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2001 Reuters Performance Review: Revenue Growth, Operating Margin, and Strategic Outlook

This document presents a comprehensive review of Reuters' performance in 2001, highlighting key metrics such as recurring revenue growth of 6%, operating margin effects from integration costs, and significant advancements in product installations. The review addresses key strategic issues, including the focus on future revenue growth and competitive positioning. It also outlines the progress of the Bridge project and key investments in strategic partnerships. Overall, the outlook is positive, emphasizing the importance of innovation and customer-centric approaches for sustainable growth.

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2001 Reuters Performance Review: Revenue Growth, Operating Margin, and Strategic Outlook

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  1. Agenda • 2001 Performance Review - Revenue - Operating margin - Bridge progress - JVs, associates and investments • Key issues for Reuters • Outlook and summary

  2. 2001 (underlying) Reuters Performance Review Recurring Revenue Q1 Q2 Q3 Q4 FY 6% 5% 2% 0% 3% • Significant high tier progress - 3000 Xtra - 6,000 units ahead of sales target - Dealing 3000 - installs 7% ahead of target

  3. 2001 (underlying) Reuters Performance ReviewOutright/Solutions Revenue • 21% growth in Consulting revenue stream • Reuters now deeply integrated in customers’ business infrastructure Q1 Q2 Q3 Q4 FY 47% 4% 25% -9% 7%

  4. Reuters Performance ReviewOperating Margin • Operating margin of 7% reflects - Bridge integration costs - Business Transformation - Once-off severance charges • Headcount reductions – 1400 of 1800 completed; all identified • Efficiency gains • Investing in next generation products - Reuters Dealing Link - Instant Messaging

  5. Reuters Performance ReviewBridge Progress • Rapid integration • Monthly loss reduced to $2m from $6mat time of announcement • Reuters US back office functions to be consolidated at St Louis campus • Neutral in 2003, earnings accretive in 2004

  6. Reuters Performance ReviewJVs, associates and investments • Dispassionate look at the portfolio • Reorganisation of Greenhouse to reflect strategic role in Group • Greater focus on investments with strong strategic significance - Instinet - Tibco - Radianz - Factiva

  7. Key Issues for Reuters • Delivering future revenue growth • Strengthening our competitive position • Maximising the value of Instinet to theReuters Group • Improving our operating margin • Capturing value through investment and resource allocation

  8. Future Revenue Growth Focus &Innovation IBB Reuters Knowledge STP 3000Xtra DomesticServices AM Smart Trading Advisor Workstation Global Scale Dealing3000 Treasury Lower Entry Points Solutions Suite SolutionsSelling DatafeedAccesses C&M Numerous verticalmarket segments

  9. Strengthening our Competitive Position • Reuters remains leader as market consolidates • Concentrating our efforts where they will count most - Global scale for operating advantage - Great, differentiating customer service - Superior open technology to drive solutions sales • Fewer, better, scaleable products

  10. Instinet • Volatile market conditions • More than a sell side ECN • Profitable business with strong buy side penetration • New products to be released in 2002 • Well positioned to participate in evolving market

  11. Outlook • Recurring revenue • Overall growth in 2002 driven by Bridge • 2-3% underlying decline in H1 • H2 rate of decline slightly higher than H1 • Outright revenue • Further solutions sales growth in 2002

  12. Put the customer at the heart of what we do Make global scale count Focus and innovate Summary Sustainable, double-digit earnings growth Unrelenting performance culture

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