% of the total outstanding, excluding an aggregate of 1,984,560 ordinary
shares that may be acquired by directors and officers pursuant to the share
option and share rights schemes referred to on pages 18-24.



The Founders
Share


Reuters is dedicated to
preserving its independence, integrity and freedom from bias in the gathering
and dissemination of news and information. The Reuters Founders Share Company
Limited (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 seize
control of the company. Control, for this purpose, means 30% of the ordinary
shares. The Trustees of the Founders Share Company (who constitute both its
members and directors) 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 82).


The Trustees are nominated
by a Nomination Committee which includes certain serving Trustees, one person
nominated by each of four news associations and two persons appointed by the
Chairman of Reuters. A Trustee may not be a director or employee of Reuters.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The current Trustees are as follows:                    |  | TRUSTEESINCE | 
|------------------------------------------------------- |  | ------------ | 
|                                                       
|Leonard Terry Berkowitz                                 |  | 1998         | 
|Sir Michael Checkland                                   |  | 1994         | 
|Dr Claude Neville David Cole CBE                        |  | 1984         | 
|Robert Francis Erburu                                   |  | 1999         | 
|Pehr Gustaf Gyllenhammar (Chairman)                     |  | 1997         | 
|Toyoo Gyohten                                           |  | 2000         | 
|Jacques Martin Henri Marie de Larosière de Champfeu KBE |  | 1999         | 
|Sir Christopher Leslie George Mallaby GC, MG, GCVO      |  | 1998         | 
|The Right Hon The Baroness Noakes DBE                   |  | 1998         | 
|Sir William Purves CBE, DSO                             |  | 1998         | 
|Jaakko Kaarle Mauno Rauramo                             |  | 1999         | 
|Arthur Ochs Sulzberger                                  |  | 1994         | 
|Ernest James Lyle Turnbull AO                           |  | 1993         | 
|Richard John Winfrey                                    |  | 1987         | 
|                                                       

|Each Trustee is normally
required to retire at the annual general meeting (AGM) 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).



RELATED PARTY
TRANSACTIONS


Related party transactions
are principally with Radianz and Factiva. During 2000, and in accordance with
inter-company agreements, Radianz provided Reuters with network services, from 1
July 2000, totalling £110 million (see material contracts on page 87).
Also during the year, Factiva provided picture archiving facilities and the
internal use of its information product, Reuters Business Briefing, at a cost of
approximately £1 million. Also Reuters acted as collection agent for
£40 million of venture revenues which were billed to it by Factiva.
Reuters provided both parties with technical and administrative support services
of £87 million and £25 million respectively. In addition, Reuters
purchased £12 million of development services from TSI.


Reuters provides financial
information services to many of the companies with which it shares a common
director. These services totalled £80 million during 2000.


All the above services were
in the normal course of business and charged at commercial rates. The services
are ongoing and continued at historical levels through the date of
this report.


Under the terms of the
agreement with Dow Jones and Company relating to the formation of the Factiva
joint venture, Reuters agreed to invest $20 million in cash in the venture over
a period of five years payable $2 million half-yearly commencing July 1999. This
element of the agreement is evidenced by an interest-free promissory note. At 31
December 2000 the balance outstanding under the note was $14 million.


For further information on
related party transactions see note 29.
Reuters Group PLC Annual Report and Form 20-F 2000  79
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|INFORMATION
FOR SHAREHOLDERS
|----------------------------

|TRADING MARKETS


The ordinary shares are
traded on the London Stock Exchange and 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 Morgan
Guaranty Trust Company of New York, as Depositary under a Deposit Agreement,
dated 18 February 1998 (the Deposit Agreement), among Reuters Group, the
Depositary and the holders from time to time of ADRs.


The table below sets forth,
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 price
information included for 1 January 1996 to 18 February 1998 (prior to the
capital reorganisation described in note 26) is for the ordinary shares of 2.5p
each of Reuters Holdings PLC (Reuters Holdings) and the American Depositary
Shares which represented them.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                          | THE LONDONSTOCK EXCHANGE | NASDAQ            
|------------------------- | ------------------------ | ------------------
|                         
|                          | POUNDS PER SHARE         | US DOLLARS PER ADS
|                         
|                          |                          | HIGH              
|                          |                          |                   
|                         
|Annual market prices:     |                          |                   
|1996                      |                          | 8.18              
|1997                      |                          | 7.82              
|1998                      |                          | 7.70              
|1999                      |                          | 10.11             
|2000                      |                          | 16.20             
|Quarterly market prices:  |                         
|1999                     
|First quarter             |                          | 9.98              
|Second quarter            |                          | 10.11             
|Third quarter             |                          | 9.70              
|Fourth quarter            |                          | 9.16              
|2000                     
|First quarter             |                          | 16.20             
|Second quarter            |                          | 12.92             
|Third quarter             |                          | 14.52             
|Fourth quarter            |                          | 13.54             
|Monthly market prices:    |                         
|2000                     
|August                    |                          | 13.80             
|September                 |                          | 14.52             
|October                   |                          | 13.54             
|November                  |                          | 13.50             
|December                  |                          | 12.95             
|2001                     
|January                   |                          | 11.58             
|February (to 16 February) |                          | 11.00             
|                         

|80  Reuters Group PLC Annual Report and Form 20-F 2000
|------------------------------------------------------

|
|

|
|

|ANALYSIS OF SHAREHOLDERS




As of 16 February 2001
there were 1,404,617,643 Reuters ordinary shares in issue, excluding ordinary
shares held by employee share ownership trusts. There were 36,641 shareholders
on the ordinary share register, presented by category in the chart below.


As of the same date 598,435
ordinary shares and ADRs evidencing 20,064,861 ADSs (representing 120,389,166
ordinary shares) were held on record in the US. These ordinary shares and ADRs
were held by 194 record holders and 2,310 record holders, respectively, and
represented 0.04% or evidenced ADSs representing 8.42%, respectively, of the
total number of ordinary shares outstanding. Since certain of these ordinary
shares and ADRs 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.


Note 1: Includes unit trusts and
mutual funds


Note 2: Includes all
holdings below 100,000 shares, except for individuals, whose holdings are
analysed below this level.



DIVIDENDS


The table below sets forth
the amounts of interim, final and total dividends (excluding any associated UK
tax credit discussed on pages 88-89) 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. The
first section of the table shows the dividends paid as reported under UK GAAP.
The second section of the table gives the amounts restated for the 1998 Capital
Reorganisation and as reported under US GAAP (see note 36).
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                            | PENCE PER SHARE | CENTS PER ADS
|----------------------------------------------------------- | --------------- | -------------
|FISCAL YEAR ENDED 31 DECEMBER                               |                 | INTERIM      
|                                                           
|                                                            |                 |              
|                                                           
|Dividends in accordance with UK GAAP                       
|1996                                                        |                 | 2.75         
|1997                                                        |                 | 3.10         
|1998                                                        |                 | 3.40         
|1999                                                        |                 | 3.65         
|2000                                                        |                 | 3.65         
|                                                           
|                                                           
|                                                            | PENCE PER SHARE | CENTS PER ADS
|FISCAL YEAR ENDED 31 DECEMBER                               |                 | INTERIM      
|                                                           
|Dividends retroactively restated in accordance with US GAAP
|1996                                                        |                 | 3.17         
|1997                                                        |                 | 3.58         
|1998(2)                                                     |                 | 108.02       
|1999                                                        |                 | 3.65         
|2000(1)                                                     |                 | 3.65         
|                                                           

|(1) The final dividend in
respect of 2000 is payable on 26 April 2001 to holders of ordinary shares on the
register at 16 March 2001 and on 3 May 2001 to holders of ADSs on the register
at 16 March 2001, and will be converted into US dollars from sterling at the
rate prevailing on 26 April 2001.


(2) The 1998 interim dividend amount in accordance
with US GAAP consists of the interim dividend of 3.40p per share (33.69 cents per
ADS) paid in September 1998 and the amount recorded as a dividend under the
terms of the Capital Reorganisation consummated on 18 February 1998 of 104.62p
per share (1024.41 cents per ADS).


During the period of
business transformation Reuters dividend policy will be aligned to the results
of Reuters Financial, which comprises Reuters Information and Reuters Trading
Solutions.




Reuters Group PLC Annual Report and Form 20-F 2000  81
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|INFORMATION
FOR SHAREHOLDERS continued
|--------------------------------------

|MEMORANDUM AND ARTICLES
OF ASSOCIATION


The following description
summarises certain material rights of holders of Reuters ordinary shares of 25p
each and material provisions of the Memorandum and Articles of Association of
Reuters Group (the Articles), the Memorandum and Articles of Association of 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 US SEC, and the UK Companies Act 1985, as amended (the
Companies Act).


All of the outstanding
ordinary shares are fully paid. Accordingly, no further contribution of capital
may be required by Reuters from the holders of such shares.


In this description, the
term holder refers to the person registered in Reuters 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. Morgan Guaranty Trust Company of New York, which acts as Depositary under
the Deposit Agreement relating to Reuters ADSs, is the holder of the ordinary
shares represented by the outstanding ADSs.



General


Reuters is incorporated
under the name Reuters Group PLC and is registered in England and Wales with
registered number 3296375. Reuters objects are set forth 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 services and products;
|- | --------------------------------------------------------------------------------

| | acquiring
and operating wireless installations, satellites and other means of communication;
|- | --------------------------------------------------------------------------------------------

| | utilising
its communications capabilities to provide various financial and securities markets
services; and
|- | -----------------------------------------------------------------------------------------------------------

| | carrying
on any other business supplemental to the foregoing or capable of enhancing the companys
profitability or capitalising on its expertise.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------

|The Articles grant Reuters
a broad range of corporate powers to effect these objectives.



The Reuters
Trust Principles and the Founders Share Company


The Articles contain two
sets of restrictions relating to the ownership of the companys shares.
These restrictions are intended to ensure continued compliance with the
following principles (the Reuters Trust Principles) set forth in the Articles:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 term Reuters means Reuters Group and every
subsidiary of Reuters Group 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. 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 Reuters may further effect the involuntary disposition of any shares
exceeding the 15% limit. 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.

82  Reuters Group PLC Annual Report and Form 20-F 2000
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|Second, Reuters 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. 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 to Reuters 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 are
intended to prevent a bid for control of Reuters. 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
anti-takeover provisions applicable to Reuters may be expected to preclude such
offers.



Directors


Reuters 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, Reuters. 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, (b) giving any guarantee, security or indemnity to a third
party in respect of obligations of Reuters for which the director has assumed
responsibility under an indemnity or guarantee, (c) relating to an offer of
securities of Reuters 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.


In the absence of an independent
quorum, the directors are not able to vote compensation to themselves or any members of
their body.



The directors are empowered to
exercise all the powers of Reuters to borrow money, subject to the limitation that the
aggregate principal amount outstanding in respect of moneys borrowed by Reuters shall not
exceed the higher of a sum equal to two and a half times Reuters share capital and
aggregate reserves (after making certain adjustments for events subsequent to the date of
the latest audited balance sheet and other adjustments described in the Articles) and
£5,000 million, unless sanctioned by an ordinary resolution of Reuters
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 10-14.


A non-executive director is
not required to hold shares of Reuters in order to qualify as a director. A
director not holding any shares may nevertheless attend and speak at general
meetings of Reuters.
Reuters Group PLC Annual Report and Form 20-F 2000  83
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|INFORMATION
FOR SHAREHOLDERS continued
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|Rights and restrictions
attaching to Reuters shares


Dividends


Holders of ordinary shares are
entitled to participate in the payment of dividends. The Founders Share is not entitled
to participate in the payment of dividends. The Board of Directors 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 requiring a
simple majority of the votes cast) but no dividend may be declared in excess of the
amount recommended by the Board. Failure to obtain shareholder approval does not affect
any previously paid interim dividends.


Reuters may allot ordinary
shares in lieu of cash dividends, subject to shareholder approval at the time
the relevant dividend is declared. In addition, Reuters 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 rights


Rights conferred by
ordinary shares. Voting at a general meeting of shareholders is by show of hands
of the holders of ordinary shares unless, before or on making known the result,
voting by reference to the number of ordinary shares held by each holder who is
present or represented at the meeting, which is referred to as 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.


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. Notwithstanding the voting rights conferred by the ordinary
shares described above, the Founders Share confers upon the Founders Share
Company the right on any resolution, the passing of which would be a variation
or abrogation of the rights attached to the Founders Share, to cast such number
of votes as are necessary to ensure the defeat of such resolution. The Articles
provide that the alteration of specified articles relating to the rights of the
Founders Share and the Reuters Trust Principles are deemed to constitute a
variation of the rights attached to the Founders Share. In addition, any
resolution proposing the winding up of Reuters voluntarily, by the Court, or any
reconstruction of Reuters, or any resolution which would attach to any share
voting rights not identical in all respects with those attached to the ordinary
shares, is deemed to be a variation of the rights attached to the Founders
Share.


Additionally, if there are,
in the opinion of the Founders Share Company, reasonable grounds for believing
that any person and their associates has or have obtained or is or are
attempting to obtain, directly or indirectly, control of Reuters, the Founders
Share Company is entitled in its absolute discretion to serve or cause to be
served on Reuters a written notice, signed by any one or more of the Reuters
Trustees, referred to as a Founders Share Control Notice, to the effect that the
Founders Share Company is of that opinion. 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 of Reuters. If a director of Reuters becomes
aware of any facts that might lead to the directors and/or the Founders Share
Company taking the view that a Founders Share Control Notice should be served,
he is required to inform the other directors of these facts without delay and
the directors are required to give notice of them to the Founders Share Company
forthwith. 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 upon Reuters a written
request for an extraordinary general meeting of Reuters and the
directors of Reuters are obligated to comply with such request. If
they do not comply, the Founders Share Company is entitled itself to
convene an extraordinary general meeting of Reuters. If a Founders
Share Control Notice has been served, however, the Founders Share
Company can convene an extraordinary general meeting of Reuters
without first requesting that the directors do so.


Any two Reuters Trustees
can bind all Reuters Trustees 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 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).



84  Reuters Group PLC Annual Report and Form 20-F 2000
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|Restrictions on ownership


Ordinary 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 (including a reversionary interest, an
interest in remainder or as a discretionary object) or if he controls the voting
rights of others, and even though the interest may be a joint interest or may be
subject to restraint or restriction. The definition of interest in shares in the
Articles is currently made by reference, with specified variations, to certain
provisions of the Companies Act.


Disclosure of interests in
ordinary shares. The Articles provide for the disclosure of interests in shares
and, by reference to the Companies Act provisions mentioned above, with
specified variations, require any person who becomes or ceases to have an
interest of 10% or more, or a material interest of 3% or more, of the ordinary
shares to notify Reuters, and any person having such an interest to notify any
change in the percentage level thereof. Under the relevant provisions of the
Companies Act as currently in force, if a person acquires an interest (as
defined therein, in a manner similar but not identical to the definition under
the Articles) 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 obligated 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
(defined as meaning all interests in shares subject to certain exceptions,
including an exception for interests arising by virtue of certain investment
management arrangements) 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 persons served with any such
notice are in default in answering any such notice. The Articles also provide
for the imposition of restrictions on transferability of the shares concerned
and on the right to receive dividends in addition to disenfranchisement if such
shares represent at least 0.25% of the class concerned. Such restrictions
cannot, however, be imposed until the expiry of 14 days. 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 in respect
of these shares, the Articles provide that the Founders Share Company may
require the directors of Reuters to apply to the Court for such order as may be
appropriate.


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, referred to as the Relevant
Shares, the directors of Reuters 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 in respect of such
shares to receive notice of, attend or vote, either in person or by proxy, at
any general meeting of Reuters or at any meeting of the
holders of any class of shares of Reuters. 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 of Reuters consider reasonable.
If such disposition is not made within the specified period, the directors of
Reuters are empowered to dispose of any shares exceeding the 15% limit. Such a
disposition may be made on terms determined by the directors, including by means
of an instruction to effect an electronic transfer in the case of uncertificated
shares. The net proceeds of the disposition shall be paid, without interest, to
the former registered holder of the Relevant Shares.


If the directors have
reasonable cause to believe that any person is or may become interested in 15%
or more of the ordinary shares and that they have made reasonable inquiries,
such shares shall be deemed to be shares in which such person is interested
until such time as the directors resolve that they are satisfied that they are
not. The directors may assume without inquiry that a person is not interested in
15% or more of the ordinary shares unless the information in the appropriate
registers kept by Reuters indicates to the contrary or the directors have reason
to believe otherwise. 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 a business which includes underwriting
offers of securities.



Reuters Group PLC Annual Report and Form 20-F 2000  85
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|INFORMATION
FOR SHAREHOLDERS continued
|--------------------------------------

|The
Founders Share. Ownership of the Founders Share is restricted to the
Founders Share Company. Under its Memorandum and Articles of
Association, the Founders Share Company is not permitted, directly or
indirectly, to dispose of, or permit or procure the disposition of,
the Founders Share or of any interest therein, or to grant, or permit
or procure the grant of, any rights in respect of the Founders Share
or any interest therein, whether directly or indirectly, and whether
by one or more operations or omissions.


Pre-emptive rights, new
issues of shares and repurchase of shares



Holders of ordinary shares
have no pre-emptive rights under the Articles. However, the ability of the
directors to cause Reuters to issue shares, securities convertible into shares
or rights to shares, otherwise than pursuant to an employee share scheme, is
restricted.


Under the Companies Act,
the directors of a company are, with certain exceptions, unable to allot any
equity securities without express authorisation, which may be contained in a
companys Articles of Association 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 other than issue by way of rights to existing shareholders unless the
statutory requirement is displaced or modified by the shareholders in general
meeting or under the companys Articles of Association.


At the annual general
meeting to be held on 24 April 2001, 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
£128,175,363 until the earlier to occur of Reuters annual general meeting
in 2002 or 24 July 2002. The resolution will also 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 £17,864,344 in nominal value.


Subject to applicable
provisions of English law, Reuters may purchase ordinary shares. Currently,
Reuters has general authority to repurchase up to 142,914,752 ordinary shares at
prices ranging from 25p 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.


Rights in a winding up



If Reuters 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, the assets of Reuters (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 capital



If, at any time, Reuters
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.


Reuters 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, Reuters may issue shares with preferred and
other special rights or restrictions, provided that the prior written consent of
the Founders Share Company is required for issuing any shares with rights not
identical to those of ordinary shares. Reuters 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 meetings


Annual 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 days of delivery of receipt
of the notice are not included. 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 Reuters register in order to have the right to
attend and vote at the meeting.


86  Reuters Group PLC Annual Report and Form 20-F 2000
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|MATERIAL CONTRACTS


Radianz Limited - joint
venture with Equant Finance BV


In May 2000 Reuters and Equant
established 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 owns 51% of Radianz. To secure
the long-term availability of the Radianz network, Reuters Limited entered into a network
services agreement (the NSA) with Radianz on 22 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 can
terminate the NSA after the end of the initial term by one party giving to the other 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.



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 relating to 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.
Meetings are attended by representatives of Reuters, Radianz and their
respective groups as appropriate.


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 Reuters and Radianz, which
Reuters believes are 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.


EXCHANGE CONTROL



Under English law and
Reuters 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 on ordinary
shares or on the conduct of Reuters operations.



EXCHANGE RATES


The 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 ENDED 31 DECEMBER   |  | AVERAGE* |  | MONTH                                    |  | HIGH |  | LOW  | 
|------------------------------- |  | -------- |  | ---------------------------------------- |  | ---- |  | ---- | 
|                               
|                                |  |          |  | August 2000                              |  | 1.51 |  | 1.45 | 
|1996                            |  | 1.57     |  | September 2000                           |  | 1.48 |  | 1.40 | 
|1997                            |  | 1.65     |  | October 2000                             |  | 1.47 |  | 1.43 | 
|1998                            |  | 1.66     |  | November 2000                            |  | 1.45 |  | 1.40 | 
|1999                            |  | 1.62     |  | December 2000                            |  | 1.50 |  | 1.44 | 
|2000                            |  | 1.52     |  | January 2001                             |  | 1.50 |  | 1.46 | 
|2001 (through 16 February 2001) |  | 1.47     |  | February 2001 (through 16 February 2001) |  | 1.48 |  | 1.44 | 

|*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 16 February 2001 the
Noon Buying Rate was $1.45 = £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 Reuters
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 Reuters, see operating and
financial review on page 34.
Reuters Group PLC Annual Report and Form 20-F 2000  87
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|INFORMATION
FOR SHAREHOLDERS continued
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|TAXATION FOR US
SHAREHOLDERS


The 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
the ordinary shares or ADRs. The statements of UK and US tax laws set forth
below are based on the laws and the UK Inland Revenue published practice in
force as of 31 December 2000. The statements herein are subject to any changes
in UK or US law, in UK Inland Revenue practice and in any double taxation
convention between the US and the UK, occurring after the date of this Report.


UK taxation consequences


UK taxation of dividends
- refund of tax credits


Under current UK taxation
legislation, no withholding tax will be deducted from dividends paid by Reuters.


A shareholder who is an individual
resident for tax purposes in the UK, is entitled to a tax credit on cash dividends paid
by Reuters on or after 6 April 1999 on ordinary shares equal to one-ninth of the cash
dividend or 10% of the dividend plus the tax credit. 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 that where ordinary shares are held in Personal
Equity Plans and Individual Savings Accounts, the tax credit on dividends received into
such accounts before 6 April 2004 will generally be repayable.


For dividends paid prior to 6 April
1999, under the terms of the UK/US Double Taxation Convention 1975 (the treaty), which is
currently being renegotiated, certain categories of US resident holders of ordinary
shares or ADRs (eligible US holders) were generally entitled to receive from the UK
Inland Revenue payment of a refund (refund) of the tax credit available to UK individual
resident shareholders which was then 25% of the cash dividend. A 15% withholding tax was
imposed on the sum of the dividend plus the refund (the gross dividend). For example, if
a dividend of £80 had been paid prior to 6 April 1999, that dividend would have
resulted in a £20 refund (the tax credit available to UK resident shareholders).
The gross dividend of £100 (£80 plus £20) would have been subject to an
UK withholding tax of £15. Thus, the eligible US holder would have received £85
(£80 cash dividend plus £5 UK tax payment).


The changes made by UK legislation
for dividends paid on or after 6 April 1999 mean that an eligible US holder effectively
ceases to be entitled to any Refund in respect of dividends, as the 15% withholding tax
under the Treaty will exceed (but will be limited to) the tax credit to which the treaty
otherwise entitles him. Hence, using the example set out above, an £80 cash
dividend would result in an eligible US holder receiving £80 after deduction of
withholding tax of £8.89 (being equal to the tax credit on the cash dividend). Any
arrangements that were in place for an eligible US holder to receive a UK tax payment
have therefore ceased.


As was the case prior to 6 April
1999, special rules apply for the purposes of determining the tax credit available to a
US corporation which, either alone or together with one or more associated corporations,
controls, directly or indirectly, 10% or more of the voting stock of Reuters.


UK taxation of capital
gains


The following categories of
US persons may be liable for both UK and US tax in respect of a gain on the
disposal of ordinary shares or ADRs: (i) US citizens resident or ordinarily
resident in the UK, (ii) US corporations resident in the UK by reason of their
business being managed or controlled in the UK, and (iii) US citizens or
corporations which are trading or carrying on a profession or vocation in the UK
through a branch or agency and which have used, held, or acquired, the ordinary
shares or ADRs for the purposes of such trade, profession or vocation of such
branch or agency. However, subject to applicable limitations, such persons may
be entitled to a tax credit against their US federal income tax liability, for
the amount of UK capital gains tax or UK corporation tax on chargeable gains (as
the case may be) which is paid in respect of such gain.


UK inheritance tax


An 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 the ordinary
shares or ADRs on the individuals death, or on a transfer of the ordinary
shares or ADRs during the individuals lifetime. However, the individual
will be subject to UK inheritance tax if the ordinary shares or ADRs 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 ADRs 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.
88  Reuters Group PLC Annual Report and Form 20-F 2000
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|UK stamp duty and stamp
duty reserve tax


No UK stamp duty or
interest thereon need be paid on the transfer of an ADR, or written agreement to
transfer an ADR, 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 ADRs.


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.


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.


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 ADRs) 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 of ordinary
shares from a depositary, or its agent or nominee, to a transferee, which
results in the cancellation of the ADR, 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 ADR
holder, which results in cancellation of the ADR 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.


US taxation consequences


The following is a summary
of certain US federal income tax consequences of the ownership of ordinary
shares or ADRs by a US holder that holds the ordinary shares or ADRs 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. 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 ADRs that
is (i) a citizen or resident 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 dividends


Subject to the passive
foreign investment company (PFIC) rules discussed below, the dividend paid by
Reuters out of its current or accumulated earnings and profits (as determined
for US federal income tax purposes) generally will be treated as dividend income
for US federal income tax purposes. 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 and any amounts withheld in respect
thereof. Such dividend will not be eligible for the 70% dividends received
deduction allowed to 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, regardless of whether the payment is in fact converted into US dollars.
Generally, any gain or loss resulting from currency exchange fluctuations during
the period from the date the dividend payment is includable in income to the
date such payment is converted into US dollars will be treated as ordinary
income or loss. Such gain or loss will generally be income or loss from sources
within the US for foreign tax credit limitation purposes.
Reuters Group PLC Annual Report and Form 20-F 2000  89
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|INFORMATION
FOR SHAREHOLDERS continued
|--------------------------------------

|The UK withholding tax will
be eligible, subject to generally applicable limitations, for credit against the
US holders US federal income tax, assuming such holder is eligible for the
benefits of the Treaty and elects to have the Treaty apply to such dividends.
Subject to certain limitations, for foreign tax credit limitation purposes, the
dividend will be income from sources outside the US, but generally will be
treated separately, together with other items of passive income (or, in the case
of certain holders, financial services income). The US Internal Revenue Service
has recently confirmed, that, in the case of eligible US holders, subject to
certain limitations, the UK withholding tax as determined by the Treaty (ie, an
amount equal to one-ninth of the cash dividend) will be treated as a foreign
income tax that is eligible for credit against the US holders federal
income tax. To qualify for such credit, eligible US holders must make an
election on Form 8833 (Treaty-Based Return Position Disclosure), which must be
filed with their tax return, in addition to any other filings that may be
required. US holders should consult their tax advisers as to the application of
the foreign tax credit rules and their eligibility for treaty benefits in their
own circumstances.


US taxation of capital
gains


Subject to the PFIC rules
discussed below, upon a sale or other disposition of ordinary shares or ADRs, 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 ADRs. 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 ADRs 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 20%.



PFIC


Reuters believes that its
ordinary shares and ADRs should not be treated as stock of a PFIC for US federal
income tax purposes, but this conclusion is a factual determination made
annually and thus may be subject to change. If Reuters were to be treated as a
PFIC, unless a US holder elects to be taxed annually on a mark-to-market basis
with respect to the ordinary shares or ADRs, a gain realised on the sale or
other disposition of ordinary shares or ADRs would, in general, not be treated
as capital gain, and a US holder would be treated as if such holder had realised
such gain and certain excess distributions ratably over the holders
holding period for the ordinary shares or ADRs and would be taxed at the highest
tax rate in effect for each such year to which the gain was allocated, together
with an interest charge in respect of the tax attributable to each such year.


90  Reuters Group PLC Annual Report and Form 20-F 2000
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|FINANCIAL
DIARY FOR 2001
|------------------------

|Tuesday 13 February    |  | Results for year 2000 announced                                                                           |        
|---------------------- |  | --------------------------------------------------------------------------------------------------------- | -------
|                      
|Wednesday 14 March     |  | Ordinary shares go ex-dividend ADSs go ex-dividend Annual report and annual review posted to shareholders |        
|                      
|Tuesday 24 April       |  | First quarter trading statement issued                                                                    |        
|                       |  | Annual General Meeting Time: 11:30 am Venue: Gibson Hall, 13 Bishopsgate, London EC2                      |  
;
|                       |  | Extraordinary General Meeting Time: 11:45 am Venue: Gibson Hall, 13 Bishopsgate, London EC2               |        
|                      
|Thursday 26 April      |  | Final dividend for 2000 payable to ordinary shareholders on the register as at 16 March 2001              |        
|                      
|Thursday 3 May         |  | Final dividend payable to ADS holders on the record as at 16 March 2001                                   |        
|                      
|Tuesday 24 July        |  | Results for first six months of 2001 announced                                                            |        
|                      
|Wednesday 1 August     |  | Ordinary shares go ex-dividend ADSs go ex-dividend                                                        |        
|                      
|Wednesday 5 September  |  | Interim dividend for 2001 payable to ordinary shareholders on the register as at 3 August 2001            |        
|                      
|Wednesday 12 September |  | Interim dividend payable to ADS holders on the record as at 3 August 2001                                 |        
|                      
|Thursday 18 October    |  | Third quarter trading statement issued                                                                    |        
|                      

|DOCUMENTS ON DISPLAY


Documents 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 public filings with the
SEC are also available on the website maintained by the SEC at www.sec.gov.

Reuters Group PLC Annual Report and Form 20-F 2000  91
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|SUMMARY
OF 1999 AND 2000 RESULTS
|--------------------------------

|£M                                    | 2000 | 1999
|------------------------------------- | ---- | ----
|REVENUE                               |      | Q1  
|                                     
|Reuters Information                   |     
|EMA                                   |      | 246 
|The Americas                          |      | 91  
|Asia/Pacific                          |      | 80  
|                                     
|Total                                 |      | 417 
|                                     
|Reuters Trading Solutions             |     
|Transactions                          |      | 101 
|Applications and Enterprise Solutions |      | 66  
|Retail Solutions                      |      | 9   
|                                     
|Total                                 |      | 176 
|                                     
|Reuters Financial                     |      | 593 
|                                     
|Reuterspace                           |      | 43  
|                                     
|Instinet                              |     
|US                                    |      | 141 
|International                         |      | 56  
|                                     
|Total                                 |      | 197 
|                                     
|TSI/RBB                               |      |    
|Intra-group revenue                   |      | (1  
|                                     
|Total revenue                         |      | 832 
|                                     
|Adjustment for TSI/RBB                |      |    
|Adjustment for Intra-group revenue    |      | 1   
|                                     
|Divisional revenue                    |      | 833 
|                                     

|92  Reuters Group PLC Annual Report and Form 20-F 2000
|------------------------------------------------------

|
|

|
|

|£M                               | 2000
|-------------------------------- | ----
|COSTS                            |     
|                                
|Reuters Information              |     
|Reuters Trading Solutions        |     
|                                
|Reuters Financial                |     
|Reuterspace                      |     
|Instinet                         |     
|TSI/RBB                          |     
|Intra-group costs                |     
|                                
|Total costs                      |     
|                                
|Adjustment for Intra-group costs |     
|Adjustment for TSI/RBB           |     
|                                
|Divisional costs                 |     
|                                
|Divisional profit                |     
|                                
|Reuters Information              |     
|Reuters Trading Solutions        |     
|                                
|Reuters Financial                |     
|Reuterspace                      |     
|Instinet                         |     
|                                
|Total                            |     
|                                
|Net currency gain                |     
|                                
|Divisional profit                |     
|Adjustment for TSI/RBB           |     
|                                
|Total                            |     
|                                

|Reuters Group PLC Annual Report and Form 20-F 2000  93
|------------------------------------------------------

|
|

|SUMMARY
OF 1999 AND 2000 RESULTS continued
|------------------------------------------

|£M                                                          | 2000 | 1999    
|----------------------------------------------------------- | ---- | --------
|DIVISIONAL PROFIT MARGIN                                    |      | H1      
|                                                           
|Reuters Information                                         |      | 17      
|Reuters Trading Solutions                                   |      | 27      
|                                                           
|Reuters Financial                                           |      | 20      
|Reuterspace                                                 |      | (23     
|Instinet                                                    |      | 22      
|TSI/RBB                                                     |      |        
|                                                           
|Total divisional profit margin                              |      | 18      
|                                                           
|Total divisional profit margin excluding TSI/RBB            |      | 18      
|                                                           
|Business transformation costs                               |      | (41     
|Goodwill amortisation                                       |      | (27     
|                                                           
|Operating profit                                            |      | 244     
|                                                           
|Operating result from joint ventures                        |      | (3      
|Operating result from associates                            |      |        
|Profit on disposal of fixed assets/ investments             |      | 202     
|Profit on disposal of subsidiary undertakings               |      | 8       
|Amounts written off fixed asset investments                 |      |        
|Income from fixed asset investments                         |      | 1       
|Net interest                                                |      | (2      
|                                                           
|Profit before taxation                                      |      | 450     
|                                                           
|Taxation on profit on ordinary activities                   |      | (97     
|                                                           
|Profit after taxation attributable to ordinary shareholders |      | 353     
|                                                           
|Tax rate on profit before goodwill                          |      | 20      
|                                                           
|Basic earnings per ordinary share                           |      | 25.2    
|                                                           
|Earnings per ADS (US$ rate used = $1.49)                    |      | $   2.25
|                                                           
|Dividend per ordinary share                                 |      | 3.65    
|                                                           
|Number of ordinary shares ranking for dividend (millions)   |      | 1,404   
|                                                           

|94  Reuters Group PLC Annual Report and Form 20-F 2000
|------------------------------------------------------

|
|

|                                                                       |  |      
|---------------------------------------------------------------------- |  | -----
|£M                                                                     |  |      
|NET ASSETS                                                             |  | 2000 
|                                                                      
|Reuters Information                                                    |  | 157  
|Reuters Trading Solutions                                              |  | 178  
|                                                                      
|Reuters Financial                                                      |  | 335  
|Reuterspace                                                            |  | 315  
|Instinet                                                               |  | 234  
|Central                                                                |  | 218  
|                                                                      
|                                                                       |  | 1,102
|                                                                      
|User Accesses at period end (000s)                                     | 
|Information product accesses                                           | 
|High tier                                                              |  | 215  
|Middle tier                                                            |  | 134  
|Lower tier                                                             |  | 62   
|Mobile                                                                 |  | 56   
|Other                                                                  |  | 40   
|                                                                      
|Information product total                                              |  | 507  
|                                                                      
|Dealing accesses                                                       |  | 21   
|Instinet accesses                                                      |  | 30   
|                                                                      
|Total accesses                                                         |  | 558  
|                                                                      
|Revenue per access ( £000)                                             | 
|Information products                                                   | 
|Total high tier                                                        |  | 6.1  
|Total Reuters Information                                              |  | 3.9  
|Dealing                                                                |  | 18.4 
|Instinet                                                               |  | 31.4 
|                                                                      
|Instinet NYSE market share %                                           |  | 3.0  
|                                                                      
|Instinet Nasdaq market share %                                         |  | 13.7 
|                                                                      
|Total subscriber locations at period end (000s)                        |  | 50.6 
|                                                                      
|Market value of listed Greenhouse Fund investments at period end ( £m) |  | 99   
|                                                                      
|Market value of TSI holding at period end ( £m)                        |  | 3,166
|                                                                      

|Reuters Group PLC Annual Report and Form 20-F 2000  95
|------------------------------------------------------

|
|

|ELEVEN
YEAR CONSOLIDATED FINANCIAL SUMMARY
|------------------------------------------

|FOR THE YEAR ENDED 31 DECEMBER          |  | 2000£M  |   | 1999£M  |   | 1998£M  |   | 1997£M  |   | 1996£M  |   | 1995£M  |   | 1994£M  |   | 1993£M  |   | 1992£M  |   | 1991£M  |   | 1990£M  |  
|--------------------------------------- |  | ------- | - | ------- | - | ------- | - | ------- | - | ------- | - | ------- | - | ------- | - | ------- | - | ------- | - | ------- | - | ------- | -
|Results                                 |  |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|Revenue                                 |  | 3,592   |   | 3,125   |   | 3,032   |   | 2,882   |   | 2,914   |   | 2,703   |   | 2,309   |   | 1,874   |   | 1,568   |   | 1,467   |   | 1,369   |  
|Net interest receivable/(payable)       |  | 3       |   | (4      | ) | 2       |   | 80      |   | 61      |   | 60      |   | 51      |   | 60      |   | 66      |   | 49      |   | 30      |  
|Profit before tax                       |  | 657     |   | 632     |   | 580     |   | 626     |   | 652     |   | 558     |   | 510     |   | 440     |   | 383     |   | 340     |   | 320     |  
|Taxation                                |  | 125     |   | 207     |   | 196     |   | 236     |   | 210     |   | 185     |   | 162     |   | 140     |   | 123     |   | 110     |   | 112     |  
|Profit attributable to ordinary         | 
|shareholders                            |  | 532     |   | 425     |   | 384     |   | 390     |   | 442     |   | 373     |   | 347     |   | 299     |   | 236     |   | 230     |   | 207     |  
|                                       
|Net assets                              | 
|Fixed assets                            |  | 1,868   |   | 1,205   |   | 1,098   |   | 1,046   |   | 1,026   |   | 999     |   | 687     |   | 571     |   | 499     |   | 488     |   | 531     |  
|Net current (liabilities)/assets        |  | (344    | ) | (232    | ) | (577    | ) | 790     |   | 525     |   | 387     |   | 176     |   | 151     |   | 419     |   | 289     |   | 81      |  
|Long term creditors                     |  | (310    | ) | (284    | ) | (16     | ) | (37     | ) | (41     | ) | (135    | ) | (87     | ) | (32     | ) | (26     | ) | (30     | ) | (27     | )
|Provisions                              |  | (112    | ) | (88     | ) | (116    | ) | (120    | ) | (51     | ) | (39     | ) | (36     | ) | (32     | ) | (23     | ) | (25     | ) | (30     | )
|                                       
|                                        |  | 1,102   |   | 601     |   | 389     |   | 1,679   |   | 1,459   |   | 1,212   |   | 740     |   | 658     |   | 869     |   | 722     |   | 555     |  
|                                       
|Tangible fixed assets                   | 
|Additions                               |  | 282     |   | 244     |   | 296     |   | 361     |   | 372     |   | 304     |   | 319     |   | 268     |   | 199     |   | 159     |   | 196     |  
|Depreciation                            |  | 276     |   | 310     |   | 331     |   | 312     |   | 283     |   | 250     |   | 221     |   | 204     |   | 186     |   | 193     |   | 140     |  
|                                       
|Development expenditure                 |  | 323     |   | 197     |   | 200     |   | 235     |   | 202     |   | 191     |   | 159     |   | 110     |   | 79      |   | 67      |   | 62      |  
|                                       
|Free cash flow                          |  | 434     |   | 402     |   | 490     |   | 449     |   | 494     |   | 455     |   | 321     |   | 224     |   | 276     |   | 339     |   | 227     |  
|                                       
|                                        |  | 2000    |   | 1999    |   | 1998    |   | 1997    |   | 1996    |   | 1995    |   | 1994    |   | 1993    |   | 1992    |   | 1991    |   | 1990    |  
|                                       
|Ratios                                  | 
|Earnings per ordinary share             |  | 37.9    | p | 30.2    | p | 26.7    | p | 24.0    | p | 27.3    | p | 23.2    | p | 21.7    | p | 18.0    | p | 14.0    | p | 13.7    | p | 12.4    | p
|Adjusted earnings per ordinary share(1) |  | 43.0    | p | 34.5    | p | 30.3    | p | 29.1    | p | 30.4    | p | 25.8    | p | 21.7    | p | 18.0    | p | 14.0    | p | 13.7    | p | 12.4    | p
|Dividends per ordinary share            |  | 16.0    | p | 14.65   | p | 14.4    | p | 13.0    | p | 11.75   | p | 9.8     | p | 8.0     | p | 6.5     | p | 5.3     | p | 4.25    | p | 3.75    | p
|Cash flow per ordinary share(2)         |  | 71.5    | p | 71.6    | p | 68.3    | p | 61.0    | p | 60.7    | p | 52.7    | p | 45.6    | p | 40.3    | p | 33.6    | p | 31.7    | p | 27.4    | p
|Book value per ordinary share(3)        |  | 70.1    | p | 36.1    | p | 23.3    | p | 99.9    | p | 88.3    | p | 73.7    | p | 44.7    | p | 40.6    | p | 51.2    | p | 42.7    | p | 32.9    | p
|Cash flow/book value(4)                 |  | 102.0   | % | 195.5   | % | 292.0   | % | 61.0    | % | 68.8    | % | 71.5    | % | 102.0   | % | 99.2    | % | 65.7    | % | 74.2    | % | 83.5    | %
|Profit before tax as a percentage       | 
|of revenue                              |  | 18.3    | % | 20.2    | % | 19.1    | % | 21.7    | % | 22.4    | % | 20.6    | % | 22.1    | % | 23.5    | % | 24.4    | % | 23.2    | % | 23.4    | %
|Return on tangible fixed assets(5)      |  | 79.9    | % | 57.5    | % | 48.2    | % | 49.0    | % | 60.0    | % | 55.2    | % | 57.6    | % | 57.2    | % | 53.2    | % | 45.4    | % | 41.3    | %
|Return on equity(6)                     |  | 71.4    | % | 102.0   | % | 78.5    | % | 25.6    | % | 33.7    | % | 34.8    | % | 50.8    | % | 39.5    | % | 29.9    | % | 36.2    | % | 43.2    | %
|                                       
|UK corporation tax rate                 |  | 30.0    | % | 30.3    | % | 31.0    | % | 31.5    | % | 33.0    | % | 33.0    | % | 33.0    | % | 33.0    | % | 33.0    | % | 33.25   | % | 34.25   | %
|                                       
|Infrastructure                          | 
|Shares issued (millions)                |  | 1,429   |   | 1,423   |   | 1,422   |   | 1,694   |   | 1,689   |   | 1,677   |   | 1,668   |   | 1,662   |   | 1,753   |   | 1,743   |   | 1,735   |  
|Employees                               |  | 18,082  |   | 16,546  |   | 16,938  |   | 16,119  |   | 15,478  |   | 14,348  |   | 13,548  |   | 11,306  |   | 10,393  |   | 10,450  |   | 10,731  |  
|User accesses                           |  | 558,000 |   | 521,000 |   | 469,000 |   | 429,000 |   | 362,000 |   | 327,100 |   | 296,700 |   | 227,400 |   | 200,800 |   | 201,800 |   | 200,900 |  

|96  Reuters Group PLC Annual Report and Form 20-F 2000
|------------------------------------------------------

|
|

|
|

|NOTES:


1997 and 1998 have been restated to
reflect the adoption of FRS 12.


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


1990 to 1996 have not been
restated to reflect the change to reporting user accesses in 1999.


1990 to 1991 have not been restated
to reflect the change to reporting user accesses in 1994.


1995 and 1996 have been
restated to reflect the effect of FRS 10 issued in 1997 which required purchased
goodwill and intangible assets to be capitalised and amortised through the
profit and loss account.


1990 to 1994 have not been restated
for FRS 10.


1990 to 1991 have not been
restated to reflect the effects of the prior year adjustment for post-retirement
medical benefits made in 1992.


1990 to 1993 have been
restated for the subdivision of every ordinary share of 10 pence each into four
new ordinary shares of 2.5 pence each in April 1994.


1990 to 1994 fixed assets
have been restated to reflect the effect of UITF abstract 13 issued in 1995.


Free cash flow is defined as
net cash inflow from operating activities plus net interest received less tax paid
and expenditure on tangible assets.





RATIOS:


(1) Adjusted earnings per
share are based on profit attributable to ordinary shareholders excluding
capital reorganisation costs and goodwill amortisation.


(2) Cash flow per ordinary
share represents profit before taxation, goodwill amortisation and depreciation
divided by the number of shares in issue after deducting shares held by employee
share ownership trusts. In 1990 to 1997 shares in Reuters Holdings PLC held by
group companies are also deducted.


(3) Book value per ordinary
share represents adjusted shareholders equity divided by the number of
shares in issue after deducting shares held by employee share ownership trusts.
In 1990 to 1997 shares in Reuters Holdings PLC held by group companies are also
deducted from shares in issue. Adjusted shareholders equity is calculated
after deducting the carrying value of interests in shares of Reuters Holdings
PLC (1990 to 1997).


(4) Cash flow/book value
represents profit before taxation, goodwill amortisation and depreciation as a
percentage of adjusted shareholders equity.


(5) Return on tangible
fixed assets represents profit after taxation as a percentage of average
tangible fixed assets. The average is calculated by adding tangible fixed assets
at the start and the end of each year and dividing by two.


(6) Return on equity
represents profit attributable to ordinary shareholders divided by the average
adjusted shareholders equity. The average is calculated by adding adjusted
shareholders equity at the start and the end of each year and dividing by
two. In 1998 a weighted average has been used to reflect the capital
reorganisation.

Reuters Group PLC Annual Report and Form 20-F 2000  97
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|CROSS
REFERENCE GUIDE TO FORM 20-F
|----------------------------------

|The information in this document that
is referenced in the following table is included in Reuters annual report on Form 20-F
for 2000 (the 2000 Form 20-F) filed with the SEC. No other information in this document
is included in the 2000 Form 20-F. The 2000 Form 20-F is the only document that is
incorporated by reference to this report in any filings by Reuters under the United
States Securities Act of 1933, as amended. The 2000 Form 20-F has not been approved or
disapproved by the SEC nor has the SEC passed upon the adequacy or accuracy of the 2000
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                                   |  | 3           | 
|Exchange rates                                            |  | 87          | 
|Capitalisation and indebtedness                           |  | n/a         | 
|Reasons for offer and use of proceeds                     |  | n/a         | 
|Risk factors                                              |  | 36-38       | 
|                                                         
|4   Information on the company                            | 
|History and development of the company                    |  | 4-7         | 
|Principal capital expenditures                            |  | 7-8         | 
|Business overview                                         |  | 4-9         | 
|Organisational structure                                  |  | 69          | 
|Property, plant and equipment                             |  | 9           | 
|                                                         
|5   Operating and financial review and prospects          | 
|Operating results                                         |  | 27-36       | 
|Liquidity and capital resources                           |  | 33-34       | 
|Research and development, patents and licences, etc       |  | 28          | 
|Trend information                                         |  | 2, 27-36    | 
|                                                         
|6   Directors, senior management and employees            | 
|Directors and senior management                           |  | 12-13       | 
|Compensation                                              |  | 15-24       | 
|Board practices                                           |  | 14,25       | 
|Employees                                                 |  | 46          | 
|Share ownership                                           |  | 24          | 
|                                                         
|7   Major shareholders and related party transactions     | 
|Major shareholders                                        |  | 79,81       | 
|Related party transactions                                |  | 79          | 
|Interests of experts and counsel                          |  | n/a         | 
|                                                         
|8   Financial information                                 | 
|Consolidated statements and other financial information   |  | see item 18 | 
|Litigation                                                |  | 9           | 
|Dividend policy                                           |  | 28,81       | 
|Significant changes                                       |  | none        | 
|                                                         

|98  Reuters Group PLC Annual Report and Form 20-F 2000
|------------------------------------------------------

|
|

|
|

|ITEM                                                                                        |         | PAGE         | 
|------------------------------------------------------------------------------------------- | ------- | ------------ | 
|                                                                                           
|9   The offer and listing                                                                   |         |              | 
|Offer and listing details - price history of stock                                          |         | 80           | 
|Plan of distribution                                                                        |         | n/a          | 
|Markets                                                                                     |         | 80           | 
|Selling shareholders                                                                        |         | n/a          | 
|Dilution                                                                                    |         | n/a          | 
|Expenses of the issue                                                                       |         | n/a          | 
|                                                                                           
|10   Additional Information                                                                 |        
|Share capital                                                                               |         | n/a          | 
|Memorandum and Articles of Association                                                      |         | 82-86        | 
|Material contracts                                                                          |         | 87           | 
|Exchange controls                                                                           |         | 87           | 
|Taxation                                                                                    |         | 88-90        | 
|Dividends and paying agents                                                                 |         | n/a          | 
|Statement by experts                                                                        |         | n/a          | 
|Documents on display                                                                        |         | 91           | 
|Subsidiary information                                                                      |         | none         | 
|                                                                                           
|11   Quantitative and qualitative disclosures about market risk                             |         | 34-35, 49-53 | 
|                                                                                           
|12   Description of securities other than equity securities                                 |         | n/a          | 
|                                                                                           
|13   Defaults, dividend arrearages and delinquencies                                        |         | none         | 
|                                                                                           
|14   Material modifications to the rights of security holders and use of proceeds           |  
; | none         | 
|                                                                                           
|17   Financial statements                                                                   |         | n/a          | 
|                                                                                           
|18   Financial statements:                                                                  |        
|Report of the auditors                                                                      |         | 26           | 
|Consolidated profit and loss account for each of the three years in the                     |        
|period ended 31 December 2000 and related notes                                             |         | 39-46        | 
|Consolidated cash flow statement for each of the three years in the                         |         |              | 
|period ended 31 December 2000 and related notes                                             |         | 47-53        | 
|Consolidated balance sheet as at 31 December 2000, 1999 and 1998 and         
related notes |         | 54-69        | 
|Accounting policies                                                                         |         | 72-73        | 
|Summary of differences between UK and US GAAP and related notes                             |         | 74-78        | 
|Report on remuneration and related matters                                                  |  
; | 15-24        | 
|                                                                                           

|Reuters Group PLC Annual Report and Form 20-F 2000  99
|------------------------------------------------------

|
|

|GLOSSARY
|--------

|Term used in annual report                              |  | US equivalent or brief description                                                                                                      | 
|------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------- | 
|Allotted                                                |  | Issued                                                                                                                                  | 
|                                                       
|Associated undertakings                                 |  | 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 of practice                               |  | 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                                                                           | 
|                                                       
|Finance lease                                           |  | Capital lease                                                                                                                           | 
|                                                       
|Freehold                                                |  | Ownership with absolute rights in perpetuity                                                                                            | 
|                                                       
|Interest receivable                                     |  | Interest income                                                                                                                         | 
|                                                       
|Interest in shares of Reuters Group PLC                 |  | Treasury stock                                                                                                                          | 
|                                                       
|Normalised profits and earnings                         |  | Exclude amortisation of goodwill and gains/losses on the disposal of subsidiaries and fixed asset investments                           | 
|                                                       
|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                                                                     | 
|                                                       
|Underlying growth                                       |  | Exclude acquisitions and disposals and significant once-off items in the period under review and is stated at comparable exchange rates | 
|                                                       
|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                                                                                                                  | 
|                                                       

|100  Reuters Group PLC Annual Report and Form 20-F 2000
|-------------------------------------------------------

|
|

|WHERE
TO FIND US
|----------------

|Corporate headquarters:           |  | Investor Relations:                 |  | Liam Hwee Tay                | 
|--------------------------------- |  | ----------------------------------- |  | ---------------------------- | 
|85 Fleet Street                   |  | Geoff Wicks                         |  | Singapore                    | 
|London EC4P 4AJ                   |  | London                              |  | Tel: 65 870 3028             | 
|Tel: 44 (0) 20 7250 1122          |  | Tel: 44 (0) 20 7542 8666            |  | Fax: 65 870 3456             | 
|Registered in England No: 3296375 |  | Fax: 44 (0) 20 7353 3002            |  | e-mail: liam.tay@reuters.com | 
|www.about.reuters.com             |  | e-mail: geoff.wicks@reuters.com     | 
|                                  |  |                                     |  | Registrar/Depositary: for    | 
|Other principal addresses:        |  | Nancy Bobrowitz                     |  | dividend queries, duplicate  | 
|1700 Broadway                     |  | New York                            |  | mailings and address changes | 
|New York NY 10019                 |  | Tel: 1 (212) 603 3345               | 
|USA                               |  | Fax: 1 (212) 247 0346               |  | Ordinary shares:             | 
|Tel: 1 (212) 603 3300             |  | From 9 April 2001                   |  | Lloyds TSB Registrars        | 
|From 9 April 2001                 |  | Tel: 1 (646) 223 5220               |  | The Causeway                 | 
|3 Times Square                    |  | Fax: 1 (646) 223 5238               |  | Worthing                     | 
|New York NY 10036                 |  | e-mail: nancy.bobrowitz@reuters.com |  | West Sussex BN99 6DA         | 
|Tel: 1 (646) 223 4000             |  |                                     |  | Tel: 0870 601 5366           | 
|                                  |  | Media queries:                      |  | Fax: 0870 900 0020           | 
|1 Rue de Jargonnant               |  | Peter V Thomas                      | 
|1207 Geneva                       |  | London                              |  | American Depositary Shares:  | 
|Switzerland                       |  | Tel: 44 (0) 20 7542 4890            |  | Morgan Guaranty Trust        | 
|Tel: 41 (022) 718 2828            |  | Fax: 44 (0) 20 7542 5458            |  | Company of New York          | 
|                                  |  | e-mail: peter.v.thomas@reuters.com  |  | PO Box 842006                | 
|3rd Floor                         |  |                                     |  | Boston MA 02284-2006         | 
|Shuwa Kamiyacho Building          |  | Nancy Bobrowitz                     |  | Tel: 1 (781) 575 4328        | 
|4-3-13 Toranomon                  |  | New York                            |  | Fax: 1 (781) 575 4088        | 
|Minato-ku, Tokyo 105              |  | Tel: 1 (212) 603 3345               | 
|Japan                             |  | Fax: 1 (212) 247 0346               | 
|Tel: 81 (03) 3432 4141            |  | From 9 April 2001                   | 
|                                  |  | Tel: 1 (646) 223 5220               | 
|18 Science Park Drive             |  | Fax: 1 (646) 223 5238               | 
|Singapore 118229                  |  | e-mail: nancy.bobrowitz@reuters.com | 
|Republic of Singapore             | 
|Tel: 65 775 5088                  | 

|Listings:



London Stock Exchange and Nasdaq
Washington DC (American Depositary Share Symbol RTRSY).


Options on ordinary shares are
traded on the London Traded Options Market. The American Stock Exchange in New York and
the Chicago Board Options Exchange list options on American Depositary Shares of Reuters.


Share price information:


Share price information about
Reuters Group PLC is available on Reuters 3000 Xtra, Reuters Securities 3000, Reuters
Securities 2000, Equity Pro and Reuters Plus products. The Reuters Instrument Codes
(RICs) are as follows:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Ordinary shares       |  | RTR.L   |  |  | 
|--------------------- |  | ------- |  |  | 
|ADSs traded on Nasdaq |  | RTRSY.O | 

|Annual report and Form
20-F:


The annual report and Form 20-F
document is filed with the US Securities and Exchange Commission (SEC) and corresponds to
the Form 10-K filed by US-based companies. Hard copies are available from the Investor
Relations departments in London and New York. Electronic copies can be accessed through
the internet on Reuters internet page (www.about.reuters.com/ar2000) or from the SECs
EDGAR Database via the SECs home page (www.sec.gov). The annual review is also available
in hard copy or through the internet.
©Reuters Group PLC 2000.
Reuters Archive assisted with the historical content. Design and typesetting by CGI.
Printing by Litho-Tech. The paper used in this annual report and Form 20-F is from fully
sustainable forests. It was produced without the use of any chlorine compounds. Instinet
is a registered trade mark of Instinet Corporation. Reuters and the sphere logo are
registered trade marks of the Reuters Group of Companies. Reuters 3000 Xtra, Reuters
Plus, Reuters Securities 3000, Reuters Securities 2000, Equity Pro, Reuters Credit,
Reuters Dealing 3000, Reuters Treasury Solutions, Reuters Intertrade Direct, Reuters Pro,
Triarch and Kalends are the trade marks of the Reuters Group of Companies.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|Reuters Group PLC Annual Report and Form 20-F 2000
|--------------------------------------------------
|                                                  
|Now and always, an innovator.........             
|                                                  

|Item 19.     Exhibits
|---------------------

|1.1 |  | Memorandum
and Articles of Association of Reuters Group PLC.
|--- |  | ------------------------------------------------------------

|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 with respect to the fiscal year ended 31 December 1997 (the 1997
20-F)).
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.1 |  | Syndicated Credit Facility Agreement, dated 4 December 1997 (the Credit
Agreement), among Reuters Group PLC, Reuters Investments Limited, Chase
Manhattan PLC, the banks listed therein and Chase Manhattan International
Limited (incorporated by reference to Exhibit 2.3 to the 1997 20-F).
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.2 |  | Amendment, dated 18 April 2000 among Reuters Group PLC, Reuters Investments
Limited and Chase Manhattan International Limited to the Syndicated Credit
Facility Agreement dated 4 December 1997.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.3 |  | Rules
of The Reuters Group PLC Long-Term Incentive Plan 1997.
|--- |  | -------------------------------------------------------------

|8.1 |  | See
Note 32 of the Notes to the Consolidated Financial Statements of Reuters Group PLC
contained herein.
|--- |  | --------------------------------------------------------------------------------------------------------

|10.1 |  | Consent
of PricewaterhouseCoopers for incorporation by reference in Forms S-8 of their report
dated 16 February 2001.
|---- |  | ---------------------------------------------------------------------------------------------------------------------

|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 authorized the undersigned to sign
this annual report on its behalf.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Dated: March 13, 2001 |  | REUTERS GROUP PLC(Registrant)By: /s/ David J. Grigson
       David J. Grigson       Finance Director
|--------------------- |  | ----------------------------------------------------------------------------------------------------