Focus and vision for 150 years..... - Thomson Reuters

DESCRIPTION OF BUSINESS continued
Further information relating to investments,
acquisitions, joint ventures and disposals in
2000 is provided in notes 16 and 31.
DATA AND COMMUNICATIONS NETWORKS
Reuters operates a number of communications
networks, employing various technologies, for
distribution of its products. Reuters is making
increasing use of internet technology which is
utilised in the Reuters web communications
network.
Reuters has two global technical centres, two
main technical centres and a number of smaller
local data centres. Reuters data centres are
linked by communications services provided
by Radianz using dedicated international
communications circuits that rely on satellite
links, optical fibre cables and coaxial
cables. These circuits are leased by Radianz
from various governmental and private
telecommunications operators including Equant.
Communications between data centres and
Reuters subscribers are provided by Radianz
in 11 countries and by Reuters directly or
third parties elsewhere; they mainly use
dedicated terrestrial circuits which are leased
from telecommunications operators and
are supplemented by a variety of other
transmission systems. These include satellitebased
networks for delivery of services to
small dish receivers on customer premises. For
further information regarding Radianz and the
relationship between Radianz and Reuters,
see pages 79 and 87.
PRINCIPAL GEOGRAPHIC MARKETS
Reuters products are distributed to 151 countries.
Within business divisions, products are divided
for financial reporting purposes into three
principal geographic areas: Europe, Middle
East and Africa (including the United Kingdom
and Ireland); Asia/Pacific (including Japan); and
The Americas. An analysis of revenue, costs,
contribution, and assets by these markets is
provided under the heading operating and
financial review and in notes 1 and 13.
SUBSCRIBERS AND MARKETING
In general, Reuters information products are
billed by number of user accesses. User
accesses include terminals, accesses to
datafeeds, slave screens and portable devices.
The number of user accesses at the end of
each of the last three years is set forth below.
AT 31 DECEMBER
000’s 2000 1999 1998
Information products 507 477 429
Dealing 21 23 24
Instinet 30 21 16
Total 558 521 469
Information relating to user accesses and an
analysis of revenue and subscribers by type
are provided under the heading operating
and financial review and in note 22.
The majority of Reuters revenue is recurring
and generally covered by contracts of indefinite
period, terminable on one or two years’ notice.
Individual services within a contract may be
cancelled on twelve, six or three months’
notice. In general, charges are based upon the
particular products purchased by a subscriber
and the number of user accesses. Payment
terms are generally in advance. Charges for
certain other Reuters products vary according
to volume of use. These include Instinet,
Dealing 2000-2, Dealing 3000 Spot Matching
and certain information products.
Under its agreements with Dealing 2000-2
and Dealing 3000 Spot Matching subscribers,
Reuters accepts liability for direct net loss
incurred by subscribers solely as a result of
a transmission or processing fault that is
shown to be caused by the negligence or
wilful misconduct of Reuters. Reuters only
accepts this liability in full for trades with a
value of up to $15 million; for trades above
$15 million, Reuters agreements with
subscribers provide that Reuters liability
is limited on a pro rata basis.
Reuters sells its products through a variety
of channels. At 31 December 2000, Reuters
sales and marketing force consisted of 5,141
persons. To support the Reuters brand, which
Reuters believes to be of significant value,
Reuters increased its investment in advertising
in 2000, using television for the first time as
a medium to reach a wider public.
EQUIPMENT SUPPLY AND SERVICING
Reuters central computers are presently
supplied principally by Sun Microsystems and
Compaq Computer Corporation (Compaq),
with a smaller number of computers from
International Business Machines Corporation
(IBM), Sequent Information Systems and other
manufacturers. Reuters central computers
are installed and normally maintained by the
supplier and operated by Reuters personnel.
Radianz’s communications network uses
equipment supplied and supported by Cisco
Systems Inc., and Nortel Networks Corporation
which is installed and operated by Radianz staff
in 11 countries and by Reuters staff elsewhere.
Database application software is supplied by
Oracle Corporation. Tivoli Systems, a subsidiary
of IBM, supplies software for network and
system management requirements.
Reuters installs and provides first level
maintenance for the majority of its client sites
either directly or in some countries via subcontractors.
These installations are usually
based on equipment supplied either by IBM or
Compaq. Some clients specify and supply such
equipment themselves and may be responsible
for its maintenance. All Reuters application
software on central computers and client site
systems is maintained by Reuters.
COMPETITION
Reuters faces competition in all market sectors
and geographical areas. Some rival vendors
compete across a range of markets and in most
major financial centres. Other vendors are more
specialised, either in markets or location.
Reuters Financial
Competitors in the provision of information
products for the financial markets include
Bloomberg LP (Bloomberg), Bridge Information
Systems Inc. (Bridge), Quick Corporation of Japan,
Telekurs AG of Switzerland and Thomson
Corporation’s Thomson Financial unit.
Competition to the Lipper funds information
business comes from Morningstar Inc., the
8 Reuters Group PLC Annual Report and Form 20-F 2000