interim results chief executive officer tom glocer 23 july 2002

Interim ResultsInterim Results

Chief Executive OfficerChief Executive Officer

Tom GlocerTom Glocer

23 July 200223 July 2002

H1 overviewH1 overviewReal progress despite tough marketsReal progress despite tough markets

• Reshaping the business

• Instinet back on track

• Underlying financials resilient

Reshaping the business to deliver sustainable, double digit earnings growthReshaping the business to deliver sustainable, double digit earnings growth

First phase:‘Self Help’

Second phase:Second phase:Revenue GrowthRevenue Growth

• Margin-driven earnings growth

- Cost savings

- Getting the right products

- Getting the right business mix

• Revenue-driven earnings growthRevenue-driven earnings growth

- Segment strategies take hold- Segment strategies take hold

- Market upturn- Market upturn

- Continued margin improvement- Continued margin improvement

Strategy and five year plan – October 2001Strategy and five year plan – October 2001

Differentiated strategy which Differentiated strategy which

• Meets customer needsMeets customer needs

• Beats the competitionBeats the competition

• Plays to our core Plays to our core competenciescompetencies

• Achieves profitable growthAchieves profitable growth

2002 update2002 update

• Cost savingsCost savings

• Right productsRight products- Win the premium desktopWin the premium desktop- Next generation architectureNext generation architecture- Win the enterprise: sell Win the enterprise: sell

solutionssolutions

• Right business mixRight business mix- Growing the business Growing the business

outside financial servicesoutside financial services- Optimise portfolio Optimise portfolio

compositioncomposition

Portfolio Portfolio compositioncomposition

OutsideOutsidefinancial servicesfinancial servicesSolutionsSolutionsNextNext

generationgenerationPremiumPremiumDesktopDesktop

RIGHT PRODUCTS RIGHT MIXCOST SAVINGSCOST SAVINGS

Cost savingsCost savingsBusiness transformation & other savingsBusiness transformation & other savings

£0

£50

£100

£150

£200

£250

£300

£350

FY 2000 FY 2001 FY 2002 FY 2003

£m£m

Business transformation & 2001 restructuring 2002 restructuring

1515

2020

100100

235235

185185

6565

205205

335335




COST SAVINGS RIGHT PRODUCTS RIGHT MIX

Right productsRight productsMarket frameworkMarket framework

Premium Growth : low

• Power Users

• 3000 Xtra, BridgeStation

• Dealing 3000

Mid TierGrowth : high

• Multiple user segmentsthroughout the enterprise

• Reuters Plus, RDL,Next Generation Products

Lower TierGrowth : high

potential

• Corporate users, retail investors

• Reuters InvestorWeb Services

• Trusted content

• Openness

• Integration

• Standards

Differentiation Differentiation throughthrough




COST SAVINGSCOST SAVINGS RIGHT PRODUCTS RIGHT MIX

Right productsRight productsWin the Premium DesktopWin the Premium Desktop

Objective: Protect and grow market share

Two key initiatives

1) Make 3000 Xtra best value for Power Users

2) Build User Communities

Total accessible market: 125,000+ positions

H1 02 sales: 67,000 positions

H1 02 installs: 44,000 positions



generationgenerationPremiumDesktop


Progress

Customer Customer satisfaction index satisfaction index now establishednow established

Make 3000 Xtra best Make 3000 Xtra best value for Power Usersvalue for Power Users

Milestones

All customers upgraded All customers upgraded to Version 4 by year endto Version 4 by year end






• PersonalisationPersonalisation

• Customer serviceCustomer service

New Customer New Customer Segment displays, Segment displays, applicationsapplications

60 new trainers in 60 new trainers in place nowplace now

120 new client trainers 120 new client trainers by year endby year end

Customer satisfaction Customer satisfaction improvementimprovement

60,000 Reuters 60,000 Reuters Messaging users via Messaging users via MindAlignMindAlign

170 firms signed up for 170 firms signed up for Reuters Messaging betaReuters Messaging beta

175,000 Reuters 175,000 Reuters Messaging users by Messaging users by year endyear end

Build User Build User CommunitiesCommunities






Progress Milestones

Instinet and Bridge Instinet and Bridge Institutional Order Institutional Order Entry available on Entry available on XtraXtra

• Introduce trade Introduce trade management and management and order routing order routing capabilitiescapabilities

• Launch Reuters Launch Reuters MessagingMessaging

Right productsRight productsRelease new products on next generation architectureRelease new products on next generation architecture

New ProductsNew Products

• Reuters KnowledgeReuters Knowledge- Initial addressable market of 30,000 in corporate financeInitial addressable market of 30,000 in corporate finance- Launch Q1 03Launch Q1 03

• Reuters Intelligent AdvisorReuters Intelligent Advisor- Initial addressable market of 175,000 in wealth managementInitial addressable market of 175,000 in wealth management- Launch Q2 03Launch Q2 03

• European Securities ProductEuropean Securities Product- Under developmentUnder development

New products expected to add >£100m in 2004New products expected to add >£100m in 2004


OutsideOutsidefinancial servicesfinancial servicesSolutionsSolutionsNext

generationPremiumPremiumDesktopDesktop


•Scaleable

•Best of breed

•Lower cost to deliver

•Flexible

•Re-usable







Streamlining the product lineStreamlining the product line

• Product announcements issued to customers todayProduct announcements issued to customers today• 25% - core product set25% - core product set• 25% - minor enhancements only25% - minor enhancements only• 50% - withdrawn from sale50% - withdrawn from sale

• Migration and support plans for customers in placeMigration and support plans for customers in place

• Minimal revenue impactMinimal revenue impact

• Major benefit is operational efficiencyMajor benefit is operational efficiency





Global consolidationGlobal consolidation

Cost ReductionCost Reduction

DifferentiationDifferentiation

Operational riskOperational risk

Advice vs. productAdvice vs. product

Integrated desktopIntegrated desktop

OutsourcingOutsourcing

Trade managementTrade management

Risk managementRisk management

Tools for advisorsTools for advisors

Customer relationship management

Customer trendsCustomer trends Customer spendingCustomer spending US$mUS$m

7,0007,000

10,00010,000

2,5002,500

1,5001,500

3,0003,000

8,0008,000Source: TowerGroup, Yankee Group 2002 estimates

Right productsRight productsWin the enterprise: Selling SolutionsWin the enterprise: Selling Solutions


OutsideOutsidefinancial servicesfinancial servicesSolutionsNextNext



Right productsRight products Win the enterprise: Selling SolutionsWin the enterprise: Selling Solutions

• Tibco Active EnterpriseTibco Active Enterpriselicenses + Kondor risklicenses + Kondor riskmanagementmanagement $1.6m$1.6m

• MaintenanceMaintenance $0.25m $0.25m p.a.p.a.

• ConsultingConsulting $0.6m$0.6m

• 220 x 220 x 3000 Xtra3000 Xtra $$2.1m p.a.2.1m p.a.


OutsideOutsidefinancial servicesfinancial servicesSolutionsNextNext



Goals: Goals: grow outright revenuepull through recurring revenueintegrate our products into customers’ workflow.

Large global buy side institution

Knowledge management portal toshare internal and external data

Leading US investment bank

Cross asset transaction portal toserve institutional clients

• Tib Portal Builder LicencesTib Portal Builder Licences $1m$1m

• ConsultingConsulting $11m$11m

• Bespoke systemBespoke systemmaintenancemaintenance $2m $2m p.a.p.a.

• £150m revenue business

• 7% year-on-year growth in TV subscription revenue

MediaMedia

• £60m revenue business with growth potential in existing and new markets

• Key assets

• Trusted brand

• High end research companies– Tower & Yankee

• Global scale and reach

• Reuters Editorial & data groups

• Factiva - channel to corporates

• Instinet - channel to financial services

ResearchResearch

• £120m revenue business

• Solutions revenue doubled in H1 02

• Interesting opportunities in STP

Commodities & EnergyCommodities & Energy

Right business mixRight business mixBuilding our presence outside the financial marketsBuilding our presence outside the financial markets


Outsidefinancial servicesSolutionsSolutionsNextNext



Getting the right business mixGetting the right business mixOptimising portfolio compositionOptimising portfolio composition

Portfolio composition




TechnologyTechnology CommunicationsCommunications

TradingTrading

ContentContent

Build a presence outside the financial marketsBuild a presence outside the financial markets

Drive value from the portfolio into Reuters operating linesDrive value from the portfolio into Reuters operating lines

Improve customer service Improve customer service

Improve our competitive positionImprove our competitive position

Deliver new productsDeliver new products

Simplify the product lineSimplify the product line

Introduce performance cultureIntroduce performance culture

Re-organise the business to improve customer focusRe-organise the business to improve customer focusand harness global scaleand harness global scale

Deliver cost savings and headcount reductionDeliver cost savings and headcount reduction

Bridge integrationBridge integration

ProgressProgressWe said …We said …

SummarySummary

Outlook for ReutersOutlook for Reuters

Continued improvement inContinued improvement in

• MarginsMargins

• CompetitivenessCompetitiveness

• Operational gearingOperational gearing

Recurring revenueRecurring revenue• Confirm H2 guidanceConfirm H2 guidance

- 5-6% underlying decline - 5-6% underlying decline• Growth in actual terms, drivenGrowth in actual terms, driven

by Bridgeby Bridge

Outright revenueOutright revenue• Likely to be around 2001 levels despite a Likely to be around 2001 levels despite a

strong sales pipelinestrong sales pipeline

Operating marginOperating margin• On track to deliver 12% On track to deliver 12% in 2002 before net in 2002 before net

impact of restructuringimpact of restructuring• Anticipate further margin improvement in Anticipate further margin improvement in

20032003• Assuming market upturn, margin Assuming market upturn, margin targettarget

remains 17-20% remains 17-20%

interim results chief executive officer tom glocer 23 july 2002

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