REUTERS GROUP PLC ANNUAL REPORT AND ACCOUNTS 1999

growth of 6% at comparable rates. In 1998combined contribution represented 88% oftotal divisional contribution with growthof 17%.16%RI10%30%RTS35%-10%RV-18%Contribution margin at actual rates1999199825%Contribution margin at actual rates was 19%,broadly in line with 1998 and 20% in 1997.The RTS and Instinet margins in 1999 wereimpacted by decline in profitability ofDealing and Instinet US respectively,combined with internal investments in newinitiatives.Divisional second half performance35%InstinetSix monthsSix months toto 30 June31 December£m 1999 1998 1999 1998Revenue 1,516 1,419 1,565 1,539% changeActual 7% 2%Comparable 5% 0%Contribution 306 291 290 282% changeActual 6% 3%Comparable 1% 3%Revenue growth at comparable rates was 5%in the first half of the year and flat in thesecond half. The second half results reflectedin particular the effect that millenniumconcerns had on many of our customers whodeferred purchases.Fourth quarter revenue was flat at both actualand comparable rates.Growth in contribution at comparable ratesimproved from 1% in the first half to 3% inthe second half.Joint ventures, associates andinvestmentsExcluded from operating profit are a numberof strategic investments, minority stakes andjoint ventures managed by the divisions. Themore significant of these are set out below:Reuters Trading Systems:• GL Trade (34.2%)GL Trade is a developer of interactivesoftware providing ‘electronic’ gateways toelectronic exchanges. Reuters share of GLTrade’s profit for 1999 was £2 million.Reuters Ventures:• Factiva (50%)• Greenhouse Fund (various)• ITN (20%)Factiva is a joint venture that combines thebusinesses of Reuters Business Briefing andDow Jones Interactive. Reuters share ofFactiva’s losses for the second half of the yearwas £4 million.Disposal of Greenhouse Fund investmentsrealised a profit of £37 million in the year.The Fund acquired new investments costing£61 million.Reuters share of profits from ITN, whichprincipally provides daily scheduledprogrammes of international and nationalnews for television and radio, was £2 millionin 1999.Instinet:• Tradepoint Financial Networks Plc (7.5%)• Archipelago LLC (16.4%)• W.R. Hambrecht & Co. (11.4%)Tradepoint is a London-based for-profit stockexchange offering an electronic order drivenequities market for UK securities.Archipelago is an electronic communicationsnetwork for NASDAQ stocks to matchpurchases and sales electronically outside theexchange trading system.W.R. Hambrecht is an investment bankoffering an ‘Open IPO’ system that allowscompanies to be taken public via auction onthe Internet.Corporate:• TIBCO Software Inc. (62.3%)TIBCO Software Inc. is a provider of realtimeinfrastructure software for the Internet.Reuters share of the TIBCO Software Inc.’sloss for the second half of the year was£3 million.Reuters realised an accounting profit of £52million from the successful IPO of TIBCOSoftware Inc. on NASDAQ in July 1999.Voting rights of Reuters are restricted to 49%and accordingly this company is nowaccounted for as an associate.If all outstanding employee options wereexercised Reuters diluted shareholding wouldbe 47%.3. DIVISIONAL REVIEWReuters InformationReuters Information (RI) is responsible forthe majority of financial informationproducts. Its aim is to produce, for financialprofessionals and their clients, its owndifferentiated content and features whileaggregating key third party products in aconvenient way.Year to 31 December£m 1999 1998 1997Revenue 1,619 1,531 1,477Costs 1,366 1,373 1,320Contribution 253 158 157Contribution% changeActual 60% 0%Comparable 52% 15%Margin 16% 10% 11%Revenue growth at actual rates was 6%, or4% at comparable rates with growth in 1998of 7% at comparable rates. Excluding theimpact of acquisitions, underlying revenuegrowth was 3% at comparable rates in 1999and 7% in 1998.RI costs declined by 2% at comparable ratesin 1999 and increased 7% at comparable ratesin 1998, resulting in a contribution growth of52% in 1999 and 15% in 1998. The reductionin costs reflects the benefits from thedivisional restructuring, including therationalisation of central development groupsand streamlining of sales and supportactivities. Also included is the reversal of anaccrual in respect of third party data fees noReuters Group PLC Annual Report 1999 35