|
|
|
|

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

FORM 20-F/A(Amendment No. 2)

(Mark One)

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

Commission file number333-08354

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

---

(Translation of Registrant’s
    name into English)

England(Jurisdiction of incorporation or organization)

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

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

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

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

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

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

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

Yes                                No

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

Item 17                               Item
    18

EXPLANATORY NOTE

This Form 20-F/A hereby amends Items
    17 and 19 of the Reuters Group PLC’s Annual Report on Form 20-F for
    the fiscal year ended 31 December 2003, which was filed on 16 March 2004
    and amended on 23 March 2004. This amendment includes the Annual Financial
    Statements for Radianz Limited, which were not available at the time the
    original report was filed, and a report of Reuters Group’s auditors
    revised to refer to the standards of the Public Company Accounting Oversight
    Board. The filing of this amendment shall not be deemed an admission that
    the original report included any untrue statement of a material fact or omitted
    to state a material fact necessary to make a statement not misleading. This
    amendment does not otherwise revise, update, amend or restate the information
    presented
    in the
    original
    report
    or reflect
    any
    events
    that
    have occurred after the original report was filed on 16 March 2004.



|
|
|
|




Back to Contents

United States opinion



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




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




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

---





Back to Contents

Consolidated profit and loss account
for the year ended 31 December

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

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

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



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

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



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

---



Back to Contents

Notes on the consolidated
profit and loss account

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

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

---



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

---



Back to Contents

Notes on the consolidated profit
and loss accountcontinued

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

The geographical analysis of performance reflects the revenues earned and operating costs incurred in each area excluding amortisation and impairment of goodwill and other intangibles and net currency
gain/(loss).

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

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

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

---



Back to Contents

2 Operating costs

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

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

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



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

---



Back to Contents

Notes on the consolidated profit 
and loss accountcontinued

2 Operating costscontinuedFees payable to PricewaterhouseCoopers were as follows:

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

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

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

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

|3 Net interest receivable/(payable)                                     |     
|----------------------------------------------------------------------- | ----
|                                                                        |     
|                                                                        | 2003
|£m                                                                      | £m  
|                                                                        |     
|Interest receivable:                                                    |     
|Listed
          investments                                            |    
|Unlisted
          investments                                          | 13  
|Share
          of joint ventures and associates interest (see note 16) | 5   
|                                                                        |     
|                                                                        | 18  
|                                                                        |     
|Interest payable:                                                       |     
|Bank
          loans and overdraft                                      | (10 
|Other
          borrowings                                              | (36 
|Unwinding
          of discount on provisions                           | (1  
|                                                                        |     
|                                                                        | (47 
|                                                                        |     
|Total net
        interest payable                                      | (29 
|                                                                        |     

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

---



Back to Contents

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

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

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

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

---



Back to Contents

Notes on the consolidated profit
and loss accountcontinued

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

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

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

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



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

---



Back to Contents

Consolidated cash flow statement
  for the year ended 31 December

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



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

---



Back to Contents

Notes on the consolidated
    cash flow statement

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

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



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

---



Back to Contents

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

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

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

Derivative instruments held at 31 December
    were:

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

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

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



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

---



Back to Contents

Notes on the consolidated
  cash flow statementcontinued

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

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

|Recognised currency hedging gains in
          2003 were favourable mainly due to the effect of the weaker US dollar
          on hedges of the net investment in overseas subsidiaries.
        Gains and losses on instruments used
            for hedging are not recognised until the exposure that is being hedged
            is itself recognised. Unrecognised gains and losses on instruments
            used for hedging, and the movements, are set out below:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

The weighted average variable rate payable
    on the interest rate swaps used to alter the currency and interest rate profile
    of debt issued at 31 December 2003 was 3% (2002: 4%, 2001: 4%). The weighted
    average variable rate is based on the rate implied in the yield curve at
    the balance sheet date.

All derivative instruments are unsecured.
    However, Reuters does not anticipate non-performance by the counterparties
    who are all banks with recognised long-term credit ratings of A3/A- or
    higher.

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

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

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

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

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

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



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

---



Back to Contents

|12                                                                                                                                                                                                                                                                                                                     | Derivatives and other financial
        instrumentscontinued
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------
|Financial
          instrument sensitivity analysisThe analysis below summarises
      the sensitivity of the fair value of the Groups financial instruments
      to hypothetical changes in market rates. Fair values are the present value
      of future cash flows based on market rates at the valuation date.

|The estimated
        adverse changes in the fair value of financial instruments are based
        on an instantaneous:
|-----------------------------------------------------------------------------------------------------------------------
|i)                                                                                                                     
|ii)                                                                                                                    
|                                                                                                                       

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

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

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

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

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

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

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



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

---



Back to Contents

Notes on the consolidated 
  cash flow statementcontinued

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

|                                                                                                                                                                                                                                                                                                                                                                                                                           |             |            |       |  |            | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | ---------- | ----- |  | ---------- | 
|                                                                                                                                                                                                                                                                                                                                                                                                                           |             |            |       |  | Borrowings
|                                                                                                                                                                                                                                                                                                                                                                                                                           |             |            |       |  |           
|                                                                                                                                                                                                                                                                                                                                                                                                                           |             |            | Other |  | Floating  
|financial                                                                                                                                                                                                                                                                                                                                                                                                                  | rate       
|Total                                                                                                                                                                                                                                                                                                                                                                                                                      | liabilities | borrowings
|£m                                                                                                                                                                                                                                                                                                                                                                                                                         | £m          | £m        
|                                                                                                                                                                                                                                                                                                                                                                                                                           |             |            |       |  |            | 
|Sterling                                                                                                                                                                                                                                                                                                                                                                                                                   | 291         |            | 30    |  | 261        | 
|US dollar                                                                                                                                                                                                                                                                                                                                                                                                                  | 515         |            | 72    |  | 443        | 
|Euro                                                                                                                                                                                                                                                                                                                                                                                                                       | 29          |            | 8     |  | 21         | 
|Swiss franc                                                                                                                                                                                                                                                                                                                                                                                                                | 39          |            |      |  | 39         | 
|Other                                                                                                                                                                                                                                                                                                                                                                                                                      | 10          |            | 3     |  | 7          | 
|                                                                                                                                                                                                                                                                                                                                                                                                                           |             |            |       |  |            | 
|31 December 2003                                                                                                                                                                                                                                                                                                                                                                                                           | 884         |            | 113   |  | 771        | 
|                                                                                                                                                                                                                                                                                                                                                                                                                           |             |            |       |  |            | 
|31 December 2002                                                                                                                                                                                                                                                                                                                                                                                                           | 882         |            | 88    |  | 794        | 
|31 December 2001                                                                                                                                                                                                                                                                                                                                                                                                           | 1,048       |            | 29    |  | 1,019      | 
|                                                                                                                                                                                                                                                                                                                                                                                                                           |             |            |       |  |            | 
|The floating rate borrowings
        comprise bank loans and overdrafts bearing interest at rates based on
        local money market rates, commercial paper and medium-term notes. The
        weighted average interest rate on bank borrowings at 31 December 2003
        was 4% (2002: 4%, 2001: 4%). The above analysis excludes creditors falling
        due within one year which are of a non-financial nature.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                       |  |                                                        |  |                       |  |                                                        |  |                       |  |                                                        | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------- |  | ------------------------------------------------------ |  | --------------------- |  | ------------------------------------------------------ |  | --------------------- |  | ------------------------------------------------------ | 
|Total financial liabilities are repayable
        as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                       |  |                                                        |  |                       |  |                                                        |  |                       |  |                                                        | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                       |  |                                                        |  |                       |  |                                                        |  |                       |  |                                                        | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                       |  |                                                        |  |                       |  |                                                        |  |                       |  |                                                        | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                       |  | 2003                                                   |  |                       |  | 2002                                                   |  |                       |  | 2001                                                   | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                       |  |                                                        |  |                       |  |                                                        |  |                       |  |                                                        | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Borrowings
        £m |  | Other
        financial
        liabilities
        £m |  | Borrowings
        £m |  | Other
        financial
        liabilities
        £m |  | Borrowings
        £m |  | Other
        financial
        liabilities
        £m | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                       |  |                                                        |  |                       |  |                                                        |  |                       |  |                                                        | 
|Within one year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 365                   |  | 55                                                     |  | 441                   |  | 35                                                     |  | 681                   |  | 16                                                     | 
|Between one and two years                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 58                    |  | 19                                                     |  | 282                   |  | 23                                                     |  | 137                   |  | 3                                                      | 
|Between two and five years                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 24                    |  | 39                                                     |  | 71                    |  | 30                                                     |  | 201                   |  | 10                                                     | 
|Over five years                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 324                   |  |                                                       |  |                      |  |                                                       |  |                      |  |                                                       | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                       |  |                                                        |  |                       |  |                                                        |  |                       |  |                                                        | 
|Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 771                   |  | 113                                                    |  | 794                   |  | 88                                                     |  | 1,019                 |  | 29                                                     | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                       |  |                                                        |  |                       |  |                                                        |  |                       |  |                                                        | 
|In April 2003, Reuters Group
        PLC entered into syndicated credit facilities for £1.0 billion,
        of which £640 million expires in 2008 and £360 million expires
        in 2004, with the ability to extend the maturity of the latter in whole
        or in part in certain circumstances. The facility is at variable interest
        rates based on LIBOR, the London Interbank Offer Rate, is committed and
        may be drawn and redrawn up to one month prior to its maturity in April
        2008. There are also bilateral facilities of £90 million. At December
        2003, the above facilities were undrawn. In January 2004, the company
        cancelled £200 million of the portion of the syndicated facility
        and £10 million of the bilateral facilities which expire in April
        2004.

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

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

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

---



Back to Contents

Consolidated balance sheet at 31 December

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

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

Tom GlocerChief Executive


David GrigsonFinance Director


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

---



Back to Contents

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

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

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

---



Back to Contents

Notes on the consolidated
    balance sheet

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

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

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

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

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

---



Back to Contents

Notes on the consolidated
    balance sheetcontinued



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

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



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

---



Back to Contents



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

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

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

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

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

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

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

---



Back to Contents

Notes on the consolidated balance sheetcontinued



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



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



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

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

---



Back to Contents

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

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

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

Instinet Group is exposed to the possibility of trades between its counterparties
      failing to settle. Due to the settlement mechanisms employed, the maximum
      exposure is generally limited to the market movement between the trade
      date and the settlement date. There are no material unprovided off-balance
      sheet exposures or positions in respect of trades undertaken on or prior
      to 31 December 2003.

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

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

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

Defined benefit plansThe Group also operates 33 defined benefit
        plans covering approximately 18% of employees. Individually, these plans
        are of a relatively minor nature. The 15 largest plans are valued under
        SSAP 24 by independently  qualified actuaries using the projected unit
        credit method. The SSAP 24 provision is reviewed annually based on locally
        reported information, with the most recent review being at 1 January
        2003. The
        smaller remaining plans are subject to
        regular valuations based on accepted actuarial practice and standards
        within the country in which the plan is established. The largest plans
        are directly invested and others are invested in insurance contracts.
        The remainder are internally funded in  accordance with local practice,
        with provisions in the subsidiary undertakings to recognise the pension
        obligations.

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

---



Back to Contents

Notes on the consolidated balance sheetcontinued



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

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

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

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

Movement on pension provisions and similar obligations

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

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

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



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

---



Back to Contents

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

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

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

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

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

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



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

---



Back to Contents

Notes on the consolidated balance sheetcontinued

23 Pensions and similar obligationscontinued

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

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



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

---



Back to Contents

24 Deferred taxation liabilities/(assets)

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

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

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

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

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

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

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



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

---



Back to Contents

Notes on the consolidated balance
  sheetcontinued

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

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

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

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

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

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

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

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

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

      been reflected in the Other reserve. Under UK GAAP, no restatement of earnings
   per share was deemed necessary as the cash payment was considered to be equivalent

      to a repurchase of shares at market value. Under US GAAP, the transaction
  was  deemed a share consolidation combined with a special dividend. Accordingly,

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



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

---



Back to Contents

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

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

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

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

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

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

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



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

---



Back to Contents

Notes on the consolidated balance
      sheetcontinued

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

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

29
        Related party transactionsDuring
        the year, Reuters Group carried out a number of transactions with related parties
        in the normal course of business
          and on an arms length basis. Details of these transactions are shown
        below:

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

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

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

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

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

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

---



Back to Contents

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

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

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

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

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

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

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

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

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

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

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

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

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

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

---



Back to Contents

Notes on the consolidated balance sheetcontinued

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

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

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

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

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

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

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

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

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

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

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

---



Back to Contents

Balance sheet of Reuters Group PLCat 31 December

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











|Tom GlocerChief Executive |  | David GrigsonFinance Director | 
|------------------------- |  | ----------------------------- | 

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



Notes on the balance sheet of Reuters Group PLC

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

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

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

---



Back to Contents

Accounting policies

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




RevenueRevenue represents the turnover, net of discounts,
derived from services provided to subscribers and sales of products applicable
to the year. Revenue from sales of subscription-based real-time and historical information
services are recognised rateably over the term of the subscription. Revenue from contracts for the outright sale of systems based product solutions,
which include the sale of fully developed software licences, is recognised at
the time of client acceptance. Short-term contracts are accounted for on a completed
contract basis. Long-term contracts are accounted for in accordance with the
contractual terms either on a percentage of completion basis or on a time and
materials as incurred basis. Revenue from associated maintenance and support services is recognised rateably
over the term of the maintenance contract. Where contracts allow Reuters to recharge
costs from communications suppliers and exchanges onwards to subscribers, this
income is recognised as revenue. Transaction products usage revenue is accounted for on a trade date basis. Securities transactionsSecurities transactions between Instinet counterparties
which pass through Instinet and in its role as agency brokers, are recorded on
a settlement date basis and, therefore, are only reflected in the balance sheet
if there is a failure to settle. Revenues and related expenses arising from such
securities transactions are accrued from the date of the transaction. DevelopmentDevelopment expenditure is charged against profit
in the year in which it is incurred. Pensions and similar obligationsThe expected costs of defined benefit pensions
and post-retirement medical benefits are charged against profit so as to spread
the cost over the service lives of the employees affected. For defined contribution schemes the charge to the profit and loss account represents
contributions payable by Reuters Group during the period. Restricted share and Instinet long-term incentive plansCosts of the restricted share and Instinet long-term
incentive plans are charged to profit over the vesting period of the awards. Tangible fixed assetsDepreciation is calculated on a straight line
basis so as to write down the assets to their residual values over their expected
useful lives: Freehold land
   Not depreciatedFreehold buildings
   Normally 50 yearsLeasehold property
   Over the term of the leaseComputer systems equipment,office equipment and motor vehicles
   2 to 5 years Stocks and contract work in progressStocks and contract work in progress are valued
at the lower of cost and net realisable value less progress payments received
and receivable from clients. Progress payments in excess of the value of work
carried out
are included within creditors. Cost is calculated on a first in first out basis by reference to the invoiced
value of supplies and attributable costs of bringing stocks to their present
location and condition. Net realisable value is the estimated market value less selling costs.




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

---



Back to Contents

Short-term investmentsGovernment securities are stated in the balance
sheet at the lower of cost plus accrued capital appreciation and market value.
Income from these securities and any adjustment for changes in their market value
during
the year is reported as part of profit. Movements in short-term investments are reported under the heading of management
of liquid resources in the cash flow statement. Debt issuanceMedium-term notes and commercial paper are stated
at the amount of the net proceeds plus accrued interest or any discount or premium.
Discounts or premia to the nominal value are amortised over the term of the issue.
Costs associated with debt issuance are charged against profit over the life
of the instrument. Foreign currency swap agreements and forward contracts are used to convert non-sterling
debt into sterling. Interest rate swaps, swaptions and forward rate agreements
are used to manage interest rate exposures. Amounts payable or receivable in
respect of these derivatives are recognised as adjustments to interest expense
over the period of the contract. LeasingOperating lease rentals are charged against
profit on a straight line basis over the period of the lease. Operating lease incentives received are initially deferred and subsequently recognised
over the minimum contract period. Deferred taxationTax deferred or accelerated by the effect of
timing differences is accounted for to the extent that a transaction or an event
that has occurred at the balance sheet date gives rise to an obligation to pay
more tax in
the future or a right to pay less tax in the future. However, deferred tax assets are only recognised to the extent that, based on
all available evidence, it is more likely than not that suitable taxable profits
will arise from which the reversal of the asset can be
deducted. Goodwill and other intangible assetsGoodwill is calculated as the difference between
the
fair value of the consideration paid and the fair value of the Groups share
of the net assets at the date of acquisition. No value is attributed to internally
generated intangible assets. Purchased goodwill and other intangibles are capitalised and amortised through
the profit and loss account on a straight line basis over their estimated useful
economic lives which are up to 20 years depending on the nature of the business
acquired. Impairment reviews are carried out at the end of the first financial
year after acquisition and where there is any indication of impairment. Impairment is measured by comparing the carrying value of the asset with the
higher of the net realisable value and the value in use. Any impairment charges
are recognised in the profit and loss account for the period
in which they arise. Interest in shares of Reuters Group PLCShares held by the employee share ownership
trusts are recorded in the balance sheet within fixed asset investments at cost
including expenses less amounts written off. Fixed asset investmentsFixed asset investments are held at cost net
of permanent diminution in values as assessed by the directors.




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

---



Back to Contents

Summary of differences between UK and USGenerally Accepted Accounting Principles (GAAP)

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




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


|74 | Reuters Group PLC Annual Report and Form
        20-F 2003 | 
|-- | ---------------------------------------------------------- | 

---



Back to Contents



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




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


|Reuters Group PLC Annual Report and Form
        20-F 2003 | 75
|---------------------------------------------------------- | --

---



Back to Contents

Summary of differences between UK and US
Generally Accepted Accounting Principles (GAAP)continued

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




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




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



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

---



Back to Contents

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

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

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



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

---



Back to Contents

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

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

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

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

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

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

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



|78 | Reuters Group PLC Annual Report and Form
      20-F 2003 | 
|-- | -------------------------------------------------------- | 

---



Back to Contents

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




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




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

---



Back to Contents

|                                                              
|--------------------------------------------------------------
|                                                              
|                                                              
|                                                              
|                                                              
|RADIANZ
      LIMITED                                         
|                                                              
|                                                              
|FINANCIAL
      STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2003
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                              
|Registered
      Number 3918478                               



---





RADIANZ LIMITED

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2003

---

Company Registration Number: 3918478

|Registered
    Office: | Fleet Place
    House
|---------------------- | ---------------------
|                       | 2 Fleet
    Place    
|                       | London               
|                       | England              
|                       | EC4M 7RF             



R2

---



Back to Contents

RADIANZ
        LIMITED

FINANCIAL
      STATEMENTS

FOR
      THE YEAR ENDED 31 DECEMBER 2003

|                                                     |              | 
|---------------------------------------------------- | ------------ | 
|CONTENTS                                             | PAGE         | 
|                                                     |              | 
|Report of independent auditor                        | R4           | 
|                                                     |              | 
|Group profit and loss account                        | R5           | 
|                                                     |              | 
|Group statement of total recognised gains and losses | R6           | 
|                                                     |              | 
|Group balance sheet                                  | R7           | 
|                                                     |              | 
|Group cash flow statement                            | R8           | 
|                                                     |              | 
|Notes to the financial statements                    | R9
    - R36 | 

R3

---



Back to Contents



Report
  of Independent Auditor

To the Board
  of Directors and Shareholders of Radianz Limited

In our opinion,
  the accompanying consolidated profit and loss account, balance sheet and statement
  of recognised gains and losses present fairly, in all material respects, the
  financial position of Radianz Limited and its subsidiaries at 31 December 2003
  and the results of their operations and their cash flows for the year ended
  31 December 2003, in conformity with accounting principles generally accepted
  in the United Kingdom. These financial statements are the responsibility of
  the Company's management; our responsibility is to express an opinion on these
  financial statements based on our audit. We conducted our audit of these statements
  in accordance with auditing standards generally accepted in the United States
  of America, which require that we plan and perform the audit to obtain reasonable
  assurance about whether the financial statements are free of material misstatement.
  An audit includes examining, on a test basis, evidence supporting the amounts
  and disclosures in the financial statements, assessing the accounting principles
  used and significant estimates made by management, and evaluating the overall
  financial statement presentation. We believe that our audit provides a reasonable
  basis for our opinion.

Accounting
    principles  generally accepted in the United Kingdom vary in certain significant
    respects from
  accounting principles generally accepted in the United States of America. The
     application of the latter would have affected the determination of consolidated

  net loss for the year ended 31 December 2003 and the determination of consolidated
     shareholders' equity at 31 December 2003 to the extent summarized in Note
    29
  to the consolidated financial statements.

/s/
  PricewaterhouseCoopers LLP
  PricewaterhouseCoopers
  LLPChartered Accountants
  and Registered Auditors 
  London, England 29
  June 2004

R4

---



Back to Contents

RADIANZ LIMITED

GROUP PROFIT AND LOSS ACCOUNT

FOR
  THE YEAR ENDED 31 DECEMBER 2003

---

|                                                   |      |  |          |   |           |   |           |  
|-------------------------------------------------- | ---- |  | -------- | - | --------- | - | --------- | -
|                                                   | Note |  | 2003     |   | 2002      |   | 2001      |  
|                                                   |      |  |          |   | Unaudited |   | Unaudited |  
|                                                   |      |  | $000    |   | $000     |   | $000     |  
|                                                   |      |  |          |   |           |   |           |  
|Revenue                                            |      |  | 533,239  |   | 493,117   |   | 423,573   |  
|Operating
      costs                              | 3    |  | (620,293 | ) | (665,045  | ) | (601,228  | )
|                                                   |      |  |          |   |           |   |           |  
|                                                   |      |  |          |   |           |   |           |  
|Operating
      loss                               |      |  | (87,054  | ) | (171,928  | ) | (177,655  | )
|Interest
      receivable and similar income  net | 4    |  | 2,585    |   | 3,815     |   | 10,579    |  
|Loss on
      diminution in value of investment    | 9    |  | -        |   | (67,021   | ) | (64,140   | )
|                                                   |      |  |          |   |           |   |           |  
|                                                   |      |  |          |   |           |   |           |  
|Loss
      on ordinary activities before taxation  |      |  | (84,469  | ) | (235,134  | ) | (231,216  | )
|Taxation                                           | 6    |  | (1,564   | ) | (1,080    | ) | (1,072    | )
|                                                   |      |  |          |   |           |   |           |  
|                                                   |      |  |          |   |           |   |           |  
|Loss
      on ordinary activities after taxation   |      |  | (86,033  | ) | (236,214  | ) | (232,288  | )
|Preference
      Dividends                         | 7    |  | (10,270  | ) | (10,270   | ) | (10,270   | )
|                                                   |      |  |          |   |           |   |           |  
|                                                   |      |  |          |   |           |   |           |  
|Loss
      for the year                            | 18   |  | (96,303  | ) | (246,484  | ) | (242,558  | )
|                                                   |      |  |          |   |           |   |           |  

Revenue and operating loss as derive from continuing operations.

There is no difference between the loss on ordinary activities before taxation and the retained loss for the year stated above and their historical cost equivalents.

The associated notes on the following pages form part of these financial statements.

R5

---



Back to Contents

RADIANZ LIMITED

GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

FOR
  THE YEAR ENDED 31 DECEMBER 2003

---

|                                         | Note |  | 2003    |   | 2002      |   | 2001      |  
|---------------------------------------- | ---- |  | ------- | - | --------- | - | --------- | -
|                                         |      |  |         |   | Unaudited |   | Unaudited |  
|                                         |      |  | $000   |   | $000     |   | $000     |  
|                                         |      |  |         |   |           |   |           |  
|Loss for
      the financial year        |      |  | (96,303 | ) | (246,484  | ) | (242,558  | )
|Exchange
      adjustments               | 18   |  | 6,664   |   | 571       |   | (1,463    | )
|                                         |      |  |         |   |           |   |           |  
|                                         |      |  |         |   |           |   |           |  
|Total
      recognised loss for the year |      |  | (89,639 | ) | (245,913  | ) | (244,021  | )
|                                         |      |  |         |   |           |   |           |  

The associated notes on the pages that follow form part of these financial statements.

R6

---



Back to Contents

RADIANZ LIMITED

GROUP
BALANCE SHEET

AS
      AT 31 DECEMBER 2003

---

|                                       |      |  | 2003     |   | 2002      |  
|-------------------------------------- | ---- |  | -------- | - | --------- | -
|                                       |      |  |          |   | Unaudited |  
|                                       | Note |  | $000    |   | $000     |  
|Fixed assets                           |      |  |          |   |           |  
|Tangible fixed assets                  | 8    |  | 149,769  |   | 182,242   |  
|Investments                            | 9    |  | -        |   | -         |  
|                                       |      |  |          |   |           |  
|                                       |      |  | 149,769  |   | 182,242   |  
|Current assets                         |      |  |          |   |           |  
|Debtors                                |      |  |          |   |           |  
|- due within one year                  | 10   |  | 89,701   |   | 200,793   |  
|- due after one year                   | 10   |  | 41,793   |   | 51,249    |  
|Restricted Cash - due after one year   | 11   |  | 19,259   |   | 33,050    |  
|Cash at bank and in hand               |      |  | 9,095    |   | 44,657    |  
|                                       |      |  |          |   |           |  
|                                       |      |  |          |   |           |  
|                                       |      |  | 159,848  |   | 329,749   |  
|Creditors: amounts falling due         |      |  |          |   |           |  
|within one year                        | 12   |  | (120,854 | ) | (246,422  | )
|                                       |      |  |          |   |           |  
|                                       |      |  |          |   |           |  
|Net current assets/(liabilities)       |      |  | 38,994   |   | 83,327    |  
|                                       |      |  |          |   |           |  
|                                       |      |  |          |   |           |  
|Total assets less current liabilities  |      |  | 188,763  |   | 265,569   |  
|                                       |      |  |          |   |           |  
|Creditors: amounts falling due         |      |  |          |   |           |  
|after one year                         | 13   |  | (3,613   | ) | -         |  
|                                       |      |  |          |   |           |  
|Provisions for liabilities and charges | 15   |  | (1,433   | ) | (2,483    | )
|                                       |      |  |          |   |           |  
|                                       |      |  |          |   |           |  
|Net assets                             |      |  | 183,717  |   | 263,086   |  
|                                       |      |  |          |   |           |  
|                                       |      |  |          |   |           |  
|Capital and reserves                   |      |  |          |   |           |  
|Called up share capital                | 16   |  | 18       |   | 18        |  
|Share premium account                  | 17   |  | 878,425  |   | 878,425   |  
|Exchange difference reserve            | 17   |  | 6,211    |   | (453      | )
|Profit and loss account                | 17   |  | (700,937 | ) | (614,904  | )
|                                       |      |  |          |   |           |  
|                                       |      |  |          |   |           |  
|Total shareholders funds              | 18   |  | 183,717  |   | 263,086   |  
|                                       |      |  |          |   |           |  
|                                       |      |  |          |   |           |  
|Analysis of shareholders funds        |      |  |          |   |           |  
|                                       |      |  |          |   |           |  
|Equity                                 | 18   |  | (4,908   | ) | 84,731    |  
|Non-equity                             | 18   |  | 188,625  |   | 178,355   |  
|                                       |      |  |          |   |           |  
|                                       |      |  |          |   |           |  
|                                       |      |  | 183,717  |   | 263,086   |  
|                                       |      |  |          |   |           |  

The associated
notes on the following pages form part of these financial statements. The financial
statements and associated notes were approved by the Board of Directors on 29
June 2004 and were signed on its behalf by:

|/s/ Howard
    Edelstein | /s/
    David Granger Ure | 
|------------------------ | ------------------------- | 
|Howard
    Edelstein     | David
    Granger Ure     | 
|Director                 | Chairman                  | 



R7

---



Back to Contents

RADIANZ LIMITED

GROUP CASH FLOW STATEMENT

---

|                                                                          | Note |  | 2003    |   | 2002      |   | 2001      |  
|------------------------------------------------------------------------- | ---- |  | ------- | - | --------- | - | --------- | -
|                                                                          |      |  |         |   | Unaudited |   | Unaudited |  
|                                                                          |      |  | $000   |   | $000     |   | $000     |  
|                                                                          |      |  |         |   |           |   |           |  
|Net cash inflow / (outflow) from operating activities                     | 19   |  | 6,228   |   | (11,116   | ) | (780      | )
|                                                                          |      |  |         |   |           |   |           |  
|Returns on investment and servicing of finance                            |      |  |         |   |           |   |           |  
|Interest received from bank deposits, investment and others               |      |  | 607     |   | 2,583     |   | 12,210    |  
|Interest paid                                                             |      |  | (170    | ) | (24       | ) | (24       | )
|Interest paid on finance leases                                           |      |  | (191    | ) | -         |   | -         |  
|                                                                          |      |  |         |   |           |   |           |  
|Taxation                                                                  |      |  | (2,092  | ) | 38        |   | (555      | )
|                                                                          |      |  |         |   |           |   |           |  
|Capital expenditure and financial investment                              |      |  |         |   |           |   |           |  
|Purchase of own shares                                                    |      |  | -       |   | -         |   | (46,261   | )
|Purchase of tangible fixed assets                                         |      |  | (38,624 | ) | (98,730   | ) | (109,416  | )
|Sale of tangible fixed assets                                             |      |  | 15      |   | 128       |   | 230       |  
|                                                                          |      |  |         |   |           |   |           |  
|                                                                          |      |  |         |   |           |   |           |  
|Net cash
       outflow from capital expenditure and financial investment |      |  | (38,609 | ) | (98,602   | ) | (155,447  | )
|                                                                          |      |  |         |   |           |   |           |  
|Management of liquid resources                                            |      |  |         |   |           |   |           |  
|Decrease in short term deposits with banks                                | 20   |  | -       |   | 140,042   |   | 90,725    |  
|                                                                          |      |  |         |   |           |   |           |  
|Financing                                                                 |      |  |         |   |           |   |           |  
|                                                                          |      |  |         |   |           |   |           |  
|Issue of ordinary share capital                                           |      |  | -       |   | -         |   | 46,261    |  
|Decrease in finance leasing                                               |      |  | (953    | ) | -         |   | -         |  
|                                                                          |      |  |         |   |           |   |           |  
|                                                                          |      |  |         |   |           |   |           |  
|Net cash (outflow)/ inflow from financing                                 |      |  | (953    | ) | -         |   | 46,261    |  
|                                                                          |      |  |         |   |           |   |           |  
|(Decrease) / Increase in cash                                             |      |  | (35,180 | ) | 32,921    |   | (7,610    | )
|                                                                          |      |  |         |   |           |   |           |  

The associated notes on the following pages form part of these financial statements.

R8

---



Back to Contents

RADIANZ LIMITED

NOTES TO THE FINANCIAL STATEMENTS

---



|1. | Principal
    activities and accounting policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Radianz
          Limited (the "Company") and its subsidiaries (collectively Radianz or Group)
          is a joint venture between Reuters Group PLC (Reuters)
          and Equant Finance BV (Equant)(collectively the parents
          (Parents)).
      Radianz
          is owned 51% by Reuters and 49% by Equant. In forming Radianz, Reuters
          contributed substantially all of its global telecommunications network
          to Radianz and Equant contributed cash and a receivable for future
          services. Control over the Radianz is joint with Reuters and Equant
          each having equal representation on the board of directors.
      Radianz
          was established to deliver a global financial extranet (RadianzNet)
          capable of providing secure and reliable networking services for transaction
          processing and content delivery to the financial services industry.
      These
          financial statements are prepared under the historical cost convention.
      The Parent
          Companies have stated their intent to continue supporting the Company
          in accordance with the terms of the shareholders agreement relating
          to the Company and accordingly each has agreed to provide financial
          support of up to fifteen million dollars to the Company, for at least
          one year from the date of these financial statements or, if shorter,
          for the period until that parent company ceases to be a shareholder
          in the Company, sufficient to enable the Company and its subsidiaries
          to meet their financial obligations as and when they fall due either
          through capital contributions, the provision of loan funding or other
          appropriate measures. The Company believes these amounts are adequate
          to enable it to meet all its financial obligations for the period noted
          above.
      The accounting
          policies set out below have been applied on a consistent basis and
          are in accordance with applicable UK accounting standards.
      Changes
            in accounting policies There
          have been no changes in accounting policies for the year ended 31 December
          2003.
      Basis
            of consolidation The Group
          profit and loss account, balance sheet and cash flow statement include
          the financial statements of the Company and its subsidiary undertakings
          up to 31 December 2003. Intra-group transactions and profits are eliminated
          fully on consolidation.
      Acquisitions
          made by the Group are included under the acquisition method of accounting
          and the Group financial statements include the results of such acquisitions
          from the relevant date of acquisition.
      Revenue Radianz
          recognises revenue when realised or realisable and earned. The Group
          considers revenue realised or realisable and earned when it has persuasive
          evidence of an arrangement, the services have been provided, the sales
          price is fixed or determinable and collectibility is reasonably assured.
          Revenue is reduced for credit notes and rebates to be paid to customers.
          In addition to the aforementioned general policy, the following are
          the specific revenue recognition policies for the Groups significant
    categories of revenue.

R9

---



Back to Contents

|RADIANZ
    LIMITED                  
|-------------------------------------
|                                     
|NOTES
    TO THE FINANCIAL STATEMENTS
|                                     
|                                     

| | Related-Party
    Revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Managed
            Network ServicesRadianz
      entered into a Network Service Agreement (NSA) with Reuters
      and its affiliates that require Radianz to provide telecommunications,
      managed network and other services to Reuters. The terms of the NSA allow
      Radianz to recover substantially all direct costs incurred in connection
      with services provided to Reuters. The Group is deemed to be acting as
      a principal under the terms of the NSA and therefore as a principal recognises
      the billing and recovery of such costs as revenue.
      Radianz
            Network (RxN) ServicesAs
      of 1 January 2003, the NSA agreement with Reuters was amended to allow
      Radianz to charge for services provided via RadianzNet based on a fixed
      and determinable price per service type. Prior to this time, the maximum
      prices were established at a level, which enabled Radianz to recover direct
      costs incurred when providing this service.
      Consulting
            ServicesRadianz
      provides certain services for specific projects for Reuters. These services
      are consulting in nature and are subject to acceptance by Reuters. Radianz
      recognizes associated revenue only when acceptance has been received from
      Reuters for the services rendered. As at 31 December 2003, $1.2 million
      of revenue subject to acceptance was deferred from Reuters and $1.2 million
      of related costs were deferred. As at 31 December 2002, $1.9 million of
      revenue and $1.7 million of cost had been deferred.
      Remote
            Dial-up ServicesRemote
      dial-up services are provided to Reuters directly by Equant. Group acts
      as an agent in such transactions billing Reuters on behalf of Equant. As
      the Group does not retain the significant risks and rewards of delivering
      these services, revenue for these transactions is recognised on a net basis
      thereby recognising only the commission as revenue. The value of the services
      provided to Reuters for the year ended 31 December 2003 was approximately
      $1.4 million (2002: $1.0 million) on a gross basis.
      Migration
            ServicesDuring
        2002 and 2003, Radianz migrated certain Reuters customers from
        Reuters legacy networks to RadianzNet. Radianz is entitled to recover
        all direct costs incurred in completing the migration services. Radianz
        recognised revenue monthly based on completed connections at a fixed
        and determinable price per connection.
      External
              Customer Revenue
      Radianz
            Network (RxN) ServicesRevenue
        from Radianzs telecommunication and managed network services to
        customers other than Reuters is recognised as the services are provided
        over the contractual period. Fees are charged in accordance with the
        customer contract, and, accordingly, may represent both a connection
        fee and recurring access and usage fees. Connection fees are deferred
        and recognized over the estimated life of the arrangement with the customer,
        which is generally the contractual period. Revenue from access and usage
        fees is recognized as the services are provided over the anticipated
        customer relationship period, which is generally determined based on
        the life of the contract.
      If customers
          are billed in advance or on a quarterly basis under the terms of the
          arrangement with Radianz, Radianz defers revenue accordingly until
          the services are delivered. As at 31 December 2003, Radianz had approximately
          $3.4 million (2002: $1.6 million) of deferred revenue relating to advance
    customer billings.

R10

---



Back to Contents

|RADIANZ
    LIMITED                  
|-------------------------------------
|                                     
|NOTES
    TO THE FINANCIAL STATEMENTS
|                                     
|                                     

| | Voice
            ServicesRevenue,
      net of discounts, for the provision of point-to point voice and data circuits

    is earned as these services are delivered.
      Hosting
      ServicesRevenue
      from the Groups hosting services is recognised as the services are
      provided over the contractual period. Fees are charged in accordance with
      the customer contract, and, accordingly, may represent both a connection
      fee and a recurring monthly hosting fee. Connection fees are deferred and
      recognised over the estimated life of the arrangement with the customer,
      which is generally the contractual
  period.
      Provisions
          for losses on contracts are recognised in the period in which the loss
          is identified for the total contract.
      Foreign
            currency translationMonetary
      assets and liabilities denominated in foreign currencies are translated
      into US dollars at the rate of exchange ruling at the balance sheet date.
      Transactions in currencies other than US dollars are converted at the rates
      of exchange prevailing at the dates the transactions were made. Gains or
      losses on exchange are recognised in the profit and loss account as they
      arise.
      Profits
          and losses of subsidiaries that have currencies of operation other
          than the US dollar are translated into US dollars at average rates
          of exchange. Share capital issued by the Company, which is Sterling
          denominated, is maintained at the historical rate at the date on which
          the shares were issued.

      Exchange
          differences arising from the retranslation of the opening net assets
          of subsidiaries which have currencies of operation other than the US
          dollar are taken to reserves together with the differences arising
          when the profit and loss accounts are translated at average rates and
          compared with rates ruling at the year end.
      LeasesLeasing
      arrangements which transfer to the group substantially all the risks and
      rewards of ownership of an asset are treated as if the asset had been purchased
      outright. The assets are included in tangible fixed assets and the capital
      element of the leasing commitment is shown in creditors as obligations
      under finance leases. The lease rentals are treated as consisting of capital
      and interest elements. The capital element is applied to reduce the outstanding
      obligations and the interest element is charged against profits in proportion
      to the reducing capital element outstanding. Assets held under finance
      lease are depreciated over the shorter of the lease term and the expected
      useful economic lives of the equivalent owned assets.
      Costs
          in respect of operating lease rentals are charged to profit and loss
          in equal annual amounts over the lease term.
      Revenue
          on sublet leases is offset against the cost of the lease within the
          profit and loss account.
      Pension
            costsThe
        Group currently operates its own pension plans in three territories.
        The largest such plan is a voluntary 401 (k) savings plan for the Groups
        employees in the United States (US). The Group matches a
        percentage of each US employees contributions. The Groups
        employees in certain other territories participate in pension plans maintained
        by Reuters and Equant. The expected cost of pensions in respect of defined
        benefit plans is charged to the profit and loss account so as to spread
        the cost over the service lives of the employees affected. The cost in
        respect of defined contribution plans is charged to the profit and loss
    account as the amount accrues.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



R11

---



Back to Contents

|RADIANZ
    LIMITED                  
|-------------------------------------
|                                     
|NOTES
    TO THE FINANCIAL STATEMENTS
|                                     
|                                     

| | The pension
        costs and disclosures in these financial statements comply with Financial
        Reporting Standard (FRS) No. 17 Retirements Benefits.
        In accordance with Financial Reporting Standard No. 17 contributions
        paid by the Group to Reuters and Equant defined benefit schemes are disclosed
        as if the pension scheme were a defined contribution pension scheme,
        as the Group is unable to identify its share of the underlying assets
    and liabilities of the pension schemes.
      DevelopmentexpenditureDevelopment
      expenditure is charged to the profit and loss account in the year in which
      it is incurred.
      Short-term
            investmentsBank
        deposits, which are not re-payable on demand, are treated as short-term
        investments in accordance with Financial Reporting Standard No. 1 (revised
        1996). Movements in such investments are included under management
        of liquid resources in the Groups cash flow statement.
      Tangible
            fixed assetsAssets
      contributed by Reuters on 30 June 2000 were capitalised at their fair values
      at the date of transfer. All other tangible fixed assets are stated at
      cost. Depreciation is calculated on a straight-line basis so as to write
      down assets to their residual value over their expected useful lives. Office,
      computer systems and network equipment are depreciated over 3 - 5 years.
      Leasehold Buildings and Improvements are depreciated over the term of the
      lease. Tangible fixed assets are reviewed for impairment whenever events
      or changes in circumstances indicate that carrying amounts may not be recoverable.
      An impairment loss is recognised in the profit and loss account to the
      extent that the carrying amount of an asset exceeds its recoverable amount,
      being the higher of its value in use and net realisable value.
      Deferred
            taxationThe
        Group has adopted Financial Reporting Standard No. 19 Deferred
        Tax which requires full provision to be made for deferred tax assets
        and liabilities arising from timing differences between the recognition
        of gains and losses in the financial statements and their recognition
        for tax purposes.
      Deferred
          tax assets are only recognised to the extent that it is regarded, as
          more likely than not that they will be recovered. The adoption of this
          accounting standard had no impact on the results of the Group.
      Share
            schemesThe
        Groups Employee Share Ownership Trust (ESOT) is a separately
        administered trust, which is funded by loans from the Group. The assets
        of the ESOT comprise shares in the Company, which were initially recorded
        at their estimated recoverable amount, being the stock option price of
        the shares payable by employees. Provision is made to the extent that
        the amounts are not expected to be recovered. The ESOT has been aggregated
        within these financial statements.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

R12

---



Back to Contents

RADIANZ LIMITED

NOTES TO THE FINANCIAL STATEMENTS

---

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Segmental
    analysis                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | TurnoverRadianz has
      network operations in many countries throughout the world. For the purpose
      of segmental disclosure, revenue by origin is defined as the location where
      invoices are issued, while revenue by destination is defined as the location
      of the customer. For the year ended 31 December 2002 there was no material
      difference between the origin and destination of revenue. However during
      2003 changes in billing arrangements resulted in the United Kingdom (UK)
      billing throughout the world. Revenue by destination is therefore shown
    separately.

| |                   |           |  |                |   |          |  |         |  |          |   |          | 
| | ----------------- | --------- |  | -------------- | - | -------- |  | ------- |  | -------- | - | -------- | 
| | Turnover          |           |  |                |   |          |  |         |  |          |   |          | 
| |                   |           |  |                |   |          |  |         |  |          |   |          | 
| | 2003              | by Origin |  | by Destination |  
| |                   |           |  |                |   |          |  |         |  |          |   |          | 
| |                   | Total     |  | Inter-         |   | External |  | Total   |  | Inter-   |   | External | 
| |                   |           |  | segment        |   |          |  |         |  | segment  |   |          | 
| |                   | $000     |  | $000          |   | $000    |  | $000   |  | $000    |   | $000    | 
| |                   |           |  |                |   |          |  |         |  |          |   |          | 
| | United Kingdom    | 387,138   |  | (1,277         | ) | 385,861  |  | 550,768 |  | (188,747 | ) | 362,021  | 
| | United States     | 212,264   |  | (115,076       | ) | 97,188   |  | 112,534 |  | (748     | ) | 111,786  | 
| | Rest of the World | 123,861   |  | (73,671        | ) | 50,190   |  | 59,961  |  | (529     | ) | 59,432   | 
| |                   |           |  |                |   |          |  |         |  |          |   |          | 
| |                   | 723,263   |  | (190,024       | ) | 533,239  |  | 723,263 |  | (190,024 | ) | 533,239  | 
| |                   |           |  |                |   |          |  |         |  |          |   |          | 
| |                   |           |  |                |   |          |  |         |  |          |   |          | 
| | 2002 Unaudited    | by Origin |  | by Destination |  
| |                   |           |  |                |   |          |  |         |  |          |   |          | 
| |                   | Total     |  | Inter-         |   | External |  | Total   |  | Inter-   |   | External | 
| |                   |           |  | segment        |   |          |  |         |  | segment  |   |          | 
| |                   | $000     |  | $000          |   | $000    |  | $000   |  | $000    |   | $000    | 
| |                   |           |  |                |   |          |  |         |  |          |   |          | 
| | United Kingdom    | 377,670   |  | (6,749         | ) | 370,921  |  | 564,850 |  | (193,929 | ) | 370,921  | 
| | United States     | 205,410   |  | (126,341       | ) | 79,069   |  | 84,357  |  | (5,288   | ) | 79,069   | 
| | Rest of the World | 110,714   |  | (67,587        | ) | 43,127   |  | 44,587  |  | (1,460   | ) | 43,127   | 
| |                   |           |  |                |   |          |  |         |  |          |   |          | 
| |                   | 693,794   |  | (200,677       | ) | 493,117  |  | 693,794 |  | (200,677 | ) | 493,117  | 
| |                   |           |  |                |   |          |  |         |  |          |   |          | 
| |                   |           |  |                |   |          |  |         |  |          |   |          | 
| | 2001 Unaudited    | by Origin |  | by Destination |  
| |                   |           |  |                |   |          |  |         |  |          |   |          | 
| |                   | Total     |  | Inter-         |   | External |  | Total   |  | Inter-   |   | External | 
| |                   |           |  | segment        |   |          |  |         |  | segment  |   |          | 
| |                   | $000     |  | $000          |   | $000    |  | $000   |  | $000    |   | $000    | 
| |                   |           |  |                |   |          |  |         |  |          |   |          | 
| | United Kingdom    | 324,050   |  | (2,162         | ) | 321,888  |  | 489,018 |  | (167,130 | ) | 321,888  | 
| | United States     | 171,685   |  | (109,697       | ) | 61,988   |  | 63,605  |  | (1,617   | ) | 61,988   | 
| | Rest of the World | 97,130    |  | (57,433        | ) | 39,697   |  | 40,242  |  | (545     | ) | 39,697   | 
| |                   |           |  |                |   |          |  |         |  |          |   |          | 
| |                   | 592,865   |  | (169,292       | ) | 423,573  |  | 592,865 |  | (169,292 | ) | 423,573  | 
| |                   |           |  |                |   |          |  |         |  |          |   |          | 

R13

---



Back to Contents

RADIANZ LIMITED

NOTES TO THE FINANCIAL STATEMENTS

---

| | Operating loss                                                                                                                                                                                                                            | 2003    |   | 2002      |   | 2001      |  
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | - | --------- | - | --------- | -
| |                                                                                                                                                                                                                                           |         |   | Unaudited |   | Unaudited |  
| |                                                                                                                                                                                                                                           | $000   |   | $000     |   | $000     |  
| | United Kingdom                                                                                                                                                                                                                            | (69,987 | ) | (171,405  | ) | (158,355  | )
| | United States                                                                                                                                                                                                                             | (21,764 | ) | (4,466    | ) | (14,021   | )
| | Rest of the World                                                                                                                                                                                                                         | 4,697   |   | 3,943     |   | (5,279    | )
| |                                                                                                                                                                                                                                           |         |   |           |   |           |  
| |                                                                                                                                                                                                                                           | (87,054 | ) | (171,928  | ) | (177,655  | )
| | Net Interest /                                                                                                                                                                                                                            |         |   |           |   |           |  
| | Interest Bearing Assets                                                                                                                                                                                                                   | 2,585   |   | 3,815     |   | 10,579    |  
| |                                                                                                                                                                                                                                           |         |   |           |   |           |  
| |                                                                                                                                                                                                                                           | (84,469 | ) | (168,113  | ) | (167,076  | )
| |                                                                                                                                                                                                                                           |         |   |           |   |           |  
| | Net Operating assets                                                                                                                                                                                                                      | 2003    |   | 2002      |   | 2001      |  
| |                                                                                                                                                                                                                                           |         |   | Unaudited |   | Unaudited |  
| |                                                                                                                                                                                                                                           | $000   |   | $000     |   | $000     |  
| | United Kingdom                                                                                                                                                                                                                            | 87,116  |   | 102,231   |   | 263,092   |  
| | United States                                                                                                                                                                                                                             | 68,900  |   | 88,646    |   | 46,456    |  
| | Rest of the World                                                                                                                                                                                                                         | (653    | ) | (5,498    | ) | 11,382    |  
| |                                                                                                                                                                                                                                           |         |   |           |   |           |  
| |                                                                                                                                                                                                                                           | 155,363 |   | 185,379   |   | 320,930   |  
| | Net Interest /                                                                                                                                                                                                                            |         |   |           |   |           |  
| | Interest Bearing Assets                                                                                                                                                                                                                   | 28,354  |   | 77,707    |   | 177,799   |  
| |                                                                                                                                                                                                                                           |         |   |           |   |           |  
| |                                                                                                                                                                                                                                           | 183,717 |   | 263,086   |   | 498,729   |  
| |                                                                                                                                                                                                                                           |         |   |           |   |           |  
| |                                                                                                                                                                                                                                           |         |   |           |   |           |  
| | The UK operating
      loss includes the Group goodwill amortisation expense of $nil million (2002:
    $104.3 million, 2001: $104.3 million).                                                                                            |        
| |                                                                                                                                                                                                                                           |         |   |           |   |           |  
| | Interest
      bearing assets consist of restricted cash, current asset investments and
      cash balances, which are held mainly within UK entities but have been shown
    separately above as they are used to fund group operations. |        
| |                                                                                                                                                                                                                                           |         |   |           |   |           |  

R14

---



Back to Contents

RADIANZ LIMITED

NOTES TO THE FINANCIAL STATEMENTS

---

|   |                                                   
|-- | --------------------------------------------------
|3. | Loss
    On Ordinary Activities Before Taxation   
|   |                                                   
|   | Loss before
    taxation is stated after charging:

|   |                                                  |  |         |   |           |   |           |  
|-- | ------------------------------------------------ |  | ------- | - | --------- | - | --------- | -
|   |                                                  |  | 2003    |   | 2002      |   | 2001      |  
|   |                                                  |  |         |   | Unaudited |   | Unaudited |  
|   |                                                  |  | $000   |   | $000     |   | $000     |  
|   | Staff costs (note 5)                             |  | 113,901 |   | 98,108    |   | 81,870    |  
|   | Depreciation of tangible assets (note 8)         |  | 67,798  |   | 65,051    |   | 55,055    |  
|   | Impairment (note 8)                              |  | 15,345  |   | 833       |   | -         |  
|   | Depreciation from related parties                |  | 7,458   |   | 6,610     |   | 9,033     |  
|   | Amortisation of goodwill                         |  | -       |   | 104,349   |   | 104,349   |  
|   | Loss on disposal of fixed assets                 |  | 146     |   | 905       |   | 3,266     |  
|   | Operating lease rentals  land & buildings       |  | 11,324  |   | 10,743    |   | 4,736     |  
|   | Foreign currency translation  net gain          |  | (745    | ) | (57       | ) | (4,649    | )
|   | Auditors remuneration                           |  |         |   |           |   |           |  
|   | Group audit fees                                 |  | 1,352   |   | 980       |   | 750       |  
|   | Other services                                   |  | 940     |   | 892       |   | 173       |  
|   |                                                  |  |         |   |           |   |           |  
|   |                                                  |  |         |   |           |   |           |  
|   | Cost by function:                                |  |         |   |           |   |           |  
|   | Operations and communications costs              |  | 546,767 |   | 498,007   |   | 423,518   |  
|   | Sales and marketing expense                      |  | 17,761  |   | 16,947    |   | 34,061    |  
|   | Administration expense                           |  | 55,765  |   | 150,091   |   | 143,649   |  
|   |                                                  |  |         |   |           |   |           |  
|   |                                                  |  |         |   |           |   |           |  
|   | Total operating costs                            |  | 620,293 |   | 665,045   |   | 601,228   |  
|   |                                                  |  |         |   |           |   |           |  
|   |                                                  |  |         |   |           |   |           |  
|4. | Interest
    receivable and similar income  net |  |         |   |           |   |           |  
|   |                                                  |  |         |   |           |   |           |  

| |                                               |  | 2003  |   | 2002      |   | 2001      |  
| | --------------------------------------------- |  | ----- | - | --------- | - | --------- | -
| |                                               |  |       |   | Unaudited |   | Unaudited |  
| |                                               |  | $000 |   | $000     |   | $000     |  
| |                                               |  |       |   |           |   |           |  
| | Interest receivable from bank deposits        |  | 602   |   | 2,197     |   | 9,737     |  
| | Discount on receivable from parent            |  | 2,367 |   | 1,642     |   | 866       |  
| |                                               |  |       |   |           |   |           |  
| |                                               |  |       |   |           |   |           |  
| | Total interest receivable                     |  | 2,969 |   | 3,839     |   | 10,603    |  
| |                                               |  |       |   |           |   |           |  
| | Interest payable on finance leases            |  | (201  | ) | -         |   | -         |  
| | Interest payable on bank loans and overdrafts |  | (183  | ) | (24       | ) | (24       | )
| |                                               |  |       |   |           |   |           |  
| |                                               |  |       |   |           |   |           |  
| | Interest receivable and similar income - net  |  | 2,585 |   | 3,815     |   | 10,579    |  
| |                                               |  |       |   |           |   |           |  

R15

---



Back to Contents

RADIANZ LIMITED

NOTES TO THE FINANCIAL STATEMENTS

---

|   |                                                                    
|-- | -------------------------------------------------------------------
|5. | Employees                                                          
|   |                                                                    
|   | The average
    number of employees during the year was as follows:



| |                                                                          |         |  |           |  |           | 
| | ------------------------------------------------------------------------ | ------- |  | --------- |  | --------- | 
| |                                                                          | 2003    |  | 2002      |  | 2001      | 
| |                                                                          |         |  | Unaudited |  | Unaudited | 
| | Operations and Engineering                                               | 609     |  | 607       |  | 492       | 
| | Sales and marketing                                                      | 76      |  | 81        |  | 83        | 
| | Administration                                                           | 237     |  | 142       |  | 112       | 
| |                                                                          |         |  |           |  |           | 
| |                                                                          |         |  |           |  |           | 
| | Total                                                                    | 922     |  | 830       |  | 687       | 
| |                                                                          |         |  |           |  |           | 
| |                                                                          |         |  |           |  |           | 
| | Staff costs incurred during the year in respect of these employees were: |        
| |                                                                          |         |  |           |  |           | 
| |                                                                          | 2003    |  | 2002      |  | 2001      | 
| |                                                                          |         |  | Unaudited |  | Unaudited | 
| |                                                                          | $000   |  | $000     |  | $000     | 
| |                                                                          |         |  |           |  |           | 
| | Wages and Salaries                                                       | 99,137  |  | 85,851    |  | 72,865    | 
| | Social Security Costs                                                    | 9,303   |  | 7,135     |  | 5,564     | 
| | Other Pension Costs                                                      | 5,461   |  | 5,122     |  | 3,441     | 
| |                                                                          |         |  |           |  |           | 
| |                                                                          |         |  |           |  |           | 
| | Total                                                                    | 113,901 |  | 98,108    |  | 81,870    | 
| |                                                                          |         |  |           |  |           | 

|   |         
|-- | --------
|6. | Taxation

| |                                      |       |   |           |  |           | 
| | ------------------------------------ | ----- | - | --------- |  | --------- | 
| |                                      | 2003  |   | 2002      |  | 2001      | 
| |                                      |       |   | Unaudited |  | Unaudited | 
| |                                      | $000 |   | $000     |  | $000     | 
| | UK corporation tax at 30%            |       |   |           |  |           | 
| | Current tax on income for the year   | -     |   | -         |  | -         | 
| | Adjustments in respect of prior year | 997   |   | -         |  | 190       | 
| |                                      |       |   |           |  |           | 
| |                                      | 997   |   | -         |  | 190       | 
| |                                      |       |   |           |  |           | 
| | US corporate income tax              |       |   |           |  |           | 
| | Current tax on income for the year   | 81    |   | 528       |  | 228       | 
| | Adjustments in respect of prior year | (69   | ) | -         |  | 171       | 
| |                                      |       |   |           |  |           | 
| |                                      | 12    |   | 528       |  | 399       | 
| |                                      |       |   |           |  |           | 
| | Other overseas corporate income tax  |       |   |           |  |           | 
| | Current tax on income for the year   | 859   |   | 552       |  | 407       | 
| | Adjustments in respect of prior year | 157   |   | -         |  | 70        | 
| |                                      |       |   |           |  |           | 
| |                                      | 1,016 |   | 552       |  | 477       | 
| |                                      |       |   |           |  |           | 
| | Deferred taxation                    | (461  | ) | -         |  | 6         | 
| |                                      |       |   |           |  |           | 
| |                                      |       |   |           |  |           | 
| | Total corporation tax charge         | 1,564 |   | 1,080     |  | 1,072     | 
| |                                      |       |   |           |  |           | 

R16

---



Back to Contents

RADIANZ LIMITED

NOTES TO THE FINANCIAL STATEMENTS

---

| |                                                                                                                                                                                                                                                                                                                                                                                        |         |   |           |   |           |  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | - | --------- | - | --------- | -
| |                                                                                                                                                                                                                                                                                                                                                                                        | 2003    |   | 2002      |   | 2001      |  
| |                                                                                                                                                                                                                                                                                                                                                                                        |         |   | Unaudited |   | Unaudited |  
| |                                                                                                                                                                                                                                                                                                                                                                                        | $000   |   | $000     |   | $000     |  
| | Factors
    affecting tax charge for the year                                                                                                                                                                                                                                                                                                                                          |         |   |           |   |           |  
| | Loss on
    ordinary activities before tax                                                                                                                                                                                                                                                                                                                                             | (84,469 | ) | (235,134  | ) | (231,216  | )
| | Loss
       on ordinary activities before tax multiplied by the standard rate of corporation
    tax in the UK of 30% (2002:
	  30%, 2001:30%)                                                                                                                                                                                                                                         | (25,341 | ) | (70,540   | ) | (69,365   | )
| |                                                                                                                                                                                                                                                                                                                                                                                        |         |   |           |   |           |  
| | Effects of:                                                                                                                                                                                                                                                                                                                                                                            |         |   |           |   |           |  
| | Adjustments
       for foreign tax  taxable at different rates                                                                                                                                                                                                                                                                                                                        | (2,898  | ) | 341       |   | (273      | )
| | Timing differences                                                                                                                                                                                                                                                                                                                                                                     | 14,933  |   | (2,136    | ) | (240      | )
| | Permanent differences                                                                                                                                                                                                                                                                                                                                                                  | 610     |   | 51,192    |   | 50,783    |  
| | Depreciation
    for the year in excess of capital allowances                                                                                                                                                                                                                                                                                                                          | -       |   | 4,620     |   | 1,335     |  
| | Tax losses carried forward                                                                                                                                                                                                                                                                                                                                                             | 13,973  |   | 17,448    |   | 18,415    |  
| | Utilisation of tax losses                                                                                                                                                                                                                                                                                                                                                              | (504    | ) | (181      | ) | (90       | )
| | Adjustments
       to tax charge in respect of previous periods                                                                                                                                                                                                                                                                                                                        | 1,134   |   | 147       |   | 431       |  
| | Minimum taxes                                                                                                                                                                                                                                                                                                                                                                          | 118     |   | 189       |   | 226       |  
| | Foreign tax credits                                                                                                                                                                                                                                                                                                                                                                    | -       |   | -         |   | (156      | )
| |                                                                                                                                                                                                                                                                                                                                                                                        |         |   |           |   |           |  
| | Current tax charge for the year                                                                                                                                                                                                                                                                                                                                                        | 2,025   |   | 1,080     |   | 1,066     |  
| |                                                                                                                                                                                                                                                                                                                                                                                        |         |   |           |   |           |  
| |                                                                                                                                                                                                                                                                                                                                                                                        |         |   |           |   |           |  
| | Radianz previously
      sold tax losses to an associated undertaking in respect of the year 2000
      for the consideration of $895,000. Subsequently, these losses were not
      utilised by the associate undertaking and returned to Radianz. As a result
      Radianz repaid the consideration of $997,000, the difference being due
    to move foreign exchange differences. |        
| |                                                                                                                                                                                                                                                                                                                                                                                        |         |   |           |   |           |  
| | The Group
      has an unrecognised deferred tax asset of approximately $76,829,000 (2002:
    $35,235,000, 2001: $16,676,000) that relates to the following:                                                                                                                                                                                                                          |        
| |                                                                                                                                                                                                                                                                                                                                                                                        |         |   |           |   |           |  

| |                                                                                                                                            | 2003   |  | 2002      |  | 2001      | 
| | ------------------------------------------------------------------------------------------------------------------------------------------ | ------ |  | --------- |  | --------- | 
| |                                                                                                                                            |        |  | Unaudited |  | Unaudited | 
| |                                                                                                                                            | $000  |  | $000     |  | $000     | 
| |                                                                                                                                            |        |  |           |  |           | 
| | Accelerated capital allowances                                                                                                             | 21,394 |  | 10,312    |  | 2,402     | 
| | Tax losses carried forward                                                                                                                 | 51,247 |  | 24,923    |  | 14,274    | 
| | Other                                                                                                                                      | 4,188  |  | -         |  | -         | 
| |                                                                                                                                            |        |  |           |  |           | 
| | Unprovided deferred tax                                                                                                                    | 76,829 |  | 35,235    |  | 16,676    | 
| |                                                                                                                                            |        |  |           |  |           | 
| |                                                                                                                                            |        |  |           |  |           | 
| | A deferred
      tax asset has not been recognised since it is not certain that this asset
    will crystallise in the foreseeable future. |       

R17

---



Back to Contents

RADIANZ LIMITED

NOTES TO THE FINANCIAL STATEMENTS

---

|   |          
|-- | ---------
|7. | Dividends

| |                                   |        |  |           |  |           | 
| | --------------------------------- | ------ |  | --------- |  | --------- | 
| |                                   | 2003   |  | 2002      |  | 2001      | 
| |                                   |        |  | Unaudited |  | Unaudited | 
| |                                   | $000  |  | $000     |  | $000     | 
| |                                   |        |  |           |  |           | 
| | 6.5% cumulative preference shares | 10,270 |  | 10,270    |  | 10,270    | 
| |                                   |        |  |           |  |           | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The preference
        shares were issued by Radianz Inc., a wholly owned US subsidiary of Radianz
        Limited, and are held equally by Reuters and Equant, the ultimate shareholders
        of Radianz Limited (see note 16). Radianz Inc. has appropriated through
        its profit and loss account preference share dividends for the year on
        these 6.5% cumulative preference shares of $10.27 million. However, in
        accordance with the provisions of Financial Reporting Standard No. 4,
        as Radianz Inc. does not have sufficient distributable reserves in order
        to pay such preference share dividends, these dividends have been credited
    back within profit and loss account reserves (note 18).
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | In 2000,
        the preference share dividends of $5.135 million were not credited back
        within profit and loss account reserves but were included within creditors:
        amounts falling due after more than one year. These dividends had
        been credited back within profit and loss account reserves in 2001 (note
    18).                                                                                                                                                                                                                                                                                                                                                                                                   

R18

---



Back to Contents

|RADIANZ
      LIMITED                    
|-----------------------------------------
|                                         
|NOTES
        TO THE FINANCIAL STATEMENTS
|                                         
|                                         

|   |                            
|-- | ---------------------------
|8. | Tangible
      fixed assets
|   |                            

|         |                               |           | Leasehold |       |  | Leasehold |   |  | Network |   |  | Computer
      and |   |  | Total   |  
|-------- | ----------------------------- | --------- | --------- | ----- |  | --------- | - |  | ------- | - |  | ------------------ | - |  | ------- | -
|Property | Improvements                  | Equipment | Office    |      
|         |                               |           | Equipment |      
|$000    | $000                         | $000     | $000     | $000
|         | Cost                          |           |           |       |  |           |   |  |         |   |  |                    |   |  |         |  
|         | At 1 January
      2003       |           | 32,600    |       |  | 4,807     |   |  | 276,378 |   |  | 13,487             |   |  | 327,272 |  
|         | Translation
      differences |           | -         |       |  | 136       |   |  | 10,421  |   |  | 343                |   |  | 10,900  |  
|         | Additions                     |           | 1,333     |       |  | 196       |   |  | 44,326  |   |  | 1,067              |   |  | 46,922  |  
|         | Reclassification              |           | (374      | )     |  | 1,125     |   |  | 396     |   |  | (1,147             | ) |  | -       |  
|         | Disposals                     |           | -         |       |  | (20       | ) |  | (11,562 | ) |  | (1,733             | ) |  | (13,315 | )
|         |                               |           |           |       |  |           |   |  |         |   |  |                    |   |  |         |  
|         |                               |           |           |       |  |           |   |  |         |   |  |                    |   |  |         |  
|         | At
      31 December 2003     |           | 33,559    |       |  | 6,244     |   |  | 319,959 |   |  | 12,017             |   |  | 371,779 |  
|         |                               |           |           |       |  |           |   |  |         |   |  |                    |   |  |         |  
|         | Depreciation                  |           |           |       |  |           |   |  |         |   |  |                    |   |  |         |  
|         | At 1 January
      2003       |           | 3,376     |       |  | 513       |   |  | 135,085 |   |  | 6,056              |   |  | 145,030 |  
|         | Translation
      differences |           | -         |       |  | 34        |   |  | 5,708   |   |  | 197                |   |  | 5,939   |  
|         | Charged
      in the year     |           | 3,918     |       |  | 779       |   |  | 59,667  |   |  | 3,434              |   |  | 67,798  |  
|         | Impairment                    |           | 13,043    |       |  | -         |   |  | 2,302   |   |  | -                  |   |  | 15,345  |  
|         | Reclassification              |           | (58       | )     |  | 474       |   |  | 499     |   |  | (915               | ) |  | -       |  
|         | Disposals                     |           | -         |       |  | (20       | ) |  | (10,413 | ) |  | (1,669             | ) |  | (12,102 | )
|         |                               |           |           |       |  |           |   |  |         |   |  |                    |   |  |         |  
|         |                               |           |           |       |  |           |   |  |         |   |  |                    |   |  |         |  
|         | At
      31 December 2003     |           | 20,279    |       |  | 1,780     |   |  | 192,848 |   |  | 7,103              |   |  | 222,010 |  
|         |                               |           |           |       |  |           |   |  |         |   |  |                    |   |  |         |  
|         | Net
      Book Value          |           |           |       |  |           |   |  |         |   |  |                    |   |  |         |  
|         | At
      31 December 2003     |           | 13,280    |       |  | 4,464     |   |  | 127,111 |   |  | 4,914              |   |  | 149,769 |  
|         |                               |           |           |       |  |           |   |  |         |   |  |                    |   |  |         |  
|         |                               |           |           |       |  |           |   |  |         |   |  |                    |   |  |         |  
|         | At 31 December
      2002     |           | 29,224    |       |  | 4,294     |   |  | 141,293 |   |  | 7,431              |   |  | 182,242 |  
|         |                               |           |           |       |  |           |   |  |         |   |  |                    |   |  |         |  

| |                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During the
      year a fixed asset verification exercise was completed. This resulted in
      a number of asset reclassifications and assets costing approximately $13.3
      million (NBV $1.2 million) being written off or retired. The resultant profit
      and loss change of $0.1 million is net of a provision relating to fixed
      assets no longer required.
| |                                                                                                                                                                                                                                                                                                                                                                              
| | An impairment
      review based on the future discounted cash flows resulted in an additional
      depreciation charge of $15.3 million relating to assets utilised in Radianzs
      hosting operations.                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                              
| | Analysis
      of assets held under finance lease at 31 December 2003                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                              

| |                                                                                                | Leasehold |  | Leasehold    |  | Network   |   | Computer
      and |  | Total  |  
| | ---------------------------------------------------------------------------------------------- | --------- |  | ------------ |  | --------- | - | ------------------ |  | ------ | -
| |                                                                                                | Property  |  | Improvements |  | Equipment |   | Office             |  |        |  
| |                                                                                                |           |  |              |  |           |   | Equipment          |  |        |  
| |                                                                                                | $000     |  | $000        |  | $000     |   | $000              |  | $000  |  
| |                                                                                                |           |  |              |  |           |   |                    |  |        |  
| | Cost                                                                                           | -         |  | -            |  | 6,335     |   | -                  |  | 6,335  |  
| | Accumulated
      depreciation                                                                 | -         |  | -            |  | (1,070    | ) | -                  |  | (1,070 | )
| |                                                                                                |           |  |              |  |           |   |                    |  |        |  
| |                                                                                                |           |  |              |  |           |   |                    |  |        |  
| | At
           31 December 2003                                                                 | -         |  | -            |  | 5,265     |   | -                  |  | 5,265  |  
| |                                                                                                |           |  |              |  |           |   |                    |  |        |  
| |                                                                                               
| | The
      Group did not own any assets under finance lease agreements at 1 January
      2003.
| |                                                                                               

R19

---



Back to Contents



|RADIANZ
      LIMITED                    
|-----------------------------------------
|                                         
|NOTES
        TO THE FINANCIAL STATEMENTS
|                                         
|                                         

|   |            
|-- | -----------
|9. | Investments
|   |            

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $000   | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | 
| | Interests
      in own shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |         | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |         | 
| | Cost                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |         | 
| | At 1 January
      2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 238,261 | 
| | Additions
      in the year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | -       | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |         | 
| | At
      31 December 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 238,261 | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |         | 
| | Provision
      for diminution in value of investment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |         | 
| | At 1 January
      2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 238,261 | 
| | Charged
      in the year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | -       | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |         | 
| | At
      31 December 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 238,261 | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |         | 
| | Net
      Book Value                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |         | 
| | At
      31 December 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | -       | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |         | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |         | 
| | At 31 December
      2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | -       | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |         | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Investment
      in own shares represents the Group cost of 35,000,000 shares (nominal value
      £175) held by the Groups ESOT. The Group established the ESOT
      to acquire shares in the Company for the benefit of employees and directors
      of the Group. On 3 July 2000, the Company provided $192 million for this
      purpose by way of a loan. On the same date the ESOT subscribed at market
      value for 28,206,850 of the Companys C ordinary shares.
      In March 2001 the Company issued a further 6,793,150 of the Companys
      ordinary C shares to Reuters and Equant for $46.3 million in
      cash. The Company provided a loan to the ESOT in this amount which the
      ESOT used to purchase these ordinary C shares for issuance
      to employees. The option scheme does not allow employees or directors to
      purchase shares at a discount to the market value at the date of grant
      of the options, therefore, no charge to the profit and loss account arises.
      The cost of funding and administering the scheme are charged to the profit
      and loss account of the Group in the period to which they relate.                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | In
      October 2001 the Group permitted employees to cancel stock options granted
      up to 30 September 2001 in exchange for an equal number of new stock options
      to be awarded in three phases in 2002. The first phase replacement stock
      options (April 2002) have a vesting schedule that closely approximates that
      of the cancelled stock options. The second and third phase replacement stock
      options each have three-year annual vesting schedules. All three phases
      of replacement stock options have expiration dates of seven years from date
      of grant in accordance with the Plan. Of the 29.0 million stock options
      with an exercise price of $6.81, which were cancelled in October 2001, 19.3
      million replacement stock options were issued at an exercise price of $2.13
      per share in April 2002 and two further grants of 4.8 million replacement
      stock options were issued in July and October 2002 at an exercise price
      of $1.92 and $1.75 per stock option, respectively. During 2003, the Company
      issued 4.7 million options at an exercise price of $1.85. Additionally,
      7.4 million options were cancelled during 2003 due to employees who resigned
      or were terminated during the year.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | A
      valuation of the Group is performed by a third party consultancy firm on
      a quarterly basis in accordance with the terms of the employee stock option
      agreement. The quarterly valuations continued to decrease in 2002 and the
      valuation of the Group as of 31 December 2002 was $435 million. As a result
      of a continuous decrease in the valuation of the Group during 2002, implying
      a reduced share price compared to the exercise price of the stock options,
      the receivable for shares held by the ESOT at 31 December 2002 have been
      written down to nil resulting in a charge for diminution in value of the
      investment of $67.0 million in 2002 (2001:$64.1 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

R20

---



Back to Contents

|RADIANZ
      LIMITED                    
|-----------------------------------------
|                                         
|NOTES
        TO THE FINANCIAL STATEMENTS
|                                         
|                                         

|    |        
|--- | -------
|10. | Debtors
|    |        

| |                                                      | 2003   |  | 2002      | 
| | ---------------------------------------------------- | ------ |  | --------- | 
| |                                                      |        |  | Unaudited | 
| |                                                      | $000  |  | $000     | 
| | Amounts
      falling due within one year:           |        |  |           | 
| | Trade debtors                                        | 11,549 |  | 10,825    | 
| | Amounts
      owed by associated undertakings        |        |  |           | 
| | -trading
        balances                            | 35,706 |  | 156,802   | 
| | -loan                                                | 9,456  |  | 10,133    | 
| | Other debtors                                        | 13,548 |  | 14,669    | 
| | Prepayments
      and accrued income                 | 19,442 |  | 8,364     | 
| |                                                      |        |  |           | 
| |                                                      |        |  |           | 
| |                                                      | 89,701 |  | 200,793   | 
| |                                                      |        |  |           | 
| | Amounts
      falling due after one year:            |        |  |           | 
| | Amounts
      owed by associated undertakings  loan | 41,793 |  | 51,249    | 
| |                                                      |        |  |           | 
| |                                                      |        |  |           | 
| |                                                      | 41,793 |  | 51,249    | 
| |                                                      |        |  |           | 
| |                                                      |        |  |           | 

|11. | Restricted
      cash
|--- | ---------------------
|    |                      

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 2003   |  | 2002      | 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------ |  | --------- | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |        |  | Unaudited | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | $000  |  | $000     | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |        |  |           | 
| | Restricted
      cash                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 19,259 |  | 33,050    | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |        |  |           | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | Restricted
      cash represents certificates of deposit at banks which are held as collateral
      for cash management facilities provided to Group companies, security for
      certain of the Groups third-party operating lease agreements and the
      related letters of guarantee, and as security over letters of credit guaranteeing
      payments to the Groups major suppliers. As a result, restricted cash
      is not available for general business purposes.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

R21

---



Back to Contents

|RADIANZ
    LIMITED                  
|-------------------------------------
|                                     
|NOTES
    TO THE FINANCIAL STATEMENTS
|                                     
|                                     

|    |                                                   
|--- | --------------------------------------------------
|12. | Creditors:
    amounts falling due within one year

| |                                       |    |         |  |           | 
| | ------------------------------------- | -- | ------- |  | --------- | 
| |                                       |    | 2003    |  | 2002      | 
| |                                       |    |         |  | Unaudited | 
| |                                       |    | $000   |  | $000     | 
| |                                       |    |         |  |           | 
| | Trade creditors                       |    | 19,221  |  | 11,318    | 
| | Amounts owed to group undertakings    |    | -       |  | -         | 
| | Amounts owed to joint venture parents |    | 35,247  |  | 165,661   | 
| | Overseas taxation                     |    | 1,298   |  | 705       | 
| | Other taxation and social security    |    | 13,598  |  | 25,449    | 
| | Other creditors                       |    | 3,068   |  | 1,806     | 
| | Accruals and deferred income          |    | 46,543  |  | 41,483    | 
| | Obligations under finance Leases      | 14 | 1,879   |  | -         | 
| |                                       |    |         |  |           | 
| |                                       |    |         |  |           | 
| |                                       |    | 120,854 |  | 246,422   | 
| |                                       |    |         |  |           | 

|    |                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------
|    | Amounts
        due to group undertakings and joint venture parents are unsecured, interest
    free and repayable on demand.
|    |                                                                                                                              
|13. | Creditors:
    amounts falling due after one year                                                                            

| |                                  |    |       |  |           | 
| | -------------------------------- | -- | ----- |  | --------- | 
| |                                  |    | 2003  |  | 2002      | 
| |                                  |    |       |  | Unaudited | 
| |                                  |    | $000 |  | $000     | 
| |                                  |    |       |  |           | 
| | Obligations under finance leases | 14 | 3,503 |  | -         | 
| | Other Creditors                  |    | 110   |  | -         | 
| |                                  |    |       |  |           | 
| |                                  |    | 3,613 |  | -         | 
| |                                  |    |       |  |           | 

|    |                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|14. | Finance
    leases                                                                                                                                                                           
|    |                                                                                                                                                                                              
|    | During
        the year the Group entered into a number of finance leases with Equant.
        The maturity profile of the financial liabilities excluding other creditors
    is as follows:

| |                          |       |  |           | 
| | ------------------------ | ----- |  | --------- | 
| |                          | 2003  |  | 2002      | 
| |                          |       |  | Unaudited | 
| |                          | $000 |  | $000     | 
| |                          |       |  |           | 
| | Within one year          | 1,879 |  | -         | 
| | Within two to five years | 3,503 |  | -         | 
| | After five years         |       |  |           | 
| |                          |       |  |           | 
| |                          |       |  |           | 
| | Total                    | 5,382 |  | -         | 
| |                          |       |  |           | 

R22

---



Back to Contents

|RADIANZ
          LIMITED                  
|-------------------------------------------
|                                           
|NOTES
          TO THE FINANCIAL STATEMENTS
|                                           
|                                           

|    |                                                |              |   |               |   |        |  
|--- | ---------------------------------------------- | ------------ | - | ------------- | - | ------ | -
|15. | Provisions
    for liabilities and charges     |              |   |               |   |        |  
|    |                                                |              |   |               |   |        |  
|    |                                                |              |   | Employee      |   |        |  
|    | Group                                          | Deferred tax |   | related costs |   | Total  |  
|    |                                                | $000        |   | $000         |   | $000  |  
|    |                                                |              |   |               |   |        |  
|    | At 1 January 2003                              | 647          |   | 1,836         |   | 2,483  |  
|    | Currency translation adjustments               | -            |   | 85            |   | 85     |  
|    | Utilised in the year                           | -            |   | (2,295        | ) | (2,295 | )
|    | (Released)/ charged to profit and loss account | (461         | ) | 1,621         |   | 1,160  |  
|    |                                                |              |   |               |   |        |  
|    |                                                |              |   |               |   |        |  
|    | At 31 December 2003                            | 186          |   | 1,247         |   | 1,433  |  
|    |                                                |              |   |               |   |        |  

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | The $1,247,000
        (2002: $1,836,000) provision for employee related costs primarily arises
        in respect of the pension cost for current employees in the USA and Italy.
        The deferred tax provision of $647,000 as at 1 January 2003, which arose
        in respect of fixed assets contributed by Reuters in the US was released
        back to the profit and loss in the year. The deferred tax provision of
        $186,000 at 31 December 2003 is in respect of timing differences for
    fixed assets owned in Singapore. The provision was created in 2003.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|16. | Called
    up share capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

| |                                             |        |  |           | 
| | ------------------------------------------- | ------ |  | --------- | 
| |                                             | 2003   |  | 2002      | 
| |                                             |        |  | Unaudited | 
| |                                             | $      |  | $         | 
| | Authorised                                  |        |  |           | 
| | 15,800 6.5% cumulative preference shares of |        |  |           | 
| | $1 each                                     | 15,800 |  | 15,800    | 
| | 510 ordinary A shares of £1 each          | 750    |  | 750       | 
| | 490 ordinary B shares of £1 each          | 720    |  | 720       | 
| | 35,000,000 ordinary C shares of           |        |  |           | 
| | £0.000005 each                              | 257    |  | 257       | 
| |                                             |        |  |           | 
| |                                             |        |  |           | 
| |                                             | 17,527 |  | 17,527    | 
| |                                             |        |  |           | 

| |                                                  |        |  |           | 
| | ------------------------------------------------ | ------ |  | --------- | 
| | Allotted,
    called up and fully paid           |        |  |           | 
| |                                                  |        |  |           | 
| |                                                  | 2003   |  | 2002      | 
| |                                                  |        |  | Unaudited | 
| |                                                  | $      |  | $         | 
| |                                                  |        |  |           | 
| | 510 ordinary A shares (Reuters) of £1 each     | 750    |  | 750       | 
| | 490 ordinary B shares (Equant) of £1 each      | 720    |  | 720       | 
| | 35,000,000 ordinary C shares of £0.000005 each | 257    |  | 257       | 
| | 15,800 6.5% cumulative preference shares of      |        |  |           | 
| | $1 each                                          | 15,800 |  | 15,800    | 
| |                                                  |        |  |           | 
| |                                                  |        |  |           | 
| |                                                  | 17,527 |  | 17,527    | 
| |                                                  |        |  |           | 

R23

---



Back to Contents

|RADIANZ
          LIMITED                  
|-------------------------------------------
|                                           
|NOTES
          TO THE FINANCIAL STATEMENTS
|                                           
|                                           

| |                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The
        rights relating to each class of share in issue at 31 December 2003 are
    as follows:
| |                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (a)                                                                                                 | The ordinary A and B shares
        have no rights to dividends other than those that may be recommended
        by directors. In the event of winding up the Company they rank pari passu
        with the other classes of shares. They carry one vote per share. No A share
        shall confer any right to vote upon a resolution for the removal from
        office of a B Director (appointed by Equant) and no B share
        shall confer any right to vote upon a resolution for the removal from
    office of an A Director (appointed by Reuters).                                                                                                                                                                                                          
| |                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (b)                                                                                                 | The ordinary C shares
        have no rights to dividends other than those that may be recommended
        by directors. In the event of winding up the Company they rank pari passu
        with the other classes of shares. They do not carry any voting rights,
    other than in resolutions on the variation of their rights.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (c)                                                                                                 | The 6.5%
        preference shares were issued by Radianz Inc., a wholly owned US subsidiary
        of Radianz Limited, and are held equally by Reuters and Equant, the ultimate
        shareholders of Radianz Limited. The 6.5% preference shares carry a fixed
        cumulative preferential dividend at the rate of 6.5% per annum, payable
        on 30 June. The shares have no redemption entitlement. On a winding up
        the holders have priority before all other classes of shares to receive
        payment of capital plus any arrears of dividend. Each preference share
        carries 0.275 votes. 75% approval of the preference shareholders is required
        for matters directly affecting the number and voting rights of the preference
    shares.

|    |                                            |         |  |            |   |          |  
|--- | ------------------------------------------ | ------- |  | ---------- | - | -------- | -
|17. | Reconciliation
    of movement in reserves |         |  |            |   |          |  
|    |                                            |         |  |            |   |          |  
|    |                                            | Share   |  | Exchange   |   | Profit & |  
|    |                                            | premium |  | difference |   | loss     |  
|    |                                            | account |  | reserve    |   | account  |  
|    | Group                                      | $000   |  | $000      |   | $000    |  
|    |                                            |         |  |            |   |          |  
|    | At 1 January 2003                          | 878,425 |  | (453       | ) | (614,904 | )
|    | Retained loss for the financial year       | -       |  | -          |   | (96,303  | )
|    | Preference share appropriations for year   |         |  |            |   |          |  
|    | ended 31 December 2003 (note 7)            | -       |  | -          |   | 10,270   |  
|    | Other gains and losses                     | -       |  | 6,664      |   | -        |  
|    |                                            |         |  |            |   |          |  
|    |                                            |         |  |            |   |          |  
|    | At 31 December 2003                        | 878,425 |  | 6,211      |   | (700,937 | )
|    |                                            |         |  |            |   |          |  

R24

---



Back to Contents

RADIANZ LIMITED

NOTES TO THE FINANCIAL STATEMENTS

---

|18. | Reconciliation
    of movement in shareholders funds
|--- | -----------------------------------------------------
|    |                                                      

| |                                                      |  | 2003     |   | 2002      |   | 2001      |  
| | ---------------------------------------------------- |  | -------- | - | --------- | - | --------- | -
| |                                                      |  |          |   | Unaudited |   | Unaudited |  
| |                                                      |  | $000    |   | $000     |   | $000     |  
| |                                                      |  |          |   |           |   |           |  
| | Loss on ordinary activities after taxation           |  | (86,033  | ) | (236,214  | ) | (232,288  | )
| | Accrued
       preference dividends payable (note 7) |  | (10,270  | ) | (10,270   | ) | (10,270   | )
| |                                                      |  |          |   |           |   |           |  
| | Loss for the year                                    |  | (96,303  | ) | (246,484  | ) | (242,558  | )
| | Other recognised gains and losses                    |  | 6,664    |   | 571       |   | (1,463    | )
| | New ordinary share capital issued                    |  | -        |   | -         |   | 46,261    |  
| | Cumulative dividend not yet declared                 |  |          |   |           |   |           |  
| | for period ended 31 December 2000 (note 7)           |  | -        |   | -         |   | 5,135     |  
| | Cumulative dividend not yet declared                 |  |          |   |           |   |           |  
| | for year ended 31 December (note 7)                  |  | 10,270   |   | 10,270    |   | 10,270    |  
| | Opening shareholders funds                          |  | 263,086  |   | 498,729   |   | 681,084   |  
| |                                                      |  |          |   |           |   |           |  
| |                                                      |  |          |   |           |   |           |  
| | Closing shareholders funds                          |  | 183,717  |   | 263,086   |   | 498,729   |  
| |                                                      |  |          |   |           |   |           |  
| |                                                      |  |          |   |           |   |           |  
| | Total shareholders funds                            |  |          |   |           |   |           |  
| |                                                      |  | 2003     |   | 2002      |   | 2001      |  
| |                                                      |  |          |   | Unaudited |   | Unaudited |  
| |                                                      |  | $000    |   | $000     |   | $000     |  
| | Equity share capital                                 |  |          |   |           |   |           |  
| | (including premium)                                  |  | 725,763  |   | 725,763   |   | 725,763   |  
| | Non-equity share capital                             |  |          |   |           |   |           |  
| | (including premium)                                  |  | 152,680  |   | 152,680   |   | 152,680   |  
| | Exchange difference reserve                          |  | 6,211    |   | (453      | ) | (1,024    | )
| | Profit and loss account                              |  | (700,937 | ) | (614,904  | ) | (378,690  | )
| |                                                      |  |          |   |           |   |           |  
| |                                                      |  |          |   |           |   |           |  
| | Total shareholders funds                            |  | 183,717  |   | 263,086   |   | 498,729   |  
| |                                                      |  |          |   |           |   |           |  
| |                                                      |  |          |   |           |   |           |  
| | Shareholders funds allocated to non-equity          |  |          |   |           |   |           |  
| |                                                      |  | 2003     |   | 2002      |   | 2001      |  
| |                                                      |  |          |   | Unaudited |   | Unaudited |  
| |                                                      |  | $000    |   | $000     |   | $000     |  
| | Non-equity share capital                             |  |          |   |           |   |           |  
| | (including premium)                                  |  | 152,680  |   | 152,680   |   | 152,680   |  
| | Cumulative dividend not paid                         |  | 35,945   |   | 25,675    |   | 15,405    |  
| |                                                      |  |          |   |           |   |           |  
| |                                                      |  |          |   |           |   |           |  
| | Total non-equity shareholders funds                 |  | 188,625  |   | 178,355   |   | 168,085   |  
| |                                                      |  |          |   |           |   |           |  

R25

---



Back to Contents

RADIANZ LIMITED

NOTES TO THE FINANCIAL STATEMENTS

---

| | Shareholders funds allocated to equity                |          |   |           |   |           |  
| | ------------------------------------------------------ | -------- | - | --------- | - | --------- | -
| |                                                        | 2003     |   | 2002      |   | 2001      |  
| |                                                        |          |   | Unaudited |   | Unaudited |  
| |                                                        | $000    |   | $000     |   | $000     |  
| | Difference between total shareholders funds           |          |   |           |   |           |  
| | and the
       amount allocated to non-equity interest | (4,908   | ) | 84,731    |   | 330,644   |  
| | Made up as follows                                     |          |   |           |   |           |  
| | Equity share capital (including premium)               | 725,763  |   | 725,763   |   | 725,763   |  
| | Exchange difference reserve                            | 6,211    |   | (453      | ) | (1,024    | )
| | Profit and loss account reserve                        | (700,937 | ) | (614,904  | ) | (378,690  | )
| | Cumulative dividends due to non-equity                 |          |   |           |   |           |  
| | Shareholders (note7)                                   | (35,945  | ) | (25,675   | ) | (15,405   | )
| |                                                        |          |   |           |   |           |  
| |                                                        |          |   |           |   |           |  
| | Total equity shareholders funds                       | (4,908   | ) | 84,731    |   | 330,644   |  
| |                                                        |          |   |           |   |           |  

|    |                                                                                   
|--- | ----------------------------------------------------------------------------------
|19. | Reconciliation
    of operating loss to net cash outflow from operating activities
|    |                                                                                   

| |                                                     | 2003     |   | 2002      |   | 2001      |  
| | --------------------------------------------------- | -------- | - | --------- | - | --------- | -
| |                                                     |          |   | Unaudited |   | Unaudited |  
| |                                                     | $000    |   | $000     |   | $000     |  
| | Operating loss                                      | (87,054  | ) | (171,928  | ) | (177,655  | )
| | Depreciation charge                                 | 67,798   |   | 65,051    |   | 55,055    |  
| | Impairment charge                                   | 15,345   |   | 833       |   | -         |  
| | Loss on sale of tangible fixed assets               | 146      |   | 905       |   | 3,266     |  
| | Amortisation of goodwill                            | -        |   | 104,349   |   | 104,349   |  
| | Unwinding of the discount on related party loan     | 2,367    |   | 1,642     |   | 866       |  
| | Decrease/ (Increase) in debtors                     | 123,349  |   | (43,973   | ) | (34,383   | )
| | Decrease /(Increase) in restricted cash             | 13,791   |   | (6,191    | ) | (19,904   | )
| | Increase /(Decrease) in trade creditors             | 7,611    |   | (1,330    | ) | 6,414     |  
| | (Decrease)/ Increase in accruals, deferred income   |          |   |           |   |           |  
| | and other creditors                                 | (136,553 | ) | 39,793    |   | 60,563    |  
| | Others                                              | (572     | ) | (267      | ) | 649       |  
| |                                                     |          |   |           |   |           |  
| |                                                     |          |   |           |   |           |  
| | Net cash inflow/(outflow) from operating activities | 6,228    |   | (11,116   | ) | (780      | )
| |                                                     |          |   |           |   |           |  

| |                                                                                         
| | ----------------------------------------------------------------------------------------
| | The 2002
    and 2001 comparatives have been restated to reflect current year treatment.
| |                                                                                         

|20. | Reconciliation
    of net cash flow to movement in net funds
|--- | ------------------------------------------------------------
|    |                                                             

| |                                                                                          | 2003    |   | 2002      |   | 2001      |  
| | ---------------------------------------------------------------------------------------- | ------- | - | --------- | - | --------- | -
| |                                                                                          |         |   | Unaudited |   | Unaudited |  
| |                                                                                          | $000   |   | $000     |   | $000     |  
| | Decrease / (increase) in cash in the year                                                | (35,180 | ) | 32,921    |   | (7,610    | )
| | Cash flow movement from lease financing                                                  | (953    | ) | -         |   | -         |  
| | Cash inflow from sale of short term investments                                          | -       |   | (140,042  | ) | (90,725   | )
| | Currency Translation Adjustments                                                         | (382    | ) | 838       |   | (197      | )
| |                                                                                          |         |   |           |   |           |  
| | Net funds at 1 January                                                                   | 44,657  |   | 150,940   |   | 249,472   |  
| |                                                                                          |         |   |           |   |           |  
| |                                                                                          |         |   |           |   |           |  
| | Net funds at 31 December                                                                 | 8,142   |   | 44,657    |   | 150,940   |  
| |                                                                                          |         |   |           |   |           |  
| |                                                                                          |         |   |           |   |           |  
| | The 2002
    and 2001 comparatives have been restated to reflect current year treatment. |        

R26

---



Back to Contents

RADIANZ LIMITED

NOTES TO THE FINANCIAL STATEMENTS

---

| |                                      | Cash    |   | Obligations   |   | Net Funds |  
| | ------------------------------------ | ------- | - | ------------- | - | --------- | -
| |                                      |         |   | under finance |   |           |  
| |                                      |         |   | leasing       |   |           |  
| |                                      | $000   |   | $000         |   | $000     |  
| |                                      |         |   |               |   |           |  
| | At 1 January 2003                    | 44,657  |   | -             |   | 44,657    |  
| | New obligations under finance Leases | -       |   | (6,335        | ) | (6,335    | )
| | Cash flow                            | (35,180 | ) | 953           |   | (34,227   | )
| | Currency Translation Adjustments     | (382    | ) | -             |   | (382      | )
| |                                      |         |   |               |   |           |  
| |                                      |         |   |               |   |           |  
| | At 31 December 2003                  | 9,095   |   | (5,382        | ) | 3,713     |  
| |                                      |         |   |               |   |           |  

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | No obligation
    under finance leases existed 2002 and 2001.                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|21. | Pensions                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The pension
        charge, representing contributions paid in the year by the Group to various
        plans operated by Reuters, Equant and the Group itself to which the Groups
        employees belong, amounted to $5.5 million (2002: $5.1 million, 2001:
        $3.4 million). Approximately $1.5million (2002: $1.9 million) of pension
        contributions were payable at the year end to the Groups scheme
    in relation to US employees.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                             

| | 2003                      | Reuters |  | Equant |  | Radianz |  | Total | 
| | ------------------------- | ------- |  | ------ |  | ------- |  | ----- | 
| |                           | $000   |  | $000  |  | $000   |  | $000 | 
| |                           |         |  |        |  |         |  |       | 
| | Defined Contribution      | 1,381   |  | 43     |  | 1,567   |  | 2,991 | 
| | Defined Benefit           | 2,081   |  | 369    |  | 20      |  | 2,470 | 
| |                           |         |  |        |  |         |  |       | 
| |                           |         |  |        |  |         |  |       | 
| | Total Pension charge 2003 | 3,462   |  | 412    |  | 1,587   |  | 5,461 | 
| |                           |         |  |        |  |         |  |       | 



| | 2002                      | Reuters |  | Equant |  | Radianz |  | Total | 
| | ------------------------- | ------- |  | ------ |  | ------- |  | ----- | 
| | Unaudited                 | $000   |  | $000  |  | $000   |  | $000 | 
| |                           |         |  |        |  |         |  |       | 
| | Defined Contribution      | 1,216   |  | 379    |  | 1,951   |  | 3,546 | 
| | Defined Benefit           | 1,499   |  | -      |  | 77      |  | 1,576 | 
| |                           |         |  |        |  |         |  |       | 
| |                           |         |  |        |  |         |  |       | 
| | Total Pension charge 2002 | 2,715   |  | 379    |  | 2,028   |  | 5,122 | 
| |                           |         |  |        |  |         |  |       | 



| | 2001                      | Reuters |  | Equant |  | Radianz |  | Total | 
| | ------------------------- | ------- |  | ------ |  | ------- |  | ----- | 
| | Unaudited                 | $000   |  | $000  |  | $000   |  | $000 | 
| |                           |         |  |        |  |         |  |       | 
| | Defined Contribution      | 810     |  | 40     |  | 845     |  | 1,695 | 
| | Defined Benefit           | 1,400   |  | 346    |  | -       |  | 1,746 | 
| |                           |         |  |        |  |         |  |       | 
| |                           |         |  |        |  |         |  |       | 
| | Total Pension charge 2001 | 2,210   |  | 386    |  | 845     |  | 3,441 | 
| |                           |         |  |        |  |         |  |       | 

| |                                                                                            
| | -------------------------------------------------------------------------------------------
| | New employees
    are eligible to join the defined contribution plans.                     
| |                                                                                            
| | The Group
    has no significant exposure to any other post-retirement benefit obligations.

R27

---



Back to Contents

RADIANZ LIMITED

NOTES
  TO THE FINANCIAL STATEMENTS

---

Defined
  Contribution Plans A number of Radianz
  employees participate in a defined contribution plan in Australia. The Group
contributes a fixed percentage of each employees salary.

Reuters operates 32 defined contribution plans of which Radianz staff are members. Members of these plans contribute 6% of basic salaries and Radianz is required to make an annual contribution of 9.525% of members basic salaries regardless of the funding status of the plan. The Group 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 independent UK investment managers.

The Group currently operates its own pension plans in three territories. The largest such plan is a voluntary 401 (k) savings plan for the Groups employees in the United States. The Group matches a percentage of each employees contributions. In certain territories the Group contributes a fixed percentage of each employees salary to local schemes based on local requirements in that country.

Defined
  Benefit Plans A number of Radianz
  employees participate in Reuters and Equant defined benefit plans.

Equant Plan benefits are primarily based on the employees compensation during the last three to five years before retirement and the number of years of service. The two largest defined benefit arrangements are in the United Kingdom and Japan.

Reuters operates 33 defined benefit plans of which a number of Radianz staff are members. They are subject to regular valuations based on the accepted actuarial practices 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 Reuters plans in accordance with UK Statement of Standard Accounting Practice 24 based on independent actuarial advice.

The contributions paid by the Group to Reuters and Equant defined benefit schemes are accounted for as if the schemes were defined contribution schemes, as the Group is unable to identify its share of the underlying assets and liabilities in the schemes. This exemption is in accordance with Financial Reporting Standard No. 17. The cost of contributions to these pension schemes is based on pension costs across the respective Reuters and Equant group companies as a whole.

Actuarial valuations of the Reuters Group PLC scheme were carried out at various dates between 31 December 2001 and 31 December 2002 and updated to 31 December 2003 by independent qualified actuaries in accordance with FRS17. As at 31 December 2003 a deficit of $49 million was identified. There was a deficit of $9.7 million on the Equant schemes as at 31 December 2001. The annual amount of contributions to these schemes is agreed with the trustees annually.

R28

---



Back to Contents

RADIANZ LIMITED

NOTES
  TO THE FINANCIAL STATEMENTS

---

|22. | Operating
      lease commitments                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                           
|    | At 31 December
      2003 and 2002 the Group had annual commitments under non-cancellable operating
      lease agreements, in respect of properties, expiring as follows:

|    |                                     |                            |  |                          | 
|--- | ----------------------------------- | -------------------------- |  | ------------------------ | 
|    |                                     | 2003                       |  | 2002                     | 
|    |                                     | Land
        and buildings |  | Land
      and buildings | 
|    |                                     |                            |  | Unaudited                | 
|    |                                     | $000                      |  | $000                    | 
|    | Annual
      commitments under non- |                            |  |                          | 
|    | cancellable
      operating leases  |                            |  |                          | 
|    | expiring:                           |                            |  |                          | 
|    | Within one
      year               | 90                         |  | 114                      | 
|    | Within two
      to five years      | 1,690                      |  | 4,047                    | 
|    | After five
      years              | 9,783                      |  | 6,851                    | 
|    |                                     |                            |  |                          | 
|    | Total                               | 11,563                     |  | 11,012                   | 
|    |                                     |                            |  |                          | 
|    |                                     |                            |  |                          | 
|23. | Capital
      commitments           |                            |  |                          | 

| |                                                 |       |  |           | 
| | ----------------------------------------------- | ----- |  | --------- | 
| |                                                 | 2003  |  | 2002      | 
| |                                                 |       |  | Unaudited | 
| |                                                 | $000 |  | $000     | 
| | Contracts
      placed for future capital       |       |  |           | 
| | expenditure
      not provided in the financial |       |  |           | 
| | statements                                      | 1,306 |  | -         | 
| |                                                 |       |  |           | 

R29

---



Back to Contents

RADIANZ LIMITED

NOTES
  TO THE FINANCIAL STATEMENTS

---

|24. | Other
      commitments                                                                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                     
|    | Future minimum
      purchase commitments of the Group with telecommunication providers for various
      telecommunications, networking and voice services with contractual terms
      of more than one year as of 31 December 2003 are as follows (in thousands):
|    |                                                                                                                                                                                                                                                                     

| |                                                                                                                              | Minimum     | 
| | ---------------------------------------------------------------------------------------------------------------------------- | ----------- | 
| | Years
      ending 31 December,                                                                                              | Commitments | 
| |                                                                                                                              |             | 
| | 2004                                                                                                                         | 41,568      | 
| | 2005                                                                                                                         | 35,047      | 
| | 2006                                                                                                                         | 21,847      | 
| |                                                                                                                              |             | 
| |                                                                                                                              |             | 
| | Total
      future purchase commitments                                                                                      | 98,462      | 
| |                                                                                                                              |             | 
| |                                                                                                                              |             | 
| | The Group
      incurred expenses of $80.0 million and $76.5 million in 2003 and 2002, respectively
      for such services. |             | 

|25. | Related
      party transactions                                                 
|--- | ---------------------------------------------------------------------------------
|    |                                                                                  
|    | Related
      party transactions with related parties in the year are as follows:
|    |                                                                                  

| |                            | 1
        January |  | Amounts  |  | Amounts        |   | 31
        December | 
| | -------------------------- | ----------------- |  | -------- |  | -------------- | - | ------------------- | 
| |                            | 2003              |  | Invoiced |  | (collected)    |   | 2003                | 
| | Group                      |                   |  |          |  | /
        paid |   |                     | 
| |                            | $000             |  | $000    |  | $000          |   | $000               | 
| | Amounts
      receivable   |                   |  |          |  |                |   |                     | 
| | Reuters
       trading    | 154,595           |  | 521,436  |  | (642,874       | ) | 33,157              | 
| | Equant 
      trading     | 2,207             |  | 2,342    |  | (2,000         | ) | 2,549               | 
| | Equant loan                | 61,382            |  | -        |  | (10,133        | ) | 51,249              | 
| |                            |                   |  |          |  |                |   |                     | 
| | Total amount receivable    | 218,184           |  | 523,778  |  | (655,007       | ) | 86,955              | 
| |                            |                   |  |          |  |                |   |                     | 
| |                            |                   |  |          |  |                |   |                     | 
| | Amounts
      payable      |                   |  |          |  |                |   |                     | 
| | Reuters                    | 121,521           |  | 125,912  |  | (222,232       | ) | 25,201              | 
| | Equant                     | 44,140            |  | 96,061   |  | (130,155       | ) | 10,046              | 
| |                            |                   |  |          |  |                |   |                     | 
| | Total amount
      payable | 165,661           |  | 221,973  |  | (352,387       | ) | 35,247              | 
| |                            |                   |  |          |  |                |   |                     | 

| | Revenue
      from related parties relate primarily to the supply of network services.                                                                                                                                                                                                   
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                          
| | Purchases
      from related parties relate to the provision of network operating services
      and other business support services.                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                          
| | The Group
      has extensive transactions and relationships with its parent companies and
      their subsidiary companies, under the terms agreed in the Network Services
      Agreement with Reuters (NSA), and shareholder Agreements relating to Radianz,
      Reuters and Equant.

R30

---



Back to Contents

|RADIANZ
    LIMITED                  
|-------------------------------------
|                                     
|NOTES
    TO THE FINANCIAL STATEMENTS
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     

|26. | Litigation                                                                                                                                                                                                                                                                                                                                                              
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                         
|    | During
        2003, Radianz received written notification that a number of formal charges,
        alleging employment discrimination based on race had been filed by a
        number of current and former employees of Radianz against Radianz with
        the U.S. Equal Employment Opportunity Commission and/or the New York
    State Division of Human Rights.
|    |                                                                                                                                                                                                                                                                                                                                                                         
|    | As of
        19 May, 2004, Radianz has settled the majority of the outstanding claims
        and has fully provided for any costs that may arise as a result of the
        remaining claims. These costs are recorded in the Administration expenses
    in the profit and loss account.                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                         

|27. | Post
    Balance Sheet Event                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Subsequent
        to 31 December 2003 as part of Radianzs strategy to provide continued
        focus on its core Extranet business, Radianz made the decision
        to sell the Voice Services line of business, which is currently being
        marketed. The revenue of this business was approximately $17 million
        during the year ended 31 December 2003 and the net asset value of this
        business was approximately $2.5 million at 31 December
2003.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | In March
        2004, as part of a review of its business and operational strategy, Radianz
        announced a voluntary redundancy program. It is expected that this program
        will result in a reduction of approximately 10% in the 2004 Company headcount.
    Redundancy costs in 2004 are expected to amount to approximately $5 million.                                                                                                                         

R31

---



Back to Contents

|RADIANZ
    LIMITED                  
|-------------------------------------
|                                     
|NOTES
    TO THE FINANCIAL STATEMENTS
|                                     
|                                     

|28. | Subsidiary
    undertakings                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                            
|    | The principal
        subsidiary undertakings at 31 December 2003, all of which are included
    in the consolidated financial statements, are shown below.                                                
|    |                                                                                                                                                                                                            
|    | A proportion
        of shares in Radianz France SA, Radianz Italia Srl, Radianz Voice Services
        Limited and Radianz Hong Kong Limited are held by wholly owned subsidiaries
    of Radianz Limited.
|    |                                                                                                                                                                                                            
|    | 3% of
        shares in Radianz Switzerland SA are held by directors on Radianz Limiteds
    behalf.                                                                                                      
|    |                                                                                                                                                                                                            

| | Name of              | Country
    of     | Description of shares /     | Proportion    | Principal 
| | -------------------- | ------------------ | --------------------------- | ------------- | ----------
| | undertaking          | incorporation      | interest held               | of nominal    | activity  
| |                      |                    |                             | value of      |           
| |                      |                    |                             | issued shares |           
| |                      |                    |                             | held          |           
| |                      |                    |                             |               |           
| | Radianz Global       | England            | Ordinary £1 shares          | 100%          | Trading   
| | Limited              |                    |                             |               |           
| | (formerly Radianz    |                    |                             |               |           
| | Europe Limited)      |                    |                             |               |           
| |                      |                    |                             |               |           
| | Radianz Global       | Jersey             | Ordinary £1 shares          | 100%          | Inactive  
| | Network Operations   |                    |                             |               |           
| | Limited              |                    |                             |               |           
| |                      |                    |                             |               |           
| | Radianz Global       | England            | Ordinary £1 shares          | 100%          | Inactive  
| | Sales Limited        |                    |                             |               |           
| |                      |                    |                             |               |           
| | Radianz US Inc       | USA                | Ordinary 1 cent shares      | 100%          | Management
| |                      |                    |                             |               |           
| | Radianz Americas     | USA                | Ordinary 1 cent shares      | 100%          | Trading   
| | Inc                  |                    |                             |               |           
| |                      |                    |                             |               |           
| | Radianz Australia    | Australia          | Ordinary AUD$1 shares       | 100%          | Trading   
| | Pty Limited          |                    |                             |               |           
| |                      |                    |                             |               |           
| | Radianz GmbH         | Austria            | Sole ownership interest     | 100%          | Trading   
| |                      |                    |                             |               |           
| | Radianz Italia Srl   | Italy              | Ordinary shares of EUR 1    | 100%          | Trading   
| |                      |                    |                             |               |           
| | Radianz France SA    | France             | Ordinary shares of FRF 50   | 100%          | Trading   
| |                      |                    |                             |               |           
| | Radianz Germany      | Germany            | Sole ownership interest     | 100%          | Trading   
| | GmbH                 |                    |                             |               |           
| |                      |                    |                             |               |           
| | Radianz Hong Kong    | Hong Kong          | Ordinary
    shares of HK$1 | 100%          | Trading   
| | Limited              |                    |                             |               |           
| |                      |                    |                             |               |           
| | Radianz Japan K.K.   | Japan              | Ordinary shares of 50,000   | 100%          | Trading   
| |                      |                    | Yen                         |               |           
| |                      |                    |                             |               |           
| | Radianz Asia Pte Ltd | Singapore          | Ordinary
    shares of S$1  | 100%          | Trading   
| |                      |                    |                             |               |           
| | Radianz Switzerland  | Switzerland        | Ordinary shares of CHF      | 100%          | Trading   
| | SA                   |                    | 1,000                       |               |           
| |                      |                    |                             |               |           
| | Radianz Proton       | Cayman
    Islands | Ordinary
    shares of US$1 | 100%          | Trading   
| | Limited              |                    |                             |               |           
| |                      |                    |                             |               |           
| | Radianz Connect      | England            | Ordinary shares of £1       | 100%          | Trading   
| | Services Limited     |                    |                             |               |           
| |                      |                    |                             |               |           
| | Radianz Portugal     | Portugal           | Sole ownership interest     | 100%          | Trading   
| | Lda                  |                    |                             |               |           
| |                      |                    |                             |               |           
| | Radianz Belgium      | Belgium            | Sole ownership interest     | 100%          | Trading   
| | Sprl                 |                    |                             |               |           

R32

---



Back to Contents

|RADIANZ
    LIMITED                  
|-------------------------------------
|                                     
|NOTES
    TO THE FINANCIAL STATEMENTS
|                                     
|                                     

| | Name
        of     | Country
    of | Description
        of shares / | Proportion    | Principal
| | ------------------- | -------------- | ------------------------------- | ------------- | ---------
| | undertaking         | incorporation  | interest held                   | of nominal    | activity 
| |                     |                |                                 | value of      |          
| |                     |                |                                 | issued shares |          
| |                     |                |                                 | held          |          
| |                     |                |                                 |               |          
| | Radianz Netherlands | Netherlands    | Sole ownership interest         | 100%          | Trading  
| | BV                  |                |                                 |               |          
| |                     |                |                                 |               |          
| | Radianz Spain SL    | Spain          | Sole ownership interest         | 100%          | Trading  
| |                     |                |                                 |               |          
| | Radianz             | Luxembourg     | Sole ownership interest         | 100%          | Trading  
| | Luxembourg          |                |                                 |               |          
| |                     |                |                                 |               |          
| | Radianz Sweden AB   | Sweden         | Sole ownership interest         | 100%          | Trading  
| |                     |                |                                 |               |          
| | Radianz US          | USA            | Ordinary 1 cent shares          | 100%          | Inactive 
| | Holdings            |                |                                 |               |          
| |                     |                |                                 |               |          
| | Radianz Canada Inc  | Canada         | Common
    share of CAN$1       | 100%          | Inactive 
| |                     |                |                                 |               |          

|29. | Summary
          of differences between UK and US General Applied Accounting Principles
    (GAAP)
|--- | ---------------------------------------------------------------------------------------------------

Accounting Principles

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

|a. | Revenue
    recognition
|-- | -----------------------

Upon formation of the company, Equant Finance BV (Equant) agreed to transfer certain existing Equant customer contracts to Radianz Limited (the Company) and its subsidiaries (collectively Radianz or the Group). Under the terms of the agreement between Equant and Radianz, when Equant is unable to obtain the customers consent to transfer the contracts, and Equant continues to provide service, Equant is required to contribute to Radianz the equivalent annual economic interest that, notionally, would have accrued to Radianz had the contract been transferred. Under US GAAP this contribution is treated as a capital contribution from Equant. Under UK GAAP, this is recognised as revenue.

|b. | Employee
    costs
|-- | ------------------

Some Radianz employees, who transferred from Reuters and Equant at the time the Company was established, retained the rights to certain unvested share options granted by the Parents at the time of the employees transfer to Radianz. Under US GAAP, the share option expense relating to the fair value of these options is recognised as non cash compensation over the vesting periods of the grants. Under UK GAAP, no expense is recognised.

|c. | Goodwill
|-- | --------

Under UK GAAP, the estimated excess fair value of the shares issued upon formation of the Company over the estimated fair value of the assets and cash contributed was recorded as goodwill on the balance sheet. Goodwill is amortised over its estimated useful economic life. Under US GAAP, the value of shares issued is recorded by reference to the fair value of the net assets contributed.

R33

---



Back to Contents

RADIANZ LIMITED

NOTES
  TO THE FINANCIAL STATEMENTS

---

|d. | Shares
      held by employee share ownership trust (ESOT)
|-- | ----------------------------------------------------------

Under UK GAAP,
  shares held by the ESOT are recorded as fixed asset investments at cost less
  any impairments. As at 31 December 2002, a full provision had been recorded
  against such amounts in the financial statements prepared under UK GAAP. Under
  US GAAP, those shares held by the ESOT areregarded
  as treasury stock and recorded at cost as a deduction from shareholders
  equity, with no provision for impairment recorded.

|e. | Discounted
      Equant Receivable
|-- | ----------------------------------

Upon formation
  of the company, Radianz entered into a contractual agreement with Equant, which
  entitles Radianz to $125 million of telecommunications, and general and administrative
  services over a period of up to 10 years. Radianz is entitled to utilise up
  to $12.5 million of these services annually from Equant under certain conditions.
  Under UK GAAP, this asset was recorded as a receivable within current assets
  at its net present value of $90 million, using a discount rate of 6.9% and the
  annual entitlement is expensed as the services are received. Interest is recognised
  in the profit and loss account as the discount on the receivable is unwound.
  Under US GAAP, the discounted receivable was recorded as a capital contribution
  and the unwinding of the discount credited to additional paid in capital, and
  the annual entitlement expensed as the services are received.

|f. | Taxation
|-- | --------

Under the terms
    of the joint venture agreement, Reuters agreed to reimburse Radianz for
  any share of the tax loss incurred by Radianz subsequently utilized by Reuters.
    Under UK GAAP, this is offset in the taxation charge for Radianz. Under US
    GAAP,
  this is shown as additional paid in capital of the company.

|Adjustments
      to net loss                      | 2003    |   | 2002      |   | 2001      |  
|-------------------------------------------------- | ------- | - | --------- | - | --------- | -
|                                                   |         |   | Unaudited |   | Unaudited |  
|                                                   | $000   |   | $000     |   | $000     |  
|                                                   |         |   |           |   |           |  
|Net
      loss in accordance with UK GAAP          | (86,033 | ) | (236,214  | ) | (232,288  | )
|                                                   |         |   |           |   |           |  
|                                                   |         |   |           |   |           |  
|a.  Revenue
      recognition                      | (2,000  | ) | (2,000    | ) | (2,200    | )
|b.  Employee
      costs                           | 1       |   | 1,996     |   | (2,871    | )
|c.  Goodwill                                       | -       |   | 104,349   |   | 104,349   |  
|d.  Impairment
      of ESOT shares                | -       |   | 67,021    |   | 64,140    |  
|e.  Interest
      - Equant receivable             | (2,367  | ) | (1,642    | ) | (866      | )
|f.  Taxation                                       | 895     |   | -         |   | 190       |  
|                                                   |         |   |           |   |           |  
|Net
      loss in accordance with US GAAP          | (89,504 | ) | (66,490   | ) | (69,546   | )
|                                                   |         |   |           |   |           |  
|                                                   |         |   |           |   |           |  
|Statement
      of comprehensive loss              | 2003    |   | 2002      |   | 2001      |  
|                                                   |         |   | Unaudited |   | Unaudited |  
|                                                   | $000   |   | $000     |   | $000     |  
|                                                   |         |   |           |   |           |  
|Net loss
      in accordance with US GAAP          | (89,504 | ) | (66,490   | ) | (69,546   | )
|Other comprehensive
      income:                  |         |   |           |   |           |  
|Foreign
      currency translation adjustment, net | 6,662   |   | 571       |   | (1,463    | )
|                                                   |         |   |           |   |           |  
|Comprehensive
      loss in accordance with US     |         |   |           |   |           |  
|GAAP                                               | (82,842 | ) | (65,919   | ) | (71,009   | )
|                                                   |         |   |           |   |           |  

R34

---



Back to Contents

RADIANZ LIMITED

NOTES
  TO THE FINANCIAL STATEMENTS

---

|Adjustments
      to shareholders equity   | 2003    |   | 2002      |   | 2001      |  
|------------------------------------------- | ------- | - | --------- | - | --------- | -
|                                            |         |   | Unaudited |   | Unaudited |  
|                                            | $000   |   | $000     |   | $000     |  
|                                            |         |   |           |   |           |  
|Net
      assets in accordance with UK GAAP | 183,717 |   | 263,086   |   | 498,729   |  
|                                            |         |   |           |   |           |  
|                                            |         |   |           |   |           |  
|c.  Goodwill                                | -       |   | -         |   | (104,349  | )
|d.  Investment
      in own shares/ESOT     | -       |   | -         |   | (67,021   | )
|e.  Discounted
      Equant receivable      | (51,249 | ) | (61,382   | ) | (72,240   | )
|                                            |         |   |           |   |           |  
|Net
      assets in accordance with US GAAP | 132,468 |   | 201,704   |   | 255,119   |  
|                                            |         |   |           |   |           |  

Cash flow statement

The principal
  differences between the cash flow prepared in conformity with UK GAAP and the
  cash flow statements presented in accordance with US GAAP are as follows:

|1. | Under
        UK GAAP, net cash flow from operating activities is determined before
        considering
      cash inflows from (a) returns on investments and servicing of finance (2003:
        $0.2 million, 2002: $2.6 million, 2001: $12.1 million), (b) taxes paid
        or
      received (2003: $2.1 million paid, 2002: $0.38 million received, 2001:
        $0.6 million paid). Under US GAAP, net cash flow from operating activities
        is
      determined after these items.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2. | Under
         UK GAAP, the purchase of Radianz shares by an ESOT (2003: $nil, 2002:
        $nil,
      2001: $46.3 million) is classified as investing activities whereas under
         US GAAP, this is classified as financing activities.                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3. | Under
      UK GAAP, movements in short- term investments (2003: $nil, 2002: $140.0
      million, 2001:
      $90.7 million) are not included in cash, but classified as management of
      liquid resources. Under US GAAP, short-term investments with maturity of
      three months or less at the date of acquisition are included in cash and
      cash equivalents.                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

|                                                     | Notes |  | 2003    |   | 2002      |   | 2001      |  
|---------------------------------------------------- | ----- |  | ------- | - | --------- | - | --------- | -
|                                                     |       |  |         |   | Unaudited |   | Unaudited |  
|                                                     |       |  |         |   |           |   |           |  
|                                                     |       |  | $000   |   | $000     |   | $000     |  
|                                                     |       |  |         |   |           |   |           |  
|Net cash inflow/ (outflow) from operating activities | 1     |  | 4,382   |   | (8,519    | ) | 10,851    |  
|Net cash outflow from investing activities           | 2     |  | (38,609 | ) | (98,602   | ) | (109,186  | )
|Net cash inflow/ (outflow) from financing activities |       |  | (953    | ) | -         |   | -         |  
|                                                     |       |  |         |   |           |   |           |  
|Net (decrease)/increase in cash and cash equivalents |       |  |         |   |           |   |           |  
|under US GAAP                                        | 3     |  | (35,180 | ) | (107,121  | ) | (98,335   | )
|                                                     |       |  |         |   |           |   |           |  
|Net (decrease)/increase in cash under UK GAAP        |       |  | (35,180 | ) | 32,921    |   | (7,610    | )
|                                                     |       |  |         |   |           |   |           |  

R35

---



Back to Contents

RADIANZ LIMITED

NOTES
  TO THE FINANCIAL STATEMENTS

---

Recent
  Accounting pronouncements

In January 2003,
the FASB issued Interpretation 46, Consolidation of Variable Interest Entities.
A variable interest entity is a legal entity (a) whose equity interest holders
as
a
group lack the characteristics of a controlling financial interest, including:
decision making ability and an interest in the entitys residual risks and
rewards or (b) where the equity holders have not provided sufficient equity investment
to permit the entity to finance its activities without additional subordinated
financial support. Interpretation 46 requires a variable interest entity to be
consolidated if any of its interest holders are entitled to a majority of the
entitys residual return or are exposed to a majority of its expected losses.
This party is referred to as the primary beneficiary.

In December 2003,
the FASB issued FASB Interpretation 46(R), Consolidation of Variable Interest
Entities. FIN 46(R) replaces FIN 46 and clarifies the accounting for interests
in variable interest entities. The company will begin to apply FIN 46 (R) to
entities considered to be variable interest entities as of the first date of
its first US GAAP balance sheet presented for periods ended after December 31,
2003. The Company does not expect that the adoption of FIN 46(R) will have a
material
affect on its financial statements.

In November 2002, the EITF reached a consensus on Issue 00-21 Revenue Arrangements with Multiple Deliverables (EITF 00-21), providing further guidance on how to account for multiple element contracts. EITF 00-21 is effective for all arrangements entered into on or after January 1, 2004. The Company does not anticipate a material impact on its accounting treatment of multiple element contracts under US GAAP.

R36

---



Item 19. Exhibits

Exhibit Index

|1.1                                                                                                                                                                                                                                 | Memorandum and Articles of
          Association of Reuters Group PLC (incorporated by reference to Exhibit
          1.1 to the Annual Report on Form 20-F filed by Reuters Group PLC with
          respect to the fiscal year ended 31 December 2001).                                                                                                                                                                                                                                                                                                                                                                         
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2.1                                                                                                                                                                                                                                 | Deposit Agreement, dated 18
          February 1998 among Reuters Group PLC, Morgan Guaranty Trust Company
          of New York, as depositary, and all holders from time to time of American
          Depositary Receipts issued thereunder (incorporated by reference to
          Exhibit 2.2 to the Annual Report on Form 20-F filed by Reuters Group
          PLC with respect to the fiscal year ended 31 December 1997).                                                                                                                                                                                                
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.1.1                                                                                                                                                                                                                               | Second Amended and Restated
          License, Maintenance and Distribution Agreement, dated October 1, 2003,
          between Reuters Limited and TIBCO Software Inc. (incorporated by reference
          to Exhibit 99.1 to the Registration Statement on Form S-3 File No.
          333-110304, filed by TIBCO on November 6, 2003, as amended)                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.1.2                                                                                                                                                                                                                               | Registration and Repurchase
          Agreement dated October 7, 2003, between Reuters Limited and TIBCO
          Software Inc. (incorporated by reference to Exhibit 4.3 to the Registration
          Statement on Form S-3 File No. 333-110304, filed by TIBCO on November
          6, 2003, as amended)                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.2                                                                                                                                                                                                                                 | Network Services Agreement,
          dated 22 May 2000, between Reuters Limited and Proholdco Limited (subsequently
          renamed Radianz Limited) (incorporated by reference to Exhibit 4.4
          to Amendment No. 1 to the Annual Report on Form 20-F filed by Reuters
          Group PLC with respect to the fiscal year ended 31 December 2000).                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.3                                                                                                                                                                                                                                 | Network Services Agreement,
          dated 28 September 2001, between Reuters Limited and SAVVIS Communications
          Corporation, as amended (incorporated by reference to Exhibit 10.4
          to the Quarterly Report on Form 10-Q filed by SAVVIS on 29 November
          2001, Exhibit 10.57 to the Annual Report on Form 10 -K filed by SAVVIS
          on 28 February 2003, Exhibits 10.1 and 10.2 to the Quarterly Report
          on Form 10-Q filed by SAVVIS on 12 August 2003, and Exhibits 10.2 through
          10.5 to the Quarterly Report on Form 10 -Q filed by SAVVIS on 30 October
          2003).
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.4*                                                                                                                                                                                                                                | Transitional
            Services Agreement dated 2 June 2003 between Reuters Limited and
            Moneyline Telerate Holdings (portions of this exhibit have been omitted
            pursuant to a request for confidential treatment)                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.5*                                                                                                                                                                                                                                | Deed
            of Covenant dated 11 October 2002 made by Reuters Group PLC relating
            to the £1,500,000,000 Euro-commercial Paper Programme                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.5.1*                                                                                                                                                                                                                              | Amended
            and Restated Note Agency Agreement dated 11 October 2002 among Reuters
            Group PLC (as Issuer), Citibank, N.A. (as Issue Agent and Principal
            Paying Agent) and Dexia Banque Internationale a Luxembourg S.A. (as
            Paying Agent)                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.5.2*                                                                                                                                                                                                                              | Dealer
            Agreement dated 11 October 2002 among Reuters Group PLC (as Issuer),
            Citibank International plc (as Arranger) and the various Dealers
            named therein                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.6*                                                                                                                                                                                                                                | Amended
            and Restated Programme Agreement dated 7 November 2003 among Reuters
            Group PLC (as Issuer and Guarantor), Reuters Finance PLC (as Issuer)
            and the various Initial Dealers named therein relating to the November
            2003 update of the £1,000,000,000 Euro Medium Term Note Programme                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.6.1*                                                                                                                                                                                                                              | Amended
            and Restated Trust Deed dated 7 November 2003 between Reuters Group
            PLC (as Issuer and Guarantor), Reuters Finance PLC (as Issuer) and
            Citicorp Trustee Company Limited (as Trustee)                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.6.2*                                                                                                                                                                                                                              | Amended
            and Restated Agency Agreement dated 7 November 2003 between Reuters
            Group PLC (as Issuer and Guarantor), Reuters Finance PLC (as Issuer),
            Citibank NA (as Agent), Citibank AG and BNP Paribas Luxembourg (as
            Paying Agents) and Citicorp Trustee Company Limited (as Trustee)                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.6.3*                                                                                                                                                                                                                              | Pricing
            Supplement dated 17 November 2003 relating to the issue by Reuters
            Finance PLC of €500,000,000 4.625% Guaranteed Notes due 19 November
            2010 under the £1,000,000,000 Euro Medium Term Note Programme                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.6.4*                                                                                                                                                                                                                              | Form
            of Permanent Global Note in respect of the issue by Reuters Finance
            PLC of €500,000,000 4.625% Guaranteed Notes due 19 November
            2010 under the £1,000,000,000 Euro Medium Term Note Programme                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.6.5*                                                                                                                                                                                                                              | Pricing
            Supplement dated 24 March 1999 relating to the issue by Reuters Group
            PLC of £200,000,000 5.375% Notes due 26 November 2004 under
            the £1,000,000,000 Euro Medium Term Note Programme                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.6.6*                                                                                                                                                                                                                              | Permanent
            Global Note dated 24 March 1999 relating to the issue by Reuters
            Group PLC of £200,000,000 5.375% Notes due 26 November 2004
            under the £1,000,000,000 Euro Medium Term Note Programme                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.7*                                                                                                                                                                                                                                | Syndicated
            Credit Facility Agreement, dated 25 April 2003, among Reuters Group
            PLC, HSBC Bank plc and J.P. Morgan plc, as arrangers, the financial
            institutions listed therein and HSBC Investment Bank Plc, as agent                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.8                                                                                                                                                                                                                                 | Agreement and Plan of Merger,
          dated 9 June 2002, among Instinet Group Incorporated, Daiquiri Merger
          Corporation and Island Holding Company, Inc.(incorporated by reference
          to Exhibit 2.1 to the Current Report on Form 8-K (File No. 000-32717)
          filed by Instinet Group Incorporated on 14 June 2002).                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.9                                                                                                                                                                                                                                 | Amended and Restated Agreement
          and Plan of Merger dated 24 February 2003 by and among Reuters Group
          PLC, Proton Acquisition Corporation and Multex.com, Inc. (incorporated
          by reference to the Tender Offer Statement on Schedule TO-T filed by
          Reuters Group PLC on 26 February 2003).                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.10.1*                                                                                                                                                                                                                             | Service
            Agreement of Thomas H. Glocer with Reuters Group PLC dated 10 February
            2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.10.2*                                                                                                                                                                                                                             | Service
            Agreement of David Grigson with Reuters Group PLC dated 21 June 2001,
            as amended 3 March 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.10.3*                                                                                                                                                                                                                             | Service
            Agreement of Devin Wenig with Reuters Group PLC dated 3 March 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.10.4*                                                                                                                                                                                                                             | Service
            Agreement of Devin Wenig with Reuters America LLC dated 3 March 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.10.5*                                                                                                                                                                                                                             | Engagement
            Letter of Niall FitzGerald with Reuters Group PLC dated 2 March 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.10.6                                                                                                                                                                                                                              | Non-Executive Chairman Compensation
          Letter between Instinet Group Incorporated and Ian Strachan, dated
          January 1, 2003 (incorporated by reference to Exhibit 10.6 to the Annual
          Report on Form 10-K filed by Instinet Group on 28 March 2002)                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.11                                                                                                                                                                                                                                | Rules of The Reuters Group
          PLC Long -Term Incentive Plan 1997 (incorporated by reference to Exhibit
          4.6 to the Annual Report on Form 20-F filed by Reuters Group PLC with
          respect to the fiscal year ended 31 December 2001).                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.12*                                                                                                                                                                                                                               | Rules
            of the Reuters Group PLC Discretionary Stock Option Plan, as amended                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|8.1                                                                                                                                                                                                                                 | See Note 32 of the Notes to
          the Consolidated Financial Statements of Reuters Group PLC contained
          in the Annual Report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.1                                                                                                                                                                                                                                | Consent
            of PricewaterhouseCoopers for incorporation by reference in the Registration
            Statements on Form S-8 of Reuters Group PLC of their report dated
            3 March 2004                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|12.1                                                                                                                                                                                                                                | Certification
            of Thomas H. Glocer filed pursuant to 17 CFR 240.13a-14(a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|12.2                                                                                                                                                                                                                                | Certification
            of David J. Grigson filed pursuant to 17 CFR 240.13a-14(a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|13.1                                                                                                                                                                                                                                | Certification
            of Thomas H. Glocer furnished pursuant to 17 CFR 240.13a-14(b) and
            18 U.S.C.§1350                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|13.2                                                                                                                                                                                                                                | Certification
            of David J. Grigson furnished pursuant to 17 CFR 240.13a-14(b) and
            18 U.S.C.§1350                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                   
|* Incorporated
          by reference to the identically numbered exhibit to the Annual Report
          on Form 20-F filed on 16 March 2004 by Reuters Group PLC with respect
          to the fiscal year ended 31 December 2003.
|                                                                                                                                                                                                                                   



---





SIGNATURES

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

|                   |                  
|------------------ | -----------------
|Date: 30 June 2004 | Reuters Group PLC
|                   | (Registrant)     
|                   |                  
|                   | By               
|                   |                  
|                   |                  



---